Cranston v. Wheeler

Bbadlby, J.: The questions presented are somewhat novel and may not be -entirely free from difficulty. As between Burdick, the vendee in the contract, and the plaintiff, the latter took, by the assignment to him, an equal undivided half of the interest afforded by the contract in the land, with the right to perfect title to it in the manner .agreed upon. He had the equitable title to that extent, unless his .right to thus acquire it was denied to him by the non-assignable provision of the contract. And that question could be raised only by Wheeler and the Dusenburys. It is upon this clause of the contract that the contention of the defendants’ counsel rests. The fact that the transfer of the one-half interest in the premises was made by Bur-dick after.the first informal memorandum of agreement was made, ■containing no such clause, does not relieve the plaintiff from the force and legal effect of any provision in the-subsequent formal contract of sale. The provision in the 'former, to the effect that a more complete contract was to*be thereafter executed, will be- deemed to have brought any stipulations in the latter within the contemplation of the parties when the original agreement was made, unless it should appear that a particular provision was inserted in it with the intent to defraud the plaintiff and defeat his rights under such previous transfer. No such purpose is found. The plaintiff, therefore, must stand upon the contract as it is, and his rights as against the vendors must be deemed dependent upon and subject to its terms. Our attention is not called to any authority, text or judicial, as to the effect of such a non-assignable provision in an execu-tory contract for the sale of land. By this contract the equitable title passed to the vendee and-there was no power reserved in the .vendor to defeat the right of the former to perfect legal title to the property. That depended wholly on the performance on the part of the vendee. And the vendors had no legal right to anything more than such performance, the failure of which, and that only, would give to them the right of restoration of the title. It is a stipulation or condition [68] consistent with the rights of parties to a contract which may be operative and effectual. In ease of a grant without a reversionary interest retained by the grantor in the land a provision in terms restraining alienation is void. (De Peyster v. Michael, 6 N. Y., 467, 506, 508.) And the fact that a right of re-entry of the grantor may arise from default in payment of rent in case of a lease in fee, does not aid in support of such condition when that right of the grantor or his assigns, will exist only in action and is not founded upon any present interest in the land. {Hid.) At the time of the execution and delivery of the contract Burdick became in equity the owner of the premises, and the legal title was held by his vendors as trustees and as security for the payment of the purchase-money of which the vendee was the trustee, and his interest was in realty and inheritable, and that of the vendors personal estate. This conversion of relation to the property, produced by the contract, may be entitled to some consideration in the construction and effect of the clause in question. The vendors had the right to-impose any conditions precedent to the right of the vendee to take-the legal title which were not repugnant to the rights given by the contract in the land, or the covenant to convey, by way of qualification of estate or of rights appurtenant to the property to be observed in the conveyance to be made.. The covenant or condition not to assign the contract is not a condition or stipulation upon which the right of conveyance was-made to depend, the payment of the purchase-money was all that was required by this contract to give the right to the legal title, and require the conveyance. And it is clear that after the full payment of the purchase-money the vendors could not successfully resist the right of an assignee of the contract to a conveyance. They could then have no interest in the condition or covenant not to assign, to give it any support or validity. It would be repugnant to the right, which as of that time is given by the contract, and nugatory. In the view taken of this case it is unnecessary to determine whether such a clause may have any and what effect' intermediate the execution of the contract and its performance on the part of the vendee. It did not prevent the transfer by the latter of an interest in the land to the plaintiff, and he became the owner in equity of [69] tbe undivided lialf of it. The insertion in leases of covenants and ■conditions of that character is common and well recognized, but being in restraint of alienation are strictly construed. (Jackson v. Silvernail, 15 Johns., 278; Jackson v. Harrison, 17 id., 66; Lynde v. Hough, 27 Barb., 415; Crusoe v. Bugby, 3 Wilson, 234; Church v. Brown, 15 Ves., 258; Field v. Mills, 33 N. J. L. R. [4 Vroom], 254.) Within the rule of construction as applied to leases the provision, ■even if it were a condition not to assign the contract, would not be •construed as a denial of the vendee’s right to sell his interest in the land, which would take with it the right to its protection under the contract. Nor would the assignment of a specified interest in it, less than the whole, come within the terms of the restrictive clause. In Crusoe v. Bugby a covenant not to assign a lease was held not to interrupt the right of the lessee to sub-let by lease for part of the term; and the other cases before cited held the same and vice versa. The provision referred to in the contract is not a condition but a covenant on the part of the vendee only. It has the form of a covenant, and there is nothing in the contract