McCroskey v. Ladd

California Supreme Court Dec 1, 1891 No. No. 13,297Published

Before: Paterson

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Holding. The court held that a vendor under a land sale contract requiring a 'good' title cannot enforce the contract if the record title contains defects that create grave doubts or uncertainty, as the purchaser is entitled to a marketable paper title free from the risk of litigation.

Issues

Whether a deed executed by corporate officers without a corporate seal and lacking evidence of board authorization constitutes a 'good' title under a land sale contract.
Whether a purchaser is required to point out specific title defects to a vendor when the contract does not explicitly mandate such notice.
Whether a vendor can enforce a contract for the sale of land when the title is subject to uncertainty and potential litigation.

Disposition. affirmed

Quotations verified verbatim against the opinion

“In cases of this kind, a title, to be good, must be one which is “free from litigation, palpable defects and grave doubts; should consist of both legal and equitable titles; and should be fairly deducible of record””

“The purchaser is entitled to a good paper title, sufficient in law, “and was not bound to accept title resting upon the statute of limitations”

“A vendor may be able through litigation to establish a perfect title, and yet be unable to enforce a contract for the sale of his land.”

Synopsis

Vendor and Vendee—Deed by Corporation—Marketable Title. A vendor agreed to convey a good and sufficient title or refund any payments made. Defendants refused to accept the deed offered. It appeared that one of the deeds relied upon by the vendor in the chain of title was executed by the president and secretary of an incorporated association under their private seals, and recited that they were authorized at an annual meeting of the association to make deeds. It was held that singe both the recital in the deed from the association and the absence of the corporate seal failed to show any authority from the board of directors to convey, the plaintiff did not offer a good paper title within the meaning of the contract.

Vendor and Vendee—Title Based on Statute of Limitations.— A purchaser is not bound to accept a title resting on the statute of limitations, or to take the risk of determining from facts which he might learn dehors the record whether or not the statute of limitations can successfully be pleaded against an adverse claim.1

Vendor and Vendee—Defects in Title.—Defendants are not called upon specifically to point out defects in a title where the contract does not require it, and especially where the flaw is in a deed from a dissolved corporation.

Vendor and Vendee.—The Flaw in the Deed from the Corporation relates directly to the authority of the officers to act, and is not a defect which can be cured by section 1207 of the Civil Code, which provides that any instrument affecting real property recorded prior to January 30, 1873, shall be deemed to impart notice of its contents to subsequent purchasers and encumbrancers, notwithstanding any defect, omission or informality in the execution of the instrument or in the certificate of acknowledgment or in the absence of any such certificate.

Vendor and Vendee—Marketable Title.—A vendor may be able through litigation to establish a perfect title, and yet be unable to enforce a contract for the sale of his land.1

PATERSON, J. On August 25, 1887, the plaintiff agreed in writing to sell and convey certain lots to the defendants on the following terms: “$650 at this date, and the balance [435]($5,850) within sixty days from this date. And said McCroskey, upon receiving said payments, agrees to make a deed of said property to said persons, and convey title to said premises to them; and, if said persons fail to make said payments as herein named, they shall forfeit all right to said property, and all right to all payments made herein. If said title is not sufficient and good, then said moneys shall be refunded.” Thereupon the defendants executed and delivered to the plaintiff a promissory note for $650. Although not required to do so by the terms of the contract, the plaintiff furnished to the defendants an abstract of his title, which the latter submitted to their attorney, who, after examination, reported that it did not show title in the plaintiff. Defendants notified plaintiff of the fact, whereupon the latter furnished another abstract, which was submitted by consent to another attorney, agreed upon by the parties, for his opinion, but the plaintiff did not agree to be bound thereby. After examining the abstract, said attorney, Archer, gave an opinion in writing that the title was not good. This opinion was handed to the plaintiff, but it did not point out, nor did the defendants ever state to the plaintiff, wherein the title was defective. The second abstract referred to was furnished after the expiration of the sixty days named in the contract. Soon after the opinion of Archer was given to the plaintiff, the defendants demanded of the latter the possession of the note referred to. After said demand plaintiff tendered to McClay, one of the defendants herein, a deed of grant, bargain and sale, in the usual form, describing the property, and demanding payment of the sum of $6,500. The demand was refused, whereupon this action was commenced to recover the amount named in the note.

One of the deeds in the chain of title upon which the plaintiff, relies was a deed from the San Justo Homestead Association, a corporation created under the laws of this state, to one Sowle. This deed was executed by the president and secretary of said association, and attested by their individual seals. No corporate seal was attached thereto. The deed recites that to facilitate the sale of certain lots “said association did, at their annual meeting held at Gilroy, California, on the 20th day of January,-1869, pass the following, to wit: ‘Resolved, that the president and secretary of the San Justo Homestead [436]

McCroskey v. Ladd

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