Grant v. Beronio

California Supreme Court Mar 9, 1893 No. No. 19078Published

Before: Harrison

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Holding. A court of equity may decree specific performance of a land sale contract by directing that purchase money be applied to satisfy existing encumbrances on the property, and a vendor cannot unilaterally invoke a refund clause to avoid their obligation to convey.

Issues

Whether a court of equity may direct the application of purchase money to satisfy encumbrances on land subject to a specific performance decree.
Whether a contract clause providing for the return of money upon failure to convey grants the vendor an option to avoid specific performance.

Disposition. affirmed

Quotations verified verbatim against the opinion

“In an action for the specific performance of an agreement to convey land, a court of equity has power, by its decree, as against the parties who are before it, to enforce all the terms of the agreement.”

“The provision therein, that in case of failure to make the deed the money was to be returned, was for the benefit of the purchaser alone, and did not give to the vendor the option of conveying the lot or not, as he might choose.”

Synopsis

Vendor and Purchaser— Contract of Sale — Specific Performance — Power of Court to Discharge Encumbrances. —1£ a contract for the sale of land provides that the conveyance shall transfer the title free of encumbrances, the court, in an action for specific performance brought by the purchaser, can direct the application of the purchase-money to the satisfaction of those encumbrances, and for that purpose can cause the money to be brought into court, and disbursed under its direction. If the holders of the encumbrances are before the court, they will be bound by the direction of the court, and their claims will be satisfied by a satisfaction of the judgment; and even if they are not before the court, where the amount of the encumbrances is ascertained, and the court finds that the liens can be discharged by mere payment, it can direct that the payment he made directly to the holders of the encumbrances, instead of to the vendor, who cannot object, so long as he incurs no liability, and is freed from any personal claim for the amount of the encumbrances.

Id. — Option for Return of Purchase-money — Encumbered Title — Rights of Purchaser. —An agreement for the sale and conveyance of land by the owner thereof, which acknowledged receipt of part of the purchase-money, and by the terms of which the balance of the purchase-money was to be paid on the delivery of a deed, free from encumbrances, within sixty days thereafter, upon receipt of which payment the vendor was to execute a good and sufficient deed conveying the title thereto, and that in ease of failure to make the deed the money paid was to he returned, does not give the vendor the option of conveying the lot or not, as he might choose, but gives the purchaser the right to an enforcement of the vendor’s unconditional agreement to make a conveyance of the land, the provision for the return of the money in the case of failure to execute the deed being for the benefit of the purchaser alone; nor can the vendor object to the enforcement of the contract, that there were encumbrances upon the land or defects in the title.

Id. —Acknowledgment of Cash Received — Order for Less Sum — Application in Discharge of Encumbrances. —The acceptance, by the vendor, of an order payable at a future time, when the deed was to he delivered, in a less sum of money than that acknowledged in the agree- • ment as received, in lieu of the cash payment acknowledged, will be regarded as a contemporaneous agreement between the parties in modification of the price to he received for the conveyance, and is not inconsistent with or contradictory of the acknowledgment in the agreement; nor can the vendor object to the application of the money to be obtained upon such order in satisfaction of liens created by him upon the land, which was agreed to be conveyed free of encumbrance.

Harrison, J. Action for specific performance.

The plaintiff had judgment in the court below, and the defendant has appealed, upon the judgment roll alone, without any bill of exceptions. The court finds that the defendant made an agreement with the plaintiff for the sale and conveyance to him of a parcel of land, of which he was the owner, in the town of San Buenaventura, for the sum of five thousand five hundred dollars, of which he acknowledged in the agreement that he had received one thousand dollars, and the remaining four thousand five hundred dollars was to be paid on delivery of a deed, free of encumbrances, within sixty days thereafter; and the defendant agreed that upon receiving such payment he would execute to the plaintiff a good and sufficient deed conveying the .title to said premises. The agreement contained the clause: “ In case failure to make deed, money paid to be returned.”

On the same day with the execution of the agreement, the plaintiff gave to the defendant an order upon certain bankers in San Buenaventura for the sum of $725, to be paid when he should deliver the deed for said premises, which the court finds was accepted by him in lieu of the cash payment of a thousand dollars provided by the agreement, the difference between the two sums being for certain commissions for the sale of the premises agreed upon between the defendant and the broker who had effected the sale. At the date of the execution of the agreement, there were two mortgages upon the property that had been executed by the defendant, but the debts secured thereby were mature and payable. The court finds that the provision in the agreement giving sixty days to complete the transaction was to enable the defendant to procure a release of the premises from [498]these mortgage liens, and that although those liens exceeded in amount the purchase price of the property, yet there was more than enough to satisfy.the first mortgage, and that the holder of the second mortgage was willing to accept the sum that would remain out of the purchase-money after deducting certain items therefrom to which the plaintiff is entitled, and to release the property therefrom; and that prior to the expiration of the sixty days, and ever since, the defendant had been able, out of said purchase-money, to procure said releases, and convey the premises in accordance with the terms of the sale. On the day before the expiration of the sixty days, the plaintiff tendered to the defendant the said sum of four thousand five hundred dollars, together with a deed for the premises prepared for execution, and demanded of him that he accept the money and execute the deed, and upon the defendant’s refusing to comply with said demand, this action was brought. The court rendered judgment that plaintiff should pay the four thousand five hundred dollars to a commissioner appointed by it for that purpose, and that the defendant should deliver to the said commissioner his deed to the plaintiff conveying the premises, and that the said commissioner, out of the moneys received by him, should pay off the first mortgage lien thereon, and certain other charges in-favor of the plaintiff, and pay the ■remaining moneys to the holder of the second mortgage, and cause the said mortgage to be discharged of record.

Grant v. Beronio

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