Semmler v. Beulah Coal Mining Company, a Corp.
| Decision Date | 12 May 1922 |
| Court | North Dakota Supreme Court |
Action in District Court, Mercer County, Pugh, J.
Defendants have appealed from a judgment in favor of the plaintiffs.
Judgment reversed.
Judgment reversed, and judgment entered dismissing the action, with costs.
Newton Dullam & Young, for appellants.
A contract of this character may be assigned by either party thereto in the absence of a covenant or stipulation to the contrary. 4 Cyc. p. 20; 39 Cyc. p. 1663; 27 R. C. L. p. 560.
The vendor conveyed his interest in the land and assigned the contract of sale by transferring the legal title to H. H Kenyon under the quit-claim deed in evidence. 39 Cyc. 663; 27 R. C. L. 560; Robertson v. Read, 52 Ark. 381; 14 S.W. 387; 20 A. S. R. 188.
The general principle in equity is that from the time the contract for the sale of land is entered into the vendor as to the land is a trustee for the purchaser and the vendee as to the purchase money is a trustee for the vendor, and every subsequent purchaser from either, with notice, is subject to the same equities as would be the party from whom he purchased. 1 Story Eq. Juris. §§ 396, 784, 789; Champion v. Brown, 6 Johnson Chancery 398; 10 A.D 343; Wilkins v. Summerville, 66 A. 893, Vermont, 11 L.R.A. (N.S.) 1183; Veith v. McMurtry, Neb., 42 N.W. 6.
The plaintiffs cannot inquire into the sale and transfer of the land, and the assignment of the contract by the vendor. 39 Cyc. 1665; Watson v. Willard, 9 Pa.St. 89.
The purchaser assigned the contract and all of his interest therein to the First State Bank of Beulah to secure the payment of a certain note for $ 1000.00 due July 1st, 1916. This assignment was permissible according to well established principles. 39 Cyc. 1673; Braten v. Jones, 5 Wis. 117; Niggeler v. Maurin, 34 Minn. 118, 24 N.W. 379; Barrows v. Hoveland, 40 Nev. 464, 58 N.W. 947.
And such an assignment may be made even to the vendor. 39 Cyc. 1670.
Sullivan, Hanley & Sullivan, for respondents.
"Under a contract to execute and deliver or cause to be executed and delivered, a deed to land with covenants of general warranty, the vendor himself must unite in the conveyance and covenants." Armstrong v. Palmer (Tex.) 218 S.W. 627; Wolfore v. Jackson, 96 S.E. 237 (Va.); McVey v. Payne, (Ky.) 39 S.W. 419; Miner v. Hilton 44 N.Y.S. 155, 15 A.D. 55.
The vendee in the contract was entitled to a deed conveying the personal covenant of warranty of the vendor, and the substitution of a third person without his consent essentially varies the terms of the contract. Paul v. Shaw (Kan.) 119 P. 546; Ann. Cases 1913B 956 and note; McVeety v. Harvey Mercantile Co., 24 (N.D.) 249; Ann. Cas. 1915B 1037; Busswell v. O. W. Kerr Co. (Minn.) 128 N.W. 459; 21 Ann. Cas. 837.
Statement.
This is an action to quiet title in certain coal lands. The salient facts are not seriously in dispute; largely, they are stipulated. They are as follows: Adjacent to the town site of Beulah, N.D., lie a fractional 80 acres of land, underlaid, for some 45 acres, with valuable lignite coal. On June 22, 1915, the owner thereof, one Juzeler, executed a contract for a deed therefor to Carl Semmler, the plaintiff. This contract expressed a consideration of $ 2,450, of which $ 105 was paid at the time of its execution. For the balance of the consideration, the contract provided annual payments thereafter covering a period of six years. The contract contained the usual provisions in case of default and prescribed that time was of the essence of the contract. Pursuant to this contract, Semmler entered into possession, sunk a shaft, installed certain mining machinery, and mining buildings. With this outfit he mined a quantity of coal on the premises. In accordance with his testimony the value of the improvements so placed by him upon the premises amounted to $ 8,600. On November 16, 1915, Semmler assigned his contract to the defendant First State Bank of Beulah. This assignment provided that it should be void if Semmler paid to the bank one note for $ 1,000 bearing even date therewith and due July 1, 1916. The money he received from the bank was invested in the mining property. Other moneys were advanced by the bank aggregating, in toto, $ 2,600, all of which were invested in mining improvements. Through such improvements, certain liens were created against the property. On June 16, 1916, Semmler quit-claimed his interest in the mining property to his wife.
