Case Name: Smith B. Waite v. Henry I. Stanley
Court: Vermont Supreme Court
Jurisdiction: Vermont
Decision Date: 1914-12-12
Citations: 88 Vt. 407
Docket Number: 
Parties: Smith B. Waite v. Henry I. Stanley.
Judges: Present: Powers, C. J., Munson, Watson, Haselton, and Taylor, JJ.
Reporter: Vermont Reports
Volume: 88
Pages: 407–420

Head Matter:
Smith B. Waite v. Henry I. Stanley.
October Term, 1913. •
Present: Powers, C. J., Munson, Watson, Haselton, and Taylor, JJ.
Opinion filed December 12, 1914.
Land Contract — Purchase Price Payable in Instalments — Construction — Respective Interest of Parties — Unpaid Instalments — Remedy of Vendor — Effect of Strict Foreclosure.
A contract for tbe sale of realty and personalty for a specified sum of money, payable in instalments,. is indivisible and entire.
At law, a contract for the sale of land, payment to be made in instalments, and title to be conveyed upon the last payment, is wholly executory, the ownership of the property remaining in the vendor,, and the vendee having only an inchoate and imperfect right; but in equity, although the legal estate is in the vendor, he holds it as trustee of the vendee, with a charge or lien thereon as security for the unpaid purchase-money, and, in the absence of stipulation to the contray, with the right to retain possession until the purchase price is fully paid, while the equitable interest of the vendee increases as each instalment is paid until he becomes the owner of the whole beneficial interest and is entitled to a conveyance.
The vendee’s rights under a contract for the sale of land may be foreclosed by a suit in equity to compel him to pay the purchase price within a designated time or be barred of all rights under the contract.
Under a contract for the sale of land toi be paid for in instalments, title not to pass until all the instalments were paid, the vendor could not recover unpaid instalments, in an action of assumpsit begun after they became due and on the same day that he began a suit to foreclose the vendee’s rights under the contract, which resulted in a decree of strict foreclosure against the vended, which became absolute before the action of assumpsit was tried; for, when that decree became absolute, the vendor’s title to the property was discharged of all interest of the vendee therein, and so there was no longer any consideration for the'vendee’s promise to pay the purchase price.
General Assumpsit. Plea,' the general issue. Trial by court at the June Term, 1913, Lamoille County, Fish, J., presiding. Judgment for the plaintiff for $854.03, and costs. The defendant excepted.
One item of the plaintiff’s specifications, which was allowed and entered into the judgment, was, “To balance payment due Nov. 11, 1911, and interest due Nov. 11, 1912, $598.00.” This item was the unpaid balance of the first instalment of purchase-money stipulated to be paid in the land contract signed and sealed by the parties, which, so far as material in this case, was as follows:
“Articles of agreement, made the 31st day of October, A. D. 1911, between Smith B. Waite of * # *, on the first part, and ITenry I. Stanley of * * *, of the second part, as follows, to wit: the said party of the first part' for the considerations hereinafter named, hereby agrees to sell to said party of the second part, who hereby agrees to purchase, the following described lands and personal property consisting of farm and dairy tools, live stock, etc., namely: * * *.
“The said party of the second part agrees to pay to said party of the first part, for the said premises and above described personal property the sum of six thousand dollars in the following instalments, that is to say, twelve hundred dollars on or before the tenth day of November, 1911, then two hundred dollars and interest on the whole unpaid debt on or before the 11th day of November in each year for four succeeding years (1912, 1913, 1914, and 1915), then five hundred dollars and interest each year and interest until the full amount of the purchase price has been paid.
“And the said party of the second part does hereby agree to pay all taxes, rentals, assessments and insurance imposed on said premises when they are due each year; and not to commit or suffer any waste or damage on said land, by cutting down, carrying off, or destroying any timber or trees, growing or being thereon, other than shall be necessary for making necessary buildings or repairing the same, or for fences or for fuel; and the said party of the second part shall carry on and cultivate the farm in good, husbandlike manner and shall care for the stock in the same manner, always keeping them in good order and condition, and shall improve the buildings to the extent-of at least $150 each year by the way of repairs.
“It is further agreed that the ownership of all personal property and additions thereto is and is to remain in the said S. B. Waite.
“It is hereby agreed that if the said party of the second part shall fail in the performance of the aforesaid agreements or stipulations on his part to be performed, then it shall be lawful for the said party of the first part, at any time after such default, if he sees fit, to declare the contract forfeited and vacated, and to re-enter upon and tahe possession of said premises, and all buildings and improvements thereon, and all accretions of personal property on said premises, and to sell and dispose of the same to any person or persons whomsoever; and the said party of the first part shall and may retain all sums of money paid by the said party of the second part, or any subsequent purchaser, as and for liquidated damages, for such failure.
“It is further agreed by and between the parties of the first and second part that the ownership of all the products of the dairy and farm of all description shall be and remain in the party of the first part until the obligations due each year are fully paid.
