Koch v. Streuter

• Decision Date: 20 February 1908
• Citation: 83 N.E. 1072,232 Ill. 594
• Parties: KOCH v. STREUTER.
• Court: Illinois Supreme Court

232 Ill. 594

83 N.E. 1072

KOCH

v.STREUTER.

Supreme Court of Illinois.

Feb. 20, 1908.

Appeal from Circuit Court, Morgan County; O. P. Thompson, Judge.

Action by George Koch against Henry Streuter. From a judgment for defendant, plaintiff appeals. Affirmed.

Welty, Sterling & Whitmore, for appellant.

Worthington & Reeve, for respondent.

VICKERS, J.

This is a bill in equity filed by George Koch against Henry Streuter for the reformation and specific performance of a contract for the exchange of farms. Upon a hearing before the circuit court of Morgan county the bill was dismissed for want of equity. From this decree Koch appeals to this court. Streuter has assigned cross-errors upon the decree of the court dismissing his cross-bill, which he filed for the purpose of obtaining a rescission and cancellation of the alleged contract.

By the contract between the parties appellant agreed to convey to the appellee 341 acres of land located in La Salle county, on the Illinois river, and appellee agreed to convey to appellant a fruit farm consisting of 199 1/2 acres, located near West Salem, in Edwards county. Each of the parties agreed to furnish an abstract showing a good and merchantable title to his land. Appellant concends that this clause in the contract does not express the agreement as the same was made, his contention being that as to 2.87 acres he was not to furnish an abstract showing a merchantable title. Appellant's contention in this respect is the ground upon which he seeks the reformation of the contract. The relief sought is resisted by appellee on the ground that appellant did not furnish an abstract showing a good and merchantable title to the La Salle county land, and on the further ground that the contract is unfair, mequitable, and was procured through fraud and misrepresentation by appellant. Appellee's fruit farm in Edwards county is a very valuable property, worth about $25,000. The La. Salle county farm is shown by the weight of the evidence to be worth from $12 to $15 per acre. It is incumbered by a mortgage for $8,500. By the agreement appellee was to exchange the fruit farm in Edwards county for the La Salle county farm, assume the mortgage indebtedness, and pay the appellant $250.

Some of the objections to the abstract of title furnished by appellant will be first noticed. It is to be remembered, however, that appellant's title is not in issue in this case, and any conclusion we may reach upon the question whether the abstract furnished complies with the contract is not a determination of appellant's title to the land.

First. One objection pointed out to the abstract of title is that, in a deed from Thirza D. Rogers and others (and all heirs at law of Roswell Dow) to Theresa E. Dow, there is a condition which is not shown to have been complied with. The language of the deed is: ‘Upon condition that grantee assumes and pays all debts, claims, and obligations owing by said Roswell Dow, deceased, with necessary costs of administration of estate.’ Conditions are either precedent or subsequent. Conditions subsequent are provisioned in a deed giving the grantor, by express words or necessary implication, the right to re-enter and repossess the premises upon the violation of the condition. Such conditions operate on estates already vested, while conditions precedent intervene and prevent the vesting until the condition is complied with. It is often a matter of difficulty to determine whether a certain provision annexed to a grant of real property is such a condition as that a breach of it confers the right of entry on the grantor or his heirs, or whether such provision is a covenant, restriction, limitation, or trust imposed on the property, affecting the estate in a different way from that in which a true condition affects it. On page 121 of Preston's edition of Sheppard's Touchstone it is said: ‘Conditions annexed to estates are sometimes so placed and confounded amongst covenants, sometimes so ambiguously drawn, and at all times have in their drawing (when deeds, etc., are prepared by unskillful persons) so much affinity with limitations, that it is hard to discern and distinguish them.’ Time has not removed or much lessened these difficulties. Indeed, the change in the meaning of technical words wrought by modern construction, the more varied uses to which lands may be put, and the ever-increasing number of expressions employed to make contracts conform to the wants of our complex commercial situation, have tended rather to increase the difficulties during the 2 1/2 centuries that have elapsed since the clause quoted from the Touchstone was written. No particular form of words is absolutely essential to create a condition, but it is essential that the intention to create it shall be clearly shown by some words. If, from the language employed, it is doubtful whether the clause is a condition or a covenant it will be construed a covenant. The rule that where clauses are susceptible of different constructions that construction will be adopted which is most favorable to the grantee obtains here.

