Court Opinion

ID: 8757573
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:52:33.07614+00
Date Added: 2024-06-11T17:01:20.825515
License: Public Domain

RINER, District Judge.
This is a bill in equity brought by appellant (complainant below) to enforce specific performance of a contract to purchase two hundred and sixty (260) acres of land situate in Blue Earth county, Minn.
The contract is in the following words, to wit:
“Tips agreement, Made and entered into this 21st day of March, A. D. 1902, by and between Frank Day of Hartford, Wis., party of the first part, and William Mountin, Jr., party of the second part, Witnesseth: That the said party of the first part, in consideration of the covenants and agreements of said party of the second part, hereinafter contained, hereby sell and agree to convey unto said party of the second part, or his assigns, by deed of warranty, upon the prompt and full performance of said party of the second part of his part of this agreement, the following described premises situate in the County of Blue Earth and State of Minnesota, to wit: the northwest quarter of-the southeast quarter (N. W. % of S. E. y¿¡ in Section eighteen (18); also the north sixty (60) acres of the southeast quarter of section nineteen (19); also the southwest quarter of section twenty (20) all in township one hundred and six (106) North, Range twenty-seven (27) containing in all two hundred and sixty acres (260) more or less, according to Government survey. And said party of the second part, in consideration of the premises, hereby agrees to pay to said party of the first part, as and for the purchase price of said premises the sum of Fifteen Thousand Dollars in manner and at the times following, to-wit: Fifteen Thousand Dollars on or before April 21st, 1902; Party of the second part is to assume a mortgage of $5,000 on above premises; for the balance $10000—to give a second mortgage on same, also a first mortgage on the northwest quarter of section twenty (20) also the east half of the southeast quarter and the southwest quarter of the southeast quarter of section eighteen all in said township 106, Range 27, also a second mortgage on the north half of the northeast quarter and the northeast 'quarter of the northwest quarter except the west two acres of the northeast quarter of the northwest quarter of section nineteen, said township 106, Range 27, said mortgage to bear interest at the rate of 5%. Both parties are to furnish a complete abstract showing clear title. Interest payable semi-annually. But should default be made in the payment of said several sums of money or any or either of them, or any part thereof, or in the payment of said interest or taxes, or any part thereof, or in any of the covenants herein to be by said party of the second part kept or performed, then this agreement to be void, at the election of said party of the first part, time being of the essence of this agreement. And in ease of default by said party of the second part in whole or in part, in any or either of the covenants of this agreement to be by him kept or performed he hereby agrees upon demand of said party of the first part, quietly and peaceably to surrender to him possession of said premises and every part thereof, it being understood that until such default said party of the second part is to have possession of said premises. All the covenants and agreements herein contained shall run w'ith the land and bind the heirs, executors, administrators and assigns of the respective parties hereto. The within mortgage is to run eight years from date of delivery of deed. It is Mutually Agreed by and between the parties hereto that the time of payment shall be an essential part of this contract; and that all the covenants and agreements herein contained shall extend to and be obligatory upon the heirs, executors, admin*760istrators, and assigns of the respective parties. In testimony whereof. Both parties have hereunto set their hands and seals the day and year hereinbefore written. Frank Day. [Seal.]
“William Mountin, Jr. [Seal.]”
