Gessner v. Palmateer

Paterson, J. — This is an appeal from an order deny, ing a motion to dissolve an attachment. The motion was made on the ground that the note upon which the action was brought was given to Webster, plaintiff’s assignor, in part payment for certain land purchased from him by defendant; that Webster had a vendor’s lien as security for the pajrment of the note; that the lien passed to plaintiff by the assignment of the note, and being thus secured, an attachment was improper. The affidavit filed in support of the motion states that the defendant purchased certain land from Webster, under a contract which provided for payment of the purchase price by installments, and that at the time and place of making said contract for the sale and purchase of said lot of land, and as part of the said contract, the defendant executed and delivered to Webster the promissory note sued on; and that Webster still holds, against the defendant, the contract, giving him the right to purchase. There is, perhaps, no subject of equity jurisprudence discussed in the books upon wiiich there is a greater diversity of opinion than exists in relation to the origin, nature, and effect of a vendor’s lien, against whom and in whose favor it avails, and how it may be discharged or waived. (Hammond v. Peyton, 34 Minn. 531.) The various definitions given, and principles applied to it by the courts, are hopelessly irreconcilable; and if we take the expressions found in decisions and text-books, without observing the distinction between the lien implied by law in favor of a vendor who has parted with the legal title and taken no security for the purchase-money, and the security which the vendor has while he holds the legal title under an unexecuted contract for the conveyance of lands upon payment of the purchase92 money, there will appear to be great confusion and inconsistency. The former, the implied lien, is properly known, as a vendor’s lien. It is the creature of courts of equity, founded upon the equitable presumption that where the vendor has parted with his title and taken no security for the payment of the purchase-money, the parties intended that the property itself should remain as a pledge for the payment of the purchase price of the land. The lien thus created by implication is not a specific, absolute charge upon the property; it is personal to the vendor, and does not pass by a transfer of his claim for the purchase-money. The fee is in the purchaser, and he may defeat the lien by a conveyance to a bona fide purchaser for value. (Sparks v. Hess, 15 Cal. 186; Baum v. Grigsby, 21 Cal. 172; 81 Am. Dec. 153; Lehndorf v. Cope, 122 Ill. 333.) The latter is improperly designated as. a vendor’s lien. Where the vendor holds the legal title under an unexecuted contract for the conveyance of the land upon payment of the purchase-money, the transaction shows upon its face that he holds it as security. The vendee cannot prejudice that title, or in any way divest it, except by performance of the act for which the vendor holds it. The vendor’s security is something stronger than a mortgage, because the legal title is retained as security. (Stephens v. Chadwick, 10 Kan. 413.) It has been called an imperfect or equitable mortgage, which is a more appropriate term than vendor’s lien. (Moore v. Lackey, 53 Miss. 85.) In many of the best-considered cases, including Sparks v. Hess, 15 Cal. 186, it is treated as if it had the similitude of a mortgage, subject to foreclosure in the same way a mortgage is foreclosed. There is no necessity for any lien by implication. Where the title is not to pass until the vendee pays the purchase price, the land is by express contract held in pledge for such payment, and the notes and contract may he considered as an instrument in the nature of a mortgage. It is [93] a lien by contract, is an incident to the debt, and the assignee of notes given for the purchase-money, like the assignee of a note secured by mortgage, is entitled to the benefit of the security. (Avery v. Clark, 87 Cal. 619; Wright v. Troutman, 81 Ill. 374; Adams v. Cowherd, 30 Mo. 460; Lowery v. Peterson, 75 Ala. 109; Bradley v. Curtis, 79 Ky. 327; McClintic v. Wise, 25 Gratt. 448; Lagon v. Bradolett, 1 Blackf. 419; Dingley v. Bank, 57 Cal. 471.) There are a few decisions to the contrary, some of which inveigh against the rule, and emanating, as they do, from highly respectable authority, are entitled to careful consideration; but they bear evidence of a departure from sound legal rules, and will be found generally to have been influenced by decisions in cases where the legal title had passed to the vendee, thus overlooking the distinction we have attempted to point out, and which is paramount always in determining questions of this kind. The authorities preponderate very decidedly in favor of the view we have expressed. (2 Jones on Liens, sec. 1119, note.) The provisions of our Civil Code, sections 3046 and 3047, apply to the vendor’s lien proper, and not to the security held by a vendor under an unexecuted contract for the sale of land. There has been, and still exists, a great conflictof decision among the American courts, not only as to the nature of the security of the implied lien, but as to whether it could be assigned, and what act of the vendor would amount to a waiver of the lien (Perry on Trusts, 4th ed., sec. 328, note 4.) The notes of the code commissioners, and cases cited by them under the sections above referred to, show that it was intended to settle this conflict by express enactment. (Annotated Civil Code, secs. 3045, 3046, notes; Avery v. Clark, 87 Cal. 619.) We are not called upon in this case to say whether the purchaser of a negotiable note for value, without notice of the security held by a vendor of real estate under an [94] unexecuted contract, would have the right to a writ of attachment; the affidavit on motion to discharge the writ herein stated that plaintiff “purchased the note sued upon in this action with full knowledge that the same was given as collateral to and identical with the debt secured by said contract and the lien on said real estate.” The note having been secured originally by the vendor’s lien, and plaintiff having taken it with notice of that fact, it was his duty to state in his affidavit for the writ “that such security has, without any act of the plaintiff, or the person to whom the security was given, become valueless.” Such is the requirement of the statute. (Code Civ. Proc., sec. 538.) The affidavit upon which the attachment was issued states that the payment of the sum claimed “ has not been secured by any mortgage or lien upon real or personal property.” The affidavit filed by defendant in support of his motion to discharge the writ states facts showing that the note was originally secured. No counter-affidavit was filed by plaintiff. The attachment was improperly issued, and therefore the motion should have been granted. The order is reversed, with directions to discharge the attachment. Beatty, C. J., De Haven, J., Garoutte, J., and Harrison, J., concurred.