Larson v. Metcalf

• Decision Date: 16 February 1926
• Docket Number: 37120
• Citation: 207 N.W. 382,201 Iowa 1208
• Parties: A. C. LARSON, Appellee, v. J. T. METCALF et al., Appellants
• Court: Iowa Supreme Court

207 N.W. 382

201 Iowa 1208

A. C. LARSON, Appellee, v. J. T. METCALF et al., Appellants

No. 37120

Supreme Court of Iowa, Des Moines

February 16, 1926

REHEARING DENIED MAY 14, 1926.

Appeal from O'Brien District Court.--WILLIAM HUTCHINSON, Judge.

SUIT to establish vendee's lien. Decree for plaintiff. Defendants appeal.

Affirmed.

Molyneux Maher & Meloy, for appellants.

T. E Diamond, for appellee.

MORLING, J. DE GRAFF, C. J., and EVANS and ALBERT, JJ., concur.

OPINION

MORLING, J.

On March 1, 1920, the defendant C. A. Watts sold to plaintiff, Larson, a tract of land by contract in substitution of one previously existing, the terms of which need not be considered, further than to say that $ 10,000 was paid by plaintiff on the two contracts, and performance was to be, but was not, made March 1, 1921. On March 1, 1920, plaintiff took possession by a tenant, who remained on the farm until after the deed to Metcalf later referred to. On June 27, 1921, Watts gave notice of intention to declare a forfeiture, and on August 6, 1921, declared the forfeiture, and served notice of it. About the time of the service of notice of intention, the plaintiff, Larson, commenced an action at law against Watts, to recover the $ 10,000, and also to recover for material and labor expended on the land, and for commission paid on a loan, and for interest and taxes, alleging plaintiff's readiness and Watts's refusal to perform, and rescission by plaintiff. The case was submitted to a jury upon the questions of plaintiff's readiness and Watts's refusal to carry out the contract, and the amount to be awarded to plaintiff, if anything. The jury returned a verdict for the plaintiff, though for an amount considerably less than his claim. On September 25, 1922, judgment was entered on the verdict.

The defendant J. T. Metcalf is a banker, and, pending the action at law (on August 10, 1921), Watts conveyed the land to Metcalf. On January 16, 1924, the petition in this suit was filed, to establish a vendee's lien for the amount of the judgment.

Defendants submit three propositions: First, that in this state a vendee is not entitled to a lien. Second, even though a vendee may have a lien, still the plaintiff had an election between recovering at law and relying upon his lien, and by suing and recovering at law, he made his election, and waived claim to lien. Third, Metcalf is a purchaser in good faith, and the lien cannot be enforced against him.

I. Our attention has not been called to any opinion by this court in which the vendee's lien, under that name, has been referred to. Nevertheless, the equitable estate of the vendee in the land contracted for,--his equitable ownership, the foundation principle of the English and American cases which gives rise to the vendor's lien, and, on refusal of the vendor to perform, raises a vendee's lien,--has been the law of this state since the decision of Pierson v. David, 1 Iowa 23, to be presently referred to. In In re Estate of Miller, 142 Iowa 563, 566, 119 N.W. 977, it is said:

"The interest acquired by the vendee is 'land,' and the right and interest conferred by the contract upon the vendor is 'personal property.' In case of the death of the vendee, his interest in the land would descend to his heirs. In case of the death of the vendor, his interest would pass as personal estate to his administrator. A judgment against the vendee would become a lien on the land, inferior, of course, to the rights of the vendor. A judgment against the vendor would not become a lien upon the land * * *"

In O'Brien v. Paulsen, 192 Iowa 1351, 1353, 186 N.W. 440, we accepted the English rule, as laid down in Paine v. Meller, 6 Ves. Jr. 349, by Lord Eldon, as follows:

"* * * for, if the party by the contract has become in equity the owner of the premises, they are his, to all intents and purposes. They are vendible as his, chargeable as his, capable of being incumbered as his; they may be devised as his; they may be assets; and they would descend to his heir."

In Cumming v. First Nat. Bank, 199 Iowa 667, 202 N.W. 556, after referring to the Miller case, we said:

"The title in equity passed to the vendee. It is not dependent upon a conveyance nor the payment of the purchase money; nor is possession or delivery of possession a necessary incident."

