Court Opinion

ID: 3544658
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:56:04.900454+00
Date Added: 2024-06-11T13:41:08.507511
License: Public Domain

We are aware of the decisions of state courts upholding life estates, but whether a devise for life accompanied by an absolute power of disposal is a life estate or an estate in fee *Page 285 
has not been passed upon in this state and is a matter of first impression, and we believe that such a devise with power to destroy the remainder ought to be held to be a devise in fee and to create in the devisee an estate in fee simple. "Where a life estate is given by will and an unequivocal power of absolute disposition of the same property is also given, the latter generally prevails and has the effect of elevating the life estate into a fee." (National Surety Co. v. Jarrett, 95 W. Va. 420, 39 A.L.R. 1171, 121 S.E. 291; Jones v. Jones,25 Mich. 401; Gadd v. Stoner, 113 Mich. 689, 71 N.W. 1111;Gibson v. Gibson, 213 Mich. 31, 181 N.W. 41; McKnight v.McKnight, 120 Tenn. 431, 115 S.W. 134; Bradley v. Carnes,94 Tenn. 27, 45 Am. St. Rep. 696, 27 S.W. 1007; Burwell v.Anderson, 3 Leigh (Va.), 348; May v. Joynes, 20 Gratt. (Va.) 692; Bowen v. Bowen, 87 Va. 438, 24 Am. St. Rep. 664, 12 S.E. 885; Newman v. Newman, 60 W. Va. 371, 7 L.R.A. (n.s.) 370, 55 S.E. 377; Meyer v. Barnett, 60 W. Va. 467, 116 Am. St. Rep. 894, 6 L.R.A. (n.s.) 1191, 56 S.E. 209; Watkins v.French, 149 Okla. 205, 299 P. 900; McNutt v. McComb,61 Kan. 25, 58 P. 965; Bilger v. Nunan, 186 Fed. 665.)
The will here considered gives Kern the absolute power to destroy the estate as against the remaindermen. (Herring v.Williams, 153 N.C. 231, 138 Am. St. Rep. 659, 69 S.E. 140;Young v. Hillier, 103 Me. 17, 125 Am. St. Rep. 283, 67 A. 571; Hamilton v. Hamilton, 149 Iowa, 321, 128 N.W. 380;Gildersleeve v. Lee, 100 Or. 578, 36 A.L.R. 1166, 198 P. 246); and it would seem to us that Kern is vested with a fee in the property and, not having exercised his power before the respondent caused the property to be sold, the whole estate is now the property of the respondent.
We have discussed the case thus far with the point in view that under the facts the whole estate is subject to sale in satisfaction of the respondent's claim; this question, however, is not necessarily before the court. Counsel for appellant seem disposed to becloud the issues. In one instance they tell us that because of the power contained in the will the life *Page 286 
estate cannot be sold by Kern's creditors, and in another breath they insist that it is personal property and cannot be sold as real estate. It was our contention that, because of the condition the property was in, the outstanding contracts of sale, that it would be regarded and treated as personalty in equity, yet that fact would not transmute it into dollars or other symbols that might be taken into hand by the officer and brought into court. The physical properties remain as before in theory and in contemplation of equity the estate was personal property, but it was not so considered by the appellant for it was inventoried as real estate.
It is a well-established principle of law that the vendor in a contract of sale of real property may dispose of his equity or interest to another, who will be compelled to convey to the purchaser complying with the contract. (27 R.C.L., p. 560, sec. 300.)
It would seem that the above is the rule in this state. (Chadwick v. Tatem, 9 Mont. 354, 23 P. 729; Tyler v.Tyler, 50 Mont. 65, 144 P. 1090; Knapp v. Andrus,56 Mont. 37, 180 P. 908; Horgan v. Russell, 24 N.D. 490, 43 L.R.A. (n.s.) 1150, 140 N.W. 99; Hunter v. Coe, 12 N.D. 505,97 N.W. 869.)
Upon appellants' theory of the case, the question presented for consideration in this court is: "Is a life estate subject to sale under execution?" There may be diversity of opinion as to what right appellant has in the body of this estate; it is probable that he has the power to destroy the remainder, but up to the time the execution was levied and the property sold there is no evidence that he did so.