It is alleged in the bill that on the 21st day of March, 1902, complainant was the owner of the land described in the contract; that on the 23d day of March, the complainant and Frank Day called upon the defendant and informed him that complainant was ready to convey the premises to Frank Day, and that Frank Day was ready to convey the same to him, and to furnish an abstract showing a perfect title as soon as the defendant was ready for it; that the defendant made no objection to the contract at the time, and stated that he and his wife would be at Mankato the following day; that on the 24th of March the defendant met the complainant and Frank Day at Mankato, but, instead of carrying out the contract, informed complainant that he would not purchase the land, and would not execute the mortgage, as required by the contract, and would not carry out the contract on his part either then or at any future time; that Frank Day thereupon demanded that the defendant carry out the contract upon his part, and then and there offered and was able and willing to convey the premises to defendant as provided in the contract, but that defendant absolutely refused to do so. It is then alleged that on the 26th of March, 1902, Frank Day and Mammie Day, his wife, by their contract in writing, duly sold and assigned the contract between Frank Day and William Mountin to the complainant, subject to the performance by the complainant of each and all the conditions of the contract to be performed by Frank Day; that on the 28th of March, 1902, the assignment was duly recorded in the office of the register of deeds of Blue Earth county, Minn.; that on the 2d day of April, 1902, the defendant was notified that the contract had been assigned, and a deed of conveyance of the premises described in the contract, together with an abstract, were presented to defendant, ready for delivery to him upon his executing and delivering to complainant the mortgage for $10,000 as provided in the contract; that the complainant at the same time demanded that the mortgage be delivered, and the terms of the contract upon the part of the defendant complied with on or about the 22d day of April, 1902; that thereupon the defendant again positively refused to carry out the contract upon his part, either then or at any future time. It is further alleged that thereafter, and before the commencement of this suit, complainant tendered to defendant a deed conveying the lands described in the contract, containing full covenants of warranty, subject to said mortgage executed by Frank Day and his wife to him, the defendant, and also a separate deed to the lands executed by the complainant and his wife to the defendant, containing full covenants of warranty, subject to the mortgage, together with an abstract of title; that, by reason of his entering into the contract agreeing to purchase the lands, the defendant has been enabled to have, has had, and now has the quiet and peaceable possession of *761the land, without any contract or agreement as to terms, except that he would purchase the land.
To this bill the defendant first filed a plea in bar, which was overruled by the court. Thereafter, on the 31st of October, 1902, the defendant filed an answer, in which he admitted that he was in possession of the land, but alleged that he came into possession of it by reason of an oral lease entered into between himself and David Mountin, who was then the owner of the land; that by the terms of the lease, in consideration of his paying the annual taxes and road taxes assessed against the premises, he was to have the use and possession of the land; that, pursuant to this oral lease, he had been in possession of the premises for 20 years; that the lease had never been terminated; and he denied that he ever entered into possession of the premises, or any part thereof, under or by virtue of the contract entered into by and between himself and Frank Day. He admitted the assignment by Frank Day and Mammie Day, his wife, to complainant, but alleged that it was without consideration, and made with intent to hinder, delay, and defraud the creditors of Frank Day. He further admitted that the assignment was recorded in the office of the register of deeds, and that soon thereafter he received notice of the assignment. He further admitted the tender of the deeds by complainant and wife, and Frank Day and wife, as alleged in the bill. He then alleges that Frank Day never owned the premises described in the contract, and that he procured the making of the contract fraudulently and through misrepresentation as to the ownership of the property, and entered into the contract merely as a speculation for the purpose of defrauding the defendant, well knowing at the time that he was and would be unable to procure title to the lands mentioned and described in the contract; that neither Frank Day nor the complainant has ever procured, exhibited and delivered, or caused to be exhibited and delivered, an abstract of title to the premises to defendant, showing-clear title to the lands as provided in the terms of the contract; that both the complainant and Frank Day have wholly failed and refused to carry out or perform their part of the terms and conditions of the contract, and never have been, and are not now, willing, ready, or able to perform or carry out tbeir part of the terms and conditions thereof; that in truth and in fact the title to the premises which Frank Day agreed to convey to this defendant by the contract was at the time of the execution of the contract, and ever since has been, and is now, defective and unmarketable, which facts were well known to the complainant and Frank Day. He then alleges that the contract is too indefinite and uncertain to be of any effect.
To this answer the complainant filed a reply, and the case was sent to a master to take and report the evidence.
It is established by the evidence that the defendant entered into the contract, hereinbefore set out, with Frank Day on the day that it bears date; that Frank Day at that time informed the defendant that his brother owned the land; that, on the day the contract was made, James B. Day, a brother of Frank Day, held a deed for the *762real estate described in the contract, having purchased it from.David Aiountin, brother of the defendant;' that soon after the execution of the contract'Frank Day and James B. Day joined in a telegram to the defendant advising him that they were ready to carry out the. contract, and that on the 23d of Aiarch, 1902, James B. Day and Frank Day called upon the defendant at his home; that he then agreed to meet them at Afankato on the following day, which he did; that he then and there declined to carry out the contract on his part; that on Aiarch 26th Frank Day assigned the contract to complainant; that complainant has tendered to defendant deeds from both Frank Day and from himself; that the defendant at all times refused to perform and carry out the terms of the contract on his part; that complainant did not have perfect title to a portion of the premises described in the contract.
