Walton v. McKinney

94 P. 1122, 11 Ariz. 385, 1908 Ariz. LEXIS 72

• Court: Arizona Supreme Court
• Decided: March 27, 1908
• Docket: Civil No. 1030
• Status: Published

Opinion

SLOAN, J.

— The appellee, P. J. McKinney, brought suit in ejectment in the court below against appellant, William Walton, to recover possession of the property described as the southeast one-quarter and the east one-half of the northeast one-quarter of the northeast one-quarter of section 3, township 1 north, range 2 east, Gila and Salt River base and meridian, containing sixty acres of land, together with three-fourths of water right No. 175 in the Grand Canal attached to said land, also a certain lateral ditch and sixty shares in the Appropriators’ Canal Company attached to said land. The appellant, Walton, filed his answer to the complaint, which contained a general demurrer, a general denial, and a cross-complaint. The cross-complaint set forth that a contract.for the sale of the premises in question was entered into between the parties to the suit on the fifth day of April, 1906, wherein McKinney agreed to sell the property described in the complaint, and, in addition, sixty shares of the Salt River Valley Water Users’ Association, for the consideration of $6,000, to be paid on or before the first day of May, 1906, and to execute and deliver to Walton a good and sufficient warranty deed to said property, and to furnish to Walton an abstract of title showing perfect title to the same upon Walton’s demand being made therefor on or before said first day of May, 1906, and wherein Walton agreed to pay $500 at the time of the execution of the contract, and the remainder of the purchase price on or before said first day of May, 1906, upon the execution and delivery of said deed and the furnishing by McKinney of said abstract of title showing perfect title to said property. It is further alleged in the cross-complaint that said cash payment of $500 was paid by Walton at the time of the execution of the contract, and that thereupon he entered into possession of said property with the knowledge and consent of McKinney, made valuable improvements thereon, and thereafter remained ready and willing at all times to perform his part of the contract. It is further alleged in the cross-complaint that McKinney failed to carry out and perform his part of the contract, in that he neglected and refused to execute and deliver to Walton the deed called for in the agreement, and failed to furnish him an abstract of title to said real estate showing perfect title to the same in McKinney, although it was within the power of said McKinney to perfect the title to said premises and carry out the terms of said contract. The cross-complaint prayed for specific performance of the agreement, or, if that be found impossible of performance, damages for such nonperformance. The cause was tried to the court at the October, 1906, term, and judgment and decree entered for the appellant upon the cross-complaint. Subsequently a new trial was granted, and the cause retried at the April, 1907, term, and judgment entered for the appellee for the immediate possession of the premises described in the complaint upon the payment by the appellee to appellant, within ten days from the date of the judgment, of the sum of $216. Prom this judgment Walton has appealed.

The facts are few, and for the most part uncontroverted. It is admitted that the agreement set forth in the cross-complaint of Walton was' entered into, and that under it Walton made a cash payment of $500, entered into possession of the premises, and made valuable improvements thereon. It further appears that Walton, before the first day of May, 1906, was ready, able and willing to pay the balance of the purchase price due upon the execution and delivery to him of the deed called for in the agreement with the abstract of title showing perfect title to said premises in McKinney, and demanded of McKinney that he execute and deliver to him such deed and abstract of title; that thereupon McKinney tendered to Walton a deed to the premises described and set forth in the agreement, save and except no mention was made therein of the sixty .shares of the Salt River Talley Water Users’ Association, and at the same time tendered an abstract of title which failed to show a perfect legal and recorded title to said premises in McKinney; that thereupon Walton refused to take such title as shown by said abstract to be in McKinney ; that after May 1, 1906, McKinney offered to execute and deliver to Walton a warranty deed to said premises, and to execute a bond to said Walton securing said title, pending the perfection of the same by McKinney; that Walton thereupon refused said deed and bond, and refused to pay the balance of the purchase price; that on the sixteenth day of July, 1906, McKinney tendered to Walton such warranty deed with the abstract of title showing a release of a mortgage shown by said abstract to be a lien upon said premises, and demanded payment of the remainder of the purchase price. Thereupon Walton refused to accept said abstract and deed, and refused to pay the balance of the purchase price, but thereupon tendered to McKinney the sum of $5,500, and demanded a good and sufficient warranty deed to the premises, together with an abstract of title showing a perfect title in McKinney. McKinney thereupon refused to execute any other or different deed, or furnish'any other or different abstract, but offered to return to Walton the $500 paid by him on the purchase price, less the rental value of the premises for the time Walton had been in possession thereof, and demanded possession of the premises. Upon Walton’s refusal to comply with the latter demand McKinney brought this suit. It is admitted that at the time suit was brought McKinney did not have a perfect legal title to the premises, in that the abstract showed that the title at one time stood in the name of one D. D. Crabb who, at the time of the purchase of the land in controversy, was a married man, but who, at the time he conveyed the premises to McKinney, was a widower; that the community interest of Crabb’s wife descended at her death to two minor children. It further appears that the land in controversy has greatly appreciated in value since the date of the contract. Upon the first trial it was developed that the community interest of Crabb’s wife, which descended to her children, was a mere equity of comparatively little value. Upon the discovery of this fact Walton in open court offered to pay the full purchase price of the premises, with interest from July, 1906, and to take such title as McKinney had in the premises. The record also discloses that Walton has made this tender good since that date.

