Pierson v Post

Mid Level Appellate Court

Supreme Court of New York, 1805

Procedural History: Case began Post v Pierson as an action in trespass in a “justices court”. With Mr. Post having been successful in his action, Mr. Pierson “sued out a certiorari, and now assigned for error, that the declaration and the matters therin were not sufficient in law to maintain an action…”1

Issues: Did the Defendant (Post) by means of pursuit ever gain a right or property in the fox he was chasing? Did the Plaintiff (Pierson) establish occupancy by killing and capturing the fox even though he was aware of the Defendant’s pursuit of the ferae naturae?

Facts: Defendant with his hounds while upon an “uninhabited, unpossessed wasteland called the beach” was in pursuit of a fox. The Plaintiff aware of the Defendants motive and in view of the Defendant captured and killed the fox first.

Rule: Merely pursuing the fox as a ferae naturae (wild animal) is insufficient to establish any legal right or property in the fox

Holding: The fox having been killed and captured by Mr. Pierson has as a consequence become his captors property.

Rationale: The court looked to six various authorities where a common theme arose each time, that being pursuit alone does not vest any property or right to the huntsman. In addition, occupancy of beasts ferae nautrae is the actual corporal possession of them.

Questions:

1) Did the majority and dissenting justices in Pierson v Post agree that first in time was the governing principle?

While the majority opinion relied upon the principle of first in time, to say that the court agreed on this principle in the same manner would be inaccurate. While both the majority and dissenting justices believed that a “first in time” principle existed, a question as to when this principle originated in relation to the fox needed to be answered. The majority believing that by capturing the fox first the property within the furae naturae would vest at the point of actual possession. Livingston J. in his dissenting opinion believed that the first to establish a reasonable occupation of the fox should be the standard.

1 Dukeminier, Krier, Alexander, Schill, Property, (7th Edition), Aspen Publishers, pg. 18, Pierson v Post, para. 2

2) Note that the majority held as it did “for the sake of certainty, and preserving peace and order in society. How did its opinion (that mere chase is insufficient to confer the rights of first possession) advance those goals?

The court realized the potential for quarrels and litigation existed if individuals merely had to state that they were in pursuit of an animal.

Ghen v. Rich

United States District Court, 1881

Procedural History: Case filed in US District Court whereby the respondent (Rich) insists that the whaling usage adhered to is invalid.

Issue: Can an industry custom be relied upon when determining in whom property rights have vested in?

Facts: Ghen, the Plaintiff, worked as a whaler for 10 years. On April 9, 1880, P was in pursuit of a fin-back whale whereby he subsequently shot and killed it with a bomb-lance. The whale eventually may arise back to the surface where it will be towed in, or if found beached, word is sent back to Provincetown and the rightful owner will collect his property. Whales owners are identified by a peculiar mark or device on the lances used to kill the whales. After the whale arose back to the surface, it was found beached by Ellis, 17 miles away who rather than sending word to Provincetown, chose to sell it at auction where it was purchased by Mr. Rich. On the 15th, the libellant heard word of this and immediately set out to claim his property. The facts state that neither Ellis nor the respondent knew the whale had been killed by Ghen, but they knew or might have known that it had been killed with a bomb lance by someone in the industry

Rule:

1) While in extremely limited circumstances, an industry’s custom and usage regarding appropriation can be considered acceptable as law regarding possession over property

2) Possession can be granted when all that is possible under the circumstances has been undertaken by the first taker

Holding: When the fin-back whale was harpooned and killed by Mr. Ghen, he had taken all reasonable steps at that time to appropriate the whale as his own property. The court was of the opinion that if the custom described in the case (requiring of the first taker the only act of appropriation that is possible, i.e. killing the animal and identifying yourself via a bomb-lance, irons, harpoon as the rightful owner of the whale) were to cease, then the whaling industry itself would collapse for no person would engage in it if knowing that anyone could take possession of his hunt subsequently at any time.

Notes & Questions:

1) Was the custom relied upon in Ghen v. Rich essential to the libellant’s case, or would the rule in Pierson v Post have served as well?

The custom relied upon by the Plaintiff was essential to his case as it was an established usage within his industry and previous case law had considered and

affirmed it as an acceptable argument. The rule in Pierson v Post would not have served well as in that case it would have rewarded the chance finder regardless of the efforts of a pursuer. However, Pierson also noted that when an animal is mortally wounded and pursuit continues, the property will vest in the pursuer.

2) Should a usage of whalers have determined the outcome of Ghen v Rich?

For the court to determine the outcome in Ghen v. Rich, it turned to case law that as well relied upon the customs of the whaling industry. In doing so, it considered these usage’s and concluded that they not only appeared reasonable, but have such exclusive application that it can only affect a small number of people.

3) Should the norms of hunters have decided Pierson v Post

If the court had allowed the norms of hunters to allow Pierson, perhaps a more equitable outcome may have arisen, however, the court viewed the question being asked in the case with perhaps a much wider scope. Perhaps sportsmen might respect rules amongst themselves, however, how do two individuals in a similar situation decide their dispute without any norms to rely upon?

Keeble v Hickeringill

Queens Bench 1707

Issue: Is an individual (trespasser?) liable to a landowner if he disturbs or maliciously interferes with that landowners use of his land to generate profit?

Does a landowner also own the wild animals on the land?

Procedural History: Case heard by Lord Chief Justice Holt at the Queens Bench Court where plaintiff received verdict of 20L. damages.

Facts: Plaintiff. Mr Keeble, had invested heavily in the trade of duck trapping. These investments included a decoy duck pond, decoy ducks, nets, traps, etc…His neighbor the Defendant, Mr. Hickeringill knowing that the Plaintiff was taking the benefit of such a trade would while on his own property discharge a firearm near the decoy duck pond with the intention of scaring away the wildfowl. The Def. did so on multiple occasions, those being the 8th, the 11th & the 12th of November.

Rule:

1) Landowners are deemed to have constructive possession over ferae naturae on their property.

2) Landowners who are maliciously interfered with in their use of their property for profit may seek damages

Holding: This action is not brought to recover damage for the loss of the fowl, but for the disturbance” Pg. 31, Para 2

Rationale: In his opinion, Holt C.J. comments that the Plaintiff is 1) using a duck pond legally & 2) is doing so on his own property for profitable purposes. He states that “every man that hath property may employ it for his pleasure and profit” and addresses duck trapping as a legal occupation within the UK. Holt C.J. concluded that duck trapping was the Plaintiff’s trade and “he that hinders another in his trade or livelihood is liable to an action for so hindering him.”

Problems:

1) The court might say the landowner had constructive possession over the animal because of the principle of ratione soli. In the United States however, the courts have taken the view that landowners generally own no rights in wild animals.

Although T may have trespassed against O to capture the wild animal, while the animal was free, it was neither the property of O nor T. After T has captured it, T can lay claim to title over the animal as he has actual possession. When T1 takes the animal from T, T1’s assertion that T had no ownership over the animal would be incorrect. This is because of the rule in Pierson v Post where the court stated

that actual possession over a ferae naturae can only exist after the animal has been captured.

If O had taken back the animal, he may have done so unjustly. If O had posted signs providing notice of “no trespassing” or “no hunting”, than a right of possession may have arisen similar to that of ratione soli. If however he has not, then he is less likely to be able to lay a claim to title merely because the animal was captured while on his property.

2) Although H, the hunter, may believe he has title over the animal because he killed and captured it, due to the fact that the animal was domesticated and would willingly return to a large shelter on F’s land, F in turn can clam a right of possession and property over the deer.

3) Suppose East had been available, would the outcome in Pierson have been different?

A distinction between the Keeble and Pierson cases immediately would be that neither the plaintiff nor the defendant owned the land where upon they found the fox. Therefore to try to incorporate some form of constructive possession probably would have failed. If however Post had owned the land upon where the fox was being chased and Pierson captured the fox while on Post’s property unknowingly, than perhaps it is more likely that Post would have been successful in his claim.

Demsetz: Towards a theory of Property Rights

1) According to Demsetz, a system of communal ownership (common property) tends to increase externalities, and a system of private ownership (private property) tends to reduce them, How?

Communal ownership being public property creates a situation where individuals are not concerned with how their actions might affect others. Land Example

Private ownership helps to internalize many of the externalities associated with communal ownership, i.e. individuals become more concerned with how they might use the resources available on their land.

2) Why is trespass considered “wrong”?

Demsetz alludes to the economic effects of trespass in his fur trade example.

Popov v Hayashi

December 18, 2002

Superior Court of San Francisco Couty, California

Issue:

1) Did the Plaintiff achieve possession or the right to possession as he attempted to catch and hold onto the ball?

2) What acts are sufficient when establishing dominion and control over property?

2) Can an action for conversion proceed where the plaintiff has failed to establish actual possession or title?

Facts: Both Plaintiff and Defendant were in attendance at a baseball game in San Francisco in early October 7, 2001. Earlier in the season, Barry Bonds had broken the homerun record of Mark Mcguire. The significance of each subsequent homerun established Mr. Bonds homerun record again and again. On this evening, the Plaintiff and Defendant were located in an area where Mr. Bonds’ homeruns were consistently landing. The area was very crowded as usual. In the first inning, Barry Bonds hit his 73’rd homerun and it landed over the right field fence into the arcade area. The ball landed in the upper webbing of Mr. Popov’s glove, however, it was not clear as to whether the ball was ever secured. A short time after, the P found himself underneath a mound of people attempting to retrieve the ball. Mr. Hayashi was near Mr. Popov and was forced to the ground by the mob, and while there noticed the loose ball and retrieved it. He was then subsequently escorted away by security for his protection. P attempted to reclaim ball however, Def. did not relinquish possession.

Rule:

1) Where an action undertakes significant but incomplete steps to achieve possession of a piece of abandoned personal property and the effort is interrupted by the unlawful acts of others, the actor has a legally cognizable pre-possessory interest in the property (pg 9)

2) A pre-possessory interest does not establish a full right to possession that is protected from a subsequent legitimate claim

Holding:

1) An action in conversion can proceed so long as a right to possession has been established.

2) Establishing dominion and control over property constitutes actual possession

3) When two superior claims in title arise, equitable division may be appropriate as a means of remedy

Rationale: Court considered the elements necessary for an action in conversion. Questioned whether actual possession was necessary or merely have a right to possession was sufficient? Ultimately a question of what amounts to possession was addressed. Grays Rule of Possession eventually adopted after much discussion

Acquisition By Creation

Property in one’s ideas and Expressions

International News Service v Associated Press

Supreme Court of the United States, 1918

Procedural History: Claimant is Associated Press. Defendant is INS. Began in Southern District of NY whereby a preliminary injunction was granted for the first two causes of action. For the third and final cause, the District court refused to take any action. At the appeals level, the injunctions were modified but still sustained. The case has now reached the US Supreme Court.

Issues:

1) Is there any proprietary value in the news?

2) If there is a property right in published news, does this right remain in existence after being published in the first newspaper with the opportunity to do so?

3) Does appropriating news from competitor’s bulletins or early-published editions constitute unfair competition in trade?

Facts: Parties to the case are competitors in the newspaper publishing industry. Defendant, INS, is accused of pirating complainant’s news in three ways. Initially by bribing the employees of AP to hand over AP news prior to publication. Secondly, INS is charged with inducing members of the AP to violate the by-laws by permitting INS to have access to news prior to publication. Finally, by copying news from bulletin boards and early editions of AP papers then subsequently, selling on this news as if it were the Defendants own.

