Bean v. Walker

• Court: New York Supreme Court Appellate Division
• Writing for the Court: DOERR; Judgment unanimously reversed with costs, motion denied and matter remitted to Supreme Court, Onondaga County, for further proceedings, in accordance with opinion by Doerr
• Citation: 464 N.Y.S.2d 895,95 A.D.2d 70
• Decision Date: 11 July 1983
• Parties: Franklin E. BEAN and Elizabeth Bean, Respondents, v. Carl J. WALKER and Beverly J. Walker, Appellants.

Page 895

464 N.Y.S.2d 895 95 A.D.2d 70 Franklin E. BEAN and Elizabeth Bean, Respondents,
v.
Carl J. WALKER and Beverly J. Walker, Appellants. Supreme Court, Appellate Division,
Fourth Department. July 11, 1983.

Page 896

Van Fleet, Yeomans & Klim, Syracuse, for appellants; Brett Martin, Syracuse, of counsel.

Hancock, Estabrook, Ryan, Shove & Hust, Syracuse, for respondents; Robert Small, Syracuse, of counsel.

Before DILLON, P.J., and DOERR, DENMAN, BOOMER and SCHNEPP, JJ.

DOERR, Justice.

Presented for our resolution is the question of the relative rights between a vendor and a defaulting vendee under a land purchase contract. Special Term, in granting summary judgment in favor of plaintiffs, effectively held that the defaulting vendee has no rights. We cannot agree.

The facts may be briefly stated. In January 1973 plaintiffs agreed to sell and defendants agreed to buy a single-family home in Syracuse for the sum of $15,000. ¹ The contract provided that this sum would be paid over a 15-year period at 5% interest, in monthly installments of $118.62. The sellers retained legal title to the property which they agreed to convey upon payment in full according to the terms of the contract. The purchasers were entitled to possession of the property, and all taxes, assessments and water rates, and insurance became the obligation of the purchasers. The contract also provided that in the event purchasers defaulted in making payment and failed to cure the default within 30 days, the sellers could elect to call the remaining balance immediately due or elect to declare the contract terminated and repossess the premises. If the latter alternative was chosen, then a forfeiture clause came into play whereby the seller could retain all the money paid under the contract as "liquidated" damages and "the same shall be in no event considered a penalty but rather the payment of rent."

Defendants went into possession of the premises in January 1973 and in the ensuing years claim to have made substantial improvements on the property. They made the required payments under the contract until August 1981 when they defaulted following an injury sustained by defendant Carl Walker. During the years while they occupied the premises as contract purchasers defendants paid to plaintiff $12,099.24, of which $7,114.75 was applied to principal. Thus, at the time of their default, defendants had paid almost one-half of the purchase price called for under the agreement. After the required 30-day period to cure the default ², plaintiffs commenced this action sounding in ejectment seeking a judgment "that they be adjudged the owner in fee" of the property and granting them possession thereof. The court granted summary judgment to plaintiffs.

If the only substantive law to be applied to this case was that of contracts, the result reached would be correct. However, under the facts presented herein the law with regard to the transfer of real property must also be considered. The reconciliation of what might appear to be conflicting concepts is not insurmountable.

While there are few New York cases which directly address the circumstances herein presented, certain general principles may be observed. "It is well settled that the owner of the real estate from the time of the execution of a valid contract for its sale is to be treated as the owner of the purchase money and the purchaser of the land is to be treated as the equitable owner thereof. The purchase money becomes personal property" (New York C. & H. R.R. Co. v. Cottle, 187 App.Div. 131, 144, 175 N.Y.S. 178 affd. 229 N.Y.

Page 897

514, 129 N.E. 896). Thus, notwithstanding the words of the contract and implications which may arise therefrom, the law of property declares that, upon the execution of a contract for sale of land, the vendee acquires equitable title (Elterman v. Hyman, 192 N.Y. 113, 119, 84 N.E. 937; Williams v. Haddock, 145 N.Y. 144, 39 N.E. 825; Occidental Realty Co. v. Palmer, 117 App.Div. 505, 506, 102 N.Y.S. 648, affd. 192 N.Y. 588, 85 N.E. 1113). The vendor holds the legal title in trust for the vendee and has an equitable lien for the payment of the purchase price (Trembath v. Berner, 240 N.Y. 618, 148 N.E. 729; New York C. & H. R.R. Co. v. Cottle, supra; Charles v. Scheibel, 128 Misc. 275, 218 N.Y.S. 545, affd. 221 App.Div. 816, 222 N.Y.S. 784; 4 Pomeroy, Equity Jurisprudence § 1261; 16 Carmody-Wait 2d, § 98:2, p. 503). The vendee in possession, for all practical purposes, is the owner of the property with all the rights of an owner subject only to the terms of the contract. The vendor may enforce his lien by foreclosure or an action at law for the purchase price of the property--the remedies are concurrent (Flickinger v. Glass, 222 N.Y. 404, 118 N.E. 792; Zeiser v. Cohn, 207 N.Y. 407, 101 N.E. 184; Charles v. Scheibel, supra). The conclusion to be reached, of course, is that upon the execution of a contract an interest in real property comes into existence by operation of law, superseding the...