Howe v. Coates

• Decision Date: 09 March 1906
• Citation: 97 Minn. 385,107 N.W. 397
• Parties: HOWE v. COATES et al.
• Court: Minnesota Supreme Court

97 Minn. 385

107 N.W. 397

HOWE

v.COATES et al.

Supreme Court of Minnesota.

March 9, 1906.

Appeal from District Court, Stearns County; L. L. Baxter, Judge.

Action by George C. Howe against Mary O. Coates and others. Verdict for defendants. From an order denying a new trial, plaintiff appeals. Reversed.

Syllabus by the Court

A contract for the sale of real estate construed, and held to call for a marketable record title.

A marketable title means a title free from reasonable doubt.

A purchaser will not be compelled to take a title when there is a defect in the record title which can be cured only by resorting to parol evidence.

A title open to reasonable doubt is not marketable, and the court cannot make it so by passing upon an objection depending upon a disputed question of fact, or a doubtful question of law, in the absence of the party in whom the outstanding right or claim is vested.

A title to real estate is not marketable when so defective as to affect the value of the land or interfere with its sale. Washburn, Bailey & Mitchell and Stewart & Brower, for appellant.

Calhoun & Bennett, Taylor & Jenks, and Reynolds & Roeser, for respondents.

ELLIOTT, J.

This is an appeal from an order denying the plaintiff's motion for a new trial. There is little, if any, controversy over the material facts. It appears that upon March 12, 1902, the appellant, the plaintiff below, and the respondents, entered into a written contract, whereby, in consideration of the sum of $50,000 in hand paid and in consideration of the covenants and agreements therein contained, the vendors granted, bargained, and sold to the vendee (the appellant herein), his heirs, and assigns the exclusive right, privilege, and option to purchase certain lands in Itasca County, Minn., known as the ‘Arcturus Mine,’ at any time on or before July 12, 1902, for the sum of $750,000. The appellant paid $50,000, which under the contract was to apply upon the purchase price if he elected to consummate the sale. The grantors covenanted that they were the owners in fee simple of the premises, free from all incumbrances, and that they had good right and authority to sell and convey the same. Among other provisions, the contract contained the following:

‘It is further agreed that the said parties of the first part shall furnish an abstract of the title to said premises to the said party of the second part, as soon as the same can reasonably be obtained, with all tax and judgment certificates necessary to cover any liens that may be upon the said premises, and at all events to furnish the said abstract within the next fifteen days, and that thereupon the said party of the second part shall cause the same to be examined and in case he shall find the title to said property or the record title thereof defective, unmerchantable or incumbered, he shall, within a reasonable time and as near as may be within fifteen days from the date of the delivery of such abstract, notify the said parties of the first part, by notification of said Daniel H. Freeman, mailed to him at St. Cloud, Minnesota, of such defects, and the said parties of the first part shall thereupon proceed to correct and cure such defects as speedily as possible, and at all events shall have such corrections complete on or before June 15th, 1902; in case the title to said premises shall be defective and the said parties of the first part shall fail to perfect the same within the time above specified, and they are notified thereof, then this agreement, at the option of the said party of the second part, shall cease and determine altogether, and the moneys hereinbefore provided to be paid, shall be refunded, in which case there shall be no claim for damages by either party; but the parties hereto may agree upon a further reasonable time for the correction of such title. In case a difference arises between the counsel for the said party of the second part, who may be employed to examine the title to said premises, and the counsel for the said parties of the first part, with respect to any alleged defect in the title or in the record of the title to said premises, as to whether the same is a substantial defect requiring correction within the spirit and terms of this agreement, or as to whether such defects as may have been discovered in the examination of such title shall have been substantially and sufficiently cured, then and in such event the matters of difference shall be submitted to Hon. D. B. Searle and Hon. Homer B. Dibell, two of the judges of the district court of the state of Minnesota, who shall determine the same, failing to agree in which, they may call in a third judge of the said district court within said state, and the decision of the majority shall prevail and be conclusive and binding upon the parties hereto.’

