Case Name: REID, Respondent, v. GORMAN, et al, Defendant (Gorman, Appellant.)
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1916-06-27
Citations: 37 S.D. 314
Docket Number: File No. 3820
Parties: REID, Respondent, v. GORMAN, et al, Defendant (Gorman, Appellant.)
Judges: SMITH, J., concurs.
Reporter: South Dakota Reports
Volume: 37
Pages: 314–328

Head Matter:
REID, Respondent, v. GORMAN, et al, Defendant (Gorman, Appellant.)
(158 N. W. 780)
(File No. 3820.
Opinion filed June 27, 1916.
Rehearing denied August 31, 1916.)
1. Ms Pendens — Rescission of Land Contract — Reclemptioner from Foreclosure Against Vendor, Effect of Lis Pendens Upon.
Where a vendee under a land sale contract sued for rescission of the contract, and filed a notice of lis pendens, in which suit ■the trial court, in determining the rights of the .parties under the sale contract, adjudged that pl-aintiff vendee had been the “owner” of the land since the date of the -sal© contract, and also decreed a foreclosure sale against the land, prayed for by defendant vendor in said suit, held, that, as against a judgment creditor of the vendor, who, through attachment in his suit, held -a judgment lien" upon -the land, and was seeking to redeem from the foreclosure sale, such lis .pendens was not notice to and did not bind said redemptioner wherein the judgment in the rescission suit decreed plaintiff vendee -to- be the owner of th.9 land, if such judgment, in so decreeing, went further than the facts -pleaded and the- relief demanded warranted.
2. Real Property — Vendee Dueler Sale Contract, Seeking Rescission • — Tender of Deed by Vendee — Title, Delivery of Deed, Necessity — “Equitable Title,” Misnomer, When.
Where, under a land sale contract, the vendee brought suit ag-ainst vendor to rescind the contract, and vendor had before suit tendered to vendee a warranty deed -to the land, and after the tender and a refusal thereof, deposited the deed with the depositary agreed -upo-n 'by the parties, held, that before title to land can pass through a deed, the deed must he delivered and delivery accepted hy the grantee; hence the legal title- to said land was in the vendor. Held, further, that the tender not having been accepted, the rights of the parties in and to the land under the contract were unaltered hy such tender. Held, further, that the vendee, immediately upon entering into the sale contract, became possessed of an equitable interest or estate in the land, and the vendor, while continuing to he vested with -the legal title thereto, he-ld it in trust for vendee’s benefit, and under an obligation to transfer title to vendee whenever -the latter should have acquired the right to- -be- vested therewith; but vendor also held.such legal title as security for payment of the balance -remaining unpaid under -the sale contract; that the interest of vendee was not, strictly speaking, an “equitable title-,” a vendee’s interest, in land constituting an equitable title only where there is a present right in him to be vested with the legal title by fulfillment of the contract on his -part to the extent of being entitled to specific performance.
3. Attachment — Attachment Lien on Vendor’s Interest in Realty-Tender of Vendor’s Deed, Refusal of, Effect — Statutory Authority for Attachment, Necessity.
Where an attachment creditor under a judgment -against a vendor of land sought to- redeem from a sale certificate on foreclosure of a mortgage executed by vendor upon the land, and vendor had tendered to vendee a warranty deed of the land, which tender had been refused, the deed having 'been deposited with the- depositary agreed upon by vendor and vendee, held, that the interest and estate of the vendor in the land was subject to the lien of the judgment in the attachment suit; it appearing that at the time of the levy of.-the attachment the vendee had abandoned the land and was denying validity of the sale contract. Held, further, that such equitable estate in fchre vendor under an executory contract, is not subject to levy under attachment, in absence of some statute authorizing same.
McCoy, J., and Smith, J., dissenting.
Appeal from Circuit Court, Hamlin County. Hon. Card G. ShjvRwood, Judge.
