Douglass v. Ransom

• Decision Date: 22 June 1931
• Parties: DOUGLASS v. RANSOM.
• Court: Wisconsin Supreme Court

205 Wis. 439

237 N.W. 260

DOUGLASS

v.RANSOM.^a1

Supreme Court of Wisconsin.

June 22, 1931.

Appeal from a judgment of the Circuit Court for Milwaukee County; Walter Schinz, Circuit Judge.

Action by Lyle E. Douglass against Alice J. Ransom. From the judgment, defendant appeals.--[By Editorial Staff.]

Affirmed.

Action for specific performance of land contract commenced March 17, 1927; judgment for plaintiff entered October 4, 1930. Defendant appeals.

The parties on January 8, 1927, entered into a contract of sale by defendant to plaintiff of residence property in Waukesha. The contract provided for a $1,000 down payment and payment of the remainder of the purchase price “as soon as merchantable abstract and warranty deed” were furnished by the defendant. The plaintiff delivered defendant his check for the down payment, and the defendant delivered to plaintiff for examination an abstract of title of the premises brought down to January 12, 1927. This abstract did not show as paid the 1926 tax, then a lien on the premises, and did not show as closed the estate of defendant's husband through whom the defendant took title as surviving joint tenant, or show the situation of the said estate other than that there was no income tax payable and that determination of the inheritance tax, if any, was not yet made. The satisfactions of several old mortgages were defective and there were discrepancies in spelling or initials in the names of several parties to the title in instruments to and from them.

This was the situation on January 19th, when, after examination of the abstract by his attorney and getting his opinion to that effect, plaintiff informed defendant that the title was not merchantable and would not be accepted until a marketable title was established. The plaintiff suggested perfecting the title by suit to quiet title. The defendant suggested the filing of affidavits identifying parties to the title where necessary and the procuring of court orders satisfying mortgages the satisfaction of which was not perfect of record. The plaintiff also suggested deducting $150 from the purchase price to cover the expense of a quia timet action and the defendant offered a $75 allowance for that purpose. But no agreement was reached. On February 23d, the defendant returned to plaintiff his $1,000 check with a letter declaring the deal ended. The plaintiff did not return this check to the defendant or reply to her letter and does not know what became of the check. There is no proof that he kept the check good by maintaining a balance in bank to cover it, but he claims that he was as at all times willing and able to pay the check and the $6,600 deferred payment of the purchase price. On February 25th the plaintiff filed in the register of deeds office a lis pendens dated February 24th, stating that he had commenced an action to enforce specific performance of the contract. The summons in the action was served March 17th. The complaint was served August 17th and filed August 18th. The defendant demurred to the complaint, the circuit court overruled the demurrer, and on appeal this court affirmed the order on April 2, 1929. The defendant by her answer claimed that the title shown by the abstract furnished was merchantable and that she had duly tendered a warranty deed which plaintiff had wrongfully refused to accept, and further claimed that the contract was void for fraud perpetrated upon her by the plaintiff. The court found that the contract was free from fraud; that the title shown by the asstract was not merchantable; that the defendant had had the use of the premises pending the suit; that the rental value of the premises was $50 per month, which was (apparently) considered as netting the equivalent of the interest on the purchase price of the premises; that $150 was the reasonable expense of completing the abstract and perfecting the title. The judgment decreed specific performance and gave plaintiff the option of accepting the title as shown by the abstract tendered and deducting $150 from the “balance of the purchase price,” and provided that the defendant deliver a warranty deed within sixty days from date of the judgment and perfect the title within that time if plaintiff did not elect to accept the title as shown by the abstract furnished, and that on default of delivery of such deed the judgment stand as a conveyance of the title, and awarded costs to the plaintiff.

Austin J. Baird, of Waukesha, for appellant.

Jacobson & Malone, of Waukesha, for respondent.

FOWLER, J.