It will thus be seen that the respondents agreed to furnish an abstract of title to the property, with all taxes and judgment certificates, within 15 days after the contract was signed, and the grantee was to have the same examined, and, if he found the title or the record title to be defective, unmerchantable, or incumbered, he should, within a reasonable time, as near as may be within 15 days from the day of the delivery of the abstract, notify the respondents of such defects, and respondents should proceed to correct and cure such defects as speedily as possible, and in all events have such corrections completed on or before June 15, 1902. It was provided that, ‘in case the title to said premises shall be defective and the said parties of the first part shall fail to perfect the same within the time above specified and they are notified thereof, then this agreement at the option of the said party of the second part shall cease and determine altogether and the moneys heretofore provided to be paid shall be refunded and in which case there shall be no claim for damages by either party.’ It is further agreed between the parties ‘that time is of the essence of this agreement in respect to all matters and things herein by the respective parties hereto agreed to be done and performed.’ In case a difference shall arise between the counsel of the respective parties with respect to any alleged defect in the title, or in the record title, as to whether the same is a substantial defect, requiring correction within the spirit and terms of the agreement, or as to whether such defects had been sufficiently cured, then the matters of difference shall be submitted to two district judges of the state, named in the agreement, who shall determine the same, ‘failing to agree in which they may call in a third judge of the said district court of the said state and the decision of the majority shall prevail and be conclusive and binding upon the parties hereto.’ Within a few days after the contract was signed the respondents delivered an incomplete abstract of title which had been used in some prior transaction, and requested appellant's attorney to have it brought down to date. The abstract as brought down and completed by the register of deeds at the instance of appellant's attorney disclosed the matters which give rise to the controversy respecting the title and the record title to the property. The alleged defects, so far as of present importance, grew out of the existence of two previous leases which have been referred to as the Foley and Snider leases.

(a) It appeared from the abstract that while Josiah E. Hayward, the ancestor of the respondents, owned the lands in question, he on March 19, 1892, his wife joining, executed and delivered to Timothy Foley and Daniel H. Freeman a mining lease for the greater portion of the land. This lease ran for a period of 50 years from its date. It provided for the payment of a nominal rental until the lapse of a period of five years after a railroad should have been completed to within one mile of the property, and thereafter there should be paid a royalty upon the iron ore mined and removed from the permises. This lease further granted an option for and throughout the full period of the lease to the lessees, their heirs, or assigns to purchase the premises for $100,000. The instrument was recorded in Itasca county. The abstract also showed an assignment recorded in the same county of a four-sevenths interest therein to Josiah E. Hayward, Henry C. Waite, Datus E. Meyers, and Frank E. Searle, and an assignment from these assignees and the original lessees of the entire lease and contract to the Foley Mining Company. No wives joined with any of these assignors in making the assignment. It is admitted that the assignors were all married men at the time of the making of such assignment and their wives were then living. There was nothing upon the abstract or records to show that the rights and interests of these married women, whatever they were, had been acquired or extinguished or surrendered. There was nothing on the abstract or record to show any surrender or termination of the estate or rights of the Foley Mining Company, except what purported to be a certified copy of a judgment in an action to determine adverse claims brought by the female respondents herein, as plaintiffs, wherein the Foley Mining Company was the sole defendant. The copy of the judgment was recorded February 13, 1899, but the certificate of comparison of the certified copy so recorded was dated February 20, 1899, and the copy of the judgment bore date February 25, 1899. The files in the clerk's office showed that this judgment was not entered in any form in the clerk's office until 12 days after the record of the certified copy in the office of the register of deeds, and that no judgment was ever entered in the Judgment Book in said action unless a judgment in an action entitled Mary O. Coates, Clara H. Freeman, Flora H. Holden, and John O. McClure v. Foley Mining Company, was such judgment.

(b) The abstract also showed that on November 29, 1895, the respondents entered...