Rule:

1) Misappropriation of news with commercial value by a competitor amounts to unfair competition

Holding:

1) News of the day is not protected under copyright law

2) News with commercial value must be regarded as a quasi property

3) When rights or privileges of the one are liable to conflict with the other (competitors), each party is under a duty so to conduct its own business as not unnecessarily or unfairly to injure that of the other

Rationale: Court believed that when a corporation invests labor, skill, & money in order to distribute the news for profit, this places a value upon the news which they are distributing. Therefore until it is distributed to the general public, there is a quasi property interest that exists again until distribution. If however prior to distribution, a

competitor gains access to the news and subsequently uses it to their benefit, this amounts to a misappropriation and ultimately created unfair competition as between the two competitors.

Cheney Brothers v Doris Silk

United States Court of Appeals, 1929

Issue: Does a property right exist in a design and if so, be protected through copyright?

Facts: Plaintiff is a corporation who manufacturers silk designs. Each season, new designs are created and manufactured. Most silks fail on their purpose and also have a very short life span for fashion. Doris Silk as a competitor and the Defendant copied a popular design and began selling a manufactured silk cutting into the profit of the Plaintiff. Plaintiff seeks a temporary injunction against Defendant during their season of operation.

Rule: A man’s property is limited to the chattels, which embody his invention. Others may imitate these at their pleasure

Holding: Patenting the design would fail for lack of originality as required to support a patent application. It would be impossible to copyright them under the Copyright Act.

Rationale: The court felt that an injunction only during the season would make no sense, as it would not cover the whole of the injury. It would create a floodgates argument that those who take longer in their designs have as much right to protection as those in annuals. In addition, the protection would have to extend further than designs, into processes, machines, and secrets.

Comments: Court viewed INS v AP (as relied on by the Plaintiff) as having a very narrow scope of application and that the Supreme Court did not intend for its application to extend any further than from the industry which it was applied towards.

Smith v Chanel

1968

Comments: Court held that a competitor perfume company to Chanel could claim in its adverts that its product was equivalent to the more expensive Chanel No. 5 . “Since appellee’s perfume was unpatented , appellants had a right to copy….[f]or imitation is the life blood of competition. It is the unimpeded availability of substantially equivalent units that permits the normal operation for supply and demand to yield the fair price society must pay for a given commodity.”

“By taking the free ride, the copyist, albeit unintentionally, serves an important public interest by offering comparable goods at lower prices.”

Property in One’s Persona

White v Samsung Electronics America, Inc.

United States Court of Appeals, 1992

Procedural History: Trial court granted summary judgment on each of the Plaintiff’s claims, however, Court of Appeals reversed in part, holding that issues of material fact precluded summary judgment on the part of the Plaintff’s claim for violation of her common law fight of publicity, and on her claim for violation of a federal statute concerned with false representations in advertising.

Issue: Can a celebrity have their right to publicity infringed upon if their name, likeness, voice or signature are not appropriated?

Facts: Defendant created an advertisement starring a robot in a wig, gown and jewelry reminiscent of Plaintiff. Robot posed next to a Wheel of Fortune like game board with a caption reading “Longest running game show. 2012AD” Defendant sued for infringement on her right to publicity.

Comments: Dissenting opinion offered by Judge Kozinski argued that IP rights pertaining to the right to publicity have shifted to far in the direction of protecting the celebrity. In addition, the decision of the majority creates in his opinion serious First Amendment problems.

Property in One’s Person

Moore v Regents of the University of California

Supreme Court of California, 1990

Procedural History: Case originated at trial court level where plaintiff brought multiple causes of action against defendants, however the primary cause being under the tort of conversion. At trial court, defendant’s demurrers to cause of action were sustained in addition to all other causes of action as they had the conversion action incorporated into them. At Court of Appeals, decision reversed as court felt plaintiff had adequately pled all the elements of a cause of action for conversion. Case again appealed to CA Supreme Court.

Issue: Does an individual’s proprietary interest via ownership in his body continue to exist after a part has been excised?

Facts: Plaintiff was diagnosed with a rare form of leukemia whereby he was advised to have his spleen removed. Defendants omitted to tell plaintiff that his spleen and associated cells were commercially valuable and were subsequently retained for research purposes. Once spleen was removed, Defendants obtained a patent over a genetically created cell that used the plaintiff’s cells to generate a new-patented cell line named after plaintiff (Mo-cell). Patient followed up as advised for seven years each time having tissue and blood withdrawn. Subsequently he became aware of defendants use of his cells for both research and commercial agreements worth hundreds of thousands of dollars. Plaintiff sued for damages with his primary cause of action being conversion in addition to breach of a fiduciary duty and negligent misrepresentation. Claimed that his blood, bodily substances and cell line derived from them were his “tangible personal property.”

Rule: An individual’s proprietary interest in his person ceases to exist at the point of removal of the specific part

Holding: No, the court held that if an individual were to have a proprietary interest in an excised part of his body, it would extend the law of conversion and ultimately create serious policy concerns for the scientific research community.

Rationale: After considering whether to extend the liability of conversion based on Moore’s complaint, the court ruled against doing so with three points in support of this conclusion.

1) A fair balancing of the relevant policy considerations would advise against doing so as the tort of conversion is a strict liability tort and would unjustly injure researcher who are far removed from the original donor and their original wishes

2) Problems in this area are better suited to legislative resolution.

3) The tort of conversion is not necessary to protect patients’ rights

In deciding whether to extend the tort of conversion, the court considered the existing law pertaining to the tort of conversion. As required under the tort, a plaintiff must establish an actual interference with his ownership or right of possession. As Moore had no intention of retaining possession, the court was left to ponder whether a right of ownership continued. It concluded no for the following reasons.

1) No judicial authority supported this assertion

2) California statutory law limited a patients continuing interest in excised cells

3) The patented cell line and the products derived cannot be Moore’s property as they are both factually and legally distinct from the cells taken in Moore’s body.

Comments: In the dissenting opinion, Mosk J. stated that property rights are both broad and abstract…the concept of property is often said to refer to a bundle of rights that may be exercised with respect to the object.

1) Right to possession

2) Right to use property

3) Right to exclude others from the property

4) Right to dispose of the property by sale or by gift

Mosk J. argues that at the time of excision of cells, Plaintiff should have had the same right to do with his cells what the defendants had done, that is exploit their commercial value.

The Right to Include, The Right to Exclude

Jacque v Steenberg Homes, Inc, 1997

Procedural History: Jury at trial court awarded $1 in nominal and $100K in punitive damages, however, the punitive damages were set aside. Court of appeal affirmed judgment however could not reinstate punitive damages award.

Issue: Did the defendant have a right of way to use the plaintiff’s land as access to another’s property?

Facts: Defendant was attempting to deliver a mobile home. Due to the circumstances surrounding the property and the time of year, it was virtually impossible to deliver the mobile home unit via an access road. In response to this, defendant approached plaintiff’s, the Jacque’s requesting to have access across their land in order to reach the property of the mobile home owner. The Jacque’s were adamant in their protests against doing this, however, Steenberg eventually plowed across the Jacques snow covered field creating a path for delivery. The Jacque’s sued Steenberg homes in trespass as a consequence. The jury’s attempt to award $100000 in punitive damages was set aside with only the $1 in nominal damages remaining. On appeal, the court of appeals affirmed the nominal damages but could not reinstate the punitive damages.

Rule: Private landowners have the right to exclude others from his or her land and is one of the most essential sticks in the bundle of rights that are commonly characterized as property (Kaiser Aetna v United States)

Holding: No, the defendants were told time after time that they were forbidden from using the plaintiff’s land. As a consequence for choosing to create a path, the Defendants were found to be trespassers.

State v. Shack, 1971

Issue: Does title to real property include dominion over the destiny of persons the owner permits to come upon the premises?

Rule: A landowner right in real property does not include dominion over individuals who he permits upon his premises

Holding: No, the court found it unthinkable that the farmer-employer can assert a right to isolate the migrant worker in any respect significant for worker’s well being.

Rationale: Since the farmer allowed workers appointed by a non-profit (that received federal money) to live upon his premises and workers were eligible for government well being benefits, the landowner has no right to exclude his workers from access to these services upon his property.

Acquisition By Find

Hannah v. Peel

Kings Bench, 1945

Procedural History:

Issue: Does a landowner have a superior claim in title to lost property found on his land than the finder does?

Facts: Defendant purchased a piece of freehold property, Gwernhaylod on December 13, 1938. Between the time of conveyance until the end of 1940, D never took actual possession of the property, merely held title. In addition again subsequent to conveyance, the house was requisitioned two separate times whereby during the second stint, Mr. Peel found himself earning 250 pounds per year while the property was used by the military. In August 1940, plaintiff, Duncan Hannah was stationed at the house when on August 21, 1940, when while adjusting the curtains in a bedroom used as a sickbay, he reached above a window frame and grabbed what he thought was dirt or plaster. The item eventually fell outside the window ledge after the plaintiff failed to keep hold of it. The following morning, Mr. Hannah saw what had fallen was actually a brooch. He later took it with him while on home leave and was informed it might be of some value to which upon his return from leave, informed his commanding officer and upon his advice handed it over to the police. By August 1942, still no owner had come forward and eventually the police handed the brooch over to the defendant who sold it for 66 pounds. Plaintiff upon realizing this demanded the brooch’s return via his solicitor. When it was not returned, P commenced proceedings claiming the return of the brooch, or its value, and damages for detention.

Rule: owner of the locus in quo does not have a superior right to possession over the finder of lost property that is unattached to the land

Holding: No, the court followed the rule in Bridges v. Hawkesworth where it stated that “a man does not necessarily possess a thing which is lying unattached on the surface of his land even though the thing is not possessed by someone else.”

Rationale: Court considered two very persuasive cases

McAvoy v Medina

Supreme Judicial Court of Mass. 1866

Procedural History: Trial appeared before Morton J. in superior court whereby the judge ruled that the plaintiff could not maintain his action and a verdict was returned to the defendant. Plaintiff appealed.

Issue: Have either the plaintiff or the defendant acquired any finders right over the mislaid property?

Facts: Defendant as a barber and plaintiff as a customer were in defendants shop. Plaintiff noticed a pocketbook left idle upon a table to which he exclaimed “see what I found.” Defendant approached plaintiff and table asking where it had been found. Plaintiff laid it back where he had found it when subsequently defendant took it, counted the money and was told by the plaintiff to keep it incase the owner returned realizing it had been mislaid. Owner also promised to advertise that it was missing. Subsequent to this, plaintiff made three demands for the money. It had been agreed that the pocketbook was laid by a transient customer of the defendant and left there accidently and was first seen by plaintiff and that the owner was unable to be found.

Rule: Mislaid property does not vest to either its finder or its holder because the owner still may call upon it

Holding: No, the plaintiff acquired no original right, and the defendant’s subsequent act in receiving and holding the property in the manner he did does not create any [property rights]

Rationale: The court relied upon Lawrence v The State which had a similar fact pattern. In the case, the court made a distinction between the case of property thus placed by the owner and neglected to be removed, and property lost. It was held there that “to place a pocketbook upon a table and to forget to take it away is not to lose it, in the sense in which the authorities referred to speak of lost property.”

Acquisition by Gift

Newman v. Bost

Supreme Court of North Carolina, 1898

Procedural History: Action tried before Coble J. and a jury whereby plaintiff was successful in her claim against administrator of her former employer’s estate. Plaintiff alleged in complaint that intestate had given to her all furniture and other property in his dwelling house. This included a $3000 life insurance policy left in a bureau, the keys to which the plaintiff received. Trial court awarded judgment in favor of plaintiff to which defendant appealed.

