Case Name: The Alemania Loan & Building Company No. 2 v. Frantzreb et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1897-06-08
Citations: 56 Ohio St. 493
Docket Number: 
Parties: The Alemania Loan & Building Company No. 2 v. Frantzreb et al.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 56
Pages: 493–500

Head Matter:
The Alemania Loan & Building Company No. 2 v. Frantzreb et al.
Vendor of real estate retaining legal title — May by oral contract attach ¡urther conditions to sale — Mortgage of purchaser subject to such oral conditions.
A vendor of real estate who retains the legal title as security for the payment of purchase money may, by subsequent oral contracts with the purchaser, annex further conditions to his obligation to convey ; and they will be enforced in equity against a mortgagee of the purchaser who acquires his interest after such further conditions have been annexed and while the legal title remains in the vendor.
(Decided June 8, 1897)
Error to the Circuit Court of Hamilton county.
The case was tried on appeal in the circuit court. It is to determine the validity of liens on real estate described in the petition, and the priority of the several items asserted by the Loan Company as its lien upon the premises over the liens of Crawford, Becker and Oesper, mortgagees of Frantzreb. The rights of the parties arise out of the following facts as shown by the pleadings and the special findings of the circuit court:
The Loan Company filed its petition in the court of common pleas November . 21, 1891, against Frantzreb and wife, alleging as its first cause of action that on July 30, 1881, it was the owner in fee of the premises, and on that day it offered them for sale when Frantzreb bid to pay therefor the sum of $2,100 in weekly and monthly installments of principal and interest as specifically set out, and he was put in possession upon an agreement that the company should retain the legal title until said sum should be fully paid with the interests thereon, and that he had defaulted in a specified portion of such payments.'
For a second cause of action, it alleged that on June 14, 1890, Frantzreb, desiring to improve the property, borrowed $1,200 of the company, subscribing for the requisite number of shares of its stock and agreeing to make certain weekly and monthly- payments according to the by-law-s of the company, it being then agreed by the parties that the company should retain the title to the property until he should fully perform that obligation. In that he also made default.
For its third cause of action, the company alleged that Frantzreb was its secretary from December 23, 1876, until December 27, 1890, and that upon his purchase of said premises in 1881, it was agreed between him and the company that it should still retain the legal title as security for the faithful performance by him of his duties as such secretary; and his default in that respect was alleged.
None of the agreements referred to was in writing. The company continued to hold the legal title to the property at the commencement of the suit.
The company asked for the appointment of a receiver to rent the property during the pendency of the suit, and for- the sale of the property and the payment to it out of the proceeds of the sale of the several sums so alleged to be due to it from Frantzreb.
'After the commencement of the suit, on December 19, 1891, Frantzreb conveyed the premises to his wife, and they thereafter united in the execution of several mortgages to defendants in error; to Crawford, March 7, 1892, to Oesper, April 26, 1892 and to Becker, April 26, 1892.
The mortgagees having been made parties, filed their several answers and cross-petitions denying the validity of the company’s liens as to its second and third causes of action, setting up their mortgages, and praying for the sale of the premises, and the payment out of the proceeds of the sums severally secured to them.
On the trial the court found that the several oral agreements set out in the petition had been entered into between the company and Frantzreb, and it found the amounts of his defaults under said several agreements, and for taxes which it paid during his occupancy of the premises which he had agreed to pay as alleged in a supplement to the petition.
As conclusions of law the court found that the company had a valid and subsisting lien on the premises for the taxes so paid by it, and for that portion of the purchase price of $2,100 which remained unpaid, being the amount of the default alleged in the first cause of action, but that it had no lion upon the property for the defaults of Frantzreb in the contracts set out in the second and third causes of action, and that after payment to the company of said taxes and the remainder of said $2,100 said mortgagees were entitled to receive the remainder of the proceeds of the sale.
Von Seggern, Pharen (& Pewald, for plaintiff in error.
All Frantzreb had was the right to a conveyance upon the payment of the amount that he had agreed to pay, and whether that right be called a con-' tract for the purpose of real estate, or an equity of redemption, or by any other name, it was a right which he could waive by delivering possession of tlie property, or by relinquishing his contract, with or without writing, and notwithstanding the statute of frauds; and we insist that if he could waive his rights under this contract by parol, he could most certainly postpone them by parol. That a parol agreement to release an equity in real estate is valid in Ohio is too well settled to be questioned. Smiley v. Wright, 2 Ohio, 506; Shot-well v. Sedam, 3 Ohio, 375; Reed v. Me Grew, 5 Ohio, 375; Shaw v. Walbridge, 33 Ohio St., 1.
There was no fraud committed or attempted. There was, as we believe, at the time these contracts were made, the utmost fair dealing and good intentions on the part of both parties. They were dealing with the understanding and belief that these acts were valid and binding on both. The property stood in the name of plaintiff in error, and was owned bjT it, as against all the world except Frantzreb, and he only had the right to purchase — a rig’ht he could release by parol, extend by parol, or postpone by parol. Peugh v. Davis, 96 U. S., 332.
