May v. Emerson , 52 Or. 262 ( 1908 )

Mr. Justice Eakin

delivered the opinion of the court.

1. The first matter for consideration is the effect of plaintiff’s judgment lien and execution sale upon defendant’s prior possession, under his purchase and escrow deed from Dugan and wife, defendant contending that when the conditions under which the escrow deed was deposited with Hughes were fulfilled, the deed related back to, or took effect from, the date of such deposit, and thus cut off the lien of plaintiff’s judgment. The sale by Dugan to the defendant, and the deposit of the deed with Hughes, created in the defendant an equitable interest in the property, such that, upon full payment of the purchase price according to the escrow agreement, the title would vest at once in the grantee, but pending the completion of the purchase by the full payment of the price, the legal title to the property remained in the vendor and was therefore subject to attachment, or the lien of a judgment against the vendor to the extent of his interest therein. Such lien, obtained with notice of the escrow agreement, is subject to the equity of the vendee. The delivery of the deed to the vendee being essential to pass the title, the escrow agreement only becomes effectual for that purpose upon the fulfillment of its conditions. The general rule is that the title passes to the vendee from the second delivery. Devlin, Deeds, § 328; Prutsman v. Baker, 30 Wis. 644 (11 Am. Rep. 592). There are exceptions to this rule, as stated in 4 Kent’s Commentary 454. “Generally an escrow takes effect from the second delivery, and is to be considered as the deed of the party from that time; but this general rule does not apply when justice requires a resort to fiction. The relation back to the first delivery, so as to give the deed effect from that time, is allowed, in cases of necessity, to avoid injury to the operation of the deed from events happening between the first and second delivery. * * But if the fiction be not required for any such purpose, it is not admitted, and the deed operates, according to the truth of the case, from the second delivery.” Rathmell v. Shirey, 60 Ohio St. 187, 197 (53 N. E. 1098) ; Devlin, Deeds, § 328. In Prutsman v. Baker, 30 Wis. 644 (11 Am. Rep. 592), it is said: “This relation back to the first delivery is permitted, however, only in cases of necessity, and where no injustice will be done, to avoid injury to the operation of the deed from events happening between the first and second delivery; as if the grantor, being a femme sole, should marry, or whether a femme sole or not, should die or be attainted, after the first and before the second delivery, and so become incapable of making a deed at the time of second delivery, the deed will be considered as taking effect from the first delivery, in order to accomplish the intent of the grantor, which would otherwise be defeated by the intervening incapacity. But subject only to this fiction of relation,- in cases like those above supposed and others of the kind, and which is only allowed to prevail in furtherance of justice, and where no injury will arise to the rights of third parties, the instrument has no effect as a deed, and no title passes until the second delivery; and it has accordingly been held that, if in the meantime the estate should be levied upon by a creditor of the grantor, he would hold by virtue of such levy, in preference to the grantee in the deed:” Wash-burn, Real Prop. § 2181; Rathmell v. Shirey, 60 Ohio St. 187 (53 N. E. 1098) ; Jackson v. Rowland, 6 Wend. 667 (22 Am. Dec. 557).

2. The second delivery cannot take effect by • relation when the grantor is able to make, and the grantee able to receive, such second delivery absolutely. Jackson v. Rowland, 6 Wend. 667 (22 Am. Dec. 557). It is held in Whitfield V. Harris, 48 Miss. 710, that this fiction of relation will apply to ward off the intervening liens of creditors; and Chinn v. Butts, 3 Dana 547, holds to the same effect. But the weight of authority is the other way. 11 Am. & Eng. Enc. Law (2d ed.) 348, says: “But it seems to be the prevailing rule that, in the interval of time between the first and second delivery, title remains in the grantor, subject to the claims of his creditors, and that this doctrine of relation cannot be applied for the purpose of defeating such intervening claims.” This text is supported by the authorities above cited, and also by Wolcott v. Johns, 7 Colo. App. 360 (44 Pac. 675) ; Taft v. Taft, 59 Mich. 185 (26 N. W. 426: 60 Am. Rep. 291) ; Hoyt v. McLagan, 87 Iowa, 746 (55 N. W. 18).

3. It is beyond controversy that the title remains in the vendor until the actual delivery of the deed. The vendor still has not only the legal title, but also an interest in the property as security for the payment of the purchase price; and this interest should be and is available to a creditor through the lien of his judgment, which lays hold of such legal title, and thereafter payments made to the vendor by the vendee are at his peril: Tomlinson v. Blackburn, 37 N. C. 509. If the purchase price is fully paid, although the deed is not actually delivered, the vendor having but the naked legal title, the judgment creditor can acquire no more: Stannis v. Nicholson, 2 Or. 332; Riddle v. Miller, 19 Or. 468 (23 Pac. 807); Riddle’s Appeal, 104 Pa. 171 (7 Atl. 232) ; Uhl v. May, 5 Neb. 157; Elwell v. Hitchcock, 41 Kan. 130 (21 Pac. 109).

