Taylor v. Interstate Inv. Co.

• Decision Date: 23 September 1913
• Citation: 75 Wash. 490,135 P. 240
• Parties: TAYLOR v. INTERSTATE INV. CO. et al.
• Court: Washington Supreme Court

135 P. 240

75 Wash. 490

TAYLOR v. INTERSTATE INV. CO. et al.

Supreme Court of Washington

September 23, 1913

Department 2. Appeal from Superior Court, Klickitat County; H. E McKenny, Judge.

Action by Sarah K. Taylor against the Interstate Investment Company and others. Judgment for defendants, and plaintiff appeals. Affirmed.

E. C. Ward and N. L. Ward, both of Goldendale, and Leroy Lomax, of Portland, Or., for appellant.

Bennett & Sinnott, of The Dalles, Or., for respondents.

ELLIS J.

This is an action in equity by the plaintiff against the defendants to quiet title to a tract of 1,308 acres of land in Klickitat county. The following facts appeared from the plaintiff's evidence: In 1890 the plaintiff and her then husband, O. D Taylor, since deceased, sold to the defendant Interstate Investment Company, a tract of 2,028 acres of land, including the land here in controversy. The price was $150,000, $50,000 of which was paid down and the other $100,000 was represented by two promissory notes of $50,000 each, drawing interest at the rate of 6 per cent. per annum one payable in July, 1895, and the other in July, 1900. The Taylors retained the legal title to the property, executing a bond for deed to the investment company, which provided for a conveyance of the land upon payment of the notes and for the delivery of immediate possession and full use of the property to the investment company, saving certain immaterial exceptions. Afterwards an arrangement was made between the investment company and the plaintiff's husband by which he was employed to sell town lots platted from the property for the defendant, retaining from the proceeds a certain agreed commission, the balance to be applied as partial payments on the notes given by the investment company for the unpaid part of the purchase price. Taylor was also employed to sell stock of the investment company on similar conditions. A part of the land was platted into lots and blocks, and between the date of the bond and the year 1893 the plaintiff's husband sold some of these lots and some stock of the company. Apparently he did not credit the amount received from those sales on the notes, claiming that there was little, if anything, to be credited. In 1891 the defendant Interstate Improvement Company was organized, and purchased all of the interest of the Interstate Investment Company in this land and in the bond for a deed therefor, thus succeeding to all of the rights of the investment company growing out of the bond and contract with Taylor. In 1893 the defendant Interstate Improvement Company commenced an action in the circuit court of Oregon for Multnomah county against the plaintiff's husband for an accounting as to the moneys received for stock and lot sales. That suit remained in the court until 1902, and it was finally adjudicated therein that the amounts received by the plaintiff's husband for such sales aggregated over $81,000, which sum it was decreed should be credited upon the notes given for the balance of the purchase price, and that the credit should be made, $40,000 as of June 1, 1892, and $41,000 as of June 1, 1893. From this final decree no appeal was prosecuted by either party. In the meantime the defendant companies apparently remained in the possession of the land through their agents until early in 1906, when both companies were dissolved by proclamation of the Governor of Oregon, in which state both companies were organized and had their situs. Since that time the defendant Rorick has been in possession, save as to certain lands sold under judicial sale for debts of the corporations. At the time of the execution of the bond for a deed there was a mortgage upon 720 acres of the land for $3,500, which was held by the Oregon Mortgage Company, bearing interest at 10 per cent., and in October, 1895, while the suit between the defendant and the plaintiff's husband for an accounting was pending and undetermined, the mortgage company brought suit in Klickitat county to foreclose the mortgage. Neither Taylor nor the improvement company made any defense, the mortgage was foreclosed, the land sold, no one redeemed, and the title to this 720 acres subsequently became vested in the defendant Rorick, who has since been in possession of it. In 1909 the plaintiff, having succeeded to the interest of her deceased husband, brought this action. The foregoing facts were sufficiently pleaded in the complaint, which is too voluminous to quote, and the prayer was for possession and for quieting title. There was also a prayer for general relief. When the plaintiff had rested her case the defendants moved for a dismissal, which was granted. From the judgment dismissing the action and awarding costs to the defendants, the plaintiff has appealed.

The appellant's theory of the action as shown by her complaint and argument is that the transaction evidenced by the bond for deed, the admitted first payment, and the two notes was an agreement to sell, but not a presently operative sale. On the other hand, the respondents claim that the transaction was a sale, and that the legal title was retained by the vendors merely as a security for the payment of the notes. The bond itself covenanted for an immediate and unqualified delivery of possession by the vendors to the vendee, authorized sales of the property, or any part of it, by the vendee, contained no provision for a forfeiture in case of nonpayment of the balance of the purchase price, and did not declare time of the essence of the contract. Clearly the transaction was a sale with a retention of title by the vendors as a security. The relation of the parties was in equity analogous to that of mortgagor and mortgagee. Though the legal title never passed, equity will regard the vendee as having acquired the property in the land, and the vendor as having acquired the property in the price.

'The vendee is looked upon and treated as the owner of the land; an equitable estate has vested in him commensurate with that provided for by the contract, whether in fee, for life, or for years; although the vendor remains owner of the legal estate, he holds it as a trustee for the vendee, to whom all the beneficial interest has passed, leaving a lien on the land, even if in possession of the vendee, as security for any unpaid portion of the purchase money. * * * The equitable interest of the vendor is correlative with that of the vendee; his beneficial interest in the land is gone, and only the naked legal title remains, which he holds in trust for the vendee, accompanied, however, by a lien upon the land as security when any of the purchase price remains unpaid. This lien, like every other equitable lien, is not an interest in the land, is neither a jus ad rem nor a jus in re, but merely an incumbrance. The vendor is regarded as owner of the purchase price, and the vendee, before actual payment, is simply a trustee of the purchase money for him. Equity carries out this doctrine to its consequences. * * *' Pomeroy's Equity Jurisprudence, vol. 1 (2d Ed.) § 368.

'The legal effect of a title bond, or agreement for a deed, is sometimes said to be like a deed by the vendor and a mortgage back by the vendee. There can be no sensible distinction between the case of a legal title conveyed to secure the payment of a debt and a legal title retained to secure payment. * * *' Jones on Liens, vol. 2 (2d Ed.) § 1108; Baker v. Sinclaire, 22 Wash. 462, 61 P. 170; Hester v. Hunnicutt, 104 Ala. 282, 16 So. 162; Bankhead v. Owen, 60 Ala. 457; Gilmore v. Gilmore, 60 Kan. 606, 57 P. 505; Manning v. North British & M. Ins. Co., 123 Mo.App. 456, 99 S.W. 1095; Graham v. McCampbell, Meigs (Tenn.) 52, 33 Am. Dec. 126; Bowen v. Lansing, 129 Mich. 117, 88 N.W. 384, 57 L. R. A. 643, 95 Am. St. Rep. 427; Holman v. Patterson's Heirs, 29 Ark. 357; Strickland v. Kirk, 51 Miss. 795.

Under the foregoing authorities it is plain that the vendee acquired the full equitable...