On October 18, 1916, the First State Bank assigned its contract and its indebtedness against Semmler to one Mounts. The latter was then connected with a town-site company. He entered negotiations with the bank for the purpose of securing title to the property, understanding that the same was in the market and that the holder must relinquish his contract. He paid the bank $ 2,600 and interest; also, the liens against the premises. His total payments, so made, aggregated $ 4,600.
On February 7, 1917, Juzeler quitclaimed the land to one Kenyon, now deceased. Kenyon was then cashier of the First State Bank. No payments were ever made by Semmler upon the contract excepting the sum of $ 105. On February 14, 1917, Kenyon instituted statutory proceedings to cancel the contract for defaults of Semmler in failing to pay taxes and yearly payments stipulated in the contract. Pursuant to such proceedings, Kenyon declared the contract forfeited on March 19, 1917.
On August 3, 1917, Kenyon quitclaimed the land to the defendant coal company, which was then organized as a North Dakota corporation. Later, it reorganized as a Minnesota corporation with substantially the same stockholders, officers, and directors, taking over the property from its predecessor, the North Dakota corporation. Mounts, above mentioned, was and is the secretary of the coal company. He was reimbursed by the company for the payments made by him to the bank. Semmler ceased his mining operations on July 3, 1916, and since that time has not been in the actual occupancy of the land or the mine. The coal company, in August, 1917, commenced to improve the mining property. They have been in possession of the land ever since. Extensive improvements have been made aggregating about $ 200,000. This coal company has mined some 100,000 tons of coal upon this land. In March, 1917, Carl Semmler instituted an action against Kenyon to restrain the cancellation proceedings. Demurrer was interposed, to the complaint, by reason of failure to state a cause of action, and was sustained. Judgment, accordingly, was entered in June, 1917, dismissing such action. In July, 1920, this action was instituted by Carl Semmler and his wife to quiet the title in the land. Trial was had in April, 1921. The plaintiff then tendered the full amount due upon the contract. This tender was refused. Thereafter, in August and September, 1921, further evidence was taken. Plaintiff's testimony is to the effect that these lands were worth $ 27,000 when taken by the defendant. Testimony of the defendants on the contrary is to the effect that such lands, without the improvements, were not worth more than $ 30 per acre, and that plaintiff's improvements were not of any substantial value. The trial court made findings in favor of the plaintiff. These findings incorporated the undisputed facts above stated. The court finds specifically that plaintiff's improvements were worth $ 7,500; that the value of the use and occupation of the lands since August, 1917, is $ 10,000; that the value of the premises when taken by defendants was, and is now, $ 2,485. The trial court concludes that the contract was not legally canceled. This conclusion is based upon the ground, as it appears from his memorandum opinion, that plaintiff was entitled to a deed containing the personal covenant by the vendor, and that Kenyon, who obtained his land from Juzeler on the quitclaim deed, was not entitled to receive forfeiture of the contract because he could not make conveyance in accordance with the terms thereof. The trial court ordered the defendants to pay the plaintiff $ 5,400 net, for use and occupation, and $ 11,000 for value of the land and improvements, if defendant desired to retain plain title, with certain other alternative provisions. Judgment was accordingly entered on December 6, 1921. The defendants have appealed.
Decision.
Upon the record no questions of fraud are presented. No equitable considerations are presented to vacate or set aside the cancellation proceedings. As assignee of the vendee in the contract the plaintiff, the vendee's wife, asserts that the cancellation proceedings are invalid because the assignee of the vendor cannot convey title with personal covenant of warranty by the vendor, as required by the contract.
Upon the making of the contract for the sale of land, where the vendee takes possession, a relation more than personal is created between the parties. A privity of estate arises. In equity, an estate passes to the vendee. In equity, the estate is measurable as a fee subject to the vendor's lien. In equity, there exists an equitable conversion. Roby v Bismarck Nat. Bank, 4 N.D. 156, 160, 59 N.W. 719, 50 Am. St. Rep. 633; Clapp v. Tower, 11 N.D. 556, 93 N.W. 862; Nearing v. Coop, 6 N.D. 345, 349, 70 N.W. 1044; Woodward v. McCollum, 16 N.D. 42, 49, 111 N.W. 623; Earley v. France, 42 N.D. 52, 57, 172 N.W. 73; Shelly v. Mikkelson, 5 N.D. 22, 36, 63 N.W. 210. In law, the vendor retains the legal estate, but, in reality through the interposition of equity, this legal estate is retained for...
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