Clinton v. Shugart

• Decision Date: 17 December 1904
• Parties: CLINTON v. SHUGART ET AL. SHUGART ET AL. v. CLINTON.
• Court: Iowa Supreme Court

126 Iowa 179

101 N.W. 785

CLINTON

v.SHUGART ET AL.

SHUGART ET AL.

v.CLINTON.

Supreme Court of Iowa.

Dec. 17, 1904.

Appeal from District Court, Pottawattamie County; N. W. Macy, Judge.

The appellant, who is a resident of Minnesota, being the owner of certain property in the city of Council Bluffs, Iowa, leased the same to the appellees under date of August 10, 1899, for a period expiring January 1, 1903, at a rental of $600 per annum. On July 3, 1901, the parties entered into a written agreement for the sale and purchase of the property for the sum of $500 in hand paid, and the further sum of $6,500, payable on or before January 2, 1903, without interest; appellees to continue to pay rent under the lease until the expiration of the term, unless the purchase price should be sooner paid. After making this contract, and before the time for the making of the conveyance had matured, general taxes for city, county, and state purposes were levied upon the property for the years 1901 and 1902, and remained delinquent and unpaid. On the day the contract matured the appellees made tender to the authorized agent of the appellant of the entire unpaid portion of the contract price, less the amount of the tax, and offered to pay the full $6,500 if appellant or her agent would remove the lien. Relying upon the theory that appellant was not bound to pay the taxes accruing after the date of the contract, the agent refused to accept the tender or to discharge the lien. On the same day the appellees filed in the office of the clerk of the district court their petition in equity against the appellant, asking a specific performance of the contract to convey. Thereafter service of the original notice of such action was served by publication. On January 29, 1903, the appellant, acting upon a forfeiture clause in the contract, served notice on the appellees that, unless payment of the agreed purchase price of the property was made within 30 days, the contract would be declared forfeited, and possession demanded. On March 10, 1903, and before publication of the original notice was completed in the action begun by the appellees, appellant began her action at law in the district court to recover possession of the property. On trial to the court in each case the issues were found with the appellees, and appellant was decreed to make the conveyance as prayed in the action for specific performance. Mrs. Clinton, defendant in the action in equity and plaintiff in the action at law, appeals. As both actions turn upon the same state of facts, they have been jointly submitted in this court, and will be disposed of in one opinion. Affirmed.E. E. Aylesworth, J. R. Reed, and Francis B. Hart, for appellant.

Harl & Tinley, for appellees.

WEAVER, J.

When the statement of facts is comprehended, it will be apparent that the principal question presented for decision is a narrow one--on which party did the duty rest to pay the taxes accruing upon the property after the making of the contract and before the conveyance was due? That part of the contract upon the construction of which this inquiry principally turns is in the following words; appellant being referred to therein as “party of the first part” and the appellees as “parties of the second part”:

“And the said second party, in consideration of the premises, hereby agrees and promises to pay to the said first party, the sum of SIX THOUSAND FIVE HUNDRED ($6,500.00) Dollars, according to the tenor and effect THIS CONTRACT, ON OR BEFORE THE 2ND DAY OF JANUARY, 1903, IT BEING UNDERSTOOD THAT THE PRESENT LEASE SHALL REMAIN IN FORCE UNTIL SAID 2ND DAY OF JANUARY, 1903, at THE OPTION OF PARTIES OF SECOND PART, WHO ARE TO CONTINUE PAYING THE RENT THEREUNDER UNTIL SAME TERMINATES OR PARTIES OF SECOND PART MAY ELECT AT ANY TIME HEREAFTER TO PAY SAID BALANCE OF $6,500.00 TO PARTIES OF FIRST PART, THEREBY TERMINATING SAID LEASE AND BECOMING ENTITLED TO DEED HEREUNDER.

Now, in case the said second party shall pay the said several sums of money punctually, in accordance with the tenor and effect of the CONTRACT, and shall strictly and literally perform all his agreements and stipulations herein contained in accordance with their true intent and meaning, then the first party, upon the surrender of this contract, will execute unto the said second party a WARRANTY deed, conveying to him the above described real estate in fee simple, with covenants that at the date of this agreement the title of the said first party was perfect in and to the same, and that he will forever WARRANT AND DEFEND the title against the lawful claims of all persons whomsoever, up to the date hereof, and with special covenants against his own acts up to the time of executing said deed, SUBJECT TO THE UNPAID INSTALLMENTS OF PAVING TAX MATURING AFTER THE DATE OF THE DEED HEREIN PROVIDED FOR. But in case the said second party shall fail to make the payments aforesaid, or any of them punctually, and upon the strict terms and the exact time herein limited, or shall fail to perform all and each of the agreements and stipulations herein contained, strictly or literally, without any default or neglect, the time for payment being expressly understood to be of the essence of this contract, then the said first party shall have the right to declare this agreement null and void, and all rights and interests hereby created or then existing in favor of said second party, or in any manner derived under this contract, shall utterly cease and determine, and the said real estate shall revert to and revest in the said first party, without any declaration of forfeiture, act of re-entry or any other act to be by said first party performed, as absolutely, fully and completely as if this agreement had never been made, and without any right of the said second party of reclamations or compensations, for money paid or improvements made.”

(This contract was written upon a printed form. In the portion above quoted the erased lines represent like erasures in the original, the unerased printed matter is here copied in ordinary type, while the written portion appears in capital letters.)

We have examined this agreement with much care in the light of the arguments of counsel and of the precedents cited, and conclude that the obligation to pay the taxes rested upon the appellant. The contract was not one by which the appellees obtained any present right to the use or possession of the property. They were in possession under a lease, and remained in possession until January 1, 1903, in their rights as tenants alone. In other words, the appellant was, in a legal sense, herself in possession by her tenants, and she was receiving the the agreed rental therefor. Until the time should arrive for a deed, the appellees, except as tenants, had no more right in or control over the premises than they would have obtained by a similar contract pending the term of a lease held by a stranger. We think it an established rule of law in this state that, as between the parties to an executory contract for the sale of land, where the seller retains the possession, rents, and profits until the conveyance is due, the duty rests upon him to pay the accruing taxes, in the absence of any agreement by which the purchaser assumes that obligation. This principle was expressly recognized in Miller v. Corey, 15 Iowa, 166;Hunt v. Rowland, 22 Iowa, 55;Lille v. Case, 54 Iowa, 182, 6 N. W. 254;Nungesser v. Hart (Iowa) 98 N. W. 505. The last-cited case seems to be directly in point. Hart had sold plaintiff a tract of land by warranty deed, and the latter brought suit for a breach of the warranty because of a tax lien which had accrued after the contract of sale and before the conveyance. It appears that the contract, as in the present case, was purely executory, and possession was not to be given until after the deed was made. Reversing the ruling of the lower court sustaining a demurrer to the petition, we held the action could be maintained, and that the seller retaining the use and possession of the property was liable for all taxes accruing before the title passed. It is, we think, the universal rule that the holder of the legal title in the actual occupancy and possession is duly bound to pay the taxes accruing during such possession, and, in the absence of some agreement to the contrary, he cannot shift the burden to the shoulders of another. Warvelle, in his work on Vendors, § 179, says: “Primarily, the duty of paying the same [taxes]...