The appellant's claims may be summarized as that the court erred in finding that: (1) The abstract furnished does not show a merchantable title; (2) the contract is free from fraud; (3) the plaintiff has at all times been able and willing to perform his part of the contract; (4) the reasonable cost of perfecting the title and completing an abstract is $150; (5) in entering judgment as rendered; and (6) in not receiving testimony of witnesses that the title shown by the abstract is merchantable.

As to (2), (3), and (4), we will only say that it appears to us that these findings are amply supported by the evidence and that no good purpose would be served by discussion of them.

[1][2][3][4][5][6] (1) The failure to show freedom from tax liens was of itself sufficient to render the title not merchantable. 57 A. L. R. 1403, and cases cited. While it is doubtless true that the abstract would have been extended to show the payment of the 1926 tax had this been asked for and no other objection had been made to the abstract by the plaintiff, the fact remains that the abstract was not so extended. A receipt showing payment of the tax on January 25, 1927, was received in evidence, but the contract provided that a “merchantable abstract” should be furnished and this implies that an abstract should be furnished which showed a merchantable title. Russell v. Ives, 172 Wis. 123, 178 N. W. 300. The abstract should have further shown such condition of the probate proceedings of the husband's estate as to free the premises from possible lien of an inheritance tax and judgments on claims filed. 57 A. L. R. 1404, 1408, and cases cited. It is not the fact that the grantor has good title, but the appearance of that fact of record, that renders a title merchantable. Stack v. Hickey, 151 Wis. 347, 138 N. W. 1011. As the plaintiff was not bound to accept the title until an abstract was furnished showing that no liens existed and that none would arise in progress of the probate proceedings, and was not bound to pay or tender the portion of the purchase price not covered by the check until such an abstract was furnished, there was no breach of the contract by the plaintiff when the defendant declared that he had breached it and for that reason declared the deal ended. The retention of the returned check without reply to defendant's letter might perhaps be construed as acquiescence by plaintiff in the defendant's position that the deal was ended but for the filing of the lis pendens on the day following its receipt and the commencement of the action. This negatives such acquiescence and shows intent by plaintiff not to waive his rights under the contract. The defendant could not, by her declaration that the contract was ended and her return of the check when no right to take such action existed, impose a duty on the plaintiff to send back the check to her or make other repudiation of her attempt at termination of the contract than commencement of suit to enforce it.

It is contended by appellant that the plaintiff can only assert such defects of title as were covered by his objections first made to the defendant as ground for holding the title not marketable. But the condition of the estate as shown by the abstract was included in the objections presented. And we do not see that any element of estoppel exists to prevent plaintiff from now asserting any valid objection that may exist. Had the defendant, relying on the assumption that no further objections to the title were made by the plaintiff, taken action to remove the defects to which objection was made and tendered an abstract showing their removal and brought action for performance by the plaintiff, she would then be in position to invoke an estoppel or claim a waiver of other defects. Chandler v. Gault, 181 Wis. 5, 10, 194 N. W. 33.

(5) The court concluded in effect that a judgment in a quia timet action to remove clouds from the title was necessary to render the title merchantable and gave the plaintiff the option to abate $150 from the purchase price to cover the cost of prosecuting such an action and accept the title shown by the abstract or require the defendant to prosecute such an action to judgment. The defects mentioned in (1), while sufficient to render the title unmerchantable, would not require prosecution of such an action to remove them, as their removal would be accomplished merely by bringing the abstract down to date. We must therefore determine whether the other defects claimed render the title unmarketable.

[7][8][9][10][11] What constitutes a marketable or merchantable (the terms are synonymous) title to real estate has been considered by this court in several cases. The general rule applicable is not difficult of statement, but it is often not easy to determine whether a particular defect falls within the rule. In the opinion of Mr. Justice Pinney in Harrass v. Edwards, 94 Wis. 459, 464, 69 N. W. 69, it is stated that although a title is good, if there is reasonable doubt as to its validity it is not marketable. A material defect is such as will cause a reasonable doubt and just apprehension in the mind of a reasonably prudent and intelligent person, acting upon competent legal advice, and prompt him to refuse to accept it. If such doubt exists as to make the title subject to probable attack by legal proceedings, or depends upon facts which can only be established by parol evidence if...