We take up first defendant's reasons for disputing the existence of a vendee's lien. He urges that a vendee's lien, where recognized, "exists as a corollary of the vendor's lien," and that, as the vendor's lien is now by statute denied after a conveyance by the vendee, the vendee's lien must likewise be held to end with a conveyance by the vendor. The vendee's equitable title to the land is not a corollary of the vendor's equitable title to the purchase money. The vendee's lien upon the land for a return of the money that he has invested in it when the vendor refuses to perform is not a corollary of the vendor's lien upon the land for the purchase money. These respective estates and liens are correlative. They correspond. They are derived from the same principle, but neither is a corollary of or derived from the other. The fundamental principle of Pierson v. David results, as we shall see, in the giving of both liens. The destruction of one by the statute does not result in the destruction of the other merely because they have the same parentage. They may be twins, but they are not Siamese twins. The statute does preserve the principle, for it permits foreclosure by the vendor, and declares that the vendee, for the purpose thereof, shall be treated as a mortgagor. Sections 12382, 12383, Code of 1924. The vendor can protect his lien without the grace of the vendee, for he can, as the statute provides (Section 10057, Code of 1924), reserve it in the conveyance which he alone executes. The vendee has not similar protection. He must depend upon his possession and his equitable estate. To deny the vendor a lien after conveyance does not put him at the mercy of the vendee. To require restoration by the vendee on rescission for the vendor's fault, and then to deny the vendee a lien, open the way for a vendor to fraudulently appropriate the money paid or improvements made by the vendee, by merely conveying his legal estate to a confederate, or a purchaser with notice. The statute (Section 10057) refers to vendors' liens only. It does not abolish the vendor's lien, but restricts it. It does not impose these restrictions upon a vendee's lien, and it would be legislating to declare that the statute which applies to vendors' liens applies conversely to vendees' liens.

The statute relating to the vendor's lien first appeared in the Code of 1873, Section 1940. In Pierson v. David, 1 Iowa 23, this court said:

"Under our law, where so much strictness is required with regard to placing on the appropriate records evidences of liens and incumbrances, it would seem that, in the absence of fraud, courts should be careful in the recognition of this lien. And yet, there is much of good conscience, equity, and natural justice in providing that the vendor shall not be regarded as having lost all dominion over his property until he is paid the agreed price. This lien or trust, though formerly objected to, as being in contravention of the policy of the statute of frauds, and for other reasons, is now firmly established. Its necessity is, indeed, too apparent, the beneficial consequences too clear, and its equitable existence too well sustained, to need now either authority or reason, to prove its origin or design. * * * This vendor's lien, it must be borne in mind, however, is an equitable mortgage, and does not contemplate any writing to evidence it. A trust estate is created by the contract, whereby the purchaser becomes the trustee, and the vendor the cestui que trust. The payment is a part of the contract, and upon this, and the ground of good conscience, this equitable trust rests. This equitable lien, it is admitted, follows the property sold into the hands of the heirs, and even future vendees with notice."

This doctrine, including in it the right to a lien on the property in the hands of subsequent purchasers with notice, was firmly established at the time of the adoption of the Code of 1873. The vendee was treated as the mortgagor, and his rights foreclosed in the same manner. Blair & Co. v. Marsh, 8 Iowa 144; Grapengether v. Fejervary, 9 Iowa 163; Johnson v. McGrew, 42 Iowa 555; Jordan v. Wimer, 45 Iowa 65; McDole v. Purdy, 23 Iowa 277. The right to the lien was held to be a part of the contract, which the legislature could not, by the Code of 1873, as to contracts then existing, impair. Jordan v. Wimer, 45 Iowa 65; Webster v. McCollough, 61 Iowa 496, 16 N.W. 578. See, also, Wightman v. Spofford, 56 Iowa 145, 8 N.W. 680. This lien was held to survive the filing and allowance of a claim against the vendee's estate. Hays v. Horine, 12 Iowa 61. Under the circumstances in Patterson v. Linder, 14 Iowa 414, it was held to survive a judgment against the vendee. It is the general rule that the vendor's lien is good as against a purchaser with either actual or constructive notice. 39 Cyc. 1822. The Code commissioners, in order to cut off a secret lien (a lien which, as has been noted, was not necessary for the protection of the vendor), recommended the passage of Section 1940. Annotations, Code of Iowa, Vol. I, page 821.

The vendor need not divest himself of the legal title except by his voluntary act, and then, by a conveyance, voluntarily place the vendee in the position of apparent ownership. The reason for the adoption of Section 1940 does not apply to a vendee. As the vendee makes his payments, the vendor becomes trustee for him of the legal estate, and the vendee becomes in...