Mesa Market Co. v. Crosby

174 F. 96, 98 C.C.A. 70, 1909 U.S. App. LEXIS 5153

• Court: Court of Appeals for the Eighth Circuit
• Decided: October 11, 1909
• Docket: No. 2,842
• Status: Published

Opinions

ADAMS, Circuit Judge

(after stating the facts as above). To avoid unprofitable repetition, the Implement Company and its assignee, the Mesa Market Company, will be referred to indiscriminately in this opinion as the purchaser, unless otherwise specified.

The contract in question was primarily one for the sale of real estate. The purchaser was to be given quiet and peaceable possession, and any default in the performance of the undertakings imposed upon it entitled the vendors to resume possession and terminate the right to purchase. If the option should be exercised, all installments of pur- . chase price paid and all improvements added to the premises were to be regarded as rental of the premises during the occupancy of the purchaser. In other words, the lawful exercise of the right to resume possession ipso facto converte'd the contract of sale into one of lease. There is abundant authority to the proposition that where a purchaser goes into possession of premises under a contract of purchase, and aft-erwards makes default and refuses to complete the purchase, he ma)>be treated as a tenant at the option of the vendors, and be held liable for use and occupation, even without a stipulation in the contract to that effect. 2 Warvelle on Vendors, § 882; Whittier v. Stege, 61 Cal. 238; Woodbury v. Woodbury, 47 N. H. 11, 90 Am. Dec. 555; Patterson v. Stoddard, 47 Me. 355, 74 Am. Dec. 490; Smith v. Wooding, 20 Ala. 324.

But we are not compelled to so hold in this case, because the contract of purchase by necessary implication of its provisions creates the relation of landlord and tenant as a consequence of default by the purchaser in the performance of its engagements. In October, 1905, the vendors asserted the right to resume possession because of a default in the payment of $4,000 which became due, as a part of the purchase price, on May 6, 1905, and later, in March, 1906, secured possession by a voluntary surrender thereof by the purchaser, not, however, until they had instituted a suit for that purpose. The evidence conclusively shows the failure to make the required payment by the purchaser and the exercise of the right to terminate the contract obligation to sell by the vendors. These propositions are not seriously controverted; but the purchaser’s contention is that prior to such termination it tendered the amount due according to contract, and that the tender was wrongfully refused.

The contention of the vendors is that the purchaser never tendered, payment at all, but that they were ready to and did tender a conveyance conforming in all respects to the requirements of the contract, and that the purchaser refused to accept and pay for the same. The controversy between the parties is, therefore, reduced to a question as to which first committed a breach of the contract.

Much discussion was had by counsel as to whether the Market Company made a legal tender of the purchase price of the lots, as it was required to do before demanding a deed (Michigan Home Colony Co. v. Tabor, 141 Fed. 332, 72 C. C. A. 480); but this need not be considered by us. The parties seem to have passed beyond that issue by continuing negotiations for the consummation of the deal thereafter, and the only questions for our consideration, according to the assignment of errors, are (1) whether the vendors first broke the contract by exacting as conditions to making the conveyance the payment of the telegraphic charges and requiring that payment be made in a certified check as already stated; (2) whether they did so by not tendering a deed conveying a marketable title — that is, one deducible of record. Of these things in their order.

Tittle attention need be given to the claim that the contract was broken by demanding payment of the telegraphic charges. That was a trifling matter, and during subsequent negotiations the demand was waived, and the matter was left exclusively to the plaintiff’s sense of fairness. Tittle also need be said concerning the next question. The vendors lived in Boston, and, if a proper legal tender was made to their agent in Colorado, it should have been in lawful money. The demand for a certified check was not for a check or other exchange on Boston, which, being the place of defendants’ residence, in the absence of a provision of the contract to the contrary, was the place of payment, and the place where the-tender should have been made, but was for a certified check merely. This demand would have been satisfied by a certified check drawn on a bank at the home of the purchaser in Colorado, and, if made, was for less than the vendors were entitled to, and constituted no substantial breach of the contract.