The Circuit Court dismissed the bill on the ground, as we gather from the opinion attached to the record, that there was, at the time the contract was made, no mutuality of remedy. Such mutuality of remedy did arise, however, on Aiarch 26, 1902, when the assignment was made to James B. Day, and more than 20 days before April 21, 1902, when the contract was to be performed.
Upon this question of mutuality of remedy at the time a contract is executed, there is some apparent conflict of authority. In some of the text-books statements may be found to the effect that, unless there is mutuality of remedy at the time the contract is made, specific performance will not be decreed. Fry on Specific Performance of Contracts, 214; Bisp. Eq. 437; Eaton, Eq. 548. And it has been so held in several cases. Boucher v. Vanbuskirk, 2 A. K. Marsh, 345; Hutchinson v.McNutt, 1 Ohio, 14; State v. Baum, 6 Ohio, 383; Cabeen v. Gordon, 1 Hill, Eq. (S. C.) 51; Norris v. Fox (C. C.) 46 Fed. 406; Farrer v. Nash, 35 Beav. 167; Bronson v. Cahill, Fed. Cas. No. 1,926.
The reason given for the rule in most of these cases is that such a transaction will not be sanctioned by a court of equity because it is a mere speculation, and one who speculates upon that for. which he has no contract, or the means of acquiring it, is not a bona fide contractor. In Eaton’s Eq. 548, it is said:
“But if tlie vendor had no title at the time the contract was executed, equity will not inter fere to compel specific performance of the contract, even if the vendor subsequently acquires a title. Such a transaction is speculative, and the vendor is not a bona fide contractor.”
Other courts have seemingly adopted the rule that a contract for the sale of real estate which the vendor does not own is enforceable by specific performance whenever, at the time the contract is to be performed, there is a mutuality of remedy. Easton v. Montgomery, 90 Cal. 307, 27 Pac. 280, 25 Am. St. Rep. 123; Burks v. Davies, 85 Cal. 114, 24 Pac. 613, 20 Am. St. Rep. 213; 1 Chitty on Contracts (11th Am. Ed.) 431; Dresel v. Jordan, 104 Mass. 407; Townshend v. Goodfellow, 40 Minn. 312, 41 N. W. 1056, 3 L. R. A. 739, 12 Am. St. Rep. 736; Smith v. Cansler, 83 Ky. 371; Hepburn v. Auld, 9 U. S: 262, 3 L. Ed. 96.
*763An examination of the cases last cited will show that in many if not all of them the vendor’s title was defective only, and that he had some interest in the lands sought to be conveyed, either equitable or otherwise, although he had not a good title at the time the contract was executed. Such was the case in Hepburn v. Auld, where the court held that, if the vendor was able to give a good title at the time of the decree, the contract could be specifically enforced. In Easton v. Montgomery, the court said:
“It is not necessary, however, that the vendor should be the absolute owner of the property at the time he enters into the agreement of sale. An equitable estate in the land or a right to become the owner of the land is as much the subject of sale as is the land itself, and whenever one is so situated with reference to a tract of land that he can acquire the title thereto, either by the voluntary act of the parties holding the title or by proceedings at law or in equity, he is in a position to make a valid agreement for the sale thereof. * * * If the agreement is made by him in good faith, and he has at the time such an interest in the land, or is so situated with reference thereto that he can carry into effect the agreement on his part at the time when he has agreed so to do, it will be upheld.”
And in Burks v. Davies, 85 Cal., 24 Pac., 20 Am. St. Rep., it is said:
“If, though he be not the absolute owner, it is in his power by the ordinary course of law or equity to make himself such owner, he will be permitted within a reasonable time to do so.”
In Smith v. Cansler, 83 Ky., Holt, J., said:
“Mutuality of obligation is, in general, necessary to the validity of a contract; and it is a general rule that, in order to be binding, it must be enforceable by either party. If, however, one is not invested with such a title as he undertakes by his contract to make to a purchaser, yet if time be not of the essence of it, and he is able to make title when the time for performance arrives, and tenders the deed, then it will be enforced, although his title was defective at the date of the contract; and in such a case, if a rescission be asked by the other party, and the vendor is not able at the time of the institution of a suit for this purpose to comply with the contract, yet, if he can perfect the title within a reasonable time, the court will afford him an opportunity to do so.”
