Case ID: sc-eq_6/html/0399-01.html
Source: Caselaw Access Project
Author: {"author": "Colcock, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The administrators of Hugh Rutledge v. Executors of Sarah Smith, and L. King et ux. and E. Philon, Trustee.
    The only question in this case was, the liability of the defendants to pay interest on the balance of the purchase money of a house arid lot purchased by Elizabeth Bride, now Mrs King, of J. S. Bee, at auction, belonging to Mrs Sarah Smith and sold by Peter Smith, her executor. The purchase money amounted to $3,000, which she placed in the hands of William Payne, Esq. her agent, to be paid when good and legal titles should be executed. Mr Payne paid to Mr J. iS. Bee, the auctioneer, $2,100, but finding the property was under many legal incumbrances, retained the balance in his bands until 1816, when he paid it back to Mrs Bride. There was no evidence that Peter Smith knew that Payne retained in his possession the balance of the purchase money. Mrs Bride, at the time, applied to James Nicholson, Esq. a gentleman then at the bar of skill and ability in the management of such cases, to inquire into the real state of facts, and procure for her good and sufficient titles for the lot. Mr Nicholson testified, that for- years he was unremitting in making applications to that effect; but that they all proved unavailing, nor were titles made to this day.
    
      when a pur-cha6'er °f real hound to pay delay oVtítie.
    
      1826.
    
      Charleston.
    
    Thompson, Chancellor.
    The law laid down by the counsel for the complainants, that where a man purchases land and is put into possession, and receives the rents, issues and profits, he shall pay interest on the amount of the purchase money, notwithstanding any intervening circumstances may have prevented the execution of the titles, I admit to be the general doctrine where the transactions have been fair and bona .fide, but it is not applicable to the present case. Mrs Bride knew nothing of these incumbrances, but it has been proved that Peter Smith did, and his concealment of the facts from her which caused her to purchase amounted (to say the least of it) to a legal fraud. There is another general principle of law equally well established as the one relied on by complainants’ counsel, which is that no man shall be permitted to take advantage of his own wrong. Mr Smith could have exempted the property from the incum-brances, or should have warned purchasers of the existence of them. This not having been done he would be taking advantage of his own wrong could he prevail in making defendants pay interest when it is obvious to the Court that the defendant was always willing, ready and anxious to pay the money when she should obtain the titles. It would be hard indeed to make Mrs Bride pay the interest when she was always ready to pay the principal. Smith had already received $2,100 of the purchase money of which he had the use—the balance, remained in the hands of Mr Payne for about five years,' the use or interest whereof the defendant was wholly deprived of, and if she was now compelled to pay interest on it it would be equivalent to fourteen per cent, — seven for the loss of the use, and seven on the balance of the debt: besides the interest on the balance of the $2, LOO was equivalent to the rents of the lot under any circumstances, and it would be ruinous to the defendant to lose the interest on that sum, and pay the interest on the balance, inasmuch as not long after the purchase of the premises they were consumed by fire — whereas if Peter Smith had executed titles, as he should have done, she could have insured them and guarded herself against any loss whatever. For these and many other reasons I am of opinion that interest cannot be allowed. It is therefore ordered and decreed that upon good and sufficient titles being executed, defendant do pay to the complainants the balance of the purchase money. I feel a great disposition to give costs to the defendants, but have concluded it will be as well to let each party pay their own.
    16 March 1826‘
    ■ The complainant appealed on these points.
    
      First. That taking possession was a waiver of objection to the defect of title.
    
      Second. That to exempt defendant from payment of interest it was necessary not only to prove that the money was not invested by defendant but that the vendors were notified of that fact.
    
      Third. Because the enjoyment of the premises was an equivalent for the interest which should have been decreed to the vendors.
    
      JDunkin, for the appellants.
    There is no evidence that notice was given to Peter Smith that the money was in the hands of Payne, nor was there any evidence that she was disturbed in the possession. While the title is in dispute the vendor is bound to pay interest, although the money is deposited, unless the vendor has notice. It is a general rule that if the purchaser has been let into the perceptions of rents and profits he shall pay interest. There are exceptions. Powell v. Matyr, 8 Ves. 146. The possession of land, and the rents and profits, are equivalent to the interest on the purchase. Hood v. Huff, 2 Const. Rep. 163. The purchase money, in the hands of the purchaser to pay incumbrances, must pay interest. 1 Sch. & Lef. 134. Taking possession under a purchase without a conveyance is a waiver of the objection to title, and the purchaser is bound to pay interest. 12 Ves. 25. 3 Desaus. Rep. 555. 2 Desaus. Rep. 592. Mrs Bride is either the debtor to the amount of the purchase, or, being in possession, she is tenant. She is either liable, therefore, for the interest or the rents.
    
      Hunt, contra.
    There cannot be any fixed rule on this subject — every case must depend on its own peculiar circumstances. The rule in England — if one can be said to be established there — is not applicable to the general state of things in this country. There most.of the real estate is improved to' the extent of its capabilities, and the rents and the profits are well ascertained, and purchases are made with a view to enjoyments. But in this country purchases are made with a view to improvements. The rents are not well ascertained, and it may safely be affirmed that real estate in this country rarely, if ever, produces an income equal to the interest of the purchase money; and in this case the premises were partially burnt. While these incumbrances were hanging over the title, complainant could not have recovered the purchase money, and while he could not. have recovered the principal it is unreasonable that he should have interest. Interest is not allowed on a bond for the purchase money, when there was an agreement to have, a re-survey, until the re-survey was made. 1- Desaus. Rep. 586. In awarding interest the Court never regards the time of the purchase, but the time at which the titles were to be executed. Blount v. Blount, 3 Atk. 636. 638. A party is never bound to pay interest when the time to pay the money is to be determined by some subsequent event, as to be paid on demand, or on, the execution of titles, &c. In this case, in law, defendant was not bound to pay until titles were executed, consequently she was not bound to pay interest. It was in the power of Peter Smith to have removed the incumbrances, and he neglected to do so, and it is unreasonable that his neglect should operate as an injury to the defendant.
    a purchaser and remains in the unin-tenupted en-the fitsfmuiít pay
    But where it thTtifles are defective chaser offers" to rescind on receivmg his money; or purchasemo-ney, with notice to the vendor, till made ^he is not bound to pay m eies.
    