Issue: Should delivery as a requirement of the law of gifts take the form of manual delivery pertaining to goods tangible when possible?

Facts: Plaintiff, as employee in home of intestate believed she had taken donatio causa mortis over property in the house of intestate. Intestate instructed plaintiff to retrieve set of keys in bedroom where he lay stricken and directed her to hand them to him. He then subsequently handed the keys back to her declaring his intention for her to have everything in the house. He pointed to the bureau, the clock and other articles of furniture in the house.

Rule: Delivery of gifts tangible where no restriction based upon size or availability exist must occur manually.

Held: Court held in favor of both plaintiff and defendant on separate issues. Pertaining to the bureau and other furniture in the bedroom, the court concluded that the plaintiff was right in her cause of action for $45 damages after defendant sold furniture. Plaintiff’s claim pertaining to insurance policy however failed because manual delivery never actually occurred , therefore preventing title from passing, when it very easily could have happened.

Rationale: Court considered the doctrine of causa mortis but was troubled by the principle it proposed which contradicted with the statute of frauds and wills of the state. It cited the case of Thomas v. Lewis however distinguished the present case from Thomas on the facts and also relied heavily upon the owner in the latter stating his intention via a written note, thus memorializing it. It then looked to the law on constructive delivery versus manual delivery.

Comment: Gift Causa Mortis is a gift made in contemplation of and in expectation of immediate approaching death, is a substitute for a will.

Gruen v. Gruen

Court of Appeals of New York, 1986

Procedural History: Plaintiff son commenced action where after a seven day jury trial, Special Term returned a verdict against the plaintiff. He subsequently appealed to the Appellate Division where it was held that a valid gift may be made reserving a life estate and reversed and remitted the matter for a determination of value. A determination was made however the defendant appealed to the Court of Appeals New York pursuant to CPLR 5601 (d).

Issue:

1) Can a valid inter vivos gift of a chattel be made where the donor has reserved a life estate in the chattel and the donee never had physical possession of it before the donors death and,

2) Which factual findings on the elements of a valid inter vivos gift more nearly comport with the weight of the evidence in this case, those of Special Term or those of the Appellate Division

Facts: The subject of the dispute is a work of art entitled “Schloss Kammer am Attersee II” and is the work of a well known Austrian modernist, Gustav Klmit. The plaintiff’s father, Victor Gruen, purchased the work of are in 1959 for $8K. On April 1, 1963 Victor Gruen wrote a letter to his son stating that he was giving him the work of art for his birthday but that he wished to retain possession of it for his lifetime. This first letter was not entered into evidence because it was destroyed by the plaintiff. Two other letters however were received dated May 22, 1963 and the other April 1, 1963 both being dictated by Victor Gruen and sent to the plaintiff. The first letter explained why he needed the initial letter back for various tax and legal reasons, however a substitute letter was also included stating how Victor wished his son to have the Klimt as his 21st birthday gift. The plaintiff never took possession of the work of art remaining solely in the possession of his father, Victor. Following Victor’s death, the plaintiff requested possession of the painting only to have the defendant refuse.

Rule: A donee may take title to a gift as part of a remainder interest even if actual possession or a right to enjoyment are non-existent

Holding: Yes, Both judgment and order of the Appellate Division are affirmed.

Rationale: Court reasoned pertaining to the inter vivos gift that a distinction between an inter vivos gift and an intent to make a gift by will exists. Inter vivos gifts require that the donor intent to make an irrevocable present transfer of ownership. If the intention to make a gift only after death whereby ownership transfers at that point as well, the gift is invalid unless made by will. The court used the three letters as evidence of an intention to make the present gift of title while also establishing a life estate in the property and also acting consistent with an individual having a life estate interest in the property (i.e. by insuring it, retaining possession of it) Court applied TEST of whether the maker intended the gift to have no effect until after the maker’s death or whether he intended it to transfer

some present interest. The evidence established an irrevocable transfer of title or right of ownership (the latter more likely). Once gift is made, the remainder title vests immediately in the donee.

Court considered letters to serve as instruments of gift. Would be illogical for law to require the donor to part with possession when that is exactly what he intends to retain via the life estate.

Adverse Possession

Adverse Possession functions as a method of transferring interests in land without consent of the prior owner, and even in spite of the dissent of such owners…

Elements require that there be an (1) entry that is (2) open and notorious (3) continuous for the statutory period, and (4) adverse and under a claim of right.

In general, an occupant acquires title to land by adverse possession if his possession is:

1) Actual Must have actual possession of the land/actual entry

2) Exclusive adverse possessor must hold exclusive possession of the land (no sharing)

3) open and notorious acts of possessor must be so visible and obvious that a reasonable owner who inspects the land will receive notice of an adverse title claim.

4) adverse (or hostile) under a claim of right What is adverse possessors state of mind? 3 approaches

a. objective test: adverse possessor’s state of mind is irrelevant

i. Test: If adverse possessor uses land as a reasonable owner would use it – without permission from the true owner- this element is satisfied

b. good faith test: adverse possessor must believe in good faith that he owns the land

c. intentional trespass test: adverse possessor must know that he does not own the land and must intend to take title from the true owner.

5) and continuous: Claimant must hold continuous possession, however not required to be in occupation of the land for every minute.

6) for the statutory period: statutory period varies by jurisdiction with majority of states utilizing either a 10, 15, or 20 year period requirement. Can range from 5 to 40 years however.

Color of Title a claim founded upon a written instrument (deed, will) or a judgment or decree that is for some reason defective and invalid (i.e. grantor never actually owned land conveyed by deed or is incompetent to convey or deed is never executed property)

*Actual possession under color of title of only part of the land covered by the defective writing is constructive possession of all that the writing describes.

Van Valkenburgh v. Lutz

Court of Appeals of New York, 1952

Procedural History: Both parties commenced suit against each other pertaining to the traveled path with Lutz prevailing at trial in his claim for a prescription right over the cleared path created years earlier. Judgment affirmed at Appellate Division in June 1948. On a separate action, the Defendant commenced a new action seeking to retain possession of the property where he had dwelled for multiple years prior to his death. At trial, the Lutzes were successful, however, plaintiff appealed. (CONSOLIDATED ACTIONS)

Issue: When adverse possession is not founded upon a written instrument but rather upon proof of actual occupation, when the element of a protected enclosure is unavailable as proof, did the defendant demonstrate sufficiently the other remaining element of cultivation or improvement of the land?

Facts: Defendant, Mary & William Lutz, in 1912 purchased @ auction 2 wooded lots in Yonkers whereby the property was titled in the husbands name. Lots 14 & 15 were situated on a high hill. To the west of the property lied a wooded triangular area containing lots 19-22. Quite often the Lutz would cross the triangular wooded area of property, as it was easier to return to their property in this manner. Eventually the defendants cleared a path across lots 19-22. In addition, the defendants built a small structure on the property around 1923 and in 1928, William Lutz chose to start farming the land after he lost his job. In 1937, the plaintiff’s purchased property nearby (Gibson Street). In 1946, a row developed resulting between P & D. In 1947 plaintiffs purchased lots 19-22 and subsequently soon after “took possession” of the property serving notice to the Lutz of his intention and requiring them to vacate any buildings upon the property. Lutz was also required to remove any belongings from the property. Lutz decided to get his own lawyer and met with plaintiff’s attorney agreeing to remove any buildings, and other junk from the property, however, he did claim a prescription right (right to use, easement). P subsequently erected a fence blocking off access to cleared right of way to which Lutz filed suit for interference with his right of way. Lutz eventually died passing on his property via survivorship to his wife, Mary.

Rule: Acquiring title via adverse possession can be evidenced either by a written instrument or if not written, either by demonstrating actual occupation in either the form of (1) a protected substantial enclosure or (2) cultivation or improvement upon the land (according to NY Civil Practice Act, s. 34, 38, 39)

Holding: No, the court said that the “proof fails to establish actual occupation for such a time or in such a manner as to establish title by adverse possession.” Appeals Court

reversed judgment of trial court

”Adverse, Hostile, Claim of Title…Mistake”Mannillo v. Gorski

Supreme Court of New Jersey, 1969

Procedural History: Plaintiffs filed complaint in Chancery Division seeking mandatory and prohibitory injunction alleging trespass on the part of the defendant. Defendant counterclaimed seeking judgment that she had gained title to the disputed premises by adverse possession. Plaintiff’s successful however defendant appealed. Before argument commenced, Supreme Court granted motion for certification.

Issue: 1) Does an entry and continuance of possession under mistaken belief that the

possessor has title to the lands involved, exhibit the requisite hostile possession to sustain the obtaining of title by adverse possession?

2) Did defendant’s acts satisfy the necessary standard of “open and notorious” possession?

Facts: Gorski (D) and her husband entered into possession of a lot (1007) under a purchase agreement in 1946 and obtained title to the real estate in 1952. Mannillo acquired an adjacent lot (1008) in 1953. In 1946, defendants son made some improvements to the house which included extending 2 rooms at the rear, enclosing a screen porch at the front, and added concrete steps on the western side connecting to a side door. Gorski also made improvements in 1953 including a concrete walkway extending to the front and rear of the property, which encroached upon Mannillo’s lot by 15 inches. Gorski had built the walkway with the mistaken belief that the property belonged to her. Mannillo sued Gorski in trespass and Gorski counterclaimed for adverse possession. Gorski asserted that she had acquired the land through adverse possession beginning in 1946 and continuing for more than twenty years. Mannillo contended that Gorski could not acquire the land through adverse possession because she possessed the land through a mistaken belief of ownership. Mannillo asserted the possession must be hostile under New Jersey law and that an encroachment onto the land of another must be accompanied by intent to invade the owner’s rights. The trial court entered judgment for Gorski, finding that her possession was exclusive, continuous, uninterrupted, visible, notorious, and against the rights and interest of the true owners. Mannillo appealed.

Rule: The very nature of the act (entry and possession) is an assertion of an individuals own title and therefore a denial of title to all others. Whether this is done by mistake matters not.

Holding:

1) Court follows Connecticut Doctrine over Maine Doctrine…”we discard the requirement that the entry and continued possession must be accompanied by a knowing intentional hostility and hold that any entry and possession for the required time which is exclusive, continuous, uninterrupted, visible and notorious,

even though under mistaken claim of title, is sufficient to support a claim of title by adverse possession.

2) No presumption of knowledge arises from a minor encroachment along a common boundary. In such a case, only where the true owner has actual knowledge thereof may it be said that the possession is open and notorious.

Comment: No erosion of Maine Doctrine values, which stare decisis, fosters, as really a question of 2 mistaken parties entitled to land.

Statute: N.J.S. 2A: 14-6 “Every person having any right or title of entry into real estate shall make such entry within 20 years next after the accrual of such right or title of entry, or be barred therefrom thereafter”

Notes:

Tacking, Ordinary Use of PropertyHoward v. Kunto

Court of Appeals of Washington, 1970

Procedural History: Defendants are appealing from a decree quieting title in favor of the plaintiffs.