While it is practically impossible to lay down any definite rule upon this subject because of the varying circumstances which surround each particular case, yet we can see no just reason why a contract by one to sell and another to purchase a piece of property, when the vendor informs the vendee at the time the contract is made that he intends to purchase but does not then own the title to the property, is not as fair, reasonable, and enforceable a contract as one to sell the property to which the vendor has title. A court of equity compels specific performance of contracts because it is the intention of the parties that they shall be performed. The person who demands performance must, it is true, be in a capacity to do substantially all that he has promised before he can entitle himself to the aid of the court. At what time this capacity must exist, whether it must be at the date of the contract, at the time it is to be executed, or at the time of the decree, depends much upon circumstances, which may vary with every case. There is, per*764haps, no class of cases which more require the exercise of a sound discretion.
There is, however, another question presented by this record which necessitates the affirmance of the decree made by the Circuit Court. The contract in this case provides that both parties are to furnish a complete abstract showing clear title, and that the conveyance from Frank Day to the defendant shall be by deed of warranty. This we construe to mean a fee-simple estate. The record discloses that the title to a portion of the land to be conveyed, to wit, southwest quarter of section twenty (20), township 120, range 27, consisting of one hundred and sixty (160) acres, is defective, in that the legal title thereto has never passed out of the United Stqtes. The evidence shows that John A. Willard, through whom the complainant claims to hold title, made an entry upon this land. There is nothing, however, to show the nature of the entry, whether it was made under the homestead, pre-emption, or other land laws of the United States. No receiver’s receipt, register’s certificate, or patent has ever been recorded. And there is nothing in the record to show that the entry was ever perfected, final proof made, or that the government has ever been divested of the legal title to this tract of land. An entry merely vests the entryman with an interest in the land which may ripen into a legal title upon final proof and the issuance of a patent. Cornelius v. Kessel, 128 U. S. 456, 9 Sup. Ct. 122, 32 L. Ed. 482; Fenn v. Holme, 62 U. S. 481, 16 L. Ed. 198. In the case last cited, which was an action in ejectment, the Supreme Court said:
“The legal title to the land in question remains in the government until it is invested by the government in its grantee. The patent is the superior and conclusive evidence of legal title. That the plaintiff in ejectment must in all cases prove a legal title to the premises in himself at the time of the demise laid in the declaration, and that evidence of an equitable estate will not be sufficient for a recovery, are principles so elementary and so .familiar to the profession as to render unnecessary the citation of authority in support of them. The inquiry presents itself as to who holds the legal title to the lands in question. The answ.er to this question is that the legal title remains in the original owner, the government, until it is invested by the government in its grantee; * * * that Congress has the sole power to declare the dignity and effect of titles emanating from the United States; and the whole legislation of the government in reference to the public lands declares the patent to be the superior and conclusive evidence of legal title. Until it issues, the fee is in the government, which by the patent passes to the grantee, and he is entitled to enforce the possession in ejectment.”
As already suggested, the evidence shows an entry or a mere filing on a portion of the land in question. This, we think, was not sufficient to authorize a decree for the specific performance of this contract. Both upon principle and authority, we think it entirely clear that specific performance will not be decreed upon the application of the vendor of real estate, unless his ability to make such a title as he has agreed to make be unquestionable; and a court of equity will not interpose its extraordinary power to compel the specific performance of a contract if the person demanding it cannot, at the date of the decree, himself do all that it is incumbent upon him to do by the terms of the agreement, unless it be a case *765where the failure to perform belongs to the category of those in which substantial justice can be done by allowing compensation to the purchaser and decreeing performance with allowances. This, however, is not such a case. Morgan v. Morgan, 2 Wheat. 290, 4 L. Ed. 242; Jeffries v. Jeffries, 117 Mass. 184; Richmond v. Gray, 3 Allen, 25; Hayes v. Harmony Grove Cemetery, 108 Mass. 400.
The decree of the Circuit Court is affirmed.