Baum v. Grigsby

Field, C. J. delivered the opinion of the Court Norton, J. concurring. The doctrine that a vendor of real property, after an absolute conveyance, retains an equitable lien for the unpaid purchase money, prevails in England and in nearly all the States of the Union. The difference of opinion in the numerous cases upon the subject in the Courts of this country relates principally to the character of the lien, and to the question whether it passes -with a transfer of the claim of the vendor for the purchase money. The hen, it is conceded, is not waived, in the absence of express agreement to that effect, by the fact that the vendor takes the note or other personal security of the vendee for the money. Such personal security is considered as only intended to meet and overcome the acknowledgment of the receipt of the money in the deed. On the other hand, when any other independent security is taken—as a mortgage on the land, or upon other property, or the personal responsibility of a third person—the lien is held to be waived, unless there is at the time an express agreement for its retention. The taking of a distinct, independent security is presumptive evidence of the waiver. The fact, therefore, that the vendee in the present case gave his negotiable promissory note to the vendor for a portion of the purchase money, in no respect affects the equitable lien of the latter. The question presented is, whether that lien passed to the plaintiff with the indorsement of the note to him. There was no attempt made to assign specially the lien; its assignment is asserted from the simple transfer of the note. The question, upon the authorities, is clearly with the appellant. [176] Indeed, with the exception of decisions in two or three States, the adjudged cases are uniformly against any assignment of the lien by a transfer of the note or other personal security of the vendee. “I am not aware of any case,” says Chancellor Walworth, “ where the assignee of the note or the security has been permitted to sustain such a claim on an implied agreement to assign the lien.” (White v. Williams, 1 Paige, 506.) “I do not find in the English books,” says Mr. Justice Hesbit, of the Supreme Court of Georgia, “ a single case in which it (the lien) has been enforced in favor of the assignee of the note for the purchase money.” (Wellborn v. Williams, 9 Geo. 89.) The cases which deny that the hen passes with the personal security of the vendee do not rest, except in a few instances, upon the want of a special assignment from the vendor, but upon the ground that the hen is in its nature unassignable; and to that conclusion we have arrived. The hen is not a specific, absolute charge upon the property. It is simply a right to resort to the property upon a failure of payment by the vendee. It does not arise from any agreement of the parties, but is the creature of equity, and is estabhshed solely for the security of the vendor. It is founded upon the natural justice of allowing a party to reach the property, which he has transferred, to satisfy the debt which constitutes the consideration of the transfer. It is, therefore, the personal privilege of the vendor. The assignee of a note given for the purchase money stands in a very different position. He has not parted with the property which he seeks to reach, in consideration of the note he has received. He has never held the property, and has, therefore, no special claims upon equity to subject it to sale for his benefit. The particular equity of the vendor in this respect cannot, in the nature of things, be asserted by another. “ It is indispensably necessary,” says Chancellor Bland, “ to the existence of such a lien, that the parties should stand in the relation towards each other of vendor and vendee of real estate, the purchase money of which has not been folly paid. If that relationship is, in any manner whatever, put off, altered, or relinquished, an equitable lien either cannot arise or will be destroyed. The pure relationship of creditor and debtor, or of borrower and lender, is incompatible with [177] the existence of an equitable lien, excludes or extinguishes it.” And again: “ An equitable lien is an incumbrance upon land, which can only be held by a vendor; and although assets may be marshaled so as to put a vendor altogether upon his equitable lien, for the benefit of other creditors, yet no third person can, as assignee of the vendor, derive any benefit from such a hen; nor can it, like a bond or mortgage, be assigned, because it is not expressed in writing, or in any separate contract, but exists only as an inseparable equitable incident of the contract of purchase, and is raised by construction of equity in favor of the vendor only. To allow it to pass by an assignment of the claim for the purchase money, or by a transfer of the bonds, or notes, given as a security for the payment of the purchase money, would be of the most ruinous consequence to titles to real estate.” (1 Bland's Chan. 523, 524.) The vendor’s hen, says the Supreme Court of Tennessee, “is nothing more than a mere equity, capable of acquiring the force and efficacy of a hen, under certain circumstances, in the event of the non-payment of the purchase money. It is the creature of a Court of Equity, and rests upon the principle, 'that a person having got the estate of another shah not, as between them, keep it and not pay the consideration.’ (Mackreth v. Symmons, 15 Ves. 329.) But this lien is a mere personal equitable right in the vendor, and is not assignable. It looks only to the security of the vendor, arid does not pass to the assignee of the vendee’s obligation for the consideration money, and, consequently, cannot be enforced in his favor.” (Green v. Demoss, 10 Humph. 374; see also Jackman v. Hallock, 1 Ohio, 320; Wellborn v. Williams, 9 Geo. 86; Briggs v. Hill, 6 How. 362; Gilman v. Brown, 1 Mason, 221; and the note of Hare & Wallace to Mackreth v. Symmons, 2 Leading Cases in Equity, 276, where all the authorities are cited.) There is a marked distinction between the hen of a vendor after absolute conveyance and the hen of a vendor where the contract of sale is unexecuted. In the latter case, the vendor holds the legal estate as security for the purchase money. He can assign his contract with the conveyance of the title—and in such ease his assignee will acquire the same lights and be subject to the same liabilities as himself. (See Sparks v. Hess, 15 Cal. 194; and Taylor v. [178] McKinney, 20 Id. 618.) In the former ease, the vendor retains a mere equity, which to become of any force or effect must be established by the decree of the Court. It follows, that the District Court erred in directing the enforcement of the lien of the vendor in favor of the plaintiff. The judgment must be reversed, and the Court below directed to enter upon its findings a simple money judgment against the defendant for the amount due upon the note, and to deny the prayer for the sale of the premises. Ordered accordingly.