Summary
stating that "[t]he interest of the vendor under a contract of purchase is the right to receive the balance of the purchase price"
Summary of this case from Stamper v. PolleyOpinion
Decided April 6, 1931.
Descent and distribution — Half-and-half statute inapplicable, when — Section 8577, General Code — Intestate real property under land contract — Equitable conversion — Proceeds from land contract pass as personalty to vendor's administrator — Legal title taken subject to land contract — Vendee's equitable title ripens into legal title, when.
1. Sister of deceased husband who had title by purchase has interest in property only in event widow died intestate, without children or their legal representatives, and in possession of identical property which came to widow from husband (Section 8577, General Code).
2. Where valid contract for sale of realty is made, whoever takes legal title by descent or devise takes it subject to contract.
3. Interest of vendor under contract to sell is right to receive balance of purchase price, which is secured by his retaining legal title.
4. Vendor's right under contract of purchase on vendor's death passes to his administrator as personal property.
5. Interest of vendee under contract of purchase is equitable title to realty.
6. Vendee's equitable title under contract to purchase may ripen into perfect title on payment of balance of purchase money and entitle vendee to legal title.
7. On execution of contracts of purchase and taking possession thereunder, widow's ownership in realty inherited from husband became converted into personalty, passing on death of widow without children or their representatives to administrator; hence husband's sister had no interest therein (Section 8577, General Code).
APPEAL: Court of Appeals for Wood county.
Messrs. Bowman James and Miss Alice M. Schultz, for plaintiff.
Mr. Raymond E. Ladd, for defendant Dorothy Mandell.
Mr. Edward M. Fries, for other defendants.
This action was brought by the administrator of the estate of Delilah Emch to secure the direction and judgment of the court as to the distribution of her estate.
Jacob Emch, husband of Delilah Emch, died intestate on June 12, 1901, owning four parcels of real estate in Wood county, the title to which he acquired by purchase. He left no children, nor legal representatives of children, and the title of the real estate descended to his widow, Delilah Emch. She took possession of the real estate and so continued until April, 1926, when she entered into three separate written contracts with purchasers for the absolute sale to them of three of the parcels, and in April, 1927, entered into another written contract for the sale of the fourth parcel. Substantial payments were made by the respective purchasers, and possession was immediately taken by each.
Delilah Emch died intestate and without issue on July 3, 1927, leaving brothers and sisters as her heirs. The total purchase price of the four tracts amounts to $7,725, and of this amount $1,950 was paid before the death of Delilah Emch. After her death, her administrator received on the land contracts the sum of $3,636.55, leaving a balance still remaining due on two of the contracts, but no default of the stipulated payments has been made by any purchaser. None of the money arising from any of these contracts is necessary for the payment of debts of Delilah Emch.
Elizabeth Emch was the sister of Jacob Emch and his only heir at law. Since the commencement of this action she has deceased, and her duly appointed administrator has been made a party.
Counsel for the various parties concede that if no contracts of sale had been made by the widow, Delilah Emch, the property would descend, on her death, one-half to her brothers and sisters and one-half to Elizabeth Emch, the sister of Jacob Emch, under the provisions of Section 8577, General Code. It is contended by counsel for the plaintiff that by virtue of the contracts made by Delilah Emch to sell the real estate to the four several purchasers, an equitable conversion thereof has been made into personalty, and that upon the execution of those contracts the interest of the widow was a claim to receive the purchase price named in the contracts, and was, therefore, personal property and not the identical property which she had inherited from her husband, and that being converted into personalty, it would pass, upon her death, to her administrator for the sole benefit of her heirs, while counsel for the heirs of Elizabeth Emch, sister of Jacob Emch, contend that the legal title to the property controls the descent, and, as the legal title had not yet been conveyed by Delilah Emch, the title would descend on her death one-half to her brothers and sisters and one-half to Elizabeth Emch.
It is well settled under the provisions of the section cited that the sister of the deceased husband would have an interest only in the event that the widow died intestate, without children or their legal representatives, and in possession of the identical property which came to her from her husband, as was held in Guear v. Stechschulte, Admr., 119 Ohio St. 1, 8, 162 N.E. 46.
The doctrine of equitable conversion of real estate into personalty, or vice versa, has long been a well-recognized principle of the law. It is well stated in 9 Ohio Jurisprudence, 719, in the language of Lord Thurlow, as follows: "Money directed to be employed in the purchase of land, and land directed to be sold and turned into money, are to be considered as that species of property into which they are directed to be converted; and this in whatever manner the direction is given: whether by will, by way of contract, marriage articles, settlement, or otherwise; and whether the money is actually deposited or only covenanted to be paid, whether the land is actually conveyed or only agreed to be conveyed, the owner of the fund, or the contracting parties, may make land money, or money land."
The editor of that work follows the quotation just given with this pertinent statement: "Thus where there is an absolute contract to sell land, though the contract is executory, the exchange is treated as having actually taken place, so that the vendor is considered the owner of the purchase money, and the purchaser is considered the owner of the land."
The doctrine is restated in 14 Ohio Jurisprudence, 240, that where land is contracted to be sold, equity considers it as converted into personalty, that the vendor is the trustee for the purchaser, and that the purchase money would go to the personal representative of the vendor and the interest of the vendee descend to his heirs. The authorities, both English and American, seem to have uniformly treated as real estate the equity of the vendee in real estate held under a contract of purchase, and the character of the estate of each is held to have been converted. Hill v. Heard, 104 Ark. 23, 148 S.W. 254, 42 L.R.A. (N.S.), 446, Ann. Cas., 1914C, 403; Bowen, Admr., v. Lansing, 129 Mich. 117, 88 N.W. 384, 57 L.R.A., 643, 646, 95 Am. St. Rep., 427.
The same principle is announced in In Matter of Estate of Dwyer, 159 Cal. 664, 115 P. 235, and in many other well-considered cases.
It may well be true that the descent of real estate is controlled by the legal title, but where valid enforceable contracts for the sale of the real estate are made, whoever takes the legal title by descent or devise takes it subject to the right of the holder of the contract of purchase to enforce the same. The interest of the vendor under a contract of purchase is a right to receive the balance of the purchase price which is secured by his retaining legal title, and that right, on the death of the vendor, passes to his administrator as personal property. The interest of the vendee under a contract of purchase is an equitable title to the real estate, equal to the amount of the purchase money which he has paid, which may ripen into a complete and perfect title upon payment of the balance of the purchase money and entitle him to a conveyance of the legal title. The legal and equitable title had not united in the same person.
Holding these views, it results that, by the execution of the contracts of purchase and the taking possession thereunder by the various purchasers, the ownership of Delilah Emch in the real estate which she had received from her husband became converted into personalty and on her death the right thereto passed to her administrator to be distributed to her brothers and sisters as next of kin.
Judgment and decree for plaintiff.
WILLIAMS, J., concurs.
LLOYD, J., not participating.