Issue:1) Is a claim of adverse possession defeated because the physical use of the premises

is restricted to summer occupancy? (Ordinary use of the property)2) Can a person who receives recorded title (a deed) to tract A under the mistaken

belief that he has title to tract B (adjacent) and subsequently occupies tract B, for the purpose of adverse possession, use the periods of possession of tract B by his immediate predecessors who also had record title to tract A? (Tacking issue)

Facts: Several owners of property in a summer resort destination discovered that the land they occupied did not match their deeds (see diagram). Howard owned the deed to the property occupied by Moyer and Moyer held the deed to the property owned by Kunto. Howard and Moyer traded deeds giving Moyer the correct deed and Howard the deed to the land occupied by Kunto. Howard brought suit to quiet title and to assert his ownership of the real estate occupied by Kunto. Kunto contended that although he had been in possession of the land less than one year, he and his successors had been living on the property for longer than the 10 year statutory period and he therefore acquired the land through adverse possession by tacking. The trial court entered judgment for Howard, holding that the actual transfer of possession is insufficient to establish privity when the deed does not describe any of the land occupied. Kunto appealed.

Rule: Continuity of possession may be established although the land is used regularly for only a certain period of time.

Holding: 1) Seasonal occupation was continuous possession because the average owner of

similar property would use it in this way2) “We hold there is sufficient privit of estate to permit tacking and thus establish

adverse possession as a matter of law.”

Rationale: “We believe the requirement of privity is no more than judicial recognition of the need for some reasonable connection between successive occupants of real property so as to raise their claim of right about the status of the wrongdoer or trespasser.”

Comments: Successive periods of AP by different persons may sometimes be combined together to satisfy the statutory duration requirement. This is known as Tacking. Tacking is only allowed if successive claimants are in privity with each other. Privity arises when one claimant transfer possessory rights to another either by deed, devise or intestate succession. NO Privity however exists between successive trespassers.

Acquisition by DiscoveryJohnson v. M’intosh

United States Supreme Court, 1823Chief Justice John Marshall Opinion

Procedural History: Plaintiff’s filed action for ejectment for lands in the State & District of Illinois. District Court of Illinois returned judgment for the defendant. Case appealed to US Supreme Court.

Issue: Can the courts recognize the title received by the plaintiffs as private citizens conveyed from the Indians in possession of the land?

Facts: Plaintiff received two conveyances of land in 1773 and 1775 from Indians, the Piankashaw Indian tribes. The defendant however subsequently obtained a patent in land from the United States government. Plaintiffs contended they have superior title over the defendants. Rule: Law of discovery principle establishes a right of title to the government by whose subjects, or by whose authority, it was made, against all other European governments, which title might be consummated by possession.

Holding: The Court is of the opinion that the plaintiffs do not exhibit a title, which can be sustained in the Courts of the United States, and there is no error in the judgment, which was rendered against them in the District Court of Illinois

Comments: The law of discovery granted title to newly discovered lands to the government of the subjects who discovered it. With this discovery came the right to exclude all other European nations from having an interest of possession in the land. After the United States defeated Britain, the rights gained under the discovery principle over land in the United States were transferred. The US government then gained the power to grant lands thus establishing title in land with private citizens.

Rights of inhabitants, the Indians, not disregarded but were rather impaired. European discovering nation would grant them a right of possession over the soil, but their rights to sovereignty were diminished and their power to dispose (transfer) at their own will, to whomever they pleased, was denied by the discovery principle because discovery gave exclusive title to those who made (found) it.

However extravagant the pretension of converting the discovery of uninhabited country into conquest may appear; if the principle has been asserted in the first instance, and afterwards sustained; if a country has been acquired and held under it; if the property of the great mass of the community originated in it, it becomes the law of the land, and cannot be questioned.

Indians = occupants, in possession of soil, no right to dispose of titleDiscovery vs. Conquest

Property: In the strict legal sense, an aggregate of rights which are guaranteed and protected by the government.

-Ownership: the unrestricted and exclusive right to a thing, the right to dispose of a thing in every legal way, to possess it, to use it, and to exclude every one else from interfering with it. 2

Possession: The detention and control, or the manual or ideal custody, of anything which may be the subject of property, for one’s use and enjoyment, either as owner or as the proprietor of a qualified right in it, and either held personally or by another who exercises it in one’s place and name. 3

2 Henry Campbell, Black, Blacks Law Dictionary, (Abridged 5th Edition) 19833 Henry Campbell, Black, Blacks Law Dictionary, (Abridged 5th Edition) 1983

Possessory Estates: The Life Estate & WasteBaker v. Weedon

Supreme Court of Mississippi, 1972

Procedural History: At trial, Court of Chancery for Alcorn County directed a sale of land which had both a life estate interest as well as a contingent remainderman interest in existence over the property at the same time. An appeal was brought to the Supreme Court of Mississippi.

Issue: Can the court order a judicial sale of the land and if so, what test did the court apply to reach a positive decision?

Facts: John Harrison Weedon had been married two times prior to living and settling in Alcorn county, Mississippi. His first marriage was to Lula Edwards, which resulted in the birth of two children, Florence Weedon Baker and Delette Weedon Jones. Florence Baker had three children, Henry Baker, Sarah Baker Lyman, and Louise Virginia Baker Heck (John Weedon’s grandchildren). Delette Weedon Jones adopted a daughter but her whereabouts at the time of trial were unknown. John Weedon next married Ella Howell and they had one child Rachel. At the time of trial however, both Ella and Rachel were deceased. In 1905, John Weedon purchased Oakland farm and in 1915 married Anna Plaxico (17 years) who assisted Mr. Weedon with the management of the farm by undertaking various activities categorized as “significant” by the court. His relationship with Anna was both close and amiable while his relationship with his daughters from the first marriage was distant and strained. In his will, Mr. Weedon created a life estate over his property for Anna and included a remainder interest for her children, however, should she not have any, a contingent remainder interest existed for Mr. Weedon’s grandchildren. In 1932 Mr. Weedon died and Anna remarried in 1933 not producing any offspring. Eventually Anna ages and is no longer able to take care of the farm. As well, the town is expanding and the state has intentions of building a highway through the property itself and became interested in purchasing a right-of-way. The grandchildren were approached by the state to begin negotiations, however, this was the first that any of the grandchildren knew of their remainder interest in the property.

Rule: The courts role in determining whether to allow the sale of land affected by a future interest, is to consider whether selling the land would prevent waste of the property and to consider whether a sale is necessary for the best interest of all the parties, including the life tenant and the contingent remaindermen.

Holding: No, the court reversed the decision of the Chancery court and remanded the case for further consideration believing that a forced sale of the land would not satisfy the “best interest of all the parties” test because while the life tenant would benefit immediately, it would have the effect of causing great financial loss for the remaindermen. This idea violates the law of waste and the court often sides against the prevention of waste. This case is unique however because instead of protecting against the destruction of the property, it rather protected the future interest holders monetary

gain to be had when the property value arises as it appeared from the facts would eventually happen.

Life Tenants: Doctrine of WasteWoodrick v. Wood

Court of Appeals of Ohio, 1994

Procedural History: Judgment entered in Cuyahoga County Court of Common Pleas denying request of plaintiff-appellant for an injunction prohibiting defendant-appellee from removing a barn that partially rests on a parcel of land that the plaintiff had a remainder interest in. Plaintiff seeks equitable remedy of an injunction to prevent defendant from destroying barn in order to increase value of residential property.

Issue: Can the holder of a remainder interest in parcel of land prohibit the life tenant of the property from destroying structures on the land? Does destruction amount to waste as the plaintiff alleges?

Facts: Catherine Wood and her husband owned several parcels of land including the subject property in question, lot 105. George Wood died in 1987 bequeathing in his will that his wife Catherine remain as the life tenant to all his property both real and personal and upon her death his property pass down to his son and daughter equally. In 1989, Sheridan Wood (son) conveyed his remainder interest in lot 105 to Catherine Wood. On the property was a barn that had been there for 25 years. The barn also partially was on lot 106. Much of the wood was rotting and it was in the defendant’s opinion in a state of disrepair.

Rule: The doctrine of waste seeks to protect the value of property by preventing voluntary acts (affirmative waste) that result in injurious acts more and have more than trivial effects or by preventing permissive waste where there has been a failure to take reasonable care of the property.

Holding: The court held in favor of the defendant affirming the judgment of the trial court. The relevant inquiry the court stated was always whether the contemplated act of the life tenant would result in diminution of the value of the property. In this case, the court ordered the life tenant to pay the value of the barn to the plaintiff as a remainderman, however, it would not authorize an injunction against the barns destruction because by doing so, the life tenant would not have run afoul the boundaries of the doctrine of waste.

Comments: Waste is defined as an abuse or destructive use of property by one in rightful possession (Blacks Law Dictionary)

Defeasible Fees: Determinable, Condition Subsequent, & Executory LimitationMahrenholz v. County Board of School Trustees

Appellate Court of Illinois, 1981

Procedural History: Plaintiffs brought action to quiet title to the subject school property. In 1979, trial court entered an order dismissing the complaint holding that the deed as a matter of law created a fee simple subject to a condition subsequent followed by the right of re-entry for condition broke, rather than a fee determinable followed by a possibility of reverter. Plaintiffs amended their complaint multiple times with it ultimately being dismissed with the final order.

Issue: Did the trial court correctly conclude that the plaintiffs could not have acquired any interest in the school property from the Jacqmains and Harry Hutton? (Did any interest in real property pertaining to the ground upon which the school sat pass to the plaintiffs via a future interest?)

Facts: Land was deeded to the Trustees of School District No. I, predecessors to the Defendants in this case, the County Board of School Trustees (Defendants), in this case, providing the land was to be used for school purposes only. Otherwise the land was to revert back to the Grantors. Later, the original grantors of the land attempted to convey their reversionary interest in this land to the Jacqmains. The Jacqmains later conveyed this reversionary interest to the Plaintiffs in this case, Herbert L. Mahrenholz and Betty Mahrenholz (Plaintiffs). Hutton, the son of the original grantors of the land later conveyed all of his interest in the land deeded to the school to the Plaintiffs. Prior to this conveyance to the Plaintiffs, Hutton had relinquished all of his rights of reverter or rights of re-entry to the Defendants. The Plaintiffs brought suit to quiet title. The trial court found that the Plaintiff could not have acquired a reversionary interest in the land from the Jacqmains or Hutton. The trial court found that the original deed language conveyed a fee simple subject to a condition subsequent followed by a right of re-entry for condition broken, rather than a determinable fee followed by a possibility of reverter. The appeals court determined that the Plaintiffs could not have acquired an future interest from the Jacqmains, as neither interest may be transferred by will or by inter vivos conveyance. The appeals court stated the only possible manner in which the Plaintiffs could have acquired an interest in the land from Hutton was if he had a possibility of reverter in the land and thus owned the school property when it ceased to be used for school purposes.

Rule: In determining the meaning of the language used in a conveyance pertaining to whether it creates either a fee simple determinable or a fee simple subject to a condition subsequent, one must look to the underlying intent of the words used

Holding: Court held that the 1941 deed created a fee simple determinable followed by a right of reverter in the original grantor and his heirs (Harry Hutton). The trial court erred in dismissing the plaintiff’s complaint and therefore the court reversed and remanded the cause to the trial court for further proceedings.

Comment: The court chose to not rule upon the following issues:1. Whether the 1977 conveyance from Harry Hutton was legally sufficient to pass

his interest in the school property to the plaintiffs2. Whether Harry Hutton effectively disclaimed his interest in the property in favor

of the defendants by virtue of his 1977 disclaimer and3. Whether the defendants have ceased use of the Hutton School grounds for “school

purposes”

Is future interest in the form of either a possibility of reverter or a right of reentry transferable? Not during life because these future property rights were not thought of as things that one could transfer but rather as “mere possibilities of becoming estates.”

Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. ToscanoCourt of Appeal of California, Fifth District, 1967

Procedural History: Appellant brought action to quiet title to real property it acquired in 1950 via a deed of gift. Trial court rendered judgment in favor of respondents however parties stipulated that when the trial court rendered judgment refusing to quiet title, it simply decided that the conditions are not void and that its decision on this limited issue is the only question presented.

Issue: Did the language in the habendum clause of the deed of conveyance create a fee simple subject to a condition subsequent that is both valid and enforceable or is the clause even valid as the appellants contend it is not due to the allegation that it restrains their power of alienation and is void?

Facts: The Appellant commenced an action to quiet title to a parcel of real property. The controversy between the parties centers on language in a deed of conveyance which reads “said property is restricted for the use and benefit of the second party, only; and in the even the same fails to be used by the second party or in the even to the sale or transfer by the second party of all or any part of said lot, the same is to revert to the first parties herein, their successors, heirs or assigns.” The Respondents, Toscano and other trustees of the deceased grantor (Respondents), maintain that the language creates a fee simple subject to a condition subsequent and the conveyance is valid and enforceable. The Appellant argues the restrictive language is an absolute restraint on the alienation of land and is void. The Appellant also argues if the language is not void then the reversionary clause only goes into effect if the Appellant sells or transfers the land. The trial court rendered judgment in favor of the Respondents and the case was appealed. The appeals court determined the language of the clause was not void as the condition restraining alienation could be severed from the condition of use. The court concluded that the portion of the clause relating to land use, when construed as a whole and in light of the surrounding circumstances, created a fee subject to condition subsequent with title to revert to the grantor. The appeals court expunged the words creating restraint on alienation from the clause.

Rule: No specific language is necessary to create a fee simple subject to a condition subsequent if the grantor’s intent is clear (most likely evidenced expressly from the language in the instrument.)

Holding: Court affirmed the trial courts judgment that the language of the condition did create a fee simple determinable.

Leaseholds PropertyGarner v. Gerrish

Court of Appeals of New York, 1984

Procedural History: Case initiated by executor for lessor in an attempt to provide lessee with notice to quit. At trial court awarded summary judgment to petitioner on the ground that the lease is “indefinite and uncertain…as regards the length of time accorded respondent to occupy the premises.” Defendant appealed where the order was reversed.

Issue: Does a lease that grants the tenant the right to terminate the agreement at a date of his choice creating a determinable life tenancy on behalf of the tenant or merely establishing a tenancy at will?

Facts: The Defendant, Mr. Gerrish (Defendant), leased property by a printed form with blanks that were filled in by the landlord, as well as a provision allowing the Defendant to terminate the lease “at a date of his own choice.” The landlord died leaving the Plaintiff, Mr. Garner (Plaintiff), to execute his estate. The Plaintiff served the Defendant with a notice to quit to premises. The Defendant refused and Plaintiff sued to evict him. Both lower courts found for the Plaintiff, stating that the lease was indefinite and uncertain and therefore created a tenancy at will, which the Plaintiff could terminate with proper notice. Defendant appealed.

Rule: A lessor can create a lease in which the lessee possesses the sole power to terminate the lease, which creates a life tenancy in the lessee.

Holding: “The lease expressly and unambiguously grants to the tenant the right to terminate, and does not reserve to the landlord a similar right. The lease simply grants a personal right to the lessee to terminate at a date of his choice, which is a fairly typical means of creating a life tenancy terminable at the will of the tenant…Thus the lease will terminate, at the latest upon the death of the named lessee. “ Trial court decision reversed and the petition dismissed.

Co-Ownership & Marital PropertyRiddle v. Harmon

Court of Appeal of California, First District, 1980

Procedural History: Trial court determined via a summary judgment quieting title to her widower plaintiff did not in law sever her interest via a conveyance from herself as a joint tenant to herself as a tenant in common.

Issue: Did plaintiff successfully sever her interest as a joint tenant via a conveyance from herself to herself and ultimately create a tenancy in common?

Facts: Plaintiff being old in age went to speak with an attorney. She learned of her property interest existing as a joint tenancy and because of this, she was prevented from passing her interest in the property via a will because of the right of survivorship. As she was married still survivorship would dictate that her husband would take over her interest. Plaintiff did not like this idea and wanted to pass down her interest in the property via a will. In order to do so, plaintiff executed a deed and a will. The deed conveyed her interest in the property as a joint tenant to herself as a tenant in common. In the conveyance existed a clause stating “the purpose of this Grant Deed is to terminate those joint tenancies formerly existing between the grantor… and her husband….” The will disposed of the plaintiff’s interest in the property.

Rule: A universal right of each joint tenant is the power to effect a severance and destroy the right of survivorship by conveyance of his or her joint tenancy interest to another “person.”

Holding: We discard the archaic rule that one cannot enfeoff oneself which, if applied, would defeat the clear intention of the grantor. There is no question but that the decedent here could have accomplished her objective – termination of the joint tenancy- by one of a variety of circuitous processes. We reject the rationale of the Clark case because it rests on a common law notion whose reason for existence vanished about the time that grant deeds and title companies replaced colorful dirt clod ceremonies as the way to transfer title to real property. One joint tenant may unilaterally sever the joint tenancy without the use of an intermediary device….judgment reversed.

Joint Tenancy Severance (Unity of Title)Harms v. Sprague

Supreme Court of Illinois, 1984

Procedural History: Plaintiff as co-owner over real property as a joint tenant filed complaint to quiet title and ask for a declaratory judgment. Trial court held in favor of defendants stating that a mortgage severs a joint tenancy. Appellate Court reversed decision holding that a mortgage by one joint tenant of his interest in the property does not sever the joint tenancy. (Unity of title not severed)

Issue:1) Is a joint tenancy severed when less than all of the joint tenants mortgage their interest in the property?2) Does such a mortgage survive the death of the mortgagor as a lien on the property?

Facts: Two brothers, John and William Harms owned a property in joint tenancy with a right of survivorship expressly stated. John used the property to secure a promissory note for a close friend’s purchase of a separate piece of land. John died, leaving William unaware of the existence of the mortgage. William brought suit against the mortgage note holders and the executor of John’s estate. The trial court held that the mortgage severed the joint tenancy and survived as a lien against the undivided one half interest that passed to the estate of John. The appellate court reversed holding that the joint tenancy was not severed and that William owned the property without the mortgage note surviving. The defendant mortgage note holders appealed.

Rule: A lien on a joint tenant’s interest in property will not effectuate a severance of the joint tenancy, absent the conveyance by a deed following the expiration of a redemption period.

Holding: Court held that plaintiff’s right of survivorship became operative upon the death of his brother. As such the plaintiff is now the sole owner of the estate in its entirety. Further we find that the mortgage executed by John Harms does not survive as a lien on the plaintiff’s property.

Rationale: Court debated between Title Theory and Lien Theory. Title Theory held that a mortgage interest created over a property held by joint tenants served as a conveyance thus destroying the unity of title ultimately severing a joint tenancy creating a tenancy in common. Lien Theory held that a mortgage merely created a security interest over the property. It did not however serve to pass title to the mortgagee.

Partitions of Land amongst co-tenantsDelfino v. Vealencis

Supreme Court of Connecticut, 1980

Procedural History: Plaintiffs sought a partition of the property by sale and division of the profits in accordance with the co-owners interests. Trial court concluded that a partition in kind could not be had without “material inquiry” to the respective rights of the parties and therefore ordered the that the property be sold @ auction. On appeal, appellants argued that trial court erred in its conclusion.

Issue: Did the Superior Court properly order the sale of the property in question, pursuant to General Statutes §52-500 owned by the plaintiffs and the defendant as tenants in common?

(Does a partition by sale promote the best interests of the parties when there is a statutory preference for partitions in kind?)

Facts: The plaintiffs, Angelo and William Delfino and the defendant Helen Vealencis owned as tenants in common 20.5 acres of land. On a portion of the land, was the defendant’s house as well as a business she operated. The plaintiffs owned an undivided 99/144 interest and the defendant owned a 45/144 interest in the land. The plaintiffs brought suit to partition the property by sale. The defendant moved for an in kind partition. The trial court ruled for a partition via an auction sale and the defendant appealed.

Rule: The court must analyze the best interests of all parties to determine whether to partition land in kind or partition via sale.

Holding: We conclude that the trial court erred in ordering a partition by sale, and that, under the facts as found, the defendant is entitled to a partition of the property in kind. There is error, the judgment is set aside and the case is remanded for further proceedings not inconsistent with this opinion.

Comments: 4 findings trial court considered (pg. 341)…

Co-tenants, Tenants in Common, Rent LiabilitySpliier v. Mackereth

Supreme Court of Alabama, 1976

Procedural History: Trial court awarded Mackereth $2100 in rent.

Issue: Was the plaintiff’s conduct sufficient to constitute ouster and thus necessitate the payment of rent to cotenants?

Facts: In 1973, Spiller purchased an undivided one half interest in a lot. Spiller’s cotenants were Mackereth and others. At the time Spiller purchased his interest, the lot was being rented to a company. Three months later, Spiller offered to buy out the other tenants, who refused and Spiller then filed an action to force the sale for division. A few months after his suit, the company vacated the lot and Spiller began to use the building on the lot as a warehouse. Mackereth brought a counterclaim to collect rent from Spiller for use of the warehouse. The trial court found that Spiller had ousted Mackereth and awarded rent. In a separate proceeding, the trial court ordered sale of the lot. Spiller appealed.

Rule: Ouster necessitating the payment of rent to non-occupying tenants requires that the occupying tenant take action that prevents the use and enjoyment of the property by the non-occupying cotenants.

Holding: The court ultimately was unable to find any evidence that supports a legal conclusion of ouster. The court therefore reversed the trial Court’s judgment which awarded Mackereth $2100 in rent.

Comments: Ouster is a cause of action available to one who is refused access to their concurrent estate. Absent an agreement to pay rent or an ouster of a cotenant, a cotenant in possession is not liable to his cotenants for the value of his use and occupation of the property. Absent an agreement, for a party to prove ouster and obligate the cotenant occupying the property to pay rent, the non-occupying tenants must demonstrate that the non-occupying cotenants were refused use and enjoyment of the land after a demand on the occupying cotenant. In the instant case, we find that a mere letter requesting rent or to vacate is an insufficient showing of ouster because each cotenant has a right to occupy the entire property and requesting rent is not asserting their right to use and enjoy the land.

Leases, CotenantSwartzbaugh v. Sampson

Court of Appeal of California, 1936

Procedural History:

Issue: Can one joint tenant who has not joined in the leases executed by her cotenant and another maintain an action to cancel the leases where the lessee is in exclusive possession of the leased property?

Facts: The defendant, Mr. Swartzbaugh and plaintiff, Mrs. Swartzbaugh, are married and owned as joint tenants, 60 acres of land. In 1933, defendant Sampson negotiated with the Swartzbaughs to lease a portion of the land for a boxing pavilion. Mrs. Swartzbaugh objected to the lease and Sampson knew she would not agree. Mr. Swartzbaugh and Sampson signed a lease and Sampson proceeded to take exclusive possession of the leased property by erecting and operating a boxing pavilion. Mrs. Swartzbaugh initiated this action to cancel the lease. The trial court granted a nonsuit to the defendant and the plaintiff appealed.

Rule: A joint tenant can lease or license anything less or equal to his rights in the joint tenancy property.

