O'Brien v. Paulsen

• Decision Date: 07 February 1922
• Docket Number: 34072
• Citation: 186 N.W. 440,192 Iowa 1351
• Parties: D. P. O'BRIEN, Appellant, v. DORA PAULSEN, Appellee
• Court: Iowa Supreme Court

186 N.W. 440

192 Iowa 1351

D. P. O'BRIEN, Appellant, v. DORA PAULSEN, Appellee

No. 34072

Supreme Court of Iowa, Des Moines

February 7, 1922

Appeal from Crawford District Court.--E. G. ALBERT, Judge.

ACTION for damages for a loss by fire through lightning to buildings located on a farm which the defendant by written contract prior to the fire sold to the plaintiff and which farm was conveyed by deed to plaintiff subsequently to the fire. By agreement of parties the jury was waived and the cause tried to the court. Judgment was entered in favor of the defendant. Plaintiff appeals.

Affirmed.

Conner & Powers, for appellant.

Sims & Kuehnle, for appellee.

DE GRAFF, J. STEVENS, C. J., WEAVER and PRESTON, JJ., concur.

OPINION

DE GRAFF, J.

On the 29th day of August 1916 the defendant entered into a written contract with the plaintiff for the sale of a certain parcel of real estate "together with all the appurtenances thereto belonging" situated in Crawford County, Iowa. The contract recites:

"Witnesseth that the party of the first part has this day sold to the party of the second part, the following described property to wit: * * * For which party of the second part agrees to pay the sum of $ 29,887.50 payable as follows: Cash in hand, five hundred dollars, receipt whereof is hereby acknowledged. Balance as follows: $ 2,500 on March 1, 1917, and on said date second party to have a deed for the premises and give first party a mortgage now on the land for $ 9,000, the second mortgage to run six years and draw interest at the rate of 5 per cent."

After the execution of this contract and before the date fixed (March 1, 1917) for the delivery of possession and deed, the barns, cattle sheds, and corncribs were destroyed by lightning. The vendor-defendant was seized in fee-simple title of the real estate and at the defined time under the contract executed a deed and delivered possession of the premises to the vendee. The vendee accepted the deed and entered into possession but refused to surrender the written contract claiming that the vendor was liable to him in damages for the value of the property destroyed by fire.

This appeal presents but one question: Must the purchaser bear the loss and may he be required to complete the purchase and pay the agreed price in case of the accidental destruction of buildings under a contract of sale, when the contract is silent on the subject? Other questions subsidiary to this primary question suggest themselves under the facts of the instant case. Was there a completed contract of sale prior to the loss of the buildings? Who was the owner of the premises at the time of the loss? Was the contract mutually obligatory? Could either of the contracting parties upon the failure of the other enforce it by an action in specific performance?

If the vendee is the equitable owner of the estate from the date of the contract of sale then he must sustain the loss, if the value of the estate is diminished between the time of the agreement and the conveyance. This is the English rule. Paine v. Meller, 6 Ves. Jr. 349. In that case Lord Eldon said:

"For if the party by the contract has become in equity the owner of the premises, they are his to all intents and purposes. They are vendible as his, chargeable as his, capable of being incumbered as his; they may be devised as his; they may be assets; and they would descend to his heir."

This is the Iowa rule. In re Estate of Miller, 142 Iowa 563, 119 N.W. 977; Davidson v. Hawkeye Ins. Co., 71 Iowa 532, 32 N.W. 514. The numerical weight of authority supports this view, and it is affirmed that though the possession was not to be delivered to the purchaser until a future day, and prior to such time a loss occurs, it is the nature of the purchaser's equitable title that casts the burden of the loss on him, and not the fact of possession. Brewer v. Herbert, 30 Md. 301 (96 Am. Dec. 582); Williams v. Lilley, 67 Conn. 50 (37 L. R. A. 150, 34 A. 765); Taylor v. Porter, 1 Dana 421 (25 Am. Dec. 155); Cropper v. Brown, 76 N.J.Eq. 406 (139 Am. St. 770, 74 A. 987); Fouts v. Foudray, 31 Okla. 221 (38 L. R. A. [N. S.] 251, 120 P. 960); Peoples St. R. Co. v. Spencer, 156 Pa. 85 (36 Am. St. 22, 27 A. 113); McGinley v. Forrest, (Neb.) 186 N.W. 74.

A fortiori this is true where the purchaser takes possession prior to the loss. Sewell v. Underhill, 197 N.Y. 168 (134 Am. St. 863, 18 Ann. Cas. 795, 90 N.E. 430); Bautz v. Kuhworth, 1 Mont. 133 (25 Am. Rep. 737). There are cases to the contrary, but the courts adopting a different rule predicate the theory on the ground of a partial failure of consideration or do not recognize in its entirety the equitable doctrine heretofore stated. See Gould v. Murch, 70 Me. 288 (35 Am. Rep. 325); Phinizy v. Guernsey, 111 Ga. 346 (78 Am. St. 207, 36 S.E. 796); Huguenin v. Courtenay, 21 S.C. 403 (53 Am. Rep. 688); Wells v. Calnan, 107 Mass. 514 (9 Am. Rep. 65); Hawkes v. Kehoe, 193 Mass. 419 (10 L. R. A. [N. S.] 125, 79 N.E. 766).

The application of the majority rule requires that the contract of sale shall have no conditions or contingencies therein that would render it unenforceable. The essential feature of the equitable title is that either party may appeal to equity for confirmation and enforcement. There must result an equitable conversion of the land and purchase money. The rule does not contemplate a mere option which is still pending and undetermined. The vendee must be in a position under the contract that he secures the entire benefit of a rise in the value of the land and of all subsequent improvements thereon and if there should be a diminution in value the vendor has a lessened security. The instant contract recites that "the party of the first part has this day sold to the party of the second part" the real estate in question. These are words of present assurance and afford the presumption, although not conclusive, that...