Brewer v. Herbert , 1869 Md. LEXIS 32 ( 1869 )

Mjllee, J.,

delivered the opinion of the Court.

After the execution of the written contract for the sale of the house and lot, and before the day fixed for delivery of possession and payment of the first instalment of purchase money, the house was accidentally destroyed by fire, without fault of either party or of the tenant then in possession of the same. The vender had a fee simple title to the property, and at the proper time, under the contract, offered to deliver possession of the premises in the condition in which they then were. This the vendee refused to receive because of the destruction of the house by fire, and the main question in the case is, can he on this ground successfully resist this application in equity by the vendor for a specific performance of the contract?

In contracts of this kind between private parties, the vendee is in equity the owner of the estate from the time of the contract of sale, and must sustain the loss if the estate be destroyed between the agreement and the conveyance, and will be enti-tied to any benefit which may accrue to it in the interim. This doctrine, notwithstanding the dictum in Stent vs. Bailey, 2 P. Wms., 290, to the contrary, was plainly announced and settled by the decision of Loud Eldon, in Paine vs. Meller, 6 Ves., 349, a case very similar in its circumstances to the present, where it was held that if there was no objection to the title of the vendor, or it had been accepted in fact by the vendee before the houses were burned, no solid objection to the bill for specific performance could be founded on the mere effect of the accident before conveyance: for if the party,” says the Lord Chancellor, “ by the contract has become in equity the owner of the premises, they are his to all intents and purposes. They are vendible as his, chargeable as his, capable of being encumbered as his; they may be devised as hi's; they may be assets; and they would descend to his heir.” This decision has always been regarded as fixing the true equitable rule in.such cases. It was recognized by Sir ThoMAS Plusier, in Harford vs. Purrier, 1 Madd. Ch., 287, and in Rawlins vs. Burgis, 2 Ves. & Bea., 387, and by Lord Chancelloe MANNERS, in Revell vs. Hussey, 2 Ball & Beatt., 287. From these and other authorities of equal weight announcing the maxim that equity regards as done that which was agreed to be done, is deduced as the established doctrine in equity, that from the time the owner of an estate enters into a binding agreement for its sale, he holds the same in trust for the purchaser, and the latter becomes a trustee of the purchase money for the vendor, and being thus in equity the owner, the vendee must bear any loss which may happen, and is entitled to any benefit which may accrue to the estate in the interim between the agreement and the conveyance. 1 Sug. on Vend., 228, 388 to 391; 2 Powell on Cont., 69; Bart on Vend. & Purchasers, 114 to 118; 2 Story’s Eq., seo. 1212. The contract here is not for a sale at a future day; it does not use in this respect prospective or contingent terms. Its language is, the vendor “ has this day sold to ” the vendee his house and lot, which clearly imports a binding contract then executed and consummated. By such terms the title in equity passes from the date of the contract, and if there were nothing else in it there would be no room for argument, for it would be impossible to withdraw the case from the operation of the rule above stated.