That a life estate may be sold on execution has been held many times. (17 R.C.L., pp. 118, 644; 21 C.J., p. 940, sec. 72; 17 Cyc. 952; Blackstone Bank v. Davis, 21 Pick. (Mass.) 42, 32 Am. Dec. 241; Fish v. Fowlie, 58 Cal. 373; Hutchinson v.Maxwell, 100 Va. 169, 93 Am. St. Rep. 944, 57 L.R.A. 384, 40 S.E. 655; Verdier v. Youngblood, Rich. Eq. Cas. (S.C.) 220, 24 Am. Dec. 417; Pedigo's Exr. v. Botts, 28 Ky. Law Rep. 196, 89 S.W. 164; Armour Fertilizer Works v. *Page 287 Lacey, 146 Ga. 196, 91 S.E. 12; Tscherne v. Crane-JohnsonCo., 56 S.D. 101, 227 N.W. 479.)
As to what we may get by reason of the sale it has been held: "The purchaser takes only title to right of judgment creditor in the land." (MacGinniss Realty Co. v. Hinderager, 63 Mont. 172,206 P. 436, citing Story v. Black, 5 Mont. 26, 61
Am.Rep. 37, 1 P. 1.)
We contend that the legal title to the land sold was vested in the defendant, Milburn G. Kern, and that for the purposes of this action, whether such title was a fee or a life estate, is not material. That such title as he had passed by the sheriff's sale and vests in the respondent. That respondent's deed is not a cloud upon Kern's title, but that it divests Kern of all title, and that the judgment should be affirmed.
On and prior to January 3, 1917, Milburn G. Kern was the owner of two tracts of land in Ravalli county. On that date he entered into a contract with James Weber, under the terms of which Kern agreed to sell, and Weber agreed to buy, one tract on deferred payments. On November 17, 1920, Kern deeded both tracts of land to his wife, Cynthia J. Kern. Thereafter, in November, 1922, Mrs. Kern entered into a contract with Paul D. Lear, under which she agreed to sell, and Lear agreed to purchase, the second of these tracts, on deferred payments, deed to be delivered upon final payment. The purchaser in each instance went into, and has at all times remained in, possession, and both contracts are in full force and effect.
On February 12, 1926, Mrs. Kern executed her will, which contains the following provision: "I give, devise and bequeath all my estate, both real and personal, to my husband, Milburn G. Kern, to have and hold the same during his natural life with the power, however, to him to sell and convey all or any part thereof, or to mortgage the same or any part thereof, and to use the proceeds thereof to all intents and purposes as if he were the owner thereof in fee, and if any thereof *Page 288 
remain at the time of his death, I devise and bequeath the same to his heirs and to my heirs, share and share alike." Kern was nominated and appointed executor of the will without bond and with authority to "sell or mortgage any of the property of my estate devised to him as hereinabove mentioned without an order of the court authorizing him to do so."
Mrs. Kern died on November 17, 1927, and plaintiff was appointed executor of her estate which is in process of administration.
On January 24, 1925, a judgment was duly made and entered against Kern, and thereafter, and on January 17, 1930, execution was issued on the judgment and the lands referred to were levied upon and sold by the sheriff, and a certificate of sale issued to defendant. This action was commenced by Kern, as executor and devisee under the will, to quiet title to the lands; he claiming "that the said sheriff's certificate of sale constitutes and is a cloud on the title of the plaintiff herein and to the above described lands, and if left outstanding may cause serious injury to the plaintiff herein." There was judgment for defendant, and plaintiff appeals.
The determinative question presented for consideration is: Upon the death of Mrs. Kern, what, if any, interest in the lands described in the complaint passed to Kern as devisee under the will?
The authorities are in accord that an enforceable contract for[1]  the purchase and sale of real property passes to the purchaser the equitable and beneficial ownership thereof, leaving only the naked legal title in the seller, as trustee for the purchaser, and as security for the unpaid purchase price. If the purchaser dies while the contract is in force and effect, his interest passes to his heirs as real property. If the seller dies while the contract is in force and effect, his interest passes to his personal representative as personal property, and not to his heirs.
