McLaughlin v. Nelson

Shepherd, District Judge. Plaintiff, McLaughlin, sued the defendant, Nelson, for $1,400 paid on a real estate purchase, which was not consummated, because, as he claimed, a merchantable title was — 309 — not furnished. By written agreement entered into on the 7th day of August, 1919, between Nelson, as vendor, and McLaughlin, as vendee, the former was to furnish the latter good and merchantable title, together with deed and abstract, on or before March 1, 1920, and time was made an essential element of the contract. A portion of the land had an unreleased mortgage on it, bearing date January 4, 1900, and being due December 16, 1901. The record shows that the maker of this mortgage had quitclaimed the land to his mortgagee during November of 1901, and that shortly thereafter the latter had conveyed the same to one McAllister by warranty deed. In addition to this, the abstract shows an affidavit reciting that in receiving said quitclaim it was the intention of the mortgagee to merge the mortgage in the deed. Promptly upon examination of the abstract, which occurred a few days after the execution of the purchase contract, plaintiff returned the same to the defendant with an attorney’s opinion to the effect that said unreleased mortgage was a cloud upon the title which would have to be removed by release or court decree. Defendant seems to have paid no immediate attention to this, except to secure a contrary opinion from his own attorney. As time of settlement drew near, however, on or about February 28, 1920, he told the plaintiff that he considered the title good as it stood. But plaintiff had had disparaging comment upon it from other sources to supplement his attorney’s opinion, and replied that it would have to be cleared, as suggested, by March 1 or the deal could not go through. And he stuck to this, although defendant offered to get a decree quieting the title as to the mortgage within 15 or 20 days, and to put up sufficient money to make good his agreement in this regard. It followed that defendant made no tender on March 1, though plaintiff was on hand, and ready, willing and able to perform according to his word, and that on the next day plaintiff declared a rescission of the contract, notifying the defendant thereof and demanding a return of his $1,400 of earnest money. On the 4th — 310 — of March defendant tendered deed and abstract, together with a written promise (subsequently kept) that he would proceed immediately to secure the order of court originally ■ demanded. But such tender was refused. The district court found against the plaintiff on his contention that the title was unmerchantable and that no sufficient tender was made, and in favor of the defendant on his cross-petition praying for specific performance. A decree was entered providing that, in case of the failure of the plaintiff to take the land and to pay the consideration within 60 days, his earnest money should be forfeited to the defendant, and title to the property should be quieted in the latter. In this state time is held to be of the essence of the contract, in the absence of waiver or estoppel, where it is so provided by the express language of the contract, and so intended by the parties. Such was the case here. But it is clear from the evidence that plaintiff was emphatic in his statement to defendant on the 28th of February that he would not take the title unless a decree or a release was obtained before March 1st. Accordingly, it would have been a vain thing for defendant to have tendered deed and abstract without decree or release, and the fact that he did not do so cannot avail the plaintiff, provided the title was good without such decree or release. Where a tender would be of no avail if made, and the fact in this regard is beyond dispute, a failure to make the tender in question will not militate against the party from whom the tender is required. The whole question, then; is whether or not the title originally presented by the abstract was good and merchantable. If it was, the district court was right in his findings and decree. If it was not, the plaintiff is entitled to a reversal. Merchantable means “vendible because of its fitness to serve its proper purpose.” Anderson’s Dictionary of Law. Fitness to serve its proper purpose includes defensibility and salability. But it does not follow that a title, to be good and merchantable, must be beyond the possibility — 311 — of attack. It simply means that it is subject to no reasonable doubt. The doctrine that a merger at law follows inevitably upon the union of a greater and less estate in the same ownership, and that a deed by a mortgagor of premises upon which he. has given a mortgage to the mortgagee extinguishes the mortgage, has long been recognized in this state. It is true that where it was not the intention of the parties that such should take place the doctrine is not favored in equity. But in this ease the mortgage, which was 20 years old at the time that the contract was entered into, was made by one Rogers to a Mr. Fisher, and afterwards, and before the mortgage was due, Rogers, who was the title owner as well as the mortgagor, deeded the land covered by the mortgage to said Fisher. And it also appears that shortly thereafter Fisher deeded the land by warranty deed to McAllister, also that subsequently thereto the property was conveyed a number of times by deeds of full warranty. Under these circumstances it seems to this court that the title was sufficiently good to exclude all reasonable doubt as to its merchantable character. Equity certainly would not hear a holder of the mortgage, even if it had been assigned to him before the deed was made from Rogers to Fisher, as against the purchaser of the property from the defendant in this case, provided the assignment of said mortgage, had not been filed for record. It is ingeniously argued by the plaintiff, on the authority of Mathews v. Jones, 47 Neb. 616, that Rogers’ title came from Fisher upon a consideration of $500, while Rogers’ quitclaim to Fisher after the execution of the mortgage states the same consideration, and that Fisher would not have accepted such conveyance from Rogers upon that consideration with the intention of canceling the said mortgage, because he would have been losing about $300 thereby. This must be admitted, he says, because the doctrine of the cases is that Fisher would be presumed to intend that which was advantageous to him, and no more. But many other considerations may have been present to influence the — 312 — parties. It is well known that the stated consideration of deeds frequently does not reflect the facts. And under the circumstances this court is constrained to hold that the rule of merger, taken in connection with the subsequent warranty deed which was made and the lapse of time, made the title in question good and merchantable beyond reasonable doubt. As the defendant says in his brief: “At law it is declared to be the inflexible rule that a merger always takes place when a greater and less estate coincide and meet in the same person in one and the same right without any intermediate estate. * * * When the circumstances under which merger ordinarily takes place are shown, the burden rests upon him who alleges that there was no merger to prove a contrary intention, or to prove facts and circumstances from which such an intention may be presumed.” 10 R. C. L. 666, see. 27. Downing v. Hartshorn, 69 Neb. 364; Mathews v. Jones, 47 Neb. 616; Wyatt-Bullard Lumber Co. v. Bourke, 55 Neb. 9; Whipple v. Fowler, 41 Neb. 675. Whenever a person acquires a greater and a lesser estate in the same property and there is no intervening estate, the lesser does not further exist as a separate estate, but is destroyed by or is considered in law as merged in the greater. This principle seems the more certain of application in the case at bar, since the rule in regard to mortgages stated in Justice v. Button, 89 Neb. 367 has been practically abrogated by subsequent statute. Section 5680, Comp. St. 1922, now provides that a decree quieting title to land incumbered by a mortgage may be obtained upon proper ground without alleging the payment of the mortgage. And it may also be said, In passing, that the case cited has little application to the case at bar, because no question of merger was there presented. It is urged by appellant that, in first filing an answer claiming forfeiture of the earnest money paid, appellee elected the law remedy, and could not later be permitted to ask equitable relief by way of specific performance. But the facts pleaded in his answer and cross-petition are not — 313 — inconsistent with the averments of his original answer, and, moreover, he could not in any event have had a remedy at law. Accordingly, the contention of appellant on this point cannot be sustained. The appellee, Nelson, was by no means without fault, in failing to give the appellant more timely notice of his intention to stand upon the title as proffered. In view of this, it will be equitable to give the latter 60 days from the entry of judgment upon the mandate in which to perform the contract, if he so elects. With this provision, the decree of the district court is Affirmed on condition.