“And the said party of the first part does hereby agree that on payment of said purchase-money and interest, and the performance of the agreements and stipulations as aforesaid, by and on the part of the said party of the second part, he or his heirs or assigns will by a good and sufficient warranty deed, convey or cause to be conveyed to the party of the second part, his heirs or assigns, the aforesaid hereditaments and premises.”
The plaintiff offered this contract in evidence, (1) for the purpose of showing the agreement for the payment of the $1,200; and (2) in connection with the testimony of the witness as to the extension of his contract by parol. The defendant objected to its admission on the grounds (1) that the action is general assumpsit, and the item for the part of said $1,200 unpaid cannot be recovered, the contract being executory; (2) because the agreement is trader seal, and the action to recover the claimed amount is under covenant, not. assumpsit. The evidence was admitted and exception saved. Defendant also excepted to the judgment rendered, on the ground that it contained the item of $598.35 arising under the land contract.
W. B. Locltlin for tbe defendant.
B. W. Hulburd and M. P. Maurice for the plaintiff.

Opinion:
Watson, J.
Although the contract upon which the plaintiff bases his right to recover the item in dispute was for the sale by him to the defendant of both land and personalty, yet the consideration was single, the contract indivisable and entire. Fay v. Oliver, 20 Vt. 118; White v. White, 68 Vt. 161, 34 Atl. 425. It was also executory. At law it merely imparted to the defendant an inchoate and imperfect right. The ownership of the property remained in the plaintiff. To make the ownership of the defendant complete something remained to be done by the plaintiff: he must pass his legal interest in legal form. In other words, he must convey the property according to the mode of conveyance required by law. This he was not obligated to do until full payment of the purchase-money and interest had been made by the defendant in annual instalments covering a period of twelve years. In Vermont Marble Co. v. Mead, 85 Vt. 20, 80 Atl. 852, it is said that, "In law a contract for the sale of land is wholly, and in every respect, executory; the vendor remains to all intents the owner of the property, and can convey it free from any legal claim or incumbrance; and the vendee acquires no interest whatever in the land."
Under the contract the defendant had the right of possession. By its tennis $1,200, the first instalment of the purchase-money, was to be paid on or before November 10, 1911. It was not so paid. At some time, but when does not appear, it was paid in part, leaving unpaid the sum of $598.35, the amount of the item in controversy. The plaintiff says the time of the payment of this sum was extended by parol. The record, however, does not show such extension to any definite time, nor upon any new consideration, nor that the defendant was not in default as to such payment at the time of the commencement of this suit and the suit in equity hereinafter noticed. The second instalment was stipulated to be paid on or before November 11, 1912. YThether it was so paid does not expressly appear, but we assume it was not. This action was commenced two days after this instalment became due, and on the same day strict foreclosure proceedings in equity "were brought on said contract" by the plaintiff and therein a decree was taken in his behalf, which decree became final May 5, 1913, a day prior to tbe trial of this action at law in the court below. When these two suits were commenced the defendant was in default in payment of the purchase-money to the extent of the unpaid portion of the first instalment and the second instalment. By reason of such default the plaintiff saw fit to avail himself of the provision of the contract allowing him, if defendant should fail in performance, "to declare the contract forfeited and vacated, and to re-enter upon and take possession of said premises." The foreclosure proceedings must have been for the effective enforcement of this provision, (being "brought on said contract,") and the decree therein conclusively shows that the defendant had failed to perform, and that by reason thereof the plaintiff was entitled to put an end to the contract and be restored to the possession of the property agreed to be conveyed. No intimation is made of nonperformance in any respect other than as above stated.
In equity after the contract was signed by the parties, although the equitable estate vested in the defendant, yet the legal estate remained in the plaintiff, he holding it as trustee for the defendant and having a charge or lien on the estate as security for the payment of the unpaid purchase-money, and in the absence of stipulations to the contrary, a right to retain the possession until the purchase-money is fully paid. Wilkins v. Somerville, 80 Vt. 48, 66 Atl. 393, 11 L. R. A. (N. S.) 1183, 130 Am. St. Rep. 906; Van Dyke v. Cole, 81 Vt. 379, 70 Atl. 593; Vermont Marble Co. v. Mead, 85 Vt. 20, 80 Atl. 852. In Lysaght v. Edwards, L. R. 2 Ch. Div. 499, Sir George Jessel, Master of the Rolls, saying the effect of such a contract for sale of real property was so completely settled before the time of Lord Hardwicke that he spoke of the settled doctrine of the court as to it, stated it as follows: "If is that the moment you have a valid contract for sale the vendor becomes in equity a trustee for the purchaser of the estate sold, and beneficial ownership passes to the purchaser, the vendor having a right to the purchase-money, a charge or lien on the estate for the security of that purchase-money, and a right to retain possession of the estate until the purchase-money is paid, in the absence of express contract as to the time of delivering possession." The extent of the vendee's equitable estate is well stated by the Supreme Court of the United States in Jennison v. Leonard, 21 Wall. 302, 22 L. ed. 539. There the Court, speaking through Mr. Justice Hunt, said: ' ' The legal title remains in the vendor, while an equitable interest vests in the vendee to the extent of the payments made by him. As his payments increase, his equitable interest increases, and when the contract price is fully paid, the entire title is equitably vested in him, and he may compel a conveyance of the legal title by the vendor, his heirs or his assigns. The vendor is a trustee of the legal title for the vendee to the extent of his payment." Sievers v. Brown, 34 Oregon 454, 56 Pac. 171, 45 L. R. A. 642.