"Applying one of its fruitful principles, that what ought to be done is regarded as done, equity says that from the contract, even while yet executory, the vendee acquires a `real' *Page 289 
right, a right of property in the land, which though lacking legal title, and therefore equitable only, is none the less the real, beneficial ownership, subject, however, to a lien of the vendor as security for the purchase price as long as that remains unpaid. This property in the land, upon the death of the vendee, descends to his heirs, or passes to his devisees, and is liable to the dower of his widow. The vendor still holds an equitable ownership of the purchase money; his property, as viewed by equity, is no longer real estate, in the land, but personal estate, in the price, and if he dies before payment, it goes to his administrators, and not to his heirs. In short, equity regards the two contracting parties as having changed positions, and the original estate of each as having been `converted,' that of the vendee from personal into real property, and that of the vendor from real into personal property." (1 Pomeroy's Equity Jurisprudence, 4th ed., sec. 105, pp. 117, 118; see, also, sec. 368, p. 685, Id.; 3 Id. secs. 1159-1168, pp. 2744-2769; Story's Equity Jurisprudence, 14th ed., p. 486.) The text is fully borne out by the authorities. (Detroit Trust Co. v. Baker,230 Mich. 551, 203 N.W. 154, 204 N.W. 773; Detroit  Security TrustCo. v. Kramer, 247 Mich. 468, 226 N.W. 234; Colignon v.Artz, 205 Wis. 51, 236 N.W. 585; Berndt v. Lusher, 40 Ohio App. 172,178 N.E. 14; Retsloff v. Smith, 79 Cal. App. 443,249 P. 886; Pinson v. Pinson, 150 S.C. 368, 148 S.E. 211;Taylor v. Interstate Inv. Co., 75 Wash. 490, 135 P. 240;Robinson v. Pierce, 278 Pa. 372, 123 A. 324; Blair v.Snodgrass, 1 Sneed (33 Tenn.), 1; Flomerfelt v. Siglin,155 Ala. 633, 130 Am. St. Rep. 67, 47 So. 106; Stockfleth v.Britten, 105 N.J. Eq. 3, 146 A. 583, 586; Clapp v. Tower,11 N.D. 556, 93 N.W. 862; Ward v. Williams, 282 Ill. 632,118 N.E. 1021; Koehne v. Beattie, 36 R.I. 316, 90 A. 211; Inre Denning's Estate, 112 Or. 621, 229 P. 912; Bowne v.Ide, 109 Conn. 307, 66 A.L.R. 1036, 147 A. 4.)
The doctrine of equitable conversion does not apply to option[2]  contracts. The distinction between contracts such as the ones before us, where the vendor has undertaken to *Page 290 
sell to a vendee who undertakes to buy the land involved, and a unilateral option, is clear. The former are mutually enforceable, while the latter is a mere offer to sell — a continuing offer of a contract — which may be accepted, within the time designated in the option, but is not enforceable against the optionee. (Gallup v. Sterling, 22 Misc. Rep. 672, 49 N.Y. Supp. 942.) Taking the option contract, we are committed to the doctrine that such a contract does not work an equitable conversion and that title remains in the owner until full compliance with the terms of the contract by the purchaser. (Knapp v. Andrus, 56 Mont. 37,180 P. 908; Tyler v. Tyler, 50 Mont. 65,144 P. 1090.) "When an option to purchase land is given, according to the doctrine most in accord with authority and principle the conversion is deemed to have taken place at the time the option is declared and not from the date of the contract giving the option. The maxim underlying the doctrine of equitable conversion rests on a duty to do something, and until the option is exercised there is no duty and it cannot be known whether there ever will be a duty. Hence, conversion should not be presumed as of a date earlier than the date when the duty becomes certain, as that would be unreasonable and the same in effect as if the duty existed from the outset. The person granting the option must in reason be presumed to intend that the discharge of the duty shall take effect for all purposes only from the date when by his direction the duty becomes absolute through the occurrence of an uncertain event. To hold otherwise would carry a rule, unknown to the common law and created by courts of equity because founded on reason, far beyond the bounds of reason. As intention is involved, or presumed intention, which must be reasonable, the manifest inconvenience of holding otherwise cannot be ignored." (6 R.C.L., p. 1088, sec. 21; Inghram v. Chandler,179 Iowa, 304, L.R.A. 1917D, 713, 161 N.W. 434; Rockland-Rockport LimeCo. v. Leary, 203 N.Y. 469, Ann. Cas. 1913d 62, L.R.A. 1916F, 352, 97 N.E. 43.) *Page 291 
Here, under each of the contracts, the vendor and vendee[3]  mutually bound themselves to each other — one to sell and the other to buy, the land described upon deferred payments, and under the doctrine of equitable conversion the interest of the vendor was converted into personal property, and upon her death her interests in the partially performed contracts passed to her personal representative as personal property, and were not subject to the attempted execution upon real property for the debts of Kern, the devisee under the will. (Bowen v. Lansing,129 Mich. 117, 95 Am. St. Rep. 427, 57 L.R.A. 643, 88 N.W. 384;Beaver v. Ross, 140 Iowa, 154, 17 Ann. Cas. 640, 20 L.R.A. (n.s.) 65, 118 N.W. 287.)
The sheriff's certificate of sale under execution upon a judgment against Kern was ineffectual and did not pass title to the purchaser; it constitutes a cloud upon the naked title held by the executor and the court erred in entering judgment for defendant.
The judgment is reversed and the cause remanded to the district court of Ravalli county, with direction to enter judgment for plaintiff Kern, as executor.
MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES GALEN, ANGSTMAN and MATTHEWS concur.