Mitchell v. White, 8 Div. 252.

• Decision Date: 16 July 1943
• Docket Number: 8 Div. 252.
• Citation: 244 Ala. 603,14 So.2d 687
• Parties: MITCHELL v. WHITE et al.
• Court: Alabama Supreme Court

14 So.2d 687

244 Ala. 603

MITCHELL v. WHITE et al.

8 Div. 252.

Supreme Court of Alabama

July 16, 1943

Norman W. Harris, of Decatur, for appellant.

Watts & White, of Huntsville, for appellees.

GARDNER, Chief Justice.

The bill is one seeking specific performance of a contract for the sale of real estate, and is filed by the vendee, Hugh T Mitchell, against the vendors, Addison White and his wife Carolyn White. The executory contract of sale was for the gross sum of $25,000, and was duly signed by the parties on April 21, 1943, having been prepared by the defendant Addison White, an attorney. Complainant, the vendee, assumed the payment of the ad valorem property tax for 1943 and an outstanding mortgage of $6,500, the remainder of the purchase money to be paid in cash. A deed with usual covenants of warranty, free and clear of incumbrances, was to be delivered to the vendee on or before May 31, 1943. The vendors agreed to deliver to the vendee, not later than April 30, 1943, an abstract of the title showing a good and marketable title and that the lands were free and clear of liens and incumbrances with the exception of the 1943 property tax and the mortgage, to which reference has been made.

Paragraph 8 of the contract reads as follows: "8. In the event that the abstract of title furnished by the vendors to comply with this agreement does not show a good and marketable title to said land, as herein provided, it is agreed that they will refund to the vendee the cash payment this day made, and this agreement shall thereupon immediately become null and void."

It appears from the bill that the abstract of title furnished to the vendee, or his attorney, did show a good and marketable title in the defendant Addison White, with the exception of the matter now to be mentioned.

It appeared from the abstract that this particular land was a part of a body of land of 1200 acres formerly owned by Lucy M. White, the mother of Addison White, who, in December 1935, then a widow and single, duly conveyed the 1200 acres to her five sons, one of whom was the defendant Addison White, reserving to herself, however, a life estate. The consideration was love and affection. In the fall of 1939 these five sons divided the 1200 acres among themselves by deeds duly executed, and in the division Addison White became the owner of the land involved in this suit. Counsel for the vendee, exercising due precaution, raised the inquiry as to whether or not there was due an estate tax, and if so, whether or not it had been paid. Of course, if due and unpaid, a lien existed in favor of the Federal Government therefor. 26 U.S.C.A. Int.Rev.Code, § 827. As to whether or not any tax was due was to be determined from the value of the gross estate of the decedent. 26 U.S.C.A. Int.Rev.Code, § 811. If there was due such an estate tax, the defendant Addison White, under Section 827(b), Title 26 U.S.C.A. Int.Rev.Code, would be personally liable therefor, with penalties attached for failure to so pay. Section 826(b) provides for reimbursement in such event.

Of course the abstract of title furnished the vendee made no disclosure as to the value of the gross estate of Lucy M. White. Defendant Addison White, upon the matter being called to his attention, appears to have entertained the view no such tax was due, admitting, of course, that no return had been made concerning it. The bill alleges that Lucy M. White left a gross estate of the value of $75,000, and that upon further investigation, the defendant White conceded that such an estate tax was due to be paid and that it constituted a lien upon the property. Thereupon he notified the vendee that on account of the defect in the title by reason of a lien of the Federal Government for the estate tax, the vendors would decline to convey the property, and tendered the $1,000 which had been paid pursuant to the contract. He invoked the provisions of Paragraph 8 of the contract as justifying this action, and the trial court evidently accepted this view in the decree rendered sustaining the demurrer to the bill. This is the sole question here presented for consideration.

The leading case upon which the defendants rely is that from the Massachusetts court of Old Colony Trust Co. v. Chauncey, 214 Mass. 271, 101 N.E. 423. Other authorities of like import upon which reliance is had to sustain the decree have been read and examined with care, among them, Weatherford v. James, 2 Ala. 170; Edwards Lumber Co. v. Smith, 191 N.C. 619, 132 S.E. 593; Safron v. McBurney & Son, 269 Pa. 392, 112 A. 677; Barker v. Critzer, 35 Kan. 459, 11 P. 382; Mackey v. Ames, 31 Minn. 103, 16 N.W. 541; Boehmer v. Willensiek, 107 Neb. 478, 186 N.W. 326; 10 L.R.A.,N.S., 121 (note to Eppstein v. Kuhn, 225 Ill. 115, 80 N.E. 80); 32 A.L.R. (note) 604; 98 A.L.R. (note) page 894.

But in the Old Colony Trust Company case, supra [214 Mass. 271, 101 N.E. 424], and others following in its wake, the court construed the contract as disclosing an intention on the part of all parties "that if it turns out that without fault on the part of the defendants subsequent to the execution of the contract they have a defective title, then, after refunding payments made, all obligations of both parties shall cease," and that the contract was therefore to be considered as at an end.

But in each of the cited cases it was subsequently discovered by the vendor there was an outstanding title or incumbrance which he would be required to remove in order to convey a good and marketable title. Illustrative is the Old Colony case, in which the one-sixth outstanding interest would have required the expenditure of some $50,000; and each of the cases are careful to use the expression "without fault on the part of the [vendor]." Illustrative of this distinguishing feature is the later case from the Massachusetts court of Margolis v. Tarutz, 265 Mass. 540, 164 N.E. 451, 453, where the Old Colony case was approvingly cited, but distinguished in the following statement found in the opinion: "But, if because of the fault of the party agreeing to sell a sale cannot be made in accordance with the agreement, the buyer may at his election accept the title which the seller has with a deduction in the purchase price to compensate for the deficiency, and in case of such fault the agreement for a refund of the deposit and a termination thereby of all obligations under the contract does not relieve the seller of his obligation to perform."

To like effect see, also, from the Massachusetts court, Moskow v. Burke, 255 Mass. 563, 152 N.E. 321.

Nor can reliance be had upon the case of Weatherford v. James, 2 Ala. 170, where the contract was not to convey the fee absolutely but rested expressly upon a contingency which had not happened. The right of the vendor in that case depended upon the passage of an act of Congress. This act was never passed, and the court, speaking of this feature of the case, observed: "The right of the complainant to call on Newman for the title, has never existed. The case then bears no resemblance to those in which the vendor has been required to execute the contract cy pres. In that class of cases the vendor is estopped from saying that he cannot make title to the whole, by his contract to that effect; and if the purchaser is willing to take such title as the vendor can make, there does not appear to be any valid objection to it."

Such was the controlling thought in Minge v. Green, 176 Ala. 343, 58 So. 381, 382. The contract in that case contained a clause very similar to that here involved. It was as follows: "Title to be good and merchantable or contract void and earnest money to be refunded. Sale to be complied with thirty (30) days from date."...