      
      Bunkin, in reply.
    A possession of five years was a bar to all incumbrances and there was no reason why she should not then have paid the money.
   Gubia, per

Colcock, J.

As a general rule, it is clear that a purchaser who takes possession, and remains in the uninterrupted enjoyment of it, or who receives the i • i • i i , , , . rents and profits, is liable to the payment or interest, • — and it is a. rule founded on the purest principles equity and justice. It does not always happen that make judicious bargains, but generally speaking a Court may well presume that the use of property is worth interest of the money. At all events it is a fair presumption, when nothing to the contrary appears. And in cases where it becomes necessary to allow compensation for the use of property, in the absence of evidence, the value which the purchaser has put on the property must be considered the most correct guide for the Court. But although, as a general rule, the purchaser be liable for interest, yet there may be cases in which I should hold he was not liable, as where a purchaser immediately, on finding that there is a difficulty about the title, offers to rescind the contract, to redeliver the possession and ceive back the money advanced — and this is refused by the vendor: I say redeliver the possession on receiving the money advanced, for I would not be understood to mean that the purchaser should give up the possession without the repayment of the money advanced: on the contrary he should hold it as an indemnity. Or where the purchaser deposits the money in bank or with an agent to await the completion of the title, and gives no- . 1 . tice to the vendor that he has done so, and does not m-tend to be answerable for interest. The case of Powell v. Matyr, 8 Ves. 146, is very analogous, both as to the • J’ , . ’ , . , c , facts and the principles, to this case. A part ot the mo-ney was Pa'd and deposit made of the balance. The Master of the Rolls decreed the payment of interest: after jay¡ng ¿[own the general rule, he admits there may be exceptions, and adds “ it must be a strong case and clearly made out.” In this instance he says, it is proved only that the party, having money in his attorney’s hands, makes up the amount of the purchase money, and during the whole time elapsed in clearing the title it remains in his hands — perhaps he loses the interest — that is during that time the interest was not made. It does not appear whether interest was made or not, or if made what has become of it. It does not follow that the mere circumstance that the vendor was not ready to complete the title at the day will vary the rule. The purchaser must state- something more than mere delay, viz. that he has not had the benefit of his money; and I think it is reasonable to add the other term that has been mentioned, that in some way it shall be intimated to the vendor that the purchaser has placed himself in that situation, his money unproductive and to. wait the event, otherwise there is no equality. The one knows that the estate produces rent, the other does not know thát the money does not produce interest. Whenever, therefore, the purchaser is delayed aS to the title and means to insist upon this, he ought to apprize the other party that he is making ho interest. In the case of Fludyer v. Cocker, 12 Ves. 25, the defendant took possession on paying a part, and afterwards refused to pay interest, on the ground that titles were not made at the day. The Master of the Rolls treats it as a case admitting of no doubt. He says, what are the legal rights is totally immaterial; that here the purchaser could not have aright to the estate, nor the vendor to the money, until the conveyance was executed. But that has nothing to do with the mode in which this Court executes the agreement. The purchaser might have said he would not have any thing to do with the estate until he got a conveyance. But that is not the course he took here. He enters into possession — an act that generally amounts even to a waiver of objections to the titles. He proceeds on the suppo- ■ •ii -ii i i mi sition that the contract will be executed. The act of taking possession is an implied agreement to pay interest. For so absurd an agreement, as that the purchaser is to receive the rents and profits, to which she has no legal title, and the vendor is to have no interest, as he has no legal title to the money, can never be implied. And the principle has been acted on invariably in our own Courts, both of Law and Equity. See the case of Ramsay and others v. Brailsford, 2 Desaus. Rep. 592, and the case of Boyle v. Rowand, 3 Desaus. Rep. 555, and the case of Hood v. Huff, 2 Const. Rep. 163.

Taking pos-Orally awai-ver of title, and is an ím-plied agree-interest.1^

Notice infer-cumstances”

Now, to apply the principles to the case before us. The purchaser took possession; has never discovered any disposition, nor made any offer, to give up the contract, but remained in the quiet and undisturbed possession to the present moment, always shewing an anxiety to obtain titles. She did deposit the money to pay ior the land with her agent, who paid a part, a large part of it, and retained the balance, on account of the titles not being made, until 1816, when he invested it in negroes for the defendant. Now, it may be inferred that this was communicated to the vendor, and therefore the purchaser is entitled to the benefit of that fact. She however withdrew the fund in 1816, and was not after that subjected to any inconvenience not originally known to her. The Chancellor in the decree considers that an insurance could not be effected-on the property. But this is a mistake j for if she had been so disposed, an insurance might have been effected. A. may insure the property of B. The right of property is a matter of no importance to the insurers. So long then as the defendant’s money remained in the possession of her agent unproductive, she is not liable to pay interest. But from the time it was invested for her benefit, that is from 1816, it is ordered and decreed that she pay interest, and that the decree of the Chancellor be so modified as to meet this view of the case.

Decree modified.