Holding: No, affirmed. An estate in joint tenancy can be severed by destroying one or more of the necessary unities (time, title, possession and interest) by operation of law, death, omissions, voluntary or involuntary acts of the joint tenants. Ordinarily, one joint tenant out of possession cannot recover exclusive possession of joint property from his cotenant, but can recover the right to be let into joint possession. Ordinarily one joint tenant cannot maintain an action against his cotenant for rent for occupancy of the property or for profits derived from his own labor. He may compel the tenant in possession to account for rents collected from third parties. The act of one joint tenant without express or implied authority from or the consent of his cotenant cannot bind or prejudicially affect the rights of the latter. However, a joint tenant may be lease or license confer upon another the right to occupy and use the property of the cotenancy as fully as the lessor/licensor might have done.

Marital Property: Equitable Division of AssetsIn re Marriage of Graham

Supreme Court of Colorado, 1978

Procedural History: Trial court awarded plaintiff $33,134 as a proportion of the future earnings of her husbands wages as a result of his MBA. She was to received this amount payable in installments of $100 every month. The Court of Appeals reversed holding that an education is not itself “property” subject to division under the Act, although it was one factor to be considered in determining maintenance or in arriving at an equitable property division.

Issue: Is an MBA (or any educational degree for that matter) considered to be marital property which can then be subject to division after the dissolution of the marriage?

Facts: Mr. and Mrs. Graham were married for six years. During that period, Mrs. Graham worked full time providing for 70% of the expenses of the marriage and Mr. Graham worked part time and obtained a Bachelor’s degree as well as Masters in Business Administration (MBA). As part of the divorce proceeding, the trial court ruled that the MBA was divisible property and estimated its worth and future earnings potential. The appellate court reversed and Mrs. Graham appealed.

Rule: An educational degree such as an MBA is simply not encompassed even by the broad views of the concept of “property.” It does not have an exchange value or any objective transferable value on an open market. It is personal to the holder. It terminates on death of the holder and is not inheritable. It cannot be assigned, sold, transferred, conveyed, or pledged. An advanced degree is a cumulative product of many years of previous education, combined with diligence and hard work. It may not be acquired by the mere expenditure of money, it is simply an intellectual achievement that may potentially assist in the future acquisition of property. In our view it has none of the attributed of property in the usual sense of that term.

Holding: Judgment affirmed…

Comments: Dissent by Carrigan J. equity demands that courts seek extraordinary remedies to prevent extraordinary injustice….not the husbands degree which constitutes the asset in question as majority has focused upon but rather the increase in the husbands earning power concomitant to that degree which is the asset conferred on him by his wife’s efforts. That increased earning capacity was the asset appraised in the economist’s expert opinion in testimony as having a discounted present value of $82K…would affirm trial courts award.

Elkus v. ElkusSupreme Court of New York, Appellate Division, 1991

Procedural History: Trial court determined that plaintiff’s career and/or celebrity status was not “marital property” subject to equitable distribution…Defendant appealed.

Issue: Can a career as a performing artist, and the accompanying celebrity status, constitute marital property subject to equitable division?

Facts: The Defendant, Mr. Elkus (Defendant) and the Plaintiff, Mrs. Frederica von State Elkus (Plaintiff), were married for 17 years. At the beginning of their marriage, Plaintiff’s career was just beginning. During their marriage, Plaintiff’s career took off. Defendant traveled with his wife, was her voice coach, attended and critiqued most of her performances and alleged that he sacrificed his own promising career for his wife’s success. The parties stipulated to mutual judgments of divorce, but requested an appeal of the trial court’s determination that Plaintiff’s celebrity status and career did not constitute marital property.

Rule: To the extent that a supporting spouse’s efforts led to an increase in value of spouse’s career, he or she is entitled to a share in equitable distribution.

Holding: In sum, we find that it is the nature and extent of the contribution by the spouse seeking equitable distribution, rather than the nature of the career, whether licensed or otherwise that should determine the status of the enterprise of marital property…Supreme Court judgment reversed on the law and matter should be remitted to the supreme court for further proceedings.

Delivery of PossessionHannan v. Dusch

Supreme Court of Appeals of Virginia, 1930

Procedural History: Plaintiff filed a declaration alleging that the defendant had a duty to deliver the leased premises to the plaintiff at the beginning of the term.

Issue: Whether a landlord, who without any express covenant as to delivery of possession leases property to a tenant, is required under the law to oust trespassers and wrongdoers so as to have it open for entry by the tenant at the beginning of the term?

Facts: The Plaintiff, Hannan (Plaintiff), leased property from the Defendant, Dusch (Defendant), for a term of 15 years. When the Plaintiff attempted to take possession of the property, he discovered there were tenants still on the property. Defendant refused to take action to evict tenants and argued that it was the Plaintiff’s duty to see that the premises were available. The Plaintiff sued to recover damages.

Rule: American Rule adopted which states that the lessee has a right to possession, but absent an explicit covenant, the lessor has no duty to deliver possession.

Holding: Judgment affirmed

Subleases and AssignmentsErnst v. Conditt

Court of Appeals of Tennessee, 1964

Procedural History: Complainants filed cause of action seeking recovery of $2404.58 of rent in arrears from the first year and $4200 of rent in arrears for the second year. In addition they sought a further sum for the removal of improvements made upon the property. Chancellor found agreement to be an assignment with a decree judgment entered for the complainants in the sum of $6904.58. Defendant appealed on the basis that the Chancellor erred in failing to hold the instrument to be a sublease rather than an assignment.

Issue: Did modifications to original lease between Ernst and Rogers create an assignment or a sublease?

Facts: The Complainants leased a tract of land to Rogers for one year and seven days. Rogers proceeded to construct a racetrack, fence and undertake other improvements to the land. The lease contained provisions prohibiting subletting, assignment and a duty to clear any construction or improvements at the end of the lease. Rogers sold the business to the Defendant and a new lease was created with an accepted sublease agreement to Defendant. Defendant ceased paying rent and the Complainants brought suit to recover past rent. Defendant argued that Rogers remained personally responsible for the rent. The lower court found for the Complainant and the Defendant appealed.

Rule: The words used in an instrument are not conclusive, rather it is the intentions of the parties that govern whether the instrument is a sublease or assignment.

Holding: Affirmed, the use of the word “sublet” is not conclusive of the construction to use on the instrument. Rather the instrument was an assignment.A sublease grants the sublessee an interest in the lease premises with a reversionary interest remaining with the lessee. An assignment conveys the whole term, leaving no interest or reversionary interest in the lessee. The Common law rule is if the instrument purports to transfer the lessee’s estate for the entire remainder of his term, it is an assignment, regardless of its form or the parties’ intentions. This current agreement, despite its terms, does not leave the lessee with a right to re-enter or a reversionary interest, thus it is an assignment.

General Rule: An assignment of a lease coveys the whole term of the lease where as a sublease is a transaction where the tenant grants an interest in the leased premises less tan his own, or reserves to himself a reversionary interest in the term.

Lessors ConsentKendall v. Ernest Pestana, Inc.

Supreme Court of California, 1985

Procedural History: The proposed assignees brought suit for declaratory and injunctive relief and damages seeking a declaration “that the refusal of Ernest Pestana, Inc. to consent to the assignment of the lease is unreasonable and is an unlawful restrait on the freedom of alienation…” The trial court sustained a demurrer to the complaint without leave to amend. An appeal was filed

Issue: In the absence of a provision that a landlords consent will not be unreasonably withheld, can a lessor unreasonably and arbitrarily withhold his or her consent to an assignment? (First impression case in CA)

Facts: The City of San Jose owned a hangar at an airport, and leased it to Irving and Janice Perlitch. The Perlitchs assigned their interest to Ernest Pestana, Inc. (Defendant). Prior to assigning their interest to Defendant, the Perlitchs entered into a sublease with Robert Bixler, who started a business on the property. The sublease stated that before the lessee could assign his interest, he had to obtain written consent from the lessor, otherwise the lease could be voidable at the option of the lessor. Bixler wanted to sell his business to Jack Kendall (Plaintiff) and requested consent from Ernest Pestana, Inc., who refused to give it, claiming it had the right to arbitrarily refuse such a request. Plaintiff seeks declaratory and injunctive relief and damages.

Rule: A restraint on alienation without the consent of the landlord of a tenant’s interest in leased property is valid, but the landlord’s consent to an alienation by the tenant cannot be withheld unreasonably, unless a freely negotiated provision in the lease gives the landlord an absolute right to withhold consent.

Holding: Court held in favor of minority rule. 2 reasons for this. Court persuaded by policy against restraint of alienation of commercial property because of increased value of space in society. Second viewpoint is seeing lease as a contract. Implied covenant now exists that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. Where a contract confers upon a party a discretionary power affecting the rights of the other party, that duty is now imposed to exercise good faith and in accordance with fair dealing.

When Tenant Defaults: Landlords RightsBerg v. Wiley

Supreme Court of Minnesota, 1978

Procedural History: Judgment given in favor of plaintiff (A Family Affair Restaurant, Inc.) against Defendants Wiley Enterprises (Landlord) and Rodney A. Wiley via a jury verdict for damages resulting from wrongful eviction from its leased premises. Berg was awarded $31000 for lost profits and $3450 for loss of chattels resulting from the wrongful lockout. Defendants appealed.

Issue: Did the evidence support sufficiently a jury’s finding that the tenant did not abandon or surrender the premises and whether the trial court erred in finding Wiley’s reentry forcible and wrongful as a matter of law?

Facts: Mr. Wiley, the Defendant (Defendant) and landlord leased land to Berg, the Plaintiff (Plaintiff), for use as a restaurant. The lease was for five years and required the tenant to bear all costs of repairs/remodeling and make no changes to the building structure without the Defendant’s approval. The relationship broke down when the Plaintiff allegedly remodeled the restaurant without the Defendant’s approval and allegedly operated the restaurant in violation of the state health code. Per the advice of his attorney, the Defendant changed the locks to the restaurant. The jury found that the Defendant had wrongfully locked the Plaintiff out and awarded damages. The jury also found that the Plaintiff did not abandon the premises by closing it for renovation as the Defendant alleged. The Defendant appealed.

Rule: The modern rule was adopted stating that the only lawful means to dispossess a tenant who has not abandoned nor voluntarily surrendered but who claims possession adversely to a landlord’s claim of breach of a written lease is by resort to judicial process

Holding: Affirmed. The only lawful means to dispossess a tenant who has neither abandoned nor voluntarily surrendered, but who claims possession of the property, is by resort to judicial process.

Minnesota has historically followed the common law rule that a landlord may rightfully use self-help to retake leased premises from a tenant provided that the (1) landlord is legally entitled to possession and (2) landlord’s means of reentry are peaceable.However there is a growing modern trend holding that self help is never available. This view is founded on the premise that the potential for violent breach of peace inheres in any situation where a landlord attempts by his own means to dispossess a tenant.

Comments: Note lease in this case was commercial however, would appear that holding applies to all leases.

The Tenant Who Has Abandoned Possession (Mitigation of Damages)Sommer v. Kridel

Supreme Court of New Jersey, 1977

Procedural History: Plaintiff sought damages in the form of rent in arrears after defendant never took possession of leased property. Plaintiff initially sought $7590, the total amount due for the full two year lease, however he then amended his complaint seeking $5865, the amount due between May 1, 1972 to September 1, 1973 neglecting to include a 6 week rent concession of $690 as provided for in the lease. Defendant filed an amended answer alleging that the plaintiff breached the contract by failing to mitigate his damages and that he accepted the defendant’s surrender of the premises. Trial court ruled in favor of the defendant holding that the landlord was under a duty to mitigate his damages. In addition, he held that the plaintiff’s failure to make any response to defendant’s unequivocal offer of surrender was tantamount to an acceptance thereby terminating the tenancy. The Appellate Division reversed in a per curiam opinion.

