Houghton v. Allen

California Supreme Court Aug 5, 1887 No. No. 12,047Published

Before: Paterson

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Holding. A vendee's interest in a real property contract is a mortgageable interest, and the vendee cannot, after executing a mortgage, voluntarily waive or surrender his contractual rights to the detriment of the mortgagee.

Issues

Whether a vendee's interest in a contract for the purchase of real property is subject to a mortgage.
Whether a vendee can waive contractual rights to the prejudice of a mortgagee after the mortgage has been executed.

Disposition. reversed

Quotations verified verbatim against the opinion

“The interest held by Allen at the time he executed the mortgage to plaintiff was the subject of mortgage.”

“We do not think that Allen could waive any right under the agreement, after the execution and delivery of the mortgage, which would operate to devest the mortgagee of his security.”

“the parties, Jackson, Allen and Dresbach, could not by an agreement among themselves deprive the plaintiff of his equities”

Synopsis

Mortgage — Validity — Mortgageable Interest — Contract for Title.—J. and E. entered into an agreement to sell A. certain lots, the consideration to be paid part in cash, and the balance in installments at one and two years. By the contract it was provided that if A. failed to pay either installment when due, J. and E. would: be released from performance on their part, time being of the essence of the eon-tract; but in such case it was the duty of ,T. and R. to sell the lots at auction to the highest bidder, and out of the money received to pay off the amount still due on the contract, and expenses. A. went into possession of the lots, built a house thereon, and occupied them for over a year. Some months before the first installment became due, A. mortgaged the lots to H. The mortgage was duly recorded. About five months after the execution of the mortgage, A. gave possession of the lots to D., and requested J. to make the deed for them to D., which he did. In an action by H. to foreclose his mortgage, held, that A. had a mortgageable interest in the lots, and that D. took them subject to the mortgage; J. and R., by conveying to him on A.’s request, having waived any breach of the contract.

PATERSON, J. On August 22, 1870, Jackson and Rulofson, being the owners of lots 6, 7 and 8, in block 1, in the town of Davisville, executed and delivered to defendant Allen a contract agreeing to sell said lots to him for the sum of two hundred and fifty dollars, and to convey the same on the twenty-second day of August, 1872. The sum of fifty dollars was paid down and the balance was to be paid in two installments of one hundred dollars each—one August 22, 1871, the other August 22, 1872. It was provided that, if Allen failed to make either of said payments, then the said parties of the first part should be wholly released from performance on their part, time being of the essence of the contract. ‘1 But in that case, ’ ’ the contract reads, 1 ‘ it shall be the duty of the parties of the first part to sell the above-described premises at public auction to the highest bidder for cash, and out of the moneys received from such sale to pay and discharge the amount remaining due upon this contract, and the expense of such sale, rendering the overplus, if any, to the said party of the second part, his executors or assigns.” In default of payments, Allen was to peacefully surrender possession of the property, but until breach of the contract he was to occupy and enjoy the use of the premises. The agreement was not recorded until July 9, 1872; but immediately after the execution and delivery of the contract Allen went into possession of the property, placed a house thereon, and continued to occupy and [782]enjoy the premises until on or about January 12, 1872. On April 6, 1871, Allen executed and delivered to plaintiff the mortgage referred to in the complaint, and which includes the said lots 6, 7 and 8. This mortgage was recorded April 7, 1871. Allen made no payment of the purchase price except the first one, fifty dollars.

On or about the twelfth day of January, 1872, the defendant Allen surrendered the possession of the said lots 6, 7 and 8 to the defendant William Dresbach, and wrote a letter to the said J. P. Jackson, requesting him to convey the said property to William Dresbach instead of to him (Allen), and on the twelfth day of January, 1872, the said Jackson made, executed and delivered to the said Dresbach a deed of said lots, which contained this recital: “The premises now herein conveyed being the same for which a bond for deed was heretofore given to Thomas Allen, and this conveyance is now made to said Dresbach at the instance and request of said Allen.” This deed was recorded February 24, 1872. The debt that was secured by the mortgage of April 6, 1871, was never paid, and in due time the mortgagee (plaintiff herein) brought his suit to foreclose his mortgage, making Allen and Dresbach defendants. Allen suffered defarflt, and Dresbach answered, averring that prior to April 6, 1871, the title to the lots in controversy was in John P. Jackson; that Jackson had deeded to him, and that he held a good title to the lots, free from and not subject to plaintiff’s mortgage. The court concluded that said lots 6, 7 and 8 were not subject to the lien of the mortgage, and judgment was entered accordingly.

Houghton v. Allen

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