Denning v. Bailey

COSHOW, J. A will takes effect on the death of the testator. The beneficiaries of the will take the property under the condition it is in at the death of the testator. If the land involved in this appeal, or its proceeds was personal property at the death of the testatrix, then it remained so through the administration of her estate. Nothing that the administrator with the will annexed could do in the course of administration could change the nature of that property: 28 R. C. L. 60, § 4, note 4; In re Estate of Bernhard, Deceased, 134 Iowa, 603 (112 N. W. 86, 12 L. R. A. (N. S.) 1029); 40 Cyc. 1074, 1368; Keep v. Miller, 41 N. J. Eq. 350 (6 Atl. 495); — 626 — Leiper’s Appeal, 35 Pa. St. 420 (78 Am. Dec. 347); In re Wilson’s Estate, 85 Or. 604, 620 (167 Pac. 580); Rood on Wills, § 429; Page on Wills, § 49. “Equitable conversion is defined as a constructive alteration in the nature of property by which in equity real estate is regarded as personalty or personal estate as realty. It grows out of the old equitable maxim that ‘Equity regards that done which ought to be done.’ 2 Story’s Equity Jurisprudence (14 ed.), §1091. ‘ ‘ There is another consideration which is incident to this subject and to which Courts of Equity have given an attention and effect proportioned to its importance. In the view of Courts of Law contracts respecting lands, or other things, of which a specific execution will be decreed in equity, are considered as simple executory agreements, and as not attaching to the property in any manner, as an incident, or as a present or future charge. But Courts of Equity regard them in a very different light. They treat them, for most purposes, precisely as if they had been specifically executed. Thus if a man has entered into a valid contract for the purchase of land, he is treated in equity as the equitable owner of the land, and the vendor is treated as the owner of the money. The purchaser may devise it as land, even before the conveyance is made, and it passes by descent to his heir as land. The vendor is deemed in equity to stand seised of it for the benefit of the purchaser, and the trust (as has been already stated) attaches to the land so as to bind the heir of the vendor, and every one claiming under him as a purchaser with notice of the trust. The heir of the purchaser may come into equity and insist upon a specific performance of the contract; and unless some other circumstances affect the case, he may require the purchase-money to be paid out of the personal estate of the purchaser in The hands of his personal representative. On the other hand the vendor may come into equity for a specific performance of the contract on the other side, and to have the money paid; for the remedy, in — 627 — cases of specific performance, is mutual, and the purchase-money is treated as the personal estate of the vendor, and goes as such to his personal representatives.” 2 Story’s Equity Jurisprudence (14 ed.), § 1092. See, also, 1 Pomeroy’s Equity Jurisprudence (4 ed.), §§ 371, 372; In re Dwyer’s Estate, 159 Cal. 664 (115 Pac. 235); 13 C. J. 855, § 8 et seq.; 6 R. C. L. 1076, 1077; Rhodes v. Meredith, 260 Ill. 138 (102 N. E. 1063, 34 Ann. Cas. 1914D, 416). In Stewart v. Mann, 85 Or. 68, 74 (165 Pac. 590, 1169), the court announces the same doctrine in the following language: “The doctrine of the cases is to the effect that a vendee acquires an estate in land under an executory contract for the purchase of the same in proportion as he pays the purchase price and is not in default in the performance of his covenant. The vendor holds the legal title to that extent in trust for the vendee.” The respondent, C. O. Denning, ably and earnestly argues that, inasmuch as the vendee was in default at the time of the death of the testatrix, the doctrine of equitable conversion does not apply. It will he noticed that the contract for the sale did not make time of the essence thereof. The record further discloses that the testatrix extended the time of payment to the purchaser. She also accepted a payment after the purchaser’s default. After her death, her administrator with the will annexed also accepted payment. The purchaser remained in possession exercising ownership of the property. Equity does not favor forfeiture: Mitchell v. Hughes, 80 Or. 574 (157 Pac. 965); Miller v. Beck, 72 Or. 140 (142 Pac. 603); Hawkins v. Rogers, 91 Or. 483 (179 Pac. 563, 905); Comely v. Campbell, 95 Or. 345 (186 Pac. 563, 187 Pac. 1103). The provision of forfeiture in the con — 628 — tract was for the benefit of the vendor. She conld waive that provision. She did not declare a forfeiture during her lifetime and for that reason forfeiture had not occurred, notwithstanding the purchaser was in arrears. Even when time is made the essence of the contract and the purchaser is in default, if the vendor accepts payment, or by any other act waives the prompt performance on the part of the purchaser, he cannot thereafter declare a forfeiture without notice to the purchaser of his intention to do so: Johnson v. Berns, 111 Or. 165 (225 Pac. 727, 224 Pac. 624), and other cases cited above. In fact, the purchaser was not in default at the time of the death of the vendor for she had extended time to the purchaser. The respondent, C. O. Denning, asserts that the contract would not be specifically enforced against the purchaser. No reason is given for that assertion. The contract is mutual, the purchaser agreeing to buy and the vendor agreeing to sell the specific property for a specified amount. Either party to a contract for the sale of land may have specific performance of that contract: Slatterly v. Gross, 96 Or. 554 (187 Pac. 300, 190 Pac. 577); 2 Story’s Equity Jurisprudence (14 ed.), § 1092; 4 Pomeroy’s Equity Jurisprudence (4 ed.), § 1402; 5 Pomeroy’s Equitable Remedies (2 ed.), § 745. “When the testatrix entered into the contract for the sale of land and placed the purchaser in possession, she then became the trustee of the title for the benefit of the purchaser, and the purchaser became the trustee of the purchase price for the benefit of the testatrix. The interest of the testatrix was thereby converted into personal property. That was the status of the land at the death of the testatrix. That land would remain personal property until by the — 629 — voluntary act of the owner thereof the same should be reconverted into realty. The sale of the land under foreclosure at the suit of the administrator with the will annexed did not constitute reconversion. The land should be treated, therefore, as personal property for the purpose of distribution under the law. It is earnestly contended by the respondent that Section 10099, Or. L., prevents the doctrine of equitable conversion from applying. We think not. By the common-law doctrine a specific devise of real property was revoked if the property was disposed of during the life of the testator. Section 10099 changes that rule by preventing a revocation of such a devise. That rule has no application to this particular case because the property in dispute here was not specifically devised. Section 10099, Or. L., referred to is as follows: “A bond, covenant or agreement made for a valuable consideration by a testator, to convey any property devised or bequeathed in any last will previously made, shall not be deemed a revocation of such previous devise or bequest, either in law or equity; but such property shall pass by the devise or bequest subject to the same remedies on such bond, covenant, or agreement, for the specific performance or otherwise, against devisees or legatees as might be had by law against the heirs of the testator or his next of kin, if the same had descended to them.” Under the common law, the devise of the land in dispute, if one had been made by her will, would have been deemed revoked by the contract for the sale of that land. By the terms of the statute the devisee would take the interest of the testatrix in the land so devised, or the unpaid purchase price, instead of the land itself. In other words, the devisee would be — 630 — placed in the same situation with reference to the land as the testator himself was. The case of Potter Realty Co. v. Derby, 75 Or. 563 (147 Pac. 548), relied upon by the respondent, C. O. Denning, does not support his contention. In that case the contract provided the remedy in case of default. The court held that the parties were bound by the terms of the contract. In the contract involved in the instant case there is no remedy provided in case of a breach. The parties are left to the remedies provided by law. The respondent, C. O. Denning, invokes the rule of construction that — “If one construction would give the property * * unequally between the children, and another would dispose of it as it would go by the statute of descent or distribution, it is but natural to suppose that the later is the true construction.” Eood on Wills, § 430. But the controversy here does not involve the construction of the will. All agree upon the import of the will. The sole matter for determination is the nature of the property of the decedent in the land at the time of her death. If it is personal property, then all concede it should be distributed as directed by the County Court. If it is real property, all concede that it descended to the heirs as decreed by the Circuit Court. The two deeds, executed by the testatrix at the same time she executed her will, were admitted without objection for the purpose of disclosing the intention of the testatrix to give the land to the two daughters. It must be conceded that the two deeds indicate that intention. The will devises the real property in the State of Nebraska to the grandchildren, one of whom is the respondent, C. O. Den — 631 — ning. The will does not mention the real property in Oregon. The presumption is very strong that the real property in Oregon was omitted from the will because the testatrix had conveyed it to her two daughters on that very day. We are not permitted to inquire into the motives or reasons of the testatrix. This appeal hinges on the status or nature of the property of the testatrix in the land at the time of her death. We believe her interest was personal property under the doctrine of equitable conversion: Collins v. Creason, 55 Or. 524 (106 Pac. 445); Miles v. Hemenway, 59 Or. 318 (111 Pac. 696, 117 Pac. 273); Sections 1266-1268, Or. L. The case of Wollenberg v. Rose, 45 Or. 615 (78 Pac. 751), relied on by respondent does not support his contention. In that case there was no written contract and the title to the land was in controversy. There was no will. The land descended to the heirs immediately on the death of the owner. In the instant case the title to the land would have passed to the purchaser by delivery to him of the deed in escrow: Flanagan Estate v. Great Central Land Co., 45 Or. 335 (77 Pac. 485). Section 1269, Or. L., provides for a conveyance by the administrator under circumstances similar to those involved. It follows, therefore, that the decree of the Circuit Court must be reversed and the decree of the County Court affirmed. A decree will be entered here accordingly, and the cause remanded to the Circuit Court with instructions to remand it to the County Court for distribution of the property agreeably to said decree of this court. Reversed and Remanded. Rehearing Denied. Second Petition por Rehearing Denied. Burnett, Bean and Brown, JJ., concur.