The real contest was not over these trifles, but arose over the conceded fact that the vendors did not tender a deed to the purchaser conveying a title shown by the land records of the county where the land was situated to have stood in their names. The contract, signed by Tucy Crosby, Herbert W. Blastings, Ada F. Gates, and Sophia W. Watson, obligated them to sell and convey the described lots by “a good and sufficient warranty deed in the usual form,” and recited as an accepted fact that they constituted the only heirs at law of Henry D. Fales, deceased. The deed tendered was a warranty deed, signed and acknowledged by Tucy Crosby, Ada F. Gates, S' ' A W. Watson, and Elizabeth E. Hastings, and contained the followm. recital:

“The said premises were part of the estate of Henry D. Fales, deceased intestate, of Brookfield aforesaid, the said Lucy Crosby, Ada If. Gates, and Sophia W. Watson, together with Herbert W. Hastings, of said North Brook-field, being the sole heirs at law of the said Henry D. Bales, and the said Elizabeth E. Hastings being the widow and sole heir at law of the said Her-bertJW. Hastings', deceased intestate. Reference is hereby made to the records of the probate court in and for the county of Worcester aforesaid; administration having been taken out on the estate of the said Henry D. Bales May 16, 1890, and administration having been taken out on the estate of the said Herbert W. Hastings, September 4,1000.”

It thus appears that the deed tendered was executed by the parties who agreed to do so, except in so far as Herbert W. Hastings was concerned. So far, then, there was a strict compliance with the obligation to convey. Mr. Hastings having died, Mrs. Hastings, representing herself to be the widow and only heir at law of Mr. Hastings, joined with the other defendants in the following covenant of warranty found in the deed:

‘‘That they are well seised of the premises above conveyed as of good, sure, perfect, absolute, and indefeasible estate of inheritance in law in fee simple, and have good right, full power, and authority to grant, bargain, sell, and convey the same,, in manner and form aforesaid, and that the same are free and clear from all former and other grants, bargains, sales, liens, taxes, assessments, aud incumbrances of whatsoever kind or nature soever.”

'By these and other covenants the deed purported to be, and was without doubt, “a warranty deed in the usual form,” warranting that the grantors were possessed of a good, unincumbered title in fee simple absolute to the premises conveyed. The deed tendered, therefore, responded to the obligation imposed upon the vendors by the contract. If the vendors failed to convey or oiler to convey the lots as required by the contract, the purchaser had his election of remedies. It might have rescinded the contract and recovered back any part of the purchase price which it had paid, or it might have affirmed the contract and resorted to a court of equity to secure specific performance by the vendors, or it might, as was done in this case, have sued the vendors at law for damages for the breach of the contract. It elected to pursue the last-mentioned remedy. It went into a court of law and tendered an issue, namely, that the defendants, the vendors, did not tender to it a sufficient deed as required by the contract. It apparently did not desire .the lots on the terms of the contract. It rejected the equitable remedy, by which it might have secured them upon terms possibly requiring a demonstration of title of record, but chose the strict action at law to recover damages for a breach of the contract.

In doing so it assumed the usual burden of proving the affirmative of the issue tendered by it. It matters not that this was negative in its character. The right of recovery depended upon proof that the vendors failed to tender a deed conveying 'good title. Neither the contract nor the pleadings based there'on imposed any obligation upon the vendors to convey a title deducible of record, and the mere fact that the one tendered does not appear to be such a title constituted no breach of the contract. A marketable title, or one deducible from the land records, is one which equity often requires to be established in suits for specific performance by vendors against purchasers, and the numerous authorities cited by plaintiff in its brief, viewed in the light of the equitable issues presented in those cases, cannot be gainsaid or questioned; but they have no application to actions at law, like the present, where the right of recovery depends, not upon equitable consideration, but upon proof of a specific breach of the contract sued on.

Maupin, in the second edition of his treatise on Marketable Title to Real Estate, says, in section 2:

“A distinction is to be observed between the action to recover damages for breach of the contract or failure of the title and an action to recover back the purchase monev, in this respect, namely: That in the former action the plaintiff cannot recover unless lie shows that the title is absolutely bad, while in the latter he will be entitled to a return of the purchase money if there be a reasonable doubt about the title.”

And in section 283 he says:

“If a purchaser sues to recover damages against his vendor for breach of the coni ract, it is not enough to show that the title has been deemed insufficient by conveyancers. lie must prove the title to be bad.”

In Meyer v. Madreperla, 68 N. J. Law, 258, 53 Atl. 477, 96 Am. St. Rep. 536, the Court of Errors and Appeals of New Jersey, after an interesting discussion of the differences between equitable and legal remedies for breach of contracts of sale, concludes its opinion thus:

“To recover at law for a breach of such a contract, it must be shown that the title tendered was not a title good at law. The discretionary power of a court of equity with respect to a title which is doubtful, though good, is not within the province of a court of law, or a jury therein. * * * Sir. Sugden remarks: ‘Whether courts of law were at liberty to follow in the footsteps of equity, and to hold that a title may be too doubtful to be forced on a purchaser. is a question on which eminent judges have differed with each other, and even with themselves.’ But, he adds, ‘it appears to be ultimately settled that courts of law cannot adopt the equitable rule, and are bound to decide the legal question upon which the right to recover must depend.’ ”

For want of proof, therefore, by the plaintiff, upon whom the burden rested, that the warranty deed as tendered failed to convey a good and unincumbered title in fee simple, the purchaser failed to prove a breach of the contract as made, and failed to establish the issue of fact upon which its right of recovery depended. It follows the court committed no error in directing a verdict for defendants on plaintiff’s cause of action.

