L.A. No. 2399.
April 14, 1910.
APPEAL from a judgment of the Superior Court of Los Angeles County. Frederick W. Houser, Judge.
The facts are stated in the opinion of the court.
F.A. Stephenson, for Appellants.
W.W. Butler, for Respondents.
This action is by the vendor to recover damages for defendant's breach of agreement to purchase certain real property situate in the city of Redondo Beach. By stipulation, many of the important facts were agreed upon. At the time of the execution of the contract the title to the property stood in the name of Kate Minerva Backman Palmer, a daughter of Mary Backman, plaintiff, and there was nothing of record to disclose that plaintiff had any title to or interest in the property. But, as provided by and in accordance with the terms of the agreement, plaintiff immediately procured the execution of a grant, bargain, and sale deed, executed by Kate Minerva Backman Palmer and her husband, and procured from the Title Insurance Trust Company of Los Angeles, an unlimited certificate of title. On the seventh day of August, within the time limited by the contract, plaintiff tendered to the defendants the deed to the property so executed by Kate Minerva Backman Palmer and her husband, and again, on the sixteenth day of August, made a like tender, offering also the sum of twenty dollars to cover taxes for the fiscal year of 1905 and 1906, the amount of which taxes had not then been determined. The defendants refused to accept the conveyance or to execute any note or mortgage as contemplated by their agreement. It is not questioned here by defendants that the agreement to purchase was in form and substance sufficient to charge them. No objection was made by them to the certificate of title or to the deed.
The court gave judgment for defendants upon the contention, on which they here rest, that as it appears that plaintiff Mary Backman, at the time of entering into the contract with defendants did not have any title or interest in or to the property which she agreed to convey, she was not a vendor under section 3307 of the Civil Code. They further insist that their position finds abundant support in Easton v. Montgomery, 90 Cal. 307, [25 Am. St. Rep. 123, 27 P. 280], and Gray v. Smith, 83 Fed. 828. As to the cases which appellants cite in support of their contention that the contract was valid and that plaintiff Mary Backman, under that contract, stood in law as a vendor, they answer that the cases are to be read in the light of their facts, and that, so read, it appears that in each instance the purported vendor had some interest or title which he could perfect.
The question is thus presented whether one who, at the time of entering into the contract, has no right or title to the land in question, may make a valid contract for the sale of that land to a vendee. In this state the question has long been settled in favor of the validity of such contracts. In Joyce v. Shafer, 97 Cal. 335, [32 P. 320], the first installment had been paid under an executory contract for the purchase of land. No other installments had been paid, and after the time for the payment of the last installment the vendor had conveyed the land for a valuable consideration to a third party; whereupon the vendee brought action to recover the first installment. This court, by Temple, J., first discussed the doctrine of rescission whereby, upon mutual abandonment, either party may recover the consideration paid, but declared that this was not a case for rescission but was an effort by the purchaser after his own default, to recover money paid by him when the vendor has not refused to complete the sale. Says the court: "The conveyance by the vendor was not a breach of the contract. One may sell land which he does not own, and yet be able, when the time of performance arrives, to furnish a good title. In the mean time the purchaser would not be at liberty to disaffirm the contract on the ground that then the vendor was unable to make a good title. It would be incumbent on him to offer to perform, or to show that at the time of performance the vendor could not furnish the title." It will be noticed that herein the rule is fairly and squarely declared, not as respondents would have it, that one may contract to sell land to which he has an imperfect or inchoate title, but that one may contract to sell land to which he has no title, and the contract will be valid and enforceable if at the time of performance by him he is able to convey good title. Joyce v. Shafer is approved in Shively v. Semi-Tropic etc. Co., 99 Cal. 261, [33 P. 848]; in Garberino v. Roberts, 109 Cal. 125, [41 P. 857], and finally in Hanson v. Fox, 155 Cal. 106, [ 99 P. 489], where the previous cases are reviewed, and it is said: "Nor does the fact which the court found, namely, that defendant had no title to the lots afford any reason for the interposition of equity. In a case such as this it is permissible for one to contract to convey title to land which he does not own, and he is in default under such contract only when the vendee has performed his part of the contract and made demand for a title which the vendor is unable to furnish. Such is and always has been the settled rule in this state." Easton v. Montgomery, 90 Cal. 307, [25 Am. St. Rep. 123, 27 P. 280], contains no declarations of law at variance with this, and indeed if it did, of necessity it would follow that those declarations were overruled by the above quoted utterances of this court in later cases. Easton v. Montgomery declares: "We cannot lose sight of the proposition that in this country, where values of land fluctuate rapidly and where transfers are so