Oberholtz v. Oberholtz

It is asserted in the application of appellees John W. Smith and Relda A. Smith for a rehearing that "the holding of the court requires the decision of the further question * * * as to whether the deed to the grantees entitles the said grantees to the unpaid portion of the monies which arise as a result of the sale of a part of the premises described in the deed by the decedent, Charles Smith, from the purchasers, John Martin and Roxie Van Horn. It is the submission of these defendant appellees that the monies arising by reason of the sale of the premises described in the land contract is personal property and accordingly passes to the estate of the decedent and not to the grantees in the deed of said decedent * * *."

We recognize the rule of equitable conversion as applied to contracts for the sale of real property — viz., that under certain circumstances equity looks upon things agreed to be done as actually done, and that, when a contract is made for the sale of real property, the vendor, from the execution of such contract, holds the legal title to the lands as a trustee for the vendee, and the vendor's beneficial interest in the contract is treated for purposes of descent as personalty and as an asset of the vendor's estate to be administered by his executor or administrator.

However, when one contracts to convey land to another and retains the legal title, he likewise retains the right to convey his legal title to a third person, subject to the rights of the contract vendee. And if the third person grantee acquires his title with notice of the prior contract, or is not a bona fide purchaser for value, such grantee's rights are no greater than those of his grantor. Mutual Aid Bldg. Loan Co. v. Gashe,Assignee, 56 Ohio St. 273, 299, 46 N.E. 985; 40 Ohio Jurisprudence, 1033, Vendor and Purchaser, Section 127.

Now, in the case under consideration, it is observed that the grantees under the deed were the recipients of a lawful gift of property. Also, the possession of the premises by the vendees under the contract constituted notice to the world of the contract. It follows that their rights rose no higher than those of their grantor. This being so, how high do these rights rise? Do these grantees hold only a bare legal title and no beneficial interest in the contract, or did the deed to them convey a beneficial interest as well as the title?

If the grantor did not intend to convey the beneficial interest and did not intend that the deed should be an assignment from the date of his death of the payments thereafter to fall due, then the only interest the deed conveyed was the right to repossess the property in event the vendees breached their contract of purchase. We think it may be assumed that the grantor intended to convey some financial interest in the property to his two children by the execution and delivery of the general warranty deed, and that assumption is buttressed by the fact that, in the deed, he reserved no rights to himself. If such was not his intention, the execution and delivery of the deed would have been a "useless and vain thing." Dineris v. Phelan, 62 Utah 387,219 P. 1114; Southern Bldg. Loan Assn. v. Page, 46 W. Va. 302,33 S.E. 336.

"A conveyance of his interest by a vendor to a third person, or an assignment by the vendor of the executory contract, will as a general rule pass the right to receive the purchase money * * *." 55 American Jurisprudence, 829, Vendor and Purchaser, Section 409.

See, also, text and cited cases under the subtitle "Rights as between vendee and subsequent grantee or mortgagee as regards unpaid part of purchase price" at page 1519 of annotation in 87 A.L.R., 1505.

The application for a rehearing is denied.

Application denied.

STEVENS and HUNSICKER, JJ., concur.