The right to urge the statute of frauds as a defense to an action on a parol contract rests alone with the party who made the contract. His creditor can not do it for him or for himself. A creditor can not thus put his debtor in the position of disregarding his moral obligaton to perform the contract. This is well settled by the decisions of this court. Lefferson v. Dallas, 20 Ohio St., 68; Minns v. Moore, 15 Ohio St., 568; Woods v. Dille, 11 Ohio, 456; Néil v. McKinney, 11 Ohio St., 58.
And, further, let us say as to those mortgagees that aside from the notice by Us pendens the fact that The Allemania Loan and Building Company No. 2 retained the legal title is sufficient to put them upon inquiry as to its rights. The Dayton Y. <& B. B. Co. v. Columbus and Xenia B. Company, 20 Ohio St., 401.
And this brings us back to the simple question of what are the rights of The Allemania Loan and Building Company No. 2 and Frantzreb as between themselves. Whatever these rights were, or are, their determination will settle this ease. Bushton v. Thompson, 35 Fed. Rep., 665; Bouvier’s Law Dictionary, Lien, par. 16.
That a parol rescission or discharge in equity may be set up to defeat a bill for specific performance of a written contract, is well settled. Wharton, Law of Evidence, paragraphs 906, 927, 1017; Sudg., Vendors and Purchasers, 173.
Parol evidence is admissible “to prove the existence of any separate or oral agreement, constituting a condition precedent to the attaching of any obligation under any contract, grant, or disposition of property, or the rescission of a contract.” Wharton, Law of Evidence, par. 927; Shughard v. Moore, 78 Penn. St., 469.
S. T. Crawford, for defendants in error.
The contract there set out was void under section 4198, Revised Statutes of Ohio.
An equitable interest once acquired in lands can not be parted with except in writing, or by the same means that it was acquired. Kelly v. Stansberry, 13 Ohio, 426.
A verbal contract for an interest in land is valid only where there has been a part performance of it, as by vendee taking possession under it, and by its authority. Armstrong v. Kattenhorn, 11 Ohio, 265; Crawford v. Wick, 18 Ohio St., 190.
An interest in, or a permanent incumbrance upon, land in this state can only arise from some of the modes provided or recognized in law. Wilkins v. Irvin, 33 Ohio St., 144; sections 4106 and 4198, Revised Statutes of Ohio.
If it be assumed that plaintiff did not obtain an interest in, or lien on, the land by this verbal contract, it would be a mere equity, and would • not prevail against subsequent duly executed and recorded mortgages of cross-complainants, whether the mortgagees had notice of plaintiff’s equity or not. Auketelv. Converse, 17 Ohio St., 21; Churehill v. Little, 23 Ohio St., 307; Bloom v. Noggle, 4 Ohio St., 45; Beroaw v. Cocherill, 20 Ohio St., 166.
These authorities show that “the contention of plaintiff in error” will be predicated on facts that did not in law or equity vest in plaintiff any legal or equitable interest in the lands, or if it did, that it was a mere equity that would displace legal rights obtained by the cross-petitioners by their mortgages duly executed and recorded, so that there was no equities in fact that cross-petitioners had notice of in favor of plaintiff; and if there was, notice of them to the mortgagees was wholly immaterial.
Plaintiff’s only legal or equitable lien on the premises are as the vendor for the unpaid purchase money. “The vendor after the sale has no interest in the estate, unless it be an equitable lien for the purchase money, and so far as the lien is concerned, the vendee holds the land as trustee of the vendor for the payment of the purchase money.” Stauffer v. Eaton, 13 Ohio, 334.
When the lien of the vendor exists, the vendee is treated as the trustee of the vendor for so much of the purchase money as remains unpaid. Boos v. Eioing, 17Ohio, 520; Niel v. Kinney, 11 Ohio St., 67; Dayton, X cb A. A. A. v. Leioton, 20 Ohio St., 401.
Frantzreb remained, and yet remains in possession, and this fact and this record show conclusively a release or surrender by anybody to plaintiff comes in too late. If we' are not correct in this, section 4192, Revised Statutes.

Opinion:
Shauck, J.
It is true, as contended by counsel for defendants, that the mortgages were executed according to law. But it does not follow that, as against the company holding the legal title, they created legal liens. Since the mortgagor has never held the legal title, the mortgages operated only to create a lien upon his equitable interest. The controversy is between the company and the mortgageesrand the superiority of right incident to the legal title is with the former.
Counsel for the mortagagees also contend that, notwithstanding the extent to which they have been executed, the oral contracts set out in the second and third causes of action are void under the statute of frauds. Remembering that the legal title remained in the company, it is quite obvious that if we should adopt this view the only effect would be to defeat utterly the rights of Frantzreb and his mortgagees.
The mortgages were- effective to convey, upon the conditions named, ' all the interest which Frantzreb had at the time of their execution. They could convey no more, because the rights now asserted by the company had been reserved to it by contracts defining the conditions upon which it would surrender to the mortgagor its legal title, and pleaded in an action which was pending when they were executed. The rights of the company against the mortgagees are, therefore, determined by the proposition that at the suit of Frantzreb, a decree for specific performance would have been rendered against the company only upon performance by him of all the conditions on which the company had agreed to convey.
The limitations inhering in the general doctrine of the vendor's lien apply only to vendors who have divested themselves of the legal title. They have no application to a vendor who retains it.
The judgment of the circuit court should have been in favor of the company upon all the causes of action.
Judgment reversed and judgment for plaintiff in error.