Sawl v. Kwiatkowski

• Decision Date: 07 December 1965
• Citation: 212 N.E.2d 228,349 Mass. 712
• Parties: Harry SAWL v. Helen KWIATKOWSKI.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 228

212 N.E.2d 228

349 Mass. 712

Harry SAWL v. Helen KWIATKOWSKI.

Supreme Judicial Court of Massachusetts, Hampden.

Argued Nov. 1, 1965.

Decided Dec. 7, 1965.

Maurice J. Ferriter, Holyoke, for defendant.

Burton S. Resnic, Holyoke, for plaintiff.

Before SPALDING, CUTTER, KIRK, SPIEGEL and REARDON, JJ.

CUTTER, Justice.

Sawl seeks specific performance of an agreement for the sale for $100,000 by Mrs. Kwiatkowski (the vendor) of real estate (the locus) in Holyoke, worth $115,000. The vendor gained title to the locus, formerly held by her and her husband as tenants by the entirety, upon his death in 1953. Sawl paid a deposit of $5,000. A written agreement dated January 22, 1963, was prepared by a broker. Under this the vendor was to convey on February 28, 1963, 'a good and clear record and marketable title * * * free from encumbrances.' The agreement provided, 'If the seller shall be unable to give title or to make conveyance as above stipulated, any payments made under this agreement shall be refunded, and all other obligations of either party hereunto shall cease. The acceptance of a deed by the Buyer shall be deemed to be a full performance and discharge hereof.' This provision, for convenience, is referred to as the 'termination clause.' ¹ A master made findings on the basis of which the facts are stated.

The vendor on November 12, 1953, gave bond as administratrix of her late husband's estate. She did not include in the estate inventory the locus, subject at the time of death to a bank mortgage upon which between $30,000 and $55,000 was due. The Massachusetts Inheritance Tax Bureau was never notified of the husband's interest in the locus. The Commissioner of Corporations and Taxation had filed a statement (form L-10), that, from information then on file with him, there appeared to be no inheritance tax due. The master found (1) that 'there is at least a reasonable probability that' an inheritance tax was in fact 'due * * * on account of the * * * [vendor's] acquisition of title as a surviving tenant by the entirety'; (2) that 'the probability of * * * a lien [for the tax] existed on February 28, 1963,' and was 'sufficiently great to render the title non-marketable in the absence of * * * evidence that' the locus 'is free of such lien'; (3) that a 'discharge of the potential inheritance tax lien was not available to the * * * [vendor] on the date * * * [set] for performance of the contract'; and (4) that when the vendor executed the agreement, 'she had no knowledge that the * * * [locus] might be subject to a tax lien; or that she might be liable for a tax as a surviving joint owner.' Discharges of all other encumbrances were available to the vendor on the date set for performance. No steps had ever been taken by the vendor to report to the Inheritance Tax Bureau the fact of a potential tax, to determine its amount, or to obtain a discharge of the tax lien. The vendor's failure, at least prior to the contract, to notify the tax authorities 'was not deliberate on her part, but * * * resulted from * * * lack of knowledge.'

Sawl tendered payment of the full purchase price in cash. The vendor offered to return the deposit check. Each tender was refused.

The master's report was confirmed. A Superior Court judge ruled that the vendor had committed a breach of contract and that she 'was at fault in failing to file' the necessary tax returns and to take steps to discharge the tax lien. A final decree ordered conveyance ten days after delivery to the vendor of an inheritance tax receipt.

The 'termination clause' is almost precisely in the language of the similar provision discussed in Old Colony Trust Co. v. Chauncey, 214 Mass. 271, 272-274, 101 N.E. 423, where Chief Justice Rugg said (p. 273, 101 N.E. p. 424) that a contract containing such a provision 'is not an absolute and unqualified agreement by the one party to sell and by the other to buy real estate with a good and sufficient title. It contains the stipulation quoted which governs the rights of the respective parties in the event that the defendnts should be unable to give a good title. This clause means 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. The language is plain and unequivocal. It does not make the duties and responsibilities of either party in that event depend upon the option of the other, but by apt language puts an end to the binding force of the contract as respects either party. Such a contract is not unreasonable, and it establishes important rights and duties. A land owner might be willing to sell only upon the assumption that his title was good, and prefer to keep it if any cloud upon it was disclosed, rather than to be at the expense of removing it, while a prospective purchaser might desire to agree to buy upon precisely these terms. If it had been the intention of the parties to make the obligation to...