May v. Emerson

• Citation: 96 P. 454,52 Or. 262
• Parties: MAY v. EMERSON. [a1]
• Decision Date: 30 June 1908
• Court: Supreme Court of Oregon

96 P. 454

52 Or. 262

MAY v. EMERSON. ^[a1]

Supreme Court of Oregon

June 30, 1908

Appeal from Circuit Court, Baker County; William Smith, Judge.

Ejectment by W.J. May against Reuben Emerson. Judgment for plaintiff and defendant appeals. Reversed.

This is an action of ejectment, commenced on October 23, 1907, to recover the possession of lots 35 and 36, in block 11 Stewart's second addition to Baker City. The answer admits that defendant is in possession, and alleges that he is the owner of the lots in fee simple; and as a second defense alleges possession under a contract of purchase, as disclosed in the stipulation of facts, which includes the following: That on February 24, 1906, defendant purchased the lots from Dugan and wife, the price to be paid in monthly installments, continuing over a period of more than a year that a deed was executed by Dugan and wife, and deposited in escrow with M.S. Hughes, to whom payments were to be made and was to be delivered by Hughes when the payments were completed; that defendant was to have possession from the date of the purchase; that on April 12, 1906, after the purchase and before the delivery of the escrow deed, plaintiff, in an action of debt against Dugan and wife, attached the said lots, which action resulted in judgment against them on April 25, 1906; that an execution sale of said lots was had on June 12, 1906, and confirmation thereof was had on June 22, 1906, and a sheriff's deed issued to the plaintiff on June 27, 1907; that plaintiff, at the time of the attachment, had knowledge of the contract of sale and escrow deed, and on July 15, 1906, notified the defendant of said judgment and execution sale, and demanded that payment of the purchase price be made to him; that defendant paid all the installments of the said purchase price to Hughes, according to the agreement, and received the deed from him on or about September 14, 1907. From these facts the trial court found that plaintiff acquired the title to the property free from any equity of the defendant, and rendered judgment accordingly, and the defendant appeals.

F.M. Saxton, for appellant.

Lomax & Anderson, for respondent.

EAKIN J. (after stating the facts as above).

The first matter for consideration is the effect of plaintiff's judgment lien and execution sale upon defendant's prior possession, under his purchase and escrow deed from Dugan and wife, defendant contending that when the conditions under which the escrow deed was deposited with Hughes were fulfilled, the deed related back to, or took effect from, the date of such deposit, and thus cut off the lien of plaintiff's judgment. The sale by Dugan to the defendant, and the deposit of the deed with Hughes, created in the defendant an equitable interest in the property, such that, upon full payment of the purchase price according to the escrow agreement, the title would vest at once in the grantee, but pending the completion of the purchase by the full payment of the price, the legal title to the property remained in the vendor and was therefore subject to attachment, or the lien of a judgment against the vendor to the extent of his interest therein. Such lien, obtained with notice of the escrow agreement, is subject to the equity of the vendee. The delivery of the deed to the vendee being essential to pass the title, the escrow agreement only becomes effectual for that purpose upon the fulfillment of its conditions. The general rule is that the title passes to the vendee from the second delivery. Devlin, Deeds, § 328; Prutsman v. Baker, 30 Wis. 644, 11 Am.Rep. 592. There are exceptions to this rule, as stated in 4 Kent's Com. 454: "Generally an escrow takes effect from the second delivery, and is to be considered as the deed of the party from that time; but this general rule does not apply when justice requires a resort to fiction. The relation back to the first delivery, so as to give the deed effect from that time, is allowed, in cases of necessity, to avoid injury to the operation of the deed from events happening between the first and second delivery. *** But if the fiction be not required for any such purpose, it is not admitted, and the deed operates, according to the truth of the case, from the second delivery." Rathmell v. Shirey, 60 Ohio St. 187, 197, 53 N.E. 1098; Devlin, Deeds, § 328. In Prutsman v. Baker, supra, it is said: "This relation back to the first delivery is permitted, however, only in cases of necessity, and where no injustice will be done, to avoid injury to the operation of the deed from events happening between the first and second delivery; as if the grantor, being a feme sole, should marry, or, whether a feme sole or not, should die or be attainted, after the first and before the second delivery, and so become incapable of making a deed at the time of second delivery, the deed will be considered as taking effect from the first delivery, in order to accomplish the intent of the grantor, which would otherwise be defeated by the intervening incapacity. But subject only to this fiction of relation, in cases like those above supposed and others of the kind, and which is only allowed to prevail in furtherance of justice, and where no injury will arise to the rights of third parties, the instrument has no effect as a deed, and no title passes until the second delivery; and it has accordingly been held that, if in the meantime the estate should be levied upon by a creditor of the grantor, he would hold by virtue of such levy, in preference to the grantee in the deed." Wash. R.P. § 2181; Rathmell v. Shirey, 60 Ohio St. 187, 53 N.E. 1098; Jackson v. Rowland, 6 Wend. (N.Y.) 667, 22 Am.Dec. 557.

The second delivery cannot take effect by relation when the grantor is able to make, and the grantee able to receive such second delivery absolutely. Jackson v. Rowland, supra. It is held in Whitfield v. Harris, 48 Miss. 710, that this fiction of relation will apply to ward off the intervening liens of creditors; and Chinn v. Butts, 3 Dana (Ky.) 547, holds to the same effect. But the weight of authority is the other way. 11 Am. & Eng.Ency.Law, 348, says: "But it seems to be the prevailing rule that, in the interval of time between the first and second delivery, title remains in the grantor, subject to the claims of his creditors, and that this doctrine of relation cannot be applied for the purpose of defeating such intervening claims." This text is supported by the authorities above cited, and also by Wolcott v. Johns, 7 Colo.App. 360, 44 P. 675; Taft v. Taft, 59 Mich. 185, 26 N.W. 426, 60 Am.Rep. 291; Hoyt v. McLagan, 87 Iowa, 746, 55 N.W. 18. It is beyond controversy that the title remains in the vendor until the actual delivery of the deed. The vendor still has not only the legal title, but also an interest in the property as security for the payment of the purchase price; and this interest should be and is available to a creditor through the lien of his judgment, which lays hold of such legal title, and thereafter payments made to the vendor by the vendee are at his peril. Tomlinson v. Blackburn, 37 N.C. 509. If the purchase price is fully paid, although the deed is not actually delivered, the vendor having but the naked legal title, the judgment creditor can acquire no more. Stannis v. Nicholson, 2...