Moulton v. Kolodzik
| Decision Date | 23 March 1906 |
| Docket Number | 14,633 - (93) |
| Citation | 107 N.W. 154,97 Minn. 423 |
| Parties | MARK M. MOULTON v. ELIZABETH KOLODZIK |
| Court | Minnesota Supreme Court |
Action in the district court for Swift county to recover from defendant $860 paid by plaintiff upon an executory contract for the sale of land, it being alleged that defendant had failed to tender a marketable title. The case was tried before Qvale, J., who directed a verdict in favor of plaintiff for the sum demanded. From a judgment entered pursuant to the verdict, defendant appealed. Affirmed.
Lis Pendens.
Notice of lis pendens, duly filed, affects subsequent purchasers and incumbrancers only, and does not operate retroactively. Rights acquired prior to such filing are paramount to the adverse claim of parties to the litigation. Such notice however, advises parties to an uncompleted transaction concerning the premises described in it of the pendency of the controversy.
Rights of Vendee.
The title vested in a vendee under an unrecorded contract for the sale of lands entitling him to possession who has paid only part of the purchase price before the filing of such notice is not injuriously affected by that notice. When, however, he comes to pay the balance of the purchase price, he has legal knowledge of the lis pendens and may protect himself against paying money to the wrong person by any means permitted by the original or any subsequent agreement between the parties, or provided by law, as by paying the money into court.
Remedies of Vendee.
Where, however, the vendor undertakes, by giving the statutory notice of foreclosure, to enforce the provisions of the contract making time of its essence, and the contract contemplates the examination of the title according to an abstract to be furnished by the vendor, it is optional with the vendee to thus protect himself or to rescind the contract and recover the part of the purchase price paid before the notice was filed, in case the vendor is not able to deliver a marketable title.
Marketable Title.
Where, as in this case, it appears from the admissions of the pleadings and the testimony introduced that the notice of lis pendens concerning the land involved in such executory contract had been filed, the action described in it had been commenced and was pending, and the complaint in that action attacked the validity of the vendor's title, that title is prima facie unmarketable.
Tender.
The vendor in such a case cannot defend an action brought to recover the part of purchase price paid on the ground of failure of the vendee to tender the balance of the purchase price when it appears that no objection was made to the medium of tender, in this case a cashier's check, and that the basis of the vendor's refusal to accept it and the matter of disagreement was the marketability of the title.
F. P. Olney, for appellant.
S. H. Hudson, for respondent.
Defendant and appellant, being the owner and in possession of certain lands, on June 12, 1902, entered into an executory contract for its sale to plaintiff and respondent, and agreed, on payment of the price, to convey the lands by warranty deed, "free and clear of all incumbrance." That contract entitled the vendee to the possession of the premises before the payment of the full purchase price, and made time of its essence. The sum of $80 was to be paid on or before the execution of the contract; $780, on June 22, 1902; and $4,140, on March 1, 1903. The first and second payments were made in conformity to the contract; but the plaintiff failed to pay the $4,140 due on March 1, 1903. After that date, defendant took steps to cancel the contract for default in making final payments, by causing a notice of cancellation to be given, requiring final payment to be made September 15, 1903. The abstract of title furnished by defendant showed a mortgage for $600 on the premises, and also a notice of lis pendens, filed January 2, 1903, in an action by Russell Sage, as trustee, the object of which was stated to be to have Russell Sage, as trustee, adjudged and determined to be the owner of said land. On September 10, 1903, plaintiff offered to pay the balance due, conditioned on a good title being given him. Defendant refused to convey, except subject to the mortgage and lis pendens.
Upon the trial, no point was made on the fact of the existence of the mortgage. The testimony shows that the plaintiff conceded that "they could arrange as to the mortgage if the other was fixed up." The only question is as to the effect of the lis pendens, filed after the execution and delivery of the land contract in question.
1. The common-law rule as to lis pendens was that all persons were bound to take notice, at their peril, of pending suits which affected the title to the property, and the purchasers pendente lite, either with or without notice, took no better title than their grantor should be adjudged to have. The purchaser was thus affected by lis pendens Bellamy v. Sabine, 1 De Gex & J. 566.
In this country, many authorities hold that the doctrine of lis pendens is not founded on any idea of constructive notice, but upon the public necessity of preserving property which is the subject of litigation to await the result of the pending suit. Greenwood v. Warren, 120 Ala. 71, 23 So. 686; Watson v. Wilson, 32 Ky. 407, 26 Am. Dec. 459; Walden v. Bodley, 50 U.S. 34, 49, 13 L.Ed. 36; Eyster v. Gaff, 91 U.S. 521, 23 L.Ed. 403; Murray v. Lylburn, 2 Johns. Ch. 441; Haughwout v. Murphy, 22 N.J.Eq. 544; Lamont v. Cheshire, 65 N.Y. 30, 37; but cf. Harrington v. Slade, 22 Barb. 161, 166. By the statutes of some states, the common-law rule is substantially reenacted without any express provisions for recording a notice of lis pendens. In such a state, the lis pendens is not the equivalent of registration within the meaning of the recording acts. Noyes v. Crawford, 118 Iowa 15, 20, 91 N.W. 799, 96 Am. St. Rep. 363. The hardship of the common-law rule, as in cases of certain equitable liens and secret trust agreements, has led to the adoption of statutes providing for registration of a notice of the lis pendens of such actions. Empire v. Engley, 18 Colo. 388, 391, 33 P. 153; West Missabe Land Co. v. Berg, 92 Minn. 2, 99 N.W. 209.
By the statute of this state, provision is made for filing a formal notice in a proper place and for filing new notices upon amended pleadings.
From the time of filing such notice, and from such time only, the pendency of the action shall be notice to purchasers and incumbrancers of the rights and equities of the party filing such notice, to the real property in such notice described. G.S. 1894, § 5866.
Under that statute, such notice must be given to affect subsequent purchasers or incumbrancers; "hence existing rights of the true owner of the property, or of any person having an interest therein, prior to the filing of such notice, cannot be affected thereby." Lovely, J., in West Missabe Land Co. v. Berg, supra. Such constructive notice by record does not affect rights which have accrued prior to the filing of the notice. If, therefore, before the notice is filed, a party to the proceeding have executed a deed to a third person, who has not recorded it, such third person is not hampered by the lis pendens. Bennett v. Hotchkiss, 20 Minn. 148 (165); Johnson v. Robinson, 20 Minn. 153 (170); Windom v. Schuppel, 39 Minn. 35, 38 N.W. 757; Shepherd v. Ware, 46 Minn. 174, 48 N.W. 773, 24 Am. St. Rep. 212; West Missabe Land Co. v. Berg, supra. This accords with the general rule. See cases collected, 21 Am. & Eng. Enc. (2d Ed.) 650.
One question in this case is, then, whether the person holding an executory contract for the sale of land which entitled him to the possession of that land is prejudicially...
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