Schenck v. Wicks

• Decision Date: 20 June 1901
• Citation: 65 P. 732,23 Utah 576
• Court: Utah Supreme Court
• Parties: JEREMIAH SCHENCK, Appellant, v. E. B. WICKS, Administrator, Respondent

65 P. 732

23 Utah 576

JEREMIAH SCHENCK, Appellant, v. E. B. WICKS, Administrator, Respondent

Supreme Court of Utah

June 20, 1901

Appeal from District Court, Salt Lake County.--Hon. Ogden Hiles Judge.

Suit to quiet title by Jeremiah Schenck against Edward B. Wicks administrator of the estate of George H. Shaw, deceased. From a decree in favor of defendant, plaintiff appeals.

The plaintiff, who is the appellant, alleges that he is now, and for a long time hitherto has been, the owner and in possession of the premises described in the complaint; that the defendant, as administrator of the estate of George H Shaw, deceased, now claims an estate or interest in said premises adverse to the plaintiff--and prays that the defendant may be required to set up the nature of his claim and that the title of the plaintiff may be quieted, and that the defendant be forever enjoined from asserting his claim to said premises. The defendant, in answer to the complaint, and by way of counterclaim and cause of action against the plaintiff, alleges that the said George H. Shaw, in his lifetime, and for more than four years prior to his death, in 1898, was, and defendant since his appointment as such administrator is, the owner, in possession and entitled to the possession, of an undivided one-half interest in said premises, and prays that the plaintiff take nothing by his complaint, and that it be adjudged that the defendant has an undivided one-half interest in said premises, and that the plaintiff be forever enjoined from asserting any claim thereto adverse to the defendant. The plaintiff, in his answer to defendant's counterclaim or cross complaint, denies the alleged claim of the defendant, and alleges that said counterclaim is barred by the provisions of section 3150, Compiled Laws 1888, which is the same as section 2883, Revised Statutes 1898. A decree in favor of the defendant was entered as prayed for in the answer. It appears from the evidence that on the fourth day of October, A. D. 1890, one Albert J. White, being then the owner in fee of all of lot 5, block 9, plat F, Salt Lake City survey (the same being the premises described in the complaint), contracted in writing with said George H. Shaw to convey to him, for the sum of two thousand dollars then paid by Shaw, and the further sum of three thousand dollars to be thereafter paid, an undivided one-half interest in fee in said land; that said agreement was duly recorded with the county recorder of Salt Lake county on the sixth day of October, 1890, and provided that Shaw should be given immediate possession by White on the execution and delivery of the deed provided for in the contract; that said three thousand dollars was evidenced by a note from Shaw to White, payable in three years, drawing interest at eight per cent per annum, and that by a subsequent agreement between Shaw and White, the note was, on or about the twenty-sixth day of April, 1894, surrendered by White to Shaw for cancellation; that on April 26, 1894, the said Albert J. White and his wife conveyed an undivided one-half interest in said premises to the said George H. Shaw, and in the deed by which the same was conveyed the consideration was stated as follows: "For the sum of one dollar, and in consideration of said Shaw having heretofore complied with all the conditions of a certain agreement, dated October 4, 1890, between the parties hereto." Said agreement contained a provision that, in case the said Shaw or his heirs or assigns failed to make the payment provided in said agreement within the time therein mentioned, the agreement should cease, and the money paid should be forfeited. On the fifth day of March, 1892, the said Albert J. White and wife executed and delivered to James H. Bacon, trustee, a trust deed which in terms conveyed said premises and the equity of redemption to the trustee to secure a debt evidenced by a promissory note of the grantors, of even date with said deed, for the sum of $ 3,000, which became due March 3, 1893, and in which it was stipulated that if it was not paid at maturity it should draw fifteen per cent interest from date. The trust deed contained a covenant of warranty, relinquished all homestead and dower rights, and authorized the trustee upon default to advertise and sell at public auction said premises, and convey the same to the purchaser. Upon default of payment by the said White and wife, the whole of said premises were sold and deeded by the trustee, in pursuance of the provisions of the trust deed, to Harvey M. Bacon, a brother of the trustee, on the eighth day of December, 1893, and were afterwards transferred by sundry mesne conveyances to Jeremiah Schenck, the plaintiff. The consideration paid by the said Harvey M. Bacon was $ 1,000.

AFFIRMED.

Messrs. Charles S. Zane and L. R. Rogers for appellant.

George L. Nye, Esq., for respondent.

BASKIN J., delivered the opinion of the court. Miner, C. J., and Bartch, J., concur.

OPINION

BASKIN, J.

The appellant contends that upon the failure of Shaw, the vendee, under said agreement of October 4, 1890, to pay the note given by him when it became due, on October 4, 1893, his said agreement with White terminated, and that the vendee forfeited all rights thereunder, as well as the $ 2,000 paid by him, and that by virtue of the sale and deed to the said Harvey M. Bacon, and the aforesaid mesne conveyance, Jeremiah Schenck, the appellant, became, and now is, vested with the absolute legal title to said premises. As James H. Bacon, trustee, the beneficiaries of the trust deed, and those who acquired title under it, had notice of the agreement of October 4, 1890, between White and Shaw, the trust deed was subject to Shaw's rights under said agreement; and the title acquired by Schenck, the appellant, under the trust deed is subordinate to any interest which Shaw acquired under said agreement. Under the executory agreement of October 4, 1890, Shaw, the vendee, acquired the equitable title to said premises, and the vendor acquired a lien on the equitable interest of the vendee for the payment of the note. Pom. Eq. Jur. 105-372, 1261-1263; Beach, Trusts, sec. 245, note 2. As, however, this lien arose, by operation of law, from the retention by the vendor of the legal title, it ceased to exist in his favor when he became divested of his legal title by the said sale and conveyance of said premises. The deed to Harvey M. Bacon, the purchaser at the sale made in pursuance of said deed of trust, passed to him the legal title to said premises; but, as the agreement between White and Shaw was duly recorded before the deed of trust was executed, the legal title so acquired by the said Harvey M. Bacon was subject to the equitable interest of the vendee under said agreement, unless the vendee's equity became extinguished upon default in the payment of Shaw's note, which occurred before said sale. Under the agreement, the payment of the balance of the consideration and the conveyance of a half interest in said premises were concurrent obligations. The vendee was entitled to a conveyance of a marketable title. The note became due on the fourth of October, 1893, but more than a year before that date the vendor, by making the deed of trust, had created a cloud upon the title agreed to be conveyed, and that cloud still existed at the maturity of the note. By reason of that cloud, the vendor was not at the maturity of the note able to convey a good and marketable title to the vendee, and afterwards, by permitting the whole of the property to be sold under the trust deed, allowed the legal title to pass to the said Harvey M. Bacon. The vendor's lien on the equitable interest of the vendee as security for the payment of the note depended solely upon the legal title retained by him; and when he became divested of that title his lien was extinguished and thereafter he could only enforce payment by a recovery on the note, and, as the note was never transferred by him, his lien did not pass by the deed of trust, or the sale and conveyance made in pursuance thereof. Haslam v. Haslam, 19 Utah 1, 56 P. 243. There was no privity under the trust deed between the trustee, or those who acquired the legal title under it, and the vendee. He was under no obligation to pay to either of them the balance of the consideration of said agreement. It is a universal rule that when by the acts of the trustee the legal title to property held in trust by him is transferred to a stranger, with notice of the trust, the latter is thereby substituted as trustee, and the interest of the cestui que trust in the trust property is not affected by the substitution.

A cloud on a title is something, such as a mortgage, deed, or judgment, etc., which shows prima facie some interest in a third party in...