Action by Frank J. Reid, against J. K. Gorman, E. J. Dunn, as sheriff in and for Hamlin. County, South Dakota, W. S. Madden and others, to quiet title to realty, and seeking a decree: requiring the defendant sheriff to issue to him a sheriff’s deed upon foreclosure; defendant Gorman claiming an interest in the land as redemptioner under the foreclosure sale. From an order overruling defendant Gorman’s demurrer to the plaintiff’s reply, said defendant appeals.
Reversed.
M. J. Russell, and George H. Marquis, for appellant.
Hall, Alexander & Purdy, and W. N. Skinner, for Respondent.
(1) To point one of the opinion, Appellant cited: “Lis Pendens’’ Cent. Digest Sec. 53; Dec. Digest Sec. 25 (6); Roosevelt v. Land & River Co. et al (Wis.) 84 N. W. 157; Sprague v. White (Iowa), 35 N. W. 751.
Respondent cited: Steele v. Taylor, 1 Minn, 275 (Gil. 210); Hall Lumber Go: v. Gustin (Mich.) 20 N. W. 616.
(2) To point two of the opinion, Appellant cited: 13 Cyc. 570.
Respondent cited: State v. Weide, 135 N. W. 696: Pomeroy’s Eq. Jus. Seos. 367, 368; Phillis v. Gross, 32 S. D. 438, 143 N. W. 373; Hickman v. Long, 150 N. W. 298.
(3) To point three of the opinion, Appellant cited: Code Civ. Proc. Sec. 646; Laws 1913, Oh. 273; Art. 5, Oh. 13, Code Civ. Proc.; North Dakota Horse & Cattle Gx v. Serumgard (N. D.) 117 N. W. 453; Cummings v. Duncan, (N. D1.) 134 N. W. 712-714; W-alklin v. Horswill, (S. D.) 123 N. W. 668; Newell v. Wagness, 1 N. D. 62, 44 N. W. 1014; May v. Emerson, 96 Pacific 454-1065; Schmidt v. Musson et al, 20 S. D. 389; 107 N. W. 367; Words and Phrases, Vol. 4, page 3846, and Vdl. 3, “Second Series,” page 132.
Respondent cited: Roblin v. Palmer, 67 N. W. 949 (S'. D.) ; Code Civ. Proc., Secs. 646, 321, 334, 3.73, 384; Clapp v. Tower, 93 N. W. 862; Woodward v. McCollum, m N. W. 623; Salzer Lumber Co. v. Claflin, 113 N. W. 1036; Mueller v. Flavin, 13 S. D. 597; Brooke v. Eastman, 17 S. D. 340; Foorman v. Wallace, 17 Pac. 680 (Cal.); North Dakota Horse & Cattle Co., v. Serumgaixl, it7 N. W. 453.

Opinion:
WHITINÍG, J.
Plaintiff, the assignee of a certificate of sale upon foreclosure of real estate mortgage, brought this action seeking a 'decree requiring the 'defendant Dunn, as sheriff, tO' issue to him, a sheriff's deed on such foreclosure, and seeking to quiet his title to the land described in his certificate as against the claims of any of th-e defendants and especially against those of the defendant Gorman. Gorman claims an interest in and to said land as a redemptioner from the above-mentioned foreclosure sale; he claims that, as an attachment lienor claiming to hold an attachment lien upon said land, he tendered to- the plaintiff the amount necessary to redeem from the foreclosure sale and, after the refusal of plaintiff to accept -the same, did, within the period provided by law for redemption, pay the amount necessary for such redemption to the defendant Dunn as> sheriff.' This appeal is from an order of the circuit court overruling Gorman's demurrer to the plaintiff's reply.
