Argued June 3, 1878
Decided June 21, 1878
Wm. Peet, for appellant.
Chas. Tracy, for respondent.
If the lease executed by the defendant to Thrall was valid and operative, at the time when the summary proceedings were instituted by the defendant, and possession obtained under the same, the plaintiff cannot maintain this action. Such lease was executed on the 1st day of June, 1870, for the term of three years, with the privilege of another year at an increased rent. The contract for the purchase of the premises bore date on the 28th day of April, 1871, and contained a provision that a certain amount was to be paid in cash on passing the title, a large portion of which was to be raised by a first mortgage, which was to be used in paying off the mortgages then on the property; for expenses of raising the loan, and rent of premises then due and the cash to be paid on account of the purchase-money. A mortgage was also to be executed to the defendant, payable in one year. The contract also provided that unless it was carried out by the defendant by the 1st day of June, 1871, the same and everything therein contained should be null and void and of no further effect.
The necessary loan was obtained by one of the officers of the church which Thrall had erected; the title was examined, mortgages prepared for Thrall, according to the contract, and the parties were to meet at the office of such officer, for the purpose of closing the transaction. The defendant and his wife were then ready to execute a conveyance, but Thrall did not appear, or make any effort to fulfill the contract, nor did he at any subsequent time offer to do so. He undoubtedly intended to abandon the contract, and I think it became forfeited by his neglect to comply with its terms. And, at this point in this aspect of the case, the question arises, whether the lease continued in force, and the defendant had any rights under the same. The contract contained no clause by which possession of the premises was transferred to Thrall; nor did Thrall become entitled thereto, by virtue thereof, before the deed was executed; nor was there any valid instrument executed under seal, as the law requires, by which the lease was to be surrendered and given up. The effect of the contract was, that in case he fulfilled its terms a deed was to be given, and then, and not before, would the lease be extinguished by the superior title. The rent of the premises certainly continued until the first of June, when the contract was to be finally consummated; and as this failed, the lease continued in force afterwards. It was under the lease and nothing else that Thrall remained in possession, and beyond this he had no lawful claim to the premises. The parties evidently understood that the lease was in force, and after the failure to fulfill the contract, Thrall paid the defendant $600, on account of rent unpaid. There is also evidence that the following fall he promised to pay all the rent which he owed upon the lease.
The doctrine of merger, it seems to me, can have no application where the instrument, as well as the acts of the parties, fail to show that there was any such intention. It is a reasonable presumption, warranted by the facts, that if it had been intended to cancel the lease, or that it should merge in the contract, a provision to that effect would have been inserted. It was not only entirely silent upon the subject, but the contract, on its face, as well as the acts of the parties, fail to show that there was any such intention. Not a single word is contained in the agreement that the lease was to be surrendered, or that possession was to be held under the contract. The true interpretation of the contract, under the circumstances, is that the lease was to remain in force until the execution of the deed, in pursuance of the contract. Before this was done Thrall had no control over the premises and no right to the possession thereof, except by virtue of the lease, and as Thrall failed to fulfill the contract, no deed was executed, and the lease continued in full force and effect, as it had previously existed, the same as if the contract had never been executed. It never was impaired, surrendered, or in any way affected by the contract, and could not be, until a conveyance was made.
The defendant's counsel cites numerous cases to sustain the position that the contract of sale superseded the lease and fixed the relations of the parties, and that it was extinguished, and thereby became merged in the contract. A careful examination of the authorities referred to discloses that all of them are distinguishable from the case at bar, and have no application to a case where no intention is manifest that the last instrument should supersede the lease. There is no question as to the correctness of the principle that a contract in writing usually covers and supersedes all prior negotiations. Nor can it be doubted that where it is apparent that the intention was that a written contract entered into, which covers the whole subject, should be a substitute for a prior agreement, that such prior agreement will thereby be extinguished and superseded. No such case is presented on this appeal, and the rules referred to cannot affect the decision here. So far as Thrall acquired any right under the contract, it was an equitable one which became forfeited on his failure to perform. ( Canfield v. Westcott, 5 Cow., 270.) Nor is the claim that the lease was merged in the contract sustained by authority. The rule is that, at law, where a greater estate and a lesser meet, and coincide in the same person and the same right, the lesser estate is merged, and that the equitable is merged in the legal estate. In equity the rule is not inflexible, and depends upon the express or implied intention of the person in whom the estates unite, whether the equitable estate shall merge in the legal estate or still be kept alive. ( James v. Morey, 2 Cow., 246; Schermerhorn v. Merrill, 1 Barb., 511; Reed v. Latson, 15 id., 9; Van Nest v. Latson, 19 id., 604; Millard v. McMullin, 68 N.Y., 345.) As we have already seen it is apparent that no intention existed that Thrall should become the owner of the premises before the conveyance to him, and it was only when a deed should be executed that the estate would become changed, and Thrall could acquire any title to the same. As the lease remained in force and Thrall acquired no right under the contract to the possession of the premises, but continued to hold under the contract, there is no ground for claiming that he was the equitable owner and the defendant had a lien for the purchase-money. There is no equitable principle which will invest him with any right as owner under the facts presented.
The equitable doctrine which protects an individual who has contracted for the purchase of land and treats him as the owner, and the vendor as the owner of the purchase-money, is not an invariable rule, and is subject to some exceptions. It cannot be applied when the intention of the parties is clearly adverse to any such presumption. Such intention is apparent here not only from the provision in the contract that unless carried out at the time named it should become void, but from the absolute refusal of the party to perform, as well as from the apparent intention, by a failure to provide for taking possession, that the lease should continue in force.
The lease not being extinguished by the contract or by the acts of the parties, but remaining in force, it follows that the proceedings to dispossess Thrall were valid; and the claim of the plaintiff has no foundation. She had acquired no right whatever as against the lease and makes out no valid claim which entitles her to maintain this action.
Having arrived at this conclusion it is not essential to consider whether any relief could properly be granted by a court of equity from the failure of Thrall to fulfill the contract at the time therein named, as well as the other questions raised. As the case stands, we think no valid reason exists for a reversal of the order of the General Term, and that the same must be affirmed, and judgment absolute ordered for the defendant on the stipulation, with costs.
Order affirmed and judgment accordingly.