Stevens v. Chadwick

The opinion of the court was delivered by Bbeweb, J.: Two questions arise in this case: First, Has the vendor of real estate, who has executed only a bond to convey, a lien for the unpaid purchase-money? and second, If he has, will the indorsement of a note given for the unpaid price transfer this lien ? Counsel for defendant in error have cited Simpson v. Mundee, 3 Kas., 172, as furnishing a conclusive answer to the first question. We do not so understand it. That case decided that, where an absolute conveyance has been made, the grantor has no lien for the unpaid purchase-money. That decision we have no desire to disturb; but it does not reach the question here. True, the lien claimed in this, as in that, is called a vendor’s lien, and properly so, for it is a lien claimed by a vendor upon the real estate he has sold. But beyond the identity of name there is little similarity between them. There the conveyance had been made; the title parted with. The lien, if it existed, grew not out of the contract of the parties. They had not in terms stipulated for any security. As was then said by Ch. J. Crozier, “There is a gx’eat variety of opinion axnong modern courts as to what the vendor’s lien is. Some of them regard it as a resxxlting trust; others as an equitable mortgage; and others still as a compound of both. Very maxxifestly it has none of the attrh butes of either. It does not arise out of the contract of the parties, nor does it result from the operation of law. It is the mere creatux-e of a court of equity, breathed into existence independently of the original ixxtention of the parties, and [412] entirely without their aid.” But here the title is not parted with. By contract it is to be retained till the price is paid. The agreement of the vendor substantially is this: When you pay the price, you can have the title; till you pay, I retain it. The title is held as security for the price. The vendee cannot compel a conveyance till he pays the price; not even, says the supreme court of Alabama, though the notes given for the price are barred by the statute of limitations and no recovery can be had thereon. Driver, Adm’r, v. Hudspeth, 16 Ala., 348, There is no secret trust in this; nothing which is repugnant to the real-estate jurisprudence of this state. The rights of the parties are determined by and expressed in the contract. The vendee holds no title, can convey none till he has paid the purchase-money. All this appears upon the record. To hold that there is no lien, would be to repudiate the contract which the parties have made — a contract which is fair and reasonable for both, conflicts with no statute, and is not against public policy. The distinction between these two liens is not always recognized or noticed in the books. Especially in those states, where the vendor’s lien after absolute conveyance is enforced, are the two liens treated as though identical, and subject to the same rules. But the distinction between them is obvious, and has been often noticed. Chief J. Watkins, in Moore and Cail, Adm’rs, v. Anders, 14 Ark., 634, speaking of bonds for conveyance, says: “The lien reserved by means of them to the vendor has none of the odious characteristics of the vendor’s equitable lien for the unpaid purchase-money, where, having conveyed the legal title, acknowledging the receipt of the purchase-money, he ought not to be heard to assert it against any subsequent purchaser, or incumbrancer, without clear and unequivocal proof of actual notice.” Chief J. Field, in Sparks v. Hess, 15 Cal., 194, uses this language: “Between the lien they thus assert, and the ordinary lien of a vendor after conveyance executed, there is a marked difference. In the latter case the vendor has parted with the legal and equitable title, and possesses only a bare right, which is of no [413] operative force or effect until established by the decree of the court. In the present case, the vendors have retained the legal title, and evidently as security for the purchase-money. Their position is, in some respects, similar to what it would have been, had they executed a conveyance to the vendee and taken from him a mortgage upon the property. A mortgage is in form a conveyance of the legal title, though intended only as security for the debt. Here the title is retained by the vendors for a similar purpose of security.” See also as .authorities sustaining this kind of lien, Smith v. Robinson, 13 Ark., 533; Taylor v. McKinney, 20 Cal., 618; Haley v. Bennett, 5 Parker, (Ala.,) 452; Driver, Adm’r, v. Hudspeth, 16 Ala., 348; Kelley v. Payne, 18 Ala., 371; Burns v. Taylor, 23 Ala., 255; Moore v. Burrows, 34 Barb., 173; Scarlett v. Hunter, 3 Jones Eq., (N. C.,) 84.; Lewis v. Capertoies, 8 Grattan, 148; Graham v. McCampbell, Meigs Rep., 52; Anthony v. Smith, 9 Hump., 511; Amory v. Reilly, 9 Ind., 490; Button v. Schroyer, 5 Wis., 598; Clark v. Hall, 7 Paige Ch., 382. In Virginia, where by statute the lien after conveyance was abolished, a lien like this was sustained. In Yancy v. Mauch, 15 Grat., 305, the court say: “The statute abolishes the lien where the vendor has conveyed the legal title, and has not reserved it on the face of the deed. It does not apply to the case where the title has been retained by the vendor, for the obvious reason that in such case the principles of our statutes requiring mortgages or deeds of trust to be recorded, was not infringed upon, and because purchasers for value of the legal title would not be endangered by parol proof of notice.” It seems therefore to us both on reason and authority that the first question must be answered in the affirmative. II. Will an indorsement of a note given for the purchase-money transfer the lien? In eases of lien, after absolute 'conveyance, the general drift of the authorities is to the effect that an indorsement of the note does not transfer the lien; and this upon the ground that, the lien not being the result of contract, but the mere creature of equity, a bare right of no operative force or effect until established by the decree of [414] a court, is a purely personal privilege which cannot be transferred. See a collection of the authorities made by Chief J. English in the case of Shall v. Biscoe, 18 Ark., 142. There are, as will be seen, conflicting decisions upon this point; but such seems to be the great weight of authority. The principle upon which these decisions rest seems to have little application here. The lien which the vendor has is something more than a bare right, a personal privilege. It is an interest created by the contract of the parties, and is as fixed, complete, and absolute as the interest of a mortgagee. It is more, for the mortgagee has no estate in the land under the decisions of this court, while the vendor in a bond to convey holds the legal title. It is a general rule, that the incident follows the principal; the transfer of a debt carries with it the security. The vendor holds the legal title as security. He transfers the debt which is secured. Why may not the indorsee, the holder of the debt, avail himself of the security? In case of a mortgage the rule is well settled. What is this but an equitable mortgage? We shall have to answer the second question also in the affirmative. Authorities are ample sustaining these views. See among others, Graham v. McCampbell, Meigs, 52; Thompson v. Pyland, 3 Head, 537; Raper v. McCook, 7 Ala., 318; Connor v. Banks, 18 Ala., 42; Kelley v. Payne, 18 Ala., 371; Wells v. Morrow, 38 Ala., 125; Smith v. Robinson, 13 Ark., 533; Moore & Cail, Adm’rs v. Anders, 14 Ark., 628; Logon v. Badollet, 1 Blackf., 416; Brumfield v. Palmer, 7 Blackf., 227; Farmer v. Hicks, 4 Smedes & M., 294; Parker v. Kelley, 10 Smedes & M., 184; Terry v. George, 37 Miss., 539. In the following cases the assignment of the note was accompanied by a conveyance of the land, and the lien was held to be transferred: Taylor v. McKinney, 20 Cal., 618; Baum v. Grigsby, 21 Cal., 172; Hooper v. Logan, 23 Md., 204. The judgment of the district court will be reversed, and the case remanded with instructions to overrule the demurrer. All the Justices concurring.