itself, nor does anything appear, which can give to it the purpose or effect of a condition. It is in no sense an essential element in relation to the performance of the contract, but merely collateral to it. The plaintiff took an interest in the land under the contract by the transfer made to him by Burdick on 4th December, 1880, prior to the execution of the formal agreement, and there seems to be nothing in the way of giving effect as against the vendors to the assignment to the plaintiff of the one-half interest in the latter contract. It follows that his rights were not divested or defeated by the transaction between the vendors and vendee and^ the subsequent conveyances of the 118 acres through Burdick’s brother to his wife. The remaining question is: What relation was produced by that transaction of the parties to it, to each other, and to the plaintiff, and what are their rights in respect to the premises ? The motives of the vendors and vendee have ho particular importance as relates to the plaintiff, and only as affects their rights to affirmative relief against each other. The vendors had the right, by arrangement with Burdick, to take his interest, or, what amounts to the same thing, extinguish it, [70] in the contract and in the premises, and convey their legal title to-him in any portion of the land, although they could not disturb-any existing rights of the plaintiff. The vendors in the contract took the interest of Burdick, and paid him for it by the conveyance to him of the 118 acres. By that arrangement and its execution, Wheeler and the "Dusenburys, as-between them and Burdick and as to the plaintiff, must be deemed to have dischai’ged Burdick from the stipulations of the contract. They have taken the equitable title to the undivided half of that, portion of the premises not conveyed to him, and thus it is merged in the legal title held by them, and the equitable title to the undivided half of the whole remains in the plaintiff. The consequence of having so discharged Burdick from liability to-pay one-half the purchase-money, is that the vendors may be treated as having the beneficial interest, to that extent, of the vendee in the contract united with the legal title in them, and thereby assuming such relation to the plaintiff in respect to the contract that the latter is entitled to pay to them one-half the unpaid purchase-money, .and, on such performance, to take a conveyance from them of half of the portion which they hold, and from the party holding under them a like share of the 118 acres. And for that purpose his relative-situation in practical effect is no different than it would have been if he had been a co-vendee with Burdick in the contract- The extinguishment-' by agreement between the vendor and the latter of his interest would not in such case affect that of the plaintiff. They have voluntarily discharged their vendee in the contract from liability to pay as part of the consideration of its relinquishment, to them. And it is not necessary to inquire whether they have the personal liability of the plaintiff. The vendors, by the transaction, have neither reduced his interest or increased his liability to-pay, but have reduced their liability to convey to one-half of that part retained by them of the premises. And the contract has in practical effect become one to sell and convey that to the plaintiff. There is nothing in the way of specific performance in behalf of the plaintiff, on performance by him. The land is charged with his interest under the contract, and the vendors or any persons holding the legal title under them may by force of it be required, on his performance, to make the conveyance. The contention on the [71] part of the plaintiff that Burdick has so failed to make payment of the portion of the purchase-money which he undertook to pay, as to permit the plaintiff to pay the whole and take title to the entire premises, is not supported. Burdick is not in the situation of default in that respect, nor has he paid one-half the purchase money. He has disposed of his interest in the contract, or in behalf of his vendors has consented to the extinguishment of such interest for a consideration, which is the legal title to 118 acres, and the equitable title to one-half of it. His creditors have taken from him that liability to pay and the consideration on which it rested, which they were at liberty to do. The plaintiff by that is denied no legal right. He had none requiring an opportunity of Burdick to make default. This view protects the rights of the plaintiff and preserves those of the other parties in the position they have voluntarily assumed. It may be that the latter have not accomplished what they designed. The law will not permit the attempted cancellation of the contract in fraud of the plaintiff to be effectual to his prejudice. While the fraudulent purpose may be entitled to consideration as characterizing the transaction between the vendors and vendee, and the several conveyances of the 118 acres so as not to vest title in a dona fide purchaser, the i-ights of the plaintiff in this action and to relief are not necessarily founded in such fraudulent intent on the part of the original parties to the contract, but in his legal rights derived from the transfer to him. They alone, in view of the facts, support his remedy and entitle him to the relief given by the conclusion of the trial court. The defendants Wheeler and the Husenburys are entitled to the moneys so tendered by the plaintiff as payment of purchase-money, and he should be required to pay it into court to the credit of this action, and the judgment should be so modified as to direct him to do so. The judgment should be affirmed, without costs of this appeal to any party. BARKER, J., concurred; Haight, J., not sitting.