There are a number of assignments of error made by counsel for appellant in their brief. In our view of the case it is unnecessary to consider any but the general assignment, which raises the question whether or not Walton, under the facts in the case, was entitled to a conveyance from McKinney of the premises in controversy upon the payment by him of the remainder of the purchase price named in the contract. In viewing the contract between McKinney and Walton two things are apparent: First, that time is not of its essence; second, that upon payment by Walton of $500 it became partially performed on his part, and was not therefore wholly ex-ecutory. It is manifest also that the conduct of Walton in refusing to accept the deed proffered by McKinney, in the face of the eoncededly defective title, was well within his rights. Only one circumstance could in any event, under the .agreement, justify McKinney in not fully performing his agreement, and that would be his inability, through no fault of his, to so perform it. So long as it was within his power to perform, and Walton stood ready, able and willing to do the things required of him, McKinney could not rescind. It is also clear that, so long as he was not in default, Walton had a right to waive any defect in the title, and, upon tender of the balance of the purchase price due McKinney, to lawfully demand the conveyance of the property.

The case is to be distinguished from one where there is an agreement for the sale of land wholly executory, and the vendor tenders a warranty deed, and there is no specific agreement to furnish an abstract of title with the deed showing a good title in the vendor. In such a case, the agreement being unilateral, equity will not decree a specific performance.. The refusal by the vendee to accept such a deed will then be regarded as a rescission of the agreement. Goldthwait v. Lynch, 9 Utah, 186, 33 Pac. 699; Meidling v. Trefz, 48 N. J. Eq. 639, 23 Atl. 824. Where a vendee, with full knowledge of the facts bearing upon the title of his vendor, declines to accept a warranty deed to the land agreed to be conveyed in a unilateral contract, and refuses to pay the purchase price, he rescinds the agreement, and he cannot thereafter recall his rescission and demand a conveyance from his vendor of such title as the latter may possess. Riley v. Allen, 71 Kan. 625, 81 Pac. 186. Where there has been no such definite and final election with the full knowledge of the facts on the part of the vendee, and the agreement is one which has been partially performed, the rule is quite otherwise.

The case of Saldutti v. Flynn, 72 N. J. Eq. 157, 65 Atl. 246, is in point. The facts in that ease were that Flynn agreed to convey land free from encumbrance to Saldutti, who at the time the contract was entered into paid part of the purchase price. Flynn tendered to Saldutti a deed, which the latter refused, because it was not executed by Flynn’s wife. There were negotiations between the parties, pending which Flynn and his wife conveyed the land to other parties. It was held that equity would enforce specific performance of the contract at the suit of Saldutti against Flynn and his grantees, notwithstanding it appeared that Flynn’s wife had not acknowledged the agreement to sell, and hence was not bound to convey, and that therefore Flynn had tendered by his deed all that Saldutti could require of him. In the decision the vice-chancellor used this language: “A vendor is in equity a trustee for the vendee from the time of the execution of the agreement. A failure of the vendee to perform the contract on his part strictly at the time fixed, if the vendor is ready to perform, does not in equity discharge the contract; unless by the contract itself, or circumstances proved in the case, time is made or has become the essence of the contract, or the delay has made specific performance inequitable. ’ ’