4. But to the extent of the unpaid purchase price the creditor’s lien will bind the property (Kinports v. Boynton, 120 Pa. 306: 14 Atl. 135: 6 Am. Rep. 706; Lefferson v. Dallas, 20 Ohio St. 68), and until the delivery of the escrow deed the rights and remedies of the creditors of the vendor are the same as in the case of an executory sale, evidenced by a bond for a deed. In both cases the vendee has but an equitable interest in the property, and the legal title remains in the vendor; and where the escrow agreement requires the vendee to make payments to the depositary, he being a mere” stakeholder, without any personal interest in the fund, the vendee is only bound to pay to him, while the grantor alone is the party in interest. But when a creditor of the grantor has laid hold of his interest in the property, and the grantee has notice of that fact, he is bound by the new; conditions. However, the docketing of the judgment is not constructive notice to him. He is not bound to search the records every time he makes a payment. He is entitled to the benefit of all payments made to the vendor until he has actual knowledge of the lien: Freeman, Judgments, § 364; 1 Black, Judgments, § 438; 17 Am. & Eng. Enc. Law (2d ed.) 780; Wehn v. Fall, 55 Neb. 547 (76 N. W. 13: 70 Am. St. Rep. 397); Tayloe v. Thompson, 5 Pet. 357 (8 L. Ed. 154) ; Moyer v. Hinman, 13 N. Y. 180; Hampson v. Edelen, 2 Har. & J. 64 (3 Am. Dec. 530) ; Parks v. Jackson, 11 Wend. 442 (25 Am. Dec. 656).

Defendant was not required to make the payments to plaintiff as they matured, until plaintiff acquired the vendor’s rights. The vendee cannot assume to determine for himself, and at his own risk, the controversy between plaintiff and his debtor; and defendant need not go into equity to settle their differences. He may stand upon his contract, and when plaintiff has acquired the vendor’s right to the money by perfecting title in himself the defendant will be justified in making payment to him. In McMullen v. Wenner, 16 Serg. & R. (Pa.) 19 (16 Am. Dec. 543), it is held that the sale on execution binds the legal estate, and the execution purchaser stands in the place of the original vendor, and is entitled to the unpaid purchase money, the payment of which he can enforce by ejectment; and this works no hardship on the vendee, as he can protect himself by withholding further payments, unless he is indemnified. And upon payment to the judgment creditor he is entitled to a conveyance of the legal title vested in the sheriff’s vendee. Moyer v. Hinman, 13 N. Y. 180; Id., 17 Barb. (N. Y.) 137. In the latter case it is held that the judgment against the vendor is a charge upon the land, and binds the legal title; but equity limits and restricts this lien to the amount of the unpaid purchase money due from the vendee, and the vendee may insist upon a conveyance of the premises upon payment of the purchase price.

In Stewart v. Coder, 11 Pa. 90, it is held that when the vendor retains the legal title for the security of unpaid purchase money, a judgment against him is a lien, not only on the naked title, but it also attaches on the money remaining unpaid, and the execution purchaser may enforce payment by an action in ejectment. A judgment creditor has a right to sell the vendor’s interest in the property, and in that mariner acquire his interest in the debt, as well as the property, as security for its payment. Olander v. Tighe, 43 Neb. 344 (61 N. W. 633) ; Doe v. Startzer, 62 Neb. 718 (87 N. W. 535). Whether the creditor has a remedy by attaching the debt, or whether in all cases that remedy would be adequate, need not be decided here; the remedy by judgment and execution sale of the vendor’s interest is a proper one. But the defendant has not forfeited his-rights by failing to redeem from -plaintiff’s execution sale. He is not a redemptioner until he has received the escrow deed, which he can secure only by paying the purchase price to the depositary, which would thus require a double payment; and, without the peril of litigation with the vendor, he could not pay plaintiff until the vendor’s interest is extinguished. The burden is upon plaintiff to put himself in a position to demand the money from the defendant. This makes it necesary for him to. acquire the vendor’s right and title. '

5. Defendant has pleaded possession under his contract of purchase, of which the plaintiff at all times had notice; and, until the defendant has forfeited his right to possession thereunder, he cannot be ousted. The stipulation in this case discloses that he paid the money to the depositary, but that is not an act of forfeiture, even though such payment may be a total loss to him. Tomlinson v. Blackburn, 37 N. C. 509.

6. But defendant cannot be ousted by plaintiff until the latter has placed him in default, by tendering him a deed and demanding the money. The execution of the deed by plaintiff and the payment of the purchase money by the defendant are concurrent acts. Guthrie v. Thompson, 1 Or. 353; Wolcott v. Madden, 10 Or. 370; Powell v. Dayton, etc., R. Co., 12 Or. 488 (8 Pac. 544.)

The defendant is not in default, and therefore cannot be ousted by ejectment; and the judgment is reversed.

Reversed.

[96 Pac. 1065.]