Issue: Is a landlord under a duty to mitigate his damages when a tenant abandons or surrenders a leased premises due to a default in payment?

Facts: James Kridel (Defendant) entered into a two-year lease with Abraham Sommer (Plaintiff), the owner of an apartment building. Defendant wrote Plaintiff a letter stating that he could not take the apartment and asked to be released from the lease. Plaintiff did not respond. A third party was ready, willing and able to rent the apartment, but was told the apartment was being rented to someone else. Plaintiff sued Defendant for the total amount due under the two-year lease. Defendant claimed Plaintiff breached the contract, failed to mitigate damages, and accepted Defendant’s surrender of the premises. The trial court found for Defendant.

Rule: Landlords now have a duty to mitigate their losses and must provide the burden of proving reasonable diligence was undertaken in attempting to re-let the premises.

Holding: “We therefore hold that the antiquated real property concepts which served as the bases for the pre-existing rule, shall no longer be controlling where there is a claim for damages under a residential lease. Such claims are now governed by the modern notions of fairness and equity. A landlord has a duty to mitigate damages where he seeks to recover rent due from a defaulting tenant.” (Pg 474) Judgment is reversed and case remanded to the trial court for proceedings.

Comments: The state has a rule that states a landlord has no duty to mitigate damages caused by a defaulting tenant. But, courts have the tendency in interpreting leases and other contracts to focus on the intention of the parties.When a breach occurs in a multi-dwelling building, each apartment may have unique qualities that make it attractive. Here, there was a specific request to rent the apartment vacated by Defendant. There is no reason to believe that absent this vacancy, Plaintiff could have rented a different apartment to the third party.Modern notions of fairness and equity must now govern. A landlord has a duty to

mitigate damages where he seeks to recover rents due from a defaulting tenant.If the landlord has other vacant apartments besides the defaulting tenant’s, his duty to mitigate consists of making reasonable efforts to re-lease the unit. He must treat the apartment as one of his vacant stock.This case shows the unfairness that can happen when a landlord has no duty to mitigate. Plaintiff could have avoided the damages, which accrued by finding a suitable tenant, and so defendant was relieved of his duty to continue to pay rent.

Duties, Rights and Remedies (Especially Regarding the Condition of the Leased Premises)

Quiet Enjoyment and Constructive EvictionReste Realty Corp. v. Cooper

Supreme Court of New Jersey, 1969

Procedural History: Trial court held in favor of defendant-lessee sustaining the defense of constructive eviction. The Appellate Division reversed this judgment on two grounds. The first that the proof did not support a finding of any wrongful act or omission on the part of the lessor sufficient to constitute a constructive eviction & second, if such act or omission could be found, defendant waived it by failing to remove form the premises within a reasonable time thereafter. Defendant’s petition for certification was granted by Supreme Court.

Issue: Is the landlord guilty of a breach of a covenant which justified the tenant’s removal from the premises on December 30, 1961 under the remedy of constructive eviction? (Covenant being breach of quiet enjoyment that was expressly stated in second lease)

Facts: The Defendant, Cooper (Defendant), leased from the Plaintiff, Reste Realty Corporation (Plaintiff), the bottom floor of a building for commercial use, for a term of five years. One year after signing the first lease, the Defendant signed a second lease giving her more of the bottom floor. The driveway was not part of the Defendant’s leasehold. Whenever it rained, the water ran off into the Defendant’s office space. Plaintiff’s management was aware of the problem and promised to fix it. When the manager died, the new management paid no attention to Defendant’s request. Defendant sent a notice of vacation and Plaintiff sued to recover rent for the unexpired term of the lease. The trial court found constructive eviction and found for the Defendant. The appellate court reversed and Defendant appealed.

Rule: When the landlord or someone acting for him or by virtue of a right acquired through him causes a substantial interference with that enjoyment and use, the tenant may claim a of constructive eviction.

Holding: We find adequate evidence to support the conclusion and are of the view that the Appellate Division should not have reversed it….we hold the view that the trial court was correct in deciding that the Defendant have been constructively evicted from the premises in question, and therefore was not liable for the rent claimed.

Comments: In our view, therefore, at the present time whenever a tenant’s right to vacate leased premises comes into existence because he is deprived of their beneficial enjoyment and use on account of acts chargeable to the landlord, it is immaterial whether the right is expressed in terms of breach of a covenant of quiet enjoyment, or material failure of consideration, or material breach of an implied warranty against latent defects. (Pg 488)

Implied Warranty of HabitabilityHIlder v. St. Peter

Supreme Court of Vermont, 1984

Procedural History: Defendants appeal from a judgment rendered in the Rutland Superior Court ordering defendants to pay plaintiff’s $4945 in damages representing reimbursement of app rent paid plus compensatory damages for the rental of a residential apartment over a 14 month period.

Issue: Defendant’s appealed raising three issues. First, whether the court correctly calculated the amount for damages awarded the plaintiffs; secondly, whether the court’s award to the plaintiff of the entire amount of rent paid to the defendants was proper since the plaintiff remained in possession o the apartment for the entire lease term and finally, whether the courts finding that defendant acted on his on his own behalf and with the apparent authority of defendant of Patricia St. Peter was error.

Facts: In October 1974, Plaintiff began occupying an apartment in the Defendants, the Mr. and Mrs. St. Peter’s (Defendants) complex. Plaintiff occupied the apartment pursuant to an oral lease and paid all rent due. Further per an oral agreement, Plaintiff cleaned the apartment in exchange for her security deposit back, which the Defendants denied receiving. Plaintiff discovered several defects and items in disrepair in her apartment. Some of which she fixed with her own funds. The trial court found that the state of disrepair constituted a breach of the implied warranty of habitability and reduced the value of the leasehold. Defendants appealed.

Rule: There is an implied warranty of habitability in every lease whether it be oral or written and it cannot be excluded.

Holding: Affirmed in part, reversed in part (punitive damages) and remanded…In the instant case, the trial court’s award of damages, based in part on a breach of the implied warranty of habitability, was not a misapplication of the law relative to habitability. Because of our holding in this case, the doctrine of constructive eviction, wherein the tenant must abandon in order to escape liability for rent, is no longer viable. Under our holding, when a landlord breaches the implied warranty of habitability, the tenant may withhold future rent, and may also seek damages in the amount of rent previously paid. ….no punitive damages for plaintiff….defendant’s third issue is meritless

Land Transactions: BrokersLicari v. Blackwelder

Appellate Court of Connecticut, 1988

Procedural History: Appeal by the defendants form the judgment of the trial court awarding damages to the plaintiffs for the breach of the defendants’ duty as real estate brokers to find a buyer for the plaintiffs’ property at the best possible price, and for acting improperly in dealing for themselves to the financial loss of the plaintiffs.

Issue: What duties are real estate brokers subject to?

Facts: Plaintiffs in this case are as the court considered to be “unsophisticated lay people with no extensive dealings in real estate.” Plaintiffs inherited property subsequent from the death of their parents and decided to put the property on the market in 1978. Plaintiffs were unaware of the actual value of the property and were absent the knowledge to determine a figure. Upon the recommendation of a neighbor, the plaintiffs contacted Robert Schwartz (a broker) for guidance and assistance in the sale of their property. Schwartz then consulted with the real estate agency of the defendants Donald Blackwelder and Hannah Opert where were also brokers. Schwartz and defendants created a “co-broke agreement” under which they would share the real estate listings and divide the commissions evenly if one of the defendants’ prospective clients purchased the real estate listed by Schwartz. Opert asked Schwartz to secure an exclusive listing on the plaintiffs’ property so that it could be shown to a prospective client. A 24-hour exclusive listing was obtained whereby the plaintiffs’ real estate was set at a price of 125K. Within this time period, defendants themselves made an offer of 115K on property which was accepted by the plaintiffs. Defendants failed to disclose the true market value the property might have for prospective buyers and the plaintiffs were under the impression that the property had been sold at its true market value. Subsequently the defendants flipped the property for 160K. The buyer ended up being an individual the plaintiffs had instructed to Schwartz to not do business with.

Rule: Brokers are fiduciaries and as such are to act in the utmost good faith. In addition, brokers are under a legal obligation to make a full, fair and prompt disclosure to his employer of all facts within his knowledge, which are or may be material to the matter in connection with which he is employed, which might affect his principal’s rights and interest, or his action in relation to the subject matter of the employment, or which in any way pertains to the discharge of the agency which the broker has undertaken.

Holding: The trial court did no err in finding the essential claims of breach of duty and intentional misrepresentation set out in the plaintiffs’ complaint were proved by the facts presented, nor in finding that the conduct of the defendants entitled the plaintiffs to an award of damages. There is no error.

The Contract of Sale (Equitable Estoppel & Specific Performance)Hickey v. Green

Appeals Court of Massachusetts, 1982

Procedural History: The Hickey’s filed a complaint seeking specific performance while Mrs. Green asserted that relief should be barred via the statute of frauds. The trial judge granted specific performance and Mrs. Green appealed.

Issue: Whether a party’s partial performance in reliance on an oral contract to purchase real property makes the contract enforceable?

Facts: The Plaintiffs entered an oral contract to purchase the Defendant, Green’s (Defendant) lot, for 15,000 dollars. The Plaintiffs gave the Defendant a deposit of 500 dollars that was accepted. On the back of the deposit check, the Plaintiffs had written a clause which stipulated the check was a deposit for the lot subject to a condition that a zoning variance was approved by the town. A few days after writing this check, the Plaintiffs learned they would not need a zoning variance to build on the lot. The payee line of the check was left blank, as the Plaintiffs were not certain whether the Defendant or her brother was to receive the check with the understanding that the Defendant would fill in the appropriate name on the check. The check was neither cashed nor endorsed. Mr. Hickey specifically stated to Mrs. Green that his intention was to sell his house and build on Mrs. Green’s lot. In reliance on their arrangements, the Plaintiffs advertised and subsequently sold their house in a very short period of time. On July 24, 1980 Mrs. Green told the Hickey’s that she no longer intended to sell her property to them and she was selling her property to another buyer for 16,000 dollars. The Plaintiffs told the Defendant that they had already sold their house and offered 16,000, but the offer was refused. The Plaintiffs filed suit for specific performance and the trial court granted relief. The Defendant appealed the decision.

Rule: The statute of frauds normally requires a contract for the sale of land to be in writing. An exception to this exists under an oral contract where a party partially performs in reliance on the contract. Part performance allows the specific enforcement of an oral contract when particular acts, such as paying part of the purchase price or making improvements on the property, have been performed by one of the parties to the agreement.

Holding: Yes, the stipulated facts require the conclusion that in equity Mrs. Green’s conduct cannot be condoned. The case must be remanded to the trial judge for the purpose of amending the judgment to require conveyance of Lot S by Mrs. Green only upon payment to her in cash within a stated period of the balance of the agreed price of $15000.

Contract of Sale (Marketable Title)Lohmeyer v. Bower

Supreme Court of Kansas, 1951

Procedural History: Dr. Lohmeyer brought suit to rescind the contract of sale and demanded the return of their earnest money. The Bowers in a cross-complaint asked specific performance of the contract. The trial court rendered judgment in favor of the Bowers and decreed specific performance o the contract. Dr. Lohmeyer appealed

Issue: Whether the property in question is subject to encumbrances or other burdens making the title unmerchantable.