Passing, now, to the counterclaim, whereby the vendors sought to recover damages from the purchaser for failure to make repairs, it may first be observed that many of the assignments of error are so general as to require or permit of no consideration at our bands, and many of them are not based on proper exceptions taken to adverse rulings. There are two, however, which fairly present these questions: (1) Whether the Mesa Market Company, in accepting the assignment of the contract from the Implement Company, assumed the personal obligation resting on the latter company to make repairs; and (2) whether the counterclaim, as pleaded by the defendants, stated a cause of action.

In 1902 the plaintiff, Mesa Market Company, took an assignment of a contract which, according to its provisions, was liable to be converted into a lease, and from that date until March, 1906, it remained in possession of the premises, claiming all the rights conferred by the contract upon its assignor. It brought this suit on one of its covenants, and sought to recover for its alleged breach. The last clause of the contract stipulated as follows:

“It is mutually agreed that this agreement shall be binding upon the heirs, executors, assigns, and successors of the respective parties of the first and second parts hereof.”

From the foregoing it cannot be doubted that the Mesa Market Company became bound, as between it and its assignor, to keep the covenant of the contract requiring its assignor to—

“make any and all repairs proper and needful for the suitable maintenance of such buildings and improvements as are now on the said premises.”

This stipulation, in our opinion, is also a covenant running with the land, and inures to the benefit and advantag-e of the vendors as against any assignee. The test is: If a covenant is such that its performance or nonperformance must affect the nature, quality, value, or mode of enjoyment of the demised premises, it is not a mere personal covenant, but one that runs with the land, and binds assignees of the covenantor, as well as the covenantor and his personal representatives. Taylor’s Landlord & Tenant (8th Ed.) §§ 260, 261, 444, and cases cited.

It is suggested, however, that there is some difficulty in enforcing this liability in the present case, because of the fact that the vendors exercised the right of avoiding the contract for nonperformance by the purchaser, and availed themselves of their contract right to appropriate the amounts paid and the improvements made by the purchaser. This, it is said, is tantamount to an election to forfeit the 23ayments and improvements made by the purchaser, and exhausts the remedy of the vendors. The principles announced in Railway Co. v. McCarthy, 96 U. S. 258, 267, 24 L. Ed. 693, and Davis v. Wakelee, 156 U. S. 680, 690, 15 Sup. Ct. 555, 39 L. Ed. 578, are invoked to defeat the vendors’ right to any other remedy than the one. first resorted to fry them. In other words, it is said they cannot “mend their hold.” There are, in our opinion, two answers to this objection: First, the facts of this case do not warrant the application of that doctrine; and, second, the pleadings do not permit it.

As already pointed out in the statement of the case, the plaintiff, in its answer to the cross-complaint or counterclaim of the defendants, merely takes issue with the allegation of the cross-complaint that the plaintiff had failed to make the required and needful repairs. This issue of fact alone was joined, and no other defense was suggested by the pleadings. On this issue the case was tried below, and the trial court was not asked to pass on, and did not pass on, the question now suggested as decisive of the case; and, of course, no assignment of error is predicated on any adverse ruling on that question. Moreover, learned counsel for the plaintiff neither in the _ court below nor here .have made any such contention. 'In view of these facts, the question stiggested is not before us, and we refrain from discussing it.

The. assignment of error that the counterclaim, as pleaded, states no cause of action, is, in our opinion, without merit. The defendants, by way of cross-complaint, set forth the covenant of the contract, which required the purchaser to make any arid all repairs proper and needful for the suitable maintenance of the buildings and improvements, alleged its violation, and specified the particulars thereof. This was quite sufficient. In fact, we do not see how it could be made better.

Several errors in admitting evidence over plaintiff’s objections are assigned; but in most instances no exceptions were preserved to the, rulings of the court. In such cases the formal assignment presents no question of law for consideration by the appellate court. Such assignments as are based on exceptions duly taken at the time have been examined and found untenable.

Some other questions were argued by counsel for plaintiff in error, all of which have received careful consideration; but they fail to disclose any prejudicial error of which it can complain.

The judgment of the Circuit Court is affirmed.