Bancroft v. Cosby

Foote, C. This is an action to enforce a vendor’s lien for the sum of fifty dollars and interest.

The vendor, after conveying the land to the vendee, and receiving the latter’s promissory note for the balance due, indorsed and delivered the note to a third person. The note, not having been paid, “ came back to the plaintiff’s possession as his own.” The question is whether a vendor’s lien exists.

In many of the states, and in California, it is held that the lien is a personal privilege of the vendor, and is not assignable. (Baum v. Grigsby, 21 Cal. 172; 81 Am. Dec. 153; Williams v. Young, 21 Cal. 227; Ross v. Heintzen, 36 Cal. 321.) In the latter case, the court speaks of the lien being “ extinguished ” by the transfer. But no such question was before the court; and in all probability it meant only to say that the lien was not assignable. The case is not inconsistent with the theory that upon a transfer of the debt the vendor’s right is suspended merely.

Lord Eldon said, in a leading case, that what is called the vendor’s lien “ goes upon this: that a person having got the estate of another, shall not, as between them, keep it and not pay the consideration.” (Mackreth v. Symmons, 15 Ves. [289]; see also 2 Story’s Eq. Jur., sec. 1219; Baum v. Grigsby, 21 Cal. 177; 81 Am. Dec. 153.) It is not a specific lien, but is a mere equity capable of acquiring the force and efficacy of a lien under certain circumstances. (Green v. Demoss, 10 Humph. 374; Williams v. Young, 21 Cal. 228.) The right is worked out upon the notion that to prevent so great a wrong to the vendor a court of equity will impress a trust upon the land. (Preston v. Ellington, 74 Ala. 138.) This trust [585]will not be extended beyond the purpose for which it was raised; viz., the protection of the vendor. But, on the other hand, it ought to be carried as far as is necessary for his protection. In other words, when the vendor, after having assigned a note for the purchase-money, has been forced to take it up, the lien ought to be revived. Every consideration of justice—every consideration which induced courts of equity to create the lien in the first instance—operates to its application to such a case. For if the note was transferred in satisfaction of a debt, the debt would revive upon the nonpayment, and the vendor would be in precisely the same situation that he was in before the transfer. And if he is compelled to pay the note to some subsequent holder, he has still stronger grounds for relief. Lord Eldon, in one case, enforced a lien where the vendor had transferred the note and taken it up again, saying: “That the note was discounted amounts to nothing; it was incidental to the nature of the security, and did not vary what it in substance was,—evidence of an intention to pay at four months. I do not believe that either of the parties had this refined equity in their contemplation; but I do not feel that I can refuse to give effect to it.” (Ex parte Loaring, 2 Rose’s Cases in Bankruptcy, 79; see also Cotter v. McGehee, 54 Miss. 510; and the dicta in Green v. Demoss, 10 Humph. 375; Lindsey v. Bates, 42 Miss. 400-401; White v. Williams, 1 Paige, 506.)