The facts as presented by the demurrer are in brief as follows: One M., being the owner of the land in question subj ect to the mortgage upon which the above-mentioned foreclosure was afterwards made, entered into an executory contract with one L-, whereby M. contracted to sell the said land to' E. subject to the said mortgage, and to convey the same by warranty deed upon payment of foe agreed consideration, a part of which, consideration was paid upon the execution and delivery of such 'Contract; the balance to be thereafter paid. L. entered upon said land, but afterwards abandoned it, and without making any further payments', brought an action against M. for the rescission, of the contract. At the time of instituting such action, L. filed in the proper office a notice of lis- pendens. M., answering L.'s complaint and by way of counterclaim, alleged the full performance by him of the covenants of said contract, among other things alleging that under 'date of said contract he •had made a warranty deed conveying said land to L., and that, subsequent to the commencement of that action, he had tendered the said deed to L., and, after such tender and refusal, had deposited it in a depository theretofore agreed upon by the parties. M. prayed a money judgment for the balance due him under such contract and for a foreclosure sale of the said land to pay such judgment. In such action, a judgment was rendered wherein it was found that Iv. had been the "owner" of the said land ever since the date of the contract and wherein a foreclosure sale was decreed. Besides confessing the action between L. and M., the facts therein pleaded, and the judgment therein rendered, the demurrer confesses the existence of the facts pleaded in the action of I/, against M.; such facts being separately pleaded. After the commencement of the action of L. against M. and the filing of the notice of lis pendens therein and the interposing of M/s counterclaim but before judgment therein, Gorman brought an action against M. and another, wherein a money judgment was demanded and wherein an attachment was issued on behalf of Gor-man and levied upon the land ¡involved herein. In that action Gorman obtained a judgment against the defendants therein. The mortgage above mentioned not having been paid, it was foreclosed, and, upon the foreclosure 'sale, plaintiff's assignor became the purchaser; and thereafter, as above noted, Gorman, claiming to be a redemptioner under and by virtue of his attachment lien, made the offer of redemption to plaintiff and the payment to the sheriff.
Respondent contends that the .appellant was bound by the notice of lis pendens, and that by reason thereof he is bound by the decree in the action of L. against M. the same as though he had been a party thereto. If this were true and we should give to the word' "owner" as used, in such decree its common acceptation, such decree w.ould be an adjudication-, ¡binding upon appellant, adjudging that M. had, at the time of the lévy ¡of appellant's attachment, no interest in said land ¡subject to attachment. Inasmuch as the facts pleaded in this aotion — in so far as they relate to> the rights of L. and M. under the contract between them — are the same as the facts that were pleaded in the counterclaim' of M. in tíre action of L. against M., the bringing of such action of L. against M., the filing ¡of the notice of lis; pendens, and the entry of" judgment therein, became of littlet moment because the judgment therein could not and did not deprive appellant of any rights which he otherwise would have ha/d against this land. It is not necessary for us to determine whether or not the judgment rendered in the action of E. against M. was warranted by the facts pleaded. The relief demanded in such action was only such relief as the defendant .therein was entitled to under, the facts alleged in his counterclaim. It follows that, if such judgment — in decreeing that L. became the "owner" of the land on- the day the contract was entered into — went further than the facts pleaded and the relief demanded warranted, rhe judgment to such extent was invalid as against appellant, and he could not be -bound thereby -even though a notice of lis pendens was filed. Section 634, Pomeroy's Eq. Juris!; 25 Cyc. § 1476. We may therefore entirely disregard! the fact that there ever was -an action between E. and M., and consider -only the question of whether or not, under the facts confessed, M., at the time of the levy of the attachment, had an interest in said land that could -be and was reached through the attachment levy. If he had then appellant through such levy became a redemp-tioner entitled! to redeem -such land from the foreclosure sale.
If the deed made by M. and- tendered to and refused by E. h'ad the effect of transferring to E- the legal title to -this land, there was left in M. nothing but a personal claim against E- which- could not in any manner be reached through- this attachment levy. But it is certainly recognized -by all authorities that, before title -can pass through a deed, there must be a delivery of such deed, and- that an essential element in delivery is the acceptance of the deed by or -on behalf of -the grantee. Devlin, § 285; 3 Washburn, Real Property (5th Ed.) 310. It is therefore clear -that the legal title to this land was held by M. at the time o-f the levy of appellant's attachment.