frequent, it is very common for the purchaser of land to make a transfer of land before he has acquired the title. It would work great injustice to hold that no one could make a valid contract for the sale of land until he had himself become clothed with the absolute title. . . . It is not necessary however, that the vendor should be the absolute owner of the property at the time he enters into the agreement of sale." In Easton v. Montgomery the vendee sought to justify his refusal to proceed upon the ground of a defect in the vendor's title. The court was not considering the case of a vendor without title at the time of making the contract, and its language is addressed to the situation actually before it. The court lays down the well-established rule that in every executory contract for the sale of land there is an implied condition that the title of the vendor is good, and that he will transfer to the purchaser by his deed of conveyance a title unencumbered and without defect; but the vendor sufficiently complies with this obligation if he is able to give a good title at the time when, by the terms of his contract of sale, he is required to make the conveyance. Says the court: "It is not necessary that the vendor should be the absolute owner of the property at the time he enters into the agreement of sale. An equitable estate in land, or a right to become the owner of the land, is as much the subject of sale as is the land itself, and whenever one is so situated with reference to a tract of land that he can acquire the title thereto, either by the voluntary act of the parties holding the title, or by proceedings at law or in equity, he is in a position to make a valid agreement for the sale thereof." Measured by the rule and language of Easton v. Montgomery, the plaintiffs by the tender of a good and sufficient deed to the property, within the time and under the terms limited by their contract, demonstrated their ability to acquire and transfer the title by the voluntary act of the parties who had formerly held it. Upon this subject and in support of the doctrine of our court, reference may be made to Dressel v. Jordan, 104 Mass. 407; Daily v. Minnick, 117 Iowa, 563, [91 N.W. 913, 60 L.R.A. 840], and Logan v. Bull, 78 Ky. 607.
Gray v. Smith, 83 Fed. 828, does not express views at variance with those adopted by this court, and if it did it would be sufficient to say that those views, not being upon a federal question, would have no weight in overthrowing the deliberate judgments of this court. Gray v. Smith was an effort by a vendor to recover damages for the vendee's withdrawal from an executory contract of sale. But the vendor in that instance had neither title nor means of procuring title, and did not and was not able to tender title, but rested his right of action solely upon the default and refusal of the vendee to proceed. It is in view of these facts that the circuit court used the following language: "The case presented for our consideration therefore was one in which the plaintiff made a contract to sell real estate of which he was not the owner and in which he had no right, title nor interest, nor the ability to compel, by the law or otherwise, a conveyance from the owner. . . . One who makes a contract to sell property of which he has no title, nor the certain means of procuring title, presents no facts upon which damage to him may be predicated if the purchaser withdraws from the contract." This last declaration is in strict accord with the views of this court, with the proviso added that the time limited by the contract in which the vendor is to procure title has at the time of the vendee's withdrawal expired. Otherwise, and by the very terms of the contract, the vendor who has stipulated to make title by a certain date, cannot be in default. Such in effect was the case of Burks v. Davies, 85 Cal. 110, [20 Am. St. Rep. 213, 24 P. 613], where the contract was a mere option, exercisable by the vendee at any time within its life, to purchase lands agreed to be conveyed by the vendor. As to some of these lands the vendor had no title, discovering which the vendee gave notice of rescission. The vendor at the time of the notice had not procured or taken steps to procure title to the lands which he did not own. As the vendee's option could be exercised at any time, it was held by this court that it became the vendor's duty to be ready at all times within the period of the option during which a conveyance might be demanded by the purchaser, to convey good title to him of all the lands which he had agreed to sell, and his inability and unreadiness so to do justified a rescission of the option.
But the case at bar is radically and essentially different from the two which have last been considered. Here the vendor entered into a contract to make a conveyance within a given time. She made tender, of full and complete title, and the tender was refused. True, the title tendered was not her own, and it is recognized that the vendee might have insisted upon title deraigned through the vendor. But their failure to object upon this ground was a waiver of the irregularity. (Royal v. Dennison, 109 Cal. 558, [42 P. 39].) The case then presented, in brief, is one where the vendor within the time limited by the contract has made good and sufficient tender of full and complete title to the land agreed to be sold. No reason in law or in equity exists for defendants' refusal to accept the tender, and for their breach of contract they are responsible in damages.
The judgment appealed from is therefore reversed and the cause remanded.
Lorigan, J., and Melvin, J., concurred.
Hearing in Bank denied.