But it has been earnestly and strenuously urged by the appellant’s counsel, that as the contract contains an agreement by the vendor to deliver possession of the house and lot to the vendee, on the first of April, 1866, the destruction of the house by fire before that period, rendered j)erformancc by the vendor of this part of the contract impossible, and he cannot, therefore, either in law or equity, ask the vendee to perform’ his part of it; and this circumstance, it is insisted, distinguishes the ease from those cited, and prevents it from falling within the principle established by them. Let us test the soundness of this argument. The vendee knew before and at the time of the contract there was a tenant in possession, whose term would not expire until the first of April, and the first instalment of the purchase money is made payable on, and interest on the deferred payments runs from that day. The subject matter of sale is realty — a lot of ground with a house upon it, described as a house and lot. The agreement as to delivery is not like the usual covenant by a tenant in a lease, to deliver in as good condition and repair as when the contract was made. There is also no difficulty about delivery, except that the premises wore not, as to the buildings upon them, in the same condition as at the date of the contract. The question then resolves itself into this, does the fact of the insertion into a contract like the present for the sale of real estate, of an agreement to deliver possession at a future day, make any difference in the application of the rule ? It is true it does not appear in the cases cited there were in the contracts any stipulations as to delivery of possession at a future day, nor is this circumstance alluded to, but they explicitly say it is the passing of the title in equity which throws the risk of loss upon the veudee, and entitles him to accruing benefits. To this, as we have seen, a conveyance is not necessary, nor is payment of the purchase money or any part of it • for in Hampson vs. Edelen, 2 H. & J., 66, this Court has decided that “ a contract for land bona fide made for a valuable consideration, vests the equitable interest in the vendee from the time of the execution of the contract, although the money is not paid at that time.” See also Siter, James & Co’s Appeal, 26 Penn. State, Rep., 180. Neither can possession nor delivery of possession be necessary, for if the contract had been silent on this subject, the vendor would have had the right to retain possession at least until the first of April, when the first instalment of the purchase money was payable, and if the vendee had obtained possession before, he would have been restrained in equity from exercising any acts of ownership prejudicial to the inheritance; (Crockford vs. Alexander, 15 Ves., 138; Reed vs. Lukens, 44 Penn. Rep., 202,) and yet the equitable title would all the while have been in him, subject to his disposition by deed or will, and liable for his debts. If then in the absence of a stipulation to deliver at a future day, there is an implied right in the vendor to retain possession until that period, and this would make no difference as to the liability of the vendee for an intermediate loss, how can the insertion of such a stipulation have in equity any different effect? The whole foundation of this doctrine of equity is that the equitable title and interest passes by the contract of sale, and from the time of its execution, and it contemplates delivery of possession as well as payment of purchase money, and a conveyance atca future period. Hence, Sir Edward SugdeN and Sir Thomas Plumee both cite, as in exact accord with the decision of Lokd EldoN, the rule of the civil law, where the very case is put in the Institutes: “ Cum autem emptio et venditio contracta sit, peri-culum rei venditce statim ad emptorem pertinet, iametsi adhuc ea res empiori tradita non sit: Itaque, si oedes totee vel aliqua ex parte incendio consumptce fuerint — emptoris damnvm est, cui necesse est, licet rem non fuerit nactus, pretium solvere.” In sales of personal property, delivery of the goods sold is not necessary to pass the title as between the parties, where the statute of frauds has been gratified by giving something in earnest, or payment of the whole or part of the purchase money, or a sufficient note or memorandum in writing of the bargain; and in such case the property is at the buyer’s risk before delivery. Franklin & Armfield vs. Long, 7 G. & J., 418. And even where the seller remaining in actual possession agrees to deliver the property at a particular place, and it is destroyed by fire before such delivery, the loss will fall on the purchaser. Terry vs. Wheeler, 25 N. Y. Rep., 520. Where sales are made under authority of a Court, the contract is not regarded as consummated until it has received the Court’s sanction or ratification, and, therefore, any loss happening before confirmation falls upon the vendor. Ex parte Minor, 11 Wagner & Marshall vs. Cohen, 6 Gill,

102. But where a loss occurs after confirmation, by which the contract is consummated, it falls upon the vendee, even though no purchase money has been paid, and the vendor remains in possession. This was expressly decided in Robertson vs. Shelton, 12 Beav., 260, where Loud .LaNguale also said: “ In equity the estate belongs to the purchaser from the date of the order to confirm the report, and the right of possession belongs to the vendor till the purchase money, for which it is security, has been paid.” Again, if we look to the contract itselfj and gather therefrom the intent of the parties, it is clear from the language used, their intention was that the equitable title and interest should pass from the day of its execution. Upon this point its terms are too positive and explicit to admit of doubt. Delivery of possession and payment of purchase money were postponed to a future day for the convenience of each party respectively, and we cannot construe the agreement to deliver, into a condition that the contract shall be void if there is any change in the state or value of the property on the day of delivery, nor interpolate any such words into the instrument. We are, A therefore, constrained to hold the argument founded on this delivery clause, to be unavailing to the appellant.