Inasmuch as the deed tendered by M. was mot accepted, the relations of M. to L. — the rights- and obligations o-f each of them under the contract — were in no manner altered by such tender, except that it had -the effect of putting E. in default. 'Such tender of deed in no m-anner changed M.'s rights or-his interest in and to the said land. Wh.at the rights of- M. and L. were under the contract is well settled under all the authorities. It certainly has become settled in this state under the line, of decisions ending with that in the case of Phillis v. Gross, 32 S. D. 438, 143 N. W. 373. Immediately upon entering' into such contract, L. became possessed of an equitable interest or estate in said land. M., while continuing to be vested with the legal title of said land, held such title in trust for the benefit of L. and under an obligation to transfer the same to L. whenever 'L. should have acquired the right to be vested with such title; but M. also held such legal title as security for the payment to him of 'the balance remaining unpaid under such contract. As stated by Pomeroy, at section 1260 of 'his Equity Jurisprudence:
"Although possession may have been delivered to the vendee, and although under the doctrine of conversion the vendee •may have acquired an equitable estate, yet the vendor retains the legal title, and the vendee cannot prejudice that legal title or do-anything by which it shall be divested, except by performing the very obligation on his part which the retention of such title was intended to secure — namely, by paying the price according-, to the terms of the contract. To call this complete legal title a lien is certainty a misnomer. In case of a conveyance, the grantor has a lien, but no title. In case of a -contract for sale before conveyance, the vendor has the legal title, and has no- need of any lien; his- title is a more efficient security since the vendee cannot -defeat it by any act or transfer even to or with a bona fide purchaser."
This interest which E. had in said land, by virtue of such contract, is sometimes spoken of as an equitable title. We think this term inaccurate, and that there never can, strictly speaking, be an}r "equitable title" except where there is a present right in the person tod be vested- with the "legal title"; in other words, there can- be no -equitable title until, by- fulfillment of -the covenants of the contract, the vendee has become -equitably entitled to the legal title, has become entitled- to- a decree of specific performance. As stated by W-arvelle, at section 176:
"The essential feature of an equitable title is that it is one which appeals to equity for confirmation and enforcement. Plence a mere contract or -covenant to convey at a future time on the purchaser performing certain acts does not create an- equitable title. It is only when thq purchaser .performs or tenders performance of all the acts necessary to' entitle him to a deed that he has an equitable title and may compel a conveyance. Prior thereto 'he has, at best, only a contract for the land when he shall have performed his part of the agreement."
However, it makes very little difference whether we speak of this interest held by the vendee as an equitable estate or an equitable title. The interest of the vendee remains the same whatever name be given it, and -the vendor still remains the holder of the legal title to- secure his rights under the contract. Is this interest of the vendor an .interest subject to the lien of a judgment, and therefore subject to levy and sale under attachment and execution? As stated by the author of the notes found in 57 L. R. A, pp. 643-654:
"It will be seen that the decisions involving the lien of a judgment against the vendor are not in harmony, but it will also be noticed that the conflict is not caused by any differences of judicial opinion as to the soundness- of the doctrine -that the vendee takes an equitable title to the property. They are all in accord as to the nature of the title and interests of -the respective parties. The only point of difference between them is as to whether the substantial interest which remains in the vendor, and for the payment of which he holds the legal -title as security, is subject to the lien of a judgment."
