King v. Knibb
| Decision Date | 09 July 1982 |
| Docket Number | No. 79-137-A,79-137-A |
| Parties | James S. KING, Jr., et al. v. Eila F. KNIBB individually and as executrix of the estate of Cyril W. Knibb. ppeal. |
| Court | Rhode Island Supreme Court |
This is a civil action for specific performance of a contract for the purchase and sale of real estate located in Burrillville, Rhode Island. The plaintiffs, Mr. and Mrs. James S. King (the Kings) appeal from a Superior Court judgment denying their requests for specific performance or, in the alternative, damages for breach of contract following a jury-waived trial. Judgment was entered on February 5, 1979, and the appeal was filed on February 19, 1979. On February 11, 1981, this court remanded the case to the Superior Court for a further finding of fact based on the evidence in the record regarding whether the vendors made a good-faith effort to remove an impediment to conveying marketable title. The finding made was that the vendors had made a good-faith effort, and the case was returned to this court on September 28, 1981. We affirm the judgment entered below.
On February 12, 1971, the Kings entered into a purchase-and-sale agreement with defendants Cyril W. and Eila F. Knibb (the Knibbs). 1 The Knibbs agreed to convey their 120-acre farm plus several buildings thereon to the Kings for the sum of $37,000. The terms of the agreement required the Kings to pay a deposit of $2,000, which they in fact paid to the Knibbs' broker, Long Realty and Insurance Co. 2 The Kings were to pay the balance of the purchase price upon delivery of the deed on the closing date, April 1, 1971. The contract also provided in relevant part:
At the time the parties entered into the purchase-and-sale agreement, there existed a duly authorized attachment upon the property. The attachment was placed thereon in 1965 when the Security Insurance Co. of New Haven sued Cyril Knibb in the Federal District Court for Rhode Island. The writ of attachment was properly filed in the registry of deeds for the town of Burrillville. In December 1968, a judgment was entered in favor of Security Insurance Co. in the amount of $125,000. 3 The property was also encumbered by a mortgage of $18,000 held by the Federal Land Bank of Springfield, Springfield, Massachusetts. The record indicates that the mortgage was given prior to the time the parties entered into their contract.
On May 1, 1971, the parties agreed to extend the time for performance of the contract until July 1, 1971, because the Kings learned from the Knibbs' broker that "there was an attachment on the property that they would have to clear." Eila F. Knibb testified at the trial that her husband unsuccessfully attempted to remove the "attachments and executions" from the property.
The trial justice denied the Kings' request for both specific performance and money damages, stating that "an attachment and subsequent execution certainly renders a title unmarketable." Since the Knibbs could not convey marketable title to the property, the parties were discharged from their obligations under the terms of the agreement. On remand he specifically found that the Knibbs had made a good-faith effort to remove the encumbrance.
As a general rule, a party seeking specific performance of a real estate contract must show, inter alia, that the seller's title to the property was marketable at the time set for closing. 6A Powell on Real Property, p 925 at 84-10 (Rev.ed.1981). A marketable title is generally considered to be a title that a prudent person with full knowledge of all the facts and legal consequences would be willing to accept. 6A Powell, supra, p 925[b] at 84-25-26 n.80; 8A Thompson on Real Property, § 4482 at 487 (Repl.ed.1963). A lien on property can render title unmarketable and preclude the granting of specific performance of a contract for its sale. See Devlin v. Wackerling, 169 A. 275 (R.I.1933) (per curiam). An attachment upon a parcel of real estate constitutes a lien or encumbrance upon the property and such an attachment places a cloud on title. See Smart v. Burgess, 35 R.I. 149, 85 A. 742 (1913); see also 8A Thompson, supra, § 4484 at 505.
The testimony revealed that an attachment upon the Knibbs' property existed on the date the purchase-and-sale agreement was executed. The parties agreed to extend the time for performance to allow the Knibbs to clear the title. Eila Knibb testified that her husband made several unsuccessful attempts to dissolve the attachment. In the absence of contrary evidence, the Kings have failed to establish that the Knibbs had good title to convey on the date set for performance.
The termination clause in the contract specifically provides that in the event the Knibbs could not convey a title free from all encumbrances, then the obligations of the parties under the contract were to cease and the status quo ante was to be restored. Several courts, particularly the Supreme Judicial Court of Massachusetts, have upheld such termination clauses when (1) the seller has not placed or caused to be placed a lien or attachment upon the property after the purchase-and-sale agreement has been executed, (2) the seller has not acted in bad faith, and (3) he has not waived the protection of the clause. Berry v. Nardozzi, 362 Mass. 145, 284 N.E.2d 250 (1972); Sawl v. Kwiatkowski, 349 Mass. 712, 212 N.E.2d 228 (1965); Lucier v. Williams, 323 Mass. 458, 82 N.E.2d 808 (1948); Old Colony Trust Co. v. Chauncey, 214 Mass. 271, 101 N.E. 423 (1913); see also Lanna v. Greene, 175 Conn. 453, 399 A.2d 837 (1978); Robison v. Compton, 97 Idaho 615, 549 P.2d 274 (1976); DePropris v. Smith, 342 Mich. 457, 70 N.W.2d 712 (1955); Jenson v. Richens, 74 Wash.2d 41, 442 P.2d 636 (1968).
The present purchase-and-sale agreement conditions conveyance upon the Knibbs' possession of clear title. As the Massachusetts Supreme Judicial Court has said repeatedly since Old Colony Trust Co. v. Chauncey, 214 Mass. at 273-74, 101 N.E. at 424, defendants did not agree to extinguish or purchase the interest of others in the property, but only to convey the property by their deed, provided that they had good title to convey. The tenor of the agreement does not require affirmative action on the part of the Knibbs to...
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