In Haffey v. Lynch, 143 N. Y. 241, 38 N. E. 298, in which a vendee under an agreement for the purchase of land partly performed by him, and who had declined to accept a conveyance tendered by the vendor because of a defect of title appearing after the contract of sale had been entered into, but who, upon the trial, had proffered to accept such conveyance and pay the full purchase price, the court said: “It is a general rule in equity that the specific performance of a contract to convey real estate will not be granted when the vendor, in consequence of a defect in his title, is unable to perform. In such cases specific performance is denied because the court cannot enforce its judgment, and because, also, it would be oppressive to the vendor. But if the defect in the title existed at the date of the contract, or was due to some fault or to some act of the vendor subsequent to the contract, the court will generally entertain an action for specific performance, and retain jurisdiction for the purpose of awarding damages for the breach of the contract; . . . and no case can be found prior to this where an equity court has denied specific performance because the vendor’s title was defective at the commencement of the action, but valid and perfect at the time of the trial. In such a ease, why should not the vendor perform? He is able to, and the vendee is entitled to performance, unless some other defense has intervened, and the court is able to enforce performance. Here the plaintiff was willing to take such a title as the defendant could convey at the trial. . . . Equity courts, iu awarding relief, generally look at the conditions existing at the close of the trial of the action, and adapt their relief to those conditions. The plaintiff in an equity action, as a general rule, should not be turned out of court on account of any defense interposed to his action, if at the time of the trial the facts are such that if he then commenced his action he would be entitled to the equitable relief sought. .If a vendor has no title, or a defective title, to land which he contracts to sell, and subsequently obtains a perfect title, he can be compelled by his vendee to perform his contract. Fry on Specific Performance, 3d ed., 480.- And why should the vendor not be compelled to perform if he perfects his title while the action for specific performance is pending ? A perfect title by the vendor is no part of the vendee’s cause of action, and he is just as much entitled to the equitable relief, and the equity court is just as competent to give it, whether the title of the vendor was perfect before or after the commencement of the action.”

These cases sufficiently illustrate the equitable doctrine applicable to such a ease as this at bar. Under the facts as disclosed McKinney was not discharged from the contract when he tendered the deed and offered to repay Walton his cash payment, as he had not fulfilled all that he had agreed to do; and the facts which would excuse him from such performance, if they existed, do not appear to have been known to Walton. It was not until the first trial of the case that Walton became aware of the true state of the title to the land in controversy. When the facts were known to him, he at once offered to accept the deed and pay the full purchase price. He thereupon brought himself squarely within the rule announced in Haffey v. Lynch, supra, and was entitled to specific performance as prayed for in his cross-complaint.

We are unable to see in what respect the enhancement of the value of the land in controversy has to do with the rights of the parties. No fact is exhibited which indicates that Walton, from motives of speculation, refused to accept the deed from McKinney at the time it was proffered, and no other fact (than that which we have mentioned) appears in the record which would render specific performance at this time inequitable. As said in Lee v. Kirby, 104 Mass. 420: “The question of the want of equality and fairness and of the hardness of the contract should, as a general rule, be judged of in relation to the time of the contract, and not by subsequent events. We do not intend to say that the court will never pay any attention to hardships produced by a change of circumstances; but certainly the general rule is that a mere decline in value since the date of the contract is not to be regarded by the court in cases of this nature.” We might add to this that the rule would' certainly not be different where the property agreed to be sold has, as in this instance, increased in value, and there is no showing that the vendee has delayed payment from motives of speculation. A vendee, under such circumstances, who has made a good bargain, is in equity entitled to the same consideration as if he had made a bad bargain, and is as fully entitled to specific enforcement in the one case as in the other.

As the facts seem to have been fully developed in the court below, we consider that this is a case which calls, not merely for the reversal of the judgment below, but for the entry of judgment in this court, authorized by paragraph 1591 of the Kevised Statutes of 1901.

The judgment of the court below will therefore be reversed, and judgment entered in this court that appellee, P. J. McKinney, within thirty days from the entry of judgment herein, duly execute, acknowledge, and deliver to appellant, William Walton, his warranty deed to the premises and property described in the complaint upon the payment by said Walton to said McKinney of the sum of $5,500, with interest thereon at the rate of six per cent per annum from May 1, 1906, to the date of this judgment, and that in case said Walton should refuse, neglect, or decline to make such payment within said date that the appellee, McKinney, have possession of said premises. It is further ordered that the appellant recover of appellee his costs expended by him in this court, and as well in the court below.

DOAN and CAMPBELL, JJ., concur.

NAVE, J.

— I do not concur in the reversal of the judgment. I believe the law is soundly expounded in the foregoing opinion, except for some inaccuracies (as I conceive them) in the review of some decisions of other courts. I am unable to deduce from the record in the case the inference of fact that Walton derived information at the first trial disclosing the value of the equity vested in the Crabb infants to be substantially different from that value as viewed in the light of the abstract of title which accompanied the tendered conveyance. Unless, at the time of the offer to accept such title as McKinney could convey, either the status of the title was different or the information newly imparted to Walton was such as to place the value of such title in a substantially different light from the status or light appearing at the time of McKinney’s tender, McKinney may not be compelled to convey, but may recover possession. Riley v. Allen, 71 Kan. 625, 81 Pac. 186; Goldthwait v. Lynch, 9 Utah, 186, 33 Pac. 699; Long v. Miller, 46 Minn. 13, 48 N. W. 409. My dissent being based upon a differing conception of the facts, and not upon a different understanding of the law, it would not be useful to elaborate my opinion.