In Hansbrough v. Peck, 5 Wall. 497, 18 L. ed. 520, the land contract, so far as material here, was very like the one before us. The Court, through Mr. Justice Nelson, said: "In case of a default in the payments, there are several remedies open to the vendor. ITe may sue on the contract and recover judgment for the purchase-money, and take out execution against the property of the defendant, and among other property, the land sold; or he may bring ejectment, and recover back the possession; but in that case, the purchaser, by going into a court of equity within a reasonable time and offering payment of the purchase-money, together with costs, is entitled to a performance of the contract; or the vendor may go in the first instance into a court of equity, as in the present ease, and call on the purchaser to come forward and pay the money due, or be forever thereafter foreclosed from setting up any claim against the estate." See also Clark v. Hall, 7 Paige 382.
The record before us shows that in the foreclosure proceedings brought "on said contract," a decree of strict foreclosure was taken by the plaintiff, which decree became final and by it he again became the sole and absolute owner of the property covered by the contract of purchase, before the trial of this suit at law on the merits. Such a suit in equity "is simply an action to compel the vendee to make payment of the purchase price within a specified timte, or else be barred of all rights under the contract, — that is an action to foreclose the contract." 3 Pom. Eq. Jur. §1262. Whether the fact that the indivisible contract covered personal property as well as real estate, made any difference in the proper application of this principle it is now too late to inquire.
Concerning a decree of strict foreclosure upon such a contract the Master of the Rolls further said in Lysaght v. Edwards, (already noticed,) "Such a decree has sometimes been called a decree for cancellation of the contract; time is given by a decree of the court of equity, # * and if the time expires without the money being paid, the contract is cancelled by the decree or judgment of the court, and the vendor becomes again the owner of the estate." In Morgan v. Dalrymple, 59 N. J. Eq. 22, 46 Atl. 664, it was held that where title is retained under an executory contract to convey, and the vendee fails to make payment as stipulated, the vendor has the right to enforce the obligation and cut off the vendee's equitable interest in the land arising out of the agreement, by foreclosure proceedings, and that as the legal title to the land was still in the vendor the only force of the decree is to cut off the equitable title of the vendee by force of the agreement. The decree in this case was affirmed by the Court of Errors and Appeals, as reported in 60 N. J. Eq. 466, 46 Atl. 666. That such a decree puts an end to the contract and restores the possession of the property to the vendor, is according to the holdings in Hansbrough v. Peck, noticed above; Church v. Smith, 39 Wis. 492; Sparks v. Hess, 15 Cal. 186; Nelson v. Hanson. 45 Minn. 543; and Sievers v. Brown, 34 Oregon 454, 56 Pac. 171, 45 L. R. A. 642. Indeed, we have found no decision to the contrary.
Under the contract, the promise of the vendor to convey the property constituted the consideration for the vendee's promise to pay the purchase-money, (Ferry v. Stephens, 66 N. Y. 321,) and since by the decree in the equity case, all interest of the vendee was foreclosed, by reason of which the contract was ended and the absolute title to the property reinstated in the vendor, there was no longer any consideration for the vendee's promise to pay the purchase price. "A court of chancery regards the transfer of real'property in a contract of sale and the payment of the price as correlative obligations. The one is the consideration of the other; and the one failing, leaves the other without a cause." Refeld v. Woodfolk, 22 How. 318, 16 L. ed. 370; Turner v. Ogden, 66 U. S. (1 Black.) 450, 17 L. ed. 203. Thus the matter stood at the time of the trial of this action at law in the court below, and the item in dispute being then without consideration the defendant was not liable therefor. See Sawyer v. McIntyre, 18 Vt. 27; Arbuckle v. Hawks, 20 Vt. 538; Graff's Executrix v. Kelly's Executors, 43 Pa. St. 453, 82 Am. Dec. 580; Day v. Lowrie, 5 Watts 412; Moore v. Smith, 24 Ill. 512.
It follows that to receive the land contract in evidence for the purposes named in the offer, was error, and the defendant's exception in this respect, also his exception to the judgment on the ground that it includes the said item arising out of the land contract, must be sustained.
Judgment reversed,. and judgment for the plaintiff to recover the sum of $255.68.