But it is said specific execution of contracts is in all cases not a matter of absolute right, but of sound discretion in the Court, and as the vendor cannot now deliver the house which was the main inducement to the vendee to buy, and constituted the chief value of the property, it would be inequitable to enforce the contract as against him. If this objection were sound, this doctrine of losses and benefits could never have been established. But whilst it is conceded an application for specific performance, is always addressed to the sound discretion of the Court, yet where a contract respecting real estate is in writing, and is in its nature and circumstances unobjectionable, it is as much a matter of course for a Court of equity to decree a specific performance of it, as it is for a Court of law to give damages for a breach of jt. Smoot vs. Rea & Andrews, 19 Md., 405; 2 Story’s Eq., see. 751. “The fairness or hardship of a contract like all its other qualities, must be judged of at the time it was entered into, not by subsequent events.” If it was then certain, mutual, fair in all its parts, and for an adequate consideration, it is immaterial that by force of subsequent circumstances, it has become less beneficial to one party unless such change is in some way the fault of the party seeking its specific execution. Revell vs. Hussey, 2 Ball. & Beatt., 288; Lawder vs. Blachford, Beatty’s Rep., 526; Webb vs. Railway Co., 9 Hare, 129; Low vs. Treadwell, 3 Fairfield, 541; Fry on Specific Performance, 93, 98. Adherence to principle compels the Courts to overlook the hardship of particular cases. But the doctrine upon which this decision rests, is founded in strict justice and equity, for whilst the vendee may think it hard to be compelled to pay for that which he cannot have in the condition it was when he purchased, the vendor, with equal justice, might think it hard to lose his money after a bona fide sale of his property, because of an accident accruing to it without fault on his part. It is to be remembered too that whilst the rule burthens the vendee witli a loss, it also entitles bim to all benefits. Thus where a reversionary interest is agreed to be purchased and lives drop, or one agrees to purchase an estate in consideration of a life annuity to the vendor, and the cestui que vie dies, or where there is a sudden rise in the value of the land from its being required for a public purpose, before conveyance, in 'all such cases the vendee reaps the benefit. So in the case before us, if a valuable mine had been 'discovered on the premises the day after the contract, or by any unforseen or unexpected circumstances their value had been increased a hundred fold, the benefit would have resulted to the vendee, and the vendor could not have been released from his contract. We cannot therefore, sustain this objection to the bill.

It appears that at the date of the contract the vendor held a policy of insurance upon the house, which by accident he allowed to expire without renewal before the fire, and of this the vendee received from him no notice. A similar state of facts existed in Paine vs. Heller, and was held to constitute no objection to the vendor’s bill. It is admitted there was no understanding between the parties that the vendor should keep the policy alive. They did not contract on any such basis. After the contract the vendee had an insurable interest in the house and in the absence of all agreement on the sub-jeet, the presumption is, he intended to protect himself by insuring in his own name, or to take the risk of a failure to insure. The vendor was not bound to keep up the insurance or give notice to the vendee of its having expired. If the policy had existed at the time of the loss, the vendor could have recovered from the insurance company, but being trustee of the premises for the vendee, he would be bound in equity to account to the latter for the money so received, (Reed vs. Lukens, 44 Penn. Rep., 200;) but his failure to renew or to give notice cannot deprive him of his right to enforce the contract of sale.

It also appears there was at the date of the contract a judgment against the vendor for $>2,363.38, but he had at that time entered an appeal from tbe judgment to tbe Court of Appeals, and given an appeal bond with security amply sufficient for that purpose to pay tbe amount of tbe judgment with costs, in casé he should fail to prosecute bis appeal with effect. The authorities are clear ’that equity will not' compel a vendee to take an imperfect or defective title, yet cases of high authority are to be found in which a pecuniary charge against which adequate security has been given, has been held not to constitute a defect in title, and also where equity has enforced the agreement where a perfect title can be made at the time of the decree. But this' judgment thus appealed from, with appeal bond given, does not in the sense in which Courts of equity use the terms, make this such an imperfect, or defective, or encumbered title, as will prevent specific execution, and especially not where the decree itself, as that appealed from in fact does, can protect the vendee by providing that the judgment debt may be paid by him out of the purchase money due on the contract and in discharge thereof

(Decided 11th March, 1869.)

We have bestowed -upon the ca,se our best care and consideration. We find nothing in the authorities cited by the appellant’s counsel sufficient to overthrow the doctrine upon .which we have based our decision, and can discover no ground upon which in justice and equity, the appellee can be denied the relief he seeks. The decree must be affirmed.

Decree affirmed.