Brown ex rel. Branner v. Thomas

The opinion of the court was delivered by Horton, C. J.: The agreement for the sale of the real estate described in the petition confers neither the legal nor the equitable .title upon Davison. It is simply an agreement to sell real estate upon conditions precedent, and sets forth a conditional sale only. In the contract it is stipulated in substance that time is of the essence thereof; that the failure to perform any of its conditions shall render the contract null and void; and that by such failure the party holding under the contract shall forfeit to the other party all the money paid thereon, all improvements made on the premises, and all right to compensation therefor; and that he shall cease to have any interest therein. (Comm’rs of Douglas Co. v. U. P. Rly. Co., 5 Kas. 615; Parker v. Winsor, 5 id. 362; McNamara v. Culver, 22 id. 661; Eckert v. McBee, 27 id. 232.) [286] When land is sold and conveyed, and notes are given for the purchase-money, the vendee may be taxed for the land and the vendor for the notes received for the purchase-money; but where the vendor still owns the laud, and also owns it conditionally, as in this case, we do not think that he can be taxed upon the land contract. (See Wilcox v. Ellis, 14 Kas. 588; C. B. U. P. Rld. Co. v. Wilcox, 14 id. 259.) The maxim, that equity considers that when land is sold on credit, and the deed is to be made when the purchase-money is paid, that the land at the time of the purchase becomes the vendee’s, and the purchase-money the vendor’s; that the vendor becomes the trustee of the vendee with respect to the land, and the vendee the trustee of the vendor with respect to the purchase-money, is not applicable here. Davison has the option to purchase. Under the agreement he has the possession of -the laud, and pays therefor the taxes and certain interest; but the legal title has not passed to him, because no deed or other conveyance has yet been made; and the equitable title has not passed, because the land has not been paid for, and because — on account of the provisions for forfeiture — it is clearly the intention of the parties, as indicated in the contract, that such title shall not pass until the land is paid for. Davison has a contingent or conditional equity in the land, but he is in danger of forfeiting the same, and if forfeiture occurs, his contingent or conditional equity ceases. If we could consider the agreement a mortgage merely, then as personal property it would be taxable. As the agreement cannot be construed into a mortgage, nor as creating a debt, but being a conditional sale only, we must hold that it is not subject to taxation. If it be claimed that the agreement is a credit, and therefore taxable, the claim is defeated by the definition given to “credit” by the tax law, as follows: “ The term ‘ credit,’ when used in this act, shall mean and include every demand for money, labor, or other valuable thing, whether due or to become due, but not secured by lien on real estate.” (Comp. Laws of 1885, p.945; Lappin v. Comm’rs of Nemaha Co., 6 Kas. 403.) We [287] do not think the agreement creates a debt, bnt if any demand for money is created thereby, it is secured on real estate, and therefore not a “credit" within the statute. The judgment of the district court will be reversed, and the cause remanded, with direction to the court below to overrule the demurrer filed to the petition. All the Justices concurring.