One of the most important considerations in determining whether a clause is a condition subsequent or something else is the presence or absence of a ‘re-entry clause’ by the grantor or his heirs, or of forfeiture of the estate for a breach of the condition. In Post v. Weil, 115 N. Y. 361, 22 N. E. 145, 5 L. R. A. 422, 12 Am. St. Rep. 809, Weil having agreed to purchase land refused to complete the purchase, for the reason that by a former deed, through which the present vendor derived title, the property was subject to the operation of a condition subsequent. The action was brought to compel the specific performance of the contract. The clause relied on in defense was as follows: ‘Provided, always, and these presents are upon this express condition that the said premises shall not, nor shall any part thereof, or any building or buildings thereon erected or to be erected, be hereafter used or occupied as a tavern or public house of any kind.’ The court, in deciding that this language was a covenant and not a condition subsequent, pointed out the absence of any clause in the deed giving the grantor or his heirs the right to re-enter for conditions broken, in the following language: ‘If we can construe this clause as an obligation to abstain from doing the thing described, which, by acceptance of the deed, became binding upon the grantee as an agreement, enforceable in behalf of any interest entitled to imvoke its protection, I think we are in conscience bound to give that construction, and thereby place ourselves in accord with that inclination of the law which regards with disfavor conditions involving forfeiture of estates. In this connection it may be noted that there is no clause in the deed giving the right to re-enter for conditions broken. * * * The presence of a re-entry clause might make certain that which in its absence is left open to construction.’ In Board of Education v. Trustees, 63 Ill. 204, this court said: ‘In the construction of deeds, courts will always incline to interpret the language as a covenant rather than a condition.’ In Star Brewery Co. v. Primas, 163 Ill. 652, on page 658, 45 N. E. 145, on page 147, this court said: ‘There is nothing in the language of the deed under consideration to indicate that it is a deed upon condition precedent or subsequent. The words ‘upon condition’ are not used. There is no provision for re-entry in case of a breach of the covenant. Such a provision usually indicates an intent to create a condition subsequent. Kew v. Trainor, 150 Ill. 150, 37 N. E. 223. Conditions, especially conditions subsequent, are not favored in law, because they tend to defeat estates, and courts are inclined to construe clauses in deeds as covenants rather than conditions'-citing Gallaher v. Herbert, 117 Ill. 160, 7 N. E. 511.

We are of the opinion that the clause in the deed under consideration is not a condition subsequent. This is the only objection pointed out or insisted upon by appellee to this particular deed. There is, however, an objection to this item in the abstract of title which we deem it our duty to point out. Appellee seeks to justify his refusal to perform this contract partly on the ground that appellant did not furnish an abstract of title showing a good merchantable title in him. He specifically objects to the clause already referred to in the deed to Theresa Dow. This objection raises the legal question whether the abstract, in this particular, shows a compliance with the contract. Having made the objection and called our attention to the clause in the deed which is relied on as showing a failure to comply with the contract, appellee should not be held to have waived the objection because he gave the wrong reason for it. We have already attempted to show that the clause objected to is not a condition subsequent. We think, however, that this clause creates an express trust in favor of the creditors of Roswell Dow, binding upon the grantee and all subsequent purchasers with notice. The authorities seem to be unanimous that where a conveyance is made of real estate upon condition that the grantee shall pay a specified sum of money to a third person, or pay the debts of the grantor or of some third person, the acceptance of the conveyance by the grantee with such clause in the deed creates a covenant on the part of the grantee to discharge the obligationimposed, and creates the relation of trustee and cestui que trust between the grantee and the persons for whose benefit the payment is to be made, without any act or assent on the part of the beneficiary. Underhill on Trusts and Trustees, p. 38, and cases there cited; Tiffany & Bullard on Law of Trusts and Trustees, pp. 94, 95. Mrs. Dow, in accepting this conveyance, received the title impressed with a trust. This trust being expressed in a deed found in the chain of title followed the land...