Facts: In 1949 Dr. Lohmeyer entered into a contract to buy from the Bowers a plot of land numbered Lot 37 in Berkley Hills Addition in the city of Emporia. The Bowers via a warranty deed would convey to the Dr. Lohmeyer an abstract of title showing good merchantable title or an Owners Policy of Title Insurance…(See Clause Pg. 548). The abstract of title showed that the original subdivider of the Berkley Hills Addition in 1926 had imposed a restrictive covenant on Lot 37 requiring that any house built on the property be 2 stories in height. At the time, Lot 37 had a single story house. Dr. Lohmeyer consulted with a lawyer where in addition, he learned that Emporia had a zoning ordinance that prevented any frame building from being built within 3 feet of a side or rear lot line. That house at the time was located within 18 inches of the north line of the lot and was thus in violation of the ordinance. In 1946, the Bowers had moved a house which had been built elsewhere onto Lot 37. When Dr. Lohmeyer brought the zoning violation to the attention of the Bowers, they offered to purchase 2 feet along the north lot line and then convey this to Dr. Lohmeyer but this offer was refused.

Rule: A marketable title to real estate is one which is free from reasonable doubt, and a title is doubtful and unmarketable if it exposes the party holding it to the hazard of litigation

Holding: We have little difficulty in concluding that the violation of §5-224 of the ordinances of the city of Emporia as well as the violation of the restrictions imposed by the dedication declaration so encumber the title to lot 37 as to expose the party holding it to the hazard of litigation and make such title doubtful and unmarketable. Conclusions heretofore announced require reversal of the judgment with directions to the trial court ot cancel and set aside the contract and render such judgment as may be equitable and proper under the issues raised by the pleadings.

Duty to Disclose DefectsStambovsky v. Ackley

New York Supreme Court, Appellate Division, 1991

Procedural History: Plaintiff, purchaser of a haunted home, sought rescission of the contract after hearing about the house’s reputation. The Supreme Court dismissed the complaint.

Issue: Whether an undisclosed condition that impairs the value of the property is a basis for rescission of the contract.

Facts: The Plaintiff moved to a new neighborhood where he contracted to buy a house. The Defendants, Ackley and a real estate agency (Defendants), knew the house they had just sold to the Plaintiff was haunted. This was a widely known fact in the area and the house had even received national press attention. After Plaintiff discovered this, he sued for rescission. The trial court dismissed his complain

Rule: Where a condition which has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care with respect to the subject transaction, nondisclosure constitutes a basis for rescission as a matter of equity.

Holding: The judgment of the Supreme Court, New York County, entered 4/9/1990 which dismissed the complaint pursuant to CPLR 3211 (a)(7), should be modified on the law and the facts in the exercise of discretion, and the first cause of action seeking rescission of the contract reinstated without costs.

Johnson v. DavisSupreme Court of Florida, 1985

Procedural History: Davis’s filed suit for rescission of the contract and for the return of their 10% deposit they gave the Johnson’s for the purchase of their home. The court held that the affirmative representation that the roof was sound was a false representation which entitled the Davis’s to rescind the contract.

Issue: is a seller under a duty to disclose material defects that even a diligent buyer would be unaware of?

Facts: The Davis’s while in negotiations with the Johnsons were told that the house had no problems, specifically with the roof. The Johnsons however were well aware of the roofs problems. The Davis’s gave the Johnsons $31K as a 10% deposit on the house. Several days later, after a heavy rain, the Davis’s discovered water “gushing” in from around the windows and from the ceiling in two rooms.

Rule: Where the seller knows of facts materially affecting the value or desirability of the property which are known or accessible only to him and also knows that such facts are not known to or within the reach of the reach of the diligent attention and observation of the buyer, the seller is under a duty to disclose them to the buyer.

Holding: Yes…we are of the opinion that the same philosophy regarding the sale of homes should be the law in the state of Florida. Accordingly we hold that where the seller knows of facts materially affecting the value or desirability of the property which are known or accessible only to him and also knows that such facts are not known to or within the reach of the reach of the diligent attention and observation of the buyer, the seller is under a duty to disclose them to the buyer. This duty is equally applicable to all forms of real estate, new and used.

Warranty against encumbrancesFrimberger v. Anzellotti

Appellate Court of Connecticut, 1991

Procedural History: Defendant appeals from judgment of the trial court awarding the plaintiff damages for breach of the warranty against encumbrances and innocent misrepresentation of real property.

Issue: Whether an alleged latent violation of a land use statute or regulation, existing on the land at the time title is conveyed, constitutes an encumbrance such that the conveyance breaches the grantor’s covenant against encumbrances

Facts: Plaintiffs purchased from the Defendant property adjacent to tidal wetlands. The Plaintiffs employed an engineering firm to repair a portion of the structure that rested on a filled in area of the wetland. Upon examination, it was discovered that the Plaintiffs’ structure encroached upon the tidal wetlands boundary and was in violation of state statute. Plaintiff filed suit for damages for breach of the warranty against encumbrances and innocent misrepresentation. The trial court ruled that the area had been filled without obtaining the necessary permits and found the Defendant liable for damages for breach of the above warranty.

Rule: Latent violations of land use regulations that are not on land records, unknown to the seller and which no enforcement action has been taken against, do not constitute a breach of the warranty against encumbrances.

Holding: The judgment is reversed as to the award of damages for breach of the warranty against encumbrances and for innocent misrep…the case is remanded with direction to enter judgment in favor of the defendant.

Covenant of SeizinRockafellor v. Gray

Supreme Court of Iowa, 1922

Procedural History: Trial court entered a decree in favor of the plaintiff adjudging that the foreclosure proceedings were invalid and void and that the sheriff’s deed to Connelly should be vacated and set aside and upon the cross-petition of H&G entered judgment against Connelly on the covenant of seizing in his deed for the amount of $4K with interest.

Issue: Whether or not the covenant of seisin runs with the land so that an action on it may be maintained by a remote grantee

Facts: On October 14, 1907 Doffing conveys an 80 acre parcel of property to the plaintiff. The property was encumbered with a $500 mortgage held in the defendant’s name (Gray). The plaintiff agreed to pay off the mortgage. Subsequently, foreclosure proceedings commenced with a sheriffs deed executed and delivered to Mr. Connolly on February 23, 1911. On April 20, 1911 a conveyance to place to Dixon by deed and contained the normal covenants of warranty and recited a consideration of $4K. On June 26, 1911, Dixon conveyed the property to Hansen & Gregerson by special warranty deed which recited a consideration of $7K. On August 15, 1918, the plaintiff as original grantee from Doffing brought an action to set aside the foreclosure sale on the ground that it was void because no jurisdiction had been acquired of the plaintiff in said action.

Rule: The covenant of seisin runs with the land and an action based on this covenant can be maintained by a remote grantee.

Holding: Affirmed, the remote grantee is entitled to the amount of consideration paid with interest. The covenant of seisin runs with the land to a remote grantee because the rights of the remote grantee are acquired by conveyance and not by virtue of actual possession of the land. If at the time of conveyance, the grantor does not own the land, the covenant of seisin is broken immediately and the measure of damages for breach of this is the consideration money and interest, unless the grantee can be shown to have lost less.

Comments: The covenant of seizin runs with the land, and is broken the instant the conveyance is delivered, and then becomes a chose in action held by the covenantee in the deed, and that a deed by said first covenantee operates as an assignment of such chose in action to a remote grantee, who can maintain an action thereon against the grantor in the original deed. The rights of the remote grantee are acquired by conveyance (assignment) and not by virtue of actual possession of the premises.

DeliverySweeney v. Sweeney

Supreme Court of Errors of Connecticut, 1940

Procedural History: Trial court concluded that there was no intention to make present delivery of John’s deed (Def.) to his brother, Maurice (Plaintiff’s estate), that there was no deliver or acceptance, that it was not intended to operate until John’s death and rendered judgment for the defendant.

Issue: Whether a second deed was delivered and if so, whether or no a condition claimed to be attached is operative?

Facts: The Plaintiff is also the Administratix in this suit. Mr. Sweeney, the Plaintiff’s husband deeded his farm to his brother the Defendant. The deed was recorded. At the same time, the Defendant deeded the property back to Mr. Sweeney, which Mr. Sweeney planned to record if the Defendant predeceased Mr. Sweeney. Until his death, the decedent managed and exercised full control over the land. The deed that conveyed the land back to the decedent was held by the Defendant, was unrecorded and later was accidentally burned. Plaintiff filed suit to quiet title to the land. The trial court concluded that the second deed was only meant to operate upon the Defendant’s death and found for the Defendant. Plaintiff appealed.

Rule: A conditional delivery is and can only be made by placing the deed in the hand of a third person to be kept by him until the happening of the even upon the happening of which the deed is to be delivered over by the third person to the grantee…absolute title vests in the grantee.

Holding: The finding does not support the conclusion…finding shows delivery, even if a conditional delivery is assumed, the condition is not good for the reasons stated….there is error and a new trial is ordered.

Note: Sweeney is the prevailing view (Delivery good and condition not enforced), however, two other conclusions courts have reached should be considered…(1) No Delivery & (2) Delivery good and condition enforced.

Rosengrant v. RosengrantCourt of Appeals of Oklahoma, 1981

Procedural History: Appeal J.W. Rosengrant from trial court’s decision to cancel and set aside a warranty deed which attempted to vest title in him to certain property owned by his aunt and uncle, Mildred and Harold Rosengrant. Trial court held the deed was invalid for want of legal delivery.

Issue: Did legal delivery occur with the deed between the uncle and his nephew?

Facts: Harold and Mildred owned a farm in Oklahoma. The Defendant was one of their several nieces and nephews. In 1971, the Defendant met with Harold and was told that upon Harold and Mildred’s death, the deed to the farm would be his. The Defendant witnessed Harold’s banker take possession of the deed. After the deaths of Harold and Mildred, the Defendant recorded the deed. In 1978, the Plaintiff filed suit alleging that the deed was void and never legally delivered to the Defendant. The trial court found the deed to be void for failure of legal delivery and Defendant appeals.

Rule: When a grantor delivers a deed under which he reserves a right of retrieval and attaches to that delivery the condition that the deed is operative only upon death and further continues to use the property, these actions are really the grantor attempting to make the deed a will, which is unallowable.

Holding: Affirmed. The deed was retrievable at any time by Harold, thus implying two conditions: (i) death of both grantors and (ii) recordation of the deed. This made the deed transfer an attempt to make the deed a will, which cannot be given effect.In cases involving attempted transfers, it is the grantor’s intent at the time the deed is delivered, which is of primary and controlling importance.When a grantor delivers a deed under which he reserves a right of retrieval and attaches to that delivery the condition that the deed is operative only upon death and further continues to use the property, these actions are grantor attempting to make the deed a will, which is unallowable. Concurrence. The concurring judge focused on the self-serving nature of the Defendant’s testimony as basis to deny that the deed was ever legally conferred.

The Recording System: Constructive Notice to BFPV’sLuthi v. Evans

Supreme Court of Kansas, 1978

Procedural History: Burris contends that the tours assignment, as recorded was not sufficient to give constructive notice to a subsequent purchaser for value. Burris was successful because of this point at the district court. On appeal, the Court of Appeals held the general description contained in the assignment to Tours to be sufficient when recorded, to give constructive notice to a subsequent purchaser, including Burris.

Issue: Whether the recording of an instrument of conveyance which uses a “Mother Hubbard” to describe property conveyed, constitutes constructive notice to a subsequent purchaser.

Facts: In 1971, Grace Owens, owner of a number of oil and gas leases, executed in writing an assignment of interest in these lease to Defendant, the International Tours (International Tours). The assignment was filed for record in the office of deeds. Four years