Byrne v. Kanig

Opinion by Hoffman, J., The sole issue in this appeal is whether the equitable owner or the legal owner of a property is responsible for the payment of a municipal sewer lien, where the contract of sale is silent as to this question. This ease was submitted to the court below on an agreed statement of facts.1 On May 3, 1966, seller-appellant and buyer-appellees entered into an agreement of sale for a property improved with a cinder block structure at 1438 East Drinker Street, Dunmore Borough, Lackawanna County. The agreement provided for an installment-purchase arrangement, by which buyers were allowed a period of ten years in which to pay the $27,000 balance due on the purchase price. The contract provides that buyers are to pay taxes on [534] the property (except a portion of the transfer taxes), keep the premises insured, and maintain the premises in repair. Upon payment of the full purchase price, seller agrees to convey to buyers “a good and sufficient Deed for the proper conveying and assuring of a good and marketable title in and to the said premises in fee simple, free from all encumbrances and dower or right of dower, conveyance to contain the usual covenant of Special Warranty.” The construction of a sanitary sewer abutting the premises was authorized by a resolution of the Scranton Sewer Authority on March 18,1968. The engineer’s certificate of completion was certified September 16, 1970. The property was assessed $2,970.00. When payment was not received, the Authority entered a lien against the property on March 10, 1971. Buyers have tendered the full purchase price, and seller has tendered a special warranty deed to the premises, but buyers have refused to accept it, claiming that the sewer lien is an encumbrance which seller is obligated to remove. Suit was brought by buyers against seller in the Court of Common Pleas of Lackawanna County for the amount of the lien. The court below entered judgment for buyers. This appeal followed. The determination of liability for municipal improvement claims as between buyer and seller is governed by the Act of May 16, 1923, P. L. 207, §9, as amended, 53 P.S. §7143, which provides that “[i]n case the real estate benefited by the improvement is sold before the municipal claim is filed, the date of completion in said certificate shall determine the liability for the payment of the claim as between buyer and seller, unless otherwise agreed upon or as above set forth.” (Emphasis supplied.)2 We must therefore determine [535] whether the property involved in this action was “solid” within the meaning of the act when the agreement of sale was entered into in 1986, or whether it will not be “sold” until it is formally conveyed by seller’s deed.3 It is well established in Pennsylvania that when an unconditional agreement for the sale of land is signed, the purchaser becomes the equitable or beneficial owner through the doctrine of equitable conversion. The vendor retains a mere security interest for the payment of the unpaid purchase price. DiDonato v. Reliance Standard Life Insurance Co., 433 Pa. 221, 249 A. 2d 327 (1969); Payne v. Clark, 409 Pa. 557, 187 A. 2d 769 (1963). The equitable owner bears the risk of loss for injury occurring to the property after execution of the agreement of sale before the settlement. DiDonato v. Reliance Standard Life Insurance Co., supra; Rappaport v. Savitz, 208 Pa. Superior Ct. 175, 220 A. 2d 401 (1966). “Whenever an unconditional agreement has been made for the sale of land, such as equity will specifically enforce, it may properly be referred to and treated as sold; then the vendee becomes the equitable owner and the vendor holds the legal title as trustee: [citations omitted]” Bauer v. Hill, 267 Pa. 559, 562, 11 A. 346 (1920) (emphasis supplied). “ ‘So much is the vendee considered, in contemplation of equity, as actually sei[s]ed of the estate, that he must bear any loss which may happen to the estate between the agreement and the conveyance, and he will be entitled to any benefit which may accrue to it in the interval, because by the contract he is oimer of the premises to every intent and purpose in equity.’ ” Spratt v. Greenfield, 279 Pa. [536] 437, 439, 124 A. 126 (1924), quoting Richter v. Selin, 8 S. & R. 425, 440 (1822) (emphasis supplied). The sales agreement in this case contemplated a period of up to ten years between agreement and settlement. Because of the doctrine of equitable conversion, appellees would for all intents and purposes be owners of the property, and the seller would retain a mere security interest. Therefore, we hold that the property was “sold” within the meaning of the statute on May 3, 1966, when buyers became equitable owners of the property. Thus, as between seller and buyers, the duty to pay for the municipal improvement begun and completed subsequent to the agreement of sale falls upon buyers. Nor may buyers unilaterally impose this obligation upon seller by failing to pay the improvement charge when assessed and allowing a lien to be entered against the property. Seller has contracted to convey to buyers a deed “free from all encumbrances”, that is, free from encumbrances at the time of settlement. Barlett v. Beverly School Land Co., 170 Pa. Superior Ct. 307, 85 A. 2d 873 (1952). Nevertheless, buyers cannot complain of an encumbrance caused by their own failure to pay a debt for which they are responsible.4 “Encumbrances created, induced, or suffered by the purchaser under a contract of sale may not be urged by him as an ob [537] jeetion to the title, nor do they constitute a breach of warranty in the vendor’s deed given in pursuance of the contract of sale,” C.J.S. Vendor & Purchaser §201. This rule is but one instance of the general principle that a party to a contract may not complain of a breach which has been caused by his own default. Miles v. Metzger, 316 Pa. 211, 173 A. 285 (1934); Commonwealth v. Berger, 11 Pa. Commonwealth Ct. 332, 312 A. 2d 100 (1973). We therefore hold that the cost of the municipal improvement must be borne by the buyers, the equitable and beneficial owners of the property. Reversed and remanded for further proceedings consistent with this opinion. Footnotes [1] This procedure is implicitly authorized by Pa. R.C.P. 1003, which provides that “[r]ules relating to the manner of commencing an action or the time for serving process or for filing or serving pleadings may be waived by agreement of the parties.” See Go odrieh-Amram, Standard Pennsylvania Practice, Procedural Rules Service, §§1003-1, 1506-2. [2] As the issue is not before us, we do not decide whether the municipality in such a case may proceed against the buyer, the seller, or both, but only the rights of the buyer and seUer inter ae. [3] This question was explicitly reserved in Barlett v. Beverly School Land Co., 170 Pa. Superior Ct. 307, 85 A. 2d 873 (1952). A subsequent lower court opinion has held that “sale” refers to the transfer of equitable ownership. Mergenthaler v. Clingan, 83 York Legal Record 99 (1969). [4] Under the terms of the Act of May 16, 1923, supra, the parties are free to agree to a different allocation of the costs of municipal improvements. We do not believe that the standard “free from encumbrances” clause contained in this contract evidenced such an agreement. Indeed, the parties have stipulated that “[t]he Agreement of Sale . . . contains no provisions for payment of municipal claims or improvements subsequent to May 3, 1966.” Nor did this court rest its interpretation of the sales agreement in Barlett v. Beverly School Land Co., supra, on such a clause, but on evidence extrinsic to the written agreement.