Fouts v. Foudray

• Decision Date: 09 January 1912
• Docket Number: Case Number: 853
• Citation: 31 Okla. 221,1912 OK 33,120 P. 960
• Parties: FOUTS v. FOUDRAY.
• Court: Oklahoma Supreme Court

1912 OK 33

120 P. 960

31 Okla. 221

FOUTS v. FOUDRAY.

Case Number: 853

Supreme Court of Oklahoma

Decided: January 9, 1912

Syllabus

¶0 1. ESCROWS--Passing of Equitable Title--Deed in Escrow. Equity treats things agreed to be done as actually performed, and where real estate is sold under a valid contract, and the deed executed and placed in escrow, to be delivered at a future date on payment of the purchase money, evidenced by promissory note due on said day, the equitable title passes at once to the vendee.

2. VENDOR AND PURCHASER--Destruction of Property--Liability of Vendee. Where buildings are destroyed by fire, without the fault of either party, between the date of the contract of sale and the execution of the deed, and before the delivery thereof, the loss must be borne by the vendee, who holds the equitable title, as the vendor only holds the naked legal title for the use of the vendee.

3. VENDOR AND PURCHASER -- Rights of Parties -- Deed in Escrow. Where a debtor executed a deed, absolute in terms, to his creditor as security for the payment of a debt, with a contemporaneous parol agreement to reconvey on payment thereof, in a suit by said creditor to recover of defendant the purchase money due upon an executory contract of sale of the property, wherein he bound himself to deliver to defendant, through an escrow, a deed therefor on payment of the purchase price, when due, held that, after default in said payment, on a tender of said deed, he was entitled to recover.

Error from District Court, Kay County; Wm. Bowles, Judge.

Action by Charles E. Foudray against Salem Fouts. Judgment for plaintiff, and defendant brings error. Affirmed.

J. F. King, for plaintiff in error.

John S. Burger, for defendant in error.

TURNER, C. J.

¶1 On May 8, 1907, Charles E. Foudray, defendant in error, sued Salem Fouts, plaintiff in error, in the district court of Kay county. His petition substantially states that prior to September 20, 1906, Hubert L. Bainum, being indebted to plaintiff, deeded to him as security for the debt lots 4 and 5 in block 1, in Virginia, Kay county, Okla., at which time it was agreed between them, in parol, that plaintiff would reconvey to him said lots on payment of said debt; that also on said date defendant, Fouts, being indebted to said Bainum, assumed the payment of said debt, and then and there executed to plaintiff his promissory note for $ 865.68, the amount of said indebtedness, due March 27, 1907, with interest, whereupon plaintiff and defendant entered into the following contract in writing:

"This agreement, made this 20th day of September, A. D. 1906, by and between Charles E. Foudray of Kay county, party of the first part, and Salem Fouts of Kay county, party of the second part, witnesseth: That the party of the first part, in consideration of one promissory note from the said party of the second part for eight hundred and sixty-five and 68-100 dollars ($ 865.68), bearing date September 20, 1906, payable March 25, 1907, and bearing interest at ten (10) per cent. per annum from maturity, has executed and placed in escrow with the State National Bank of Blackwell a deed to the following described real estate, situated in the county of Kay, territory of Oklahoma, to wit: Lots numbered four (4) and five (5) in block one (1) in the town of Virginia, according to the recorded plat thereof. Said deed to be surrendered to party of the second part when said party of the second part shall have fully paid the note hereinbefore described. Should said note not be paid, then deed shall remain with the State National Bank, subject to the order of party of the first part, and party of the second part forfeits all right to property herein mentioned. Party of the second part agrees to pay all taxes and keep one thousand and 00-100 dollars ($ 1,000.00) in insurance on said property, if possible, in some responsible company for the benefit of party of the first part. [Signed] Charles E. Foudray. Salem Fouts. Witnessed by Urban Tracey, E. P. Blake.

"I agree if Salem Fouts pays on note hereinbefore described, five hundred and 00-100 dollars, on or before date of due to grant him an extension of six months for payment of the balance. Charles E. Foudray."

¶2 That, pursuant thereto, plaintiff placed in said bank said warranty deed to said lots, conveying the same to defendant, together with said contract and note, with instructions to deliver said deed to defendant when said note was paid; that defendant neglected to insure said buildings as required in said contract; that the same was, on October 22, 1906, destroyed by fire, while in his possession, in consequence of which said mortgage security is worthless; that defendant also failed to pay said note, or any part thereof. He tendered into court said warranty deed, and prayed judgment against defendant for the amount of said note and interest, and, in effect, for specific performance of said contract. For answer, defendant admitted the allegations in the petition, alleged that said buildings were destroyed (without fault of either as agreed), by reason of all of which, he says, there was no consideration for said note. Upon this agreed state of facts, there was judgment for plaintiff, and defendant brings the case here. The question for us to determine is whether he was entitled to recover on the facts as stated, and the inferences fairly arising therefrom.

¶3 The three instruments aforesaid, being part of one and the same transaction, construed together, in effect were a valid executory contract of sale, whereby plaintiff on that day, not only sold, but executed, to defendant a warranty deed to the property, pursuant to said contract. Said deed, in that it read "do by these presents grant, bargain and sell," was a sale in praesenti, and was executory only in the sense that the delivery and receipt of the purchase money agreed to be paid therefor should take place in the future. When this is the case, while the naked legal title remains in the vendor, the equitable title to the property at once passes to the vendee, and with all its attendant benefits and burdens; or, as stated in the syllabus of Dunn v. Yakish, 10 Okla. 388, 61 P. 926:

"Equity treats things agreed to be done as actually performed and when real estate is sold under a valid contract, the purchase money to be paid in part, and the deed executed at a future day, the equitable title passes at once to the vendee. * * * *"

¶4 And in 1 Pom. Eq. Jur., sec 368.

"In some respects, and for some purposes, the contract is executory in equity, as well as at law; but, so far as the interest or estate in the land of the two parties is concerned, it is regarded as executed, and as operating to transfer the estate from the vendor, and to vest it in the vendee. By the terms of the contract, the land ought to be conveyed to the vendee and the purchase price ought to be transferred to the vendor; equity therefore regards these as done--the vendee as having acquired the property in the land, and the vendor as having acquired the property in the price. The vendee is looked upon and treated as the owner of the land; an equitable estate has vested in him commensurate with that provided for by the contract, whether in fee, for life, or for years. Although the vendor remains owner of the legal estate, he holds it as a trustee for the vendee, to whom all the beneficial interests have passed, having a lien on the land, even if in possession of the vendee, as security for any unpaid portion of the purchase money. * * * It follows, also, as a necessary consequence, that the vendee is entitled to any improvement, or increment, in the value of the land after the conclusion of the contract, and must himself bear any and all accidental injuries, losses, or wrongs done to the soil

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