We believe that, under the overwhelming weight of authority, su-oh interest is subject to- the lien of a judgment and can be reache/d through air attachment of th-e land. Of the cases recognizing this rule, we cite a few: Dalrymple v. Security L. & T. Co., 11 N. D. 65, 88 N. W. 1033; Doak v. Runyan, 33 Mich. 75; Moyer v. Hinman, 13 N. Y. 180; Marston v. Osgood, 69 N. H. 96, 38 Atl. 378; Holman v. Creagmiles, 14 Ind. 177; Lefferson v. Dallas, 20 Ohio St. 69; Stewart v. Coder, 11 Pa. 90; Hardee v. McMichael, 68 Ga. 678; Coolbough v. Roemer, 30 Minn. 424, 15 N. W. 869; Filley v. Duncan, 1 Neb. 134, 93 Am. Dec. 337, and notes page 353; McMullen v. Wenner, 16 Serg. & R. (Pa.) 18, 16 Am. Dec. 543; note to Keirsted v. Avery, 4 Paige, (N. Y.) 9; Kinports v. Boynton, 120 Pa. 306, 14 Atl. 135, 6 Am. St. Rep. 706; Wehn v. Fall, 55 Neb. 547, 76 N. W. 13, 70 Am. St.Rep. 397; Snyder v. Martin, 17 W. Va. 276, 41 Am. Rep. 670; Hope v. Blair, 105 Mo. 85, 16 S. W. 595, 24 Am. St. Rep. 366; McLaurie v. Barnes, 72 Ill. 73; Green v. Daniels, 53 C. C. A. 379, 115 Fed. 449; 39 Cyc. 1657, 1658; 17 Am. & Eng. Encv. Law (2d Ed.) 780; Black on Judgments, § 438; Freeman on Judgments, § 363. At section 364, Freeman- on Judgments (4th Ed.), the learned author, makes statement that:
"It is everywhere conceded that a judgment lien accruing against a vendor after the making -of the contract of. sale extends to all his interest remaining in the land, and entitles the purchaser at the sale to all sums still to 'be paid by vendee."
Later, in section 181, Freeman- on Executions (3d Ed.), this same author recognizes that the rule is 'different in four states; ¡but he says:
"W-e are, however, entirely unable to understand how the interest of a vendor, while he retains the legal title, and has the right to continue to retain it, because the contract of purchase has not been performed, can be held not subject to execution to the extent of transferring by an execution sale the precise -interest held by the vendor.*
In those states where there are decisions not in harmony with the majority rule, it will -be found that general^ there was involved the -conflicting' claims of a vendee in possession and the party -claiming under execution or attachment sale against-vendor. Such cases will be found to turn upon the fact that possession was taken and retained by-the vendee. We do not believe -a single authority could be found holding the vendor's interest not subject to be reached by a lev)!- on the land, where, as in filis case, at the time of levy the vendee had abandoned the land- and was denying the validity of the -contract. Under such facts, there is left no- -one- with any right or interest, legal or equitable, that can authorize him to question a creditor's right -to proceed against the land.
It is an established rule of law that -an equitable estate in lands, such as that of a vendee under an executory contract, is not subject to the lien, of a judgment or to levy under attachment or -execution in the absence of some statute authorizing same. It would follow that, if the interest of the vendor was not subject to- lien of judgment, all that would be necessary in order to put land -where it would be free from judgment liens would be for the owner to enter into an executory contract for its sale.
' Inasmuch as plaintiff is seeking relief in equity, it might not be improper to note the results that would flow under each contention urged before us. The land in question is alleged to be worth $6,500. This allegation is undisputed. The foreclosures sale was for $3,485. That amount with interest measures plaintiff's equitable rights. This amount, to-wit, $3,724.89, was tendered him and has been paid to the sheriff as redemption money. Under no principle of justice 'is he entitled to- another cent. This leaves an equity of nearly $3,000 belonging to M. Justice and equity demand that M. get the benefit thereof. This he would get through the application of same to the payment of Gorman's claim. Gorman's claim' is- in exceess of this equity, and M. -is insolvent; therefore Gorman is equitably entitled to relief. The law gives a -clear method of enforcing justice among these parties. Gorman has followed this method and is entitled to have the same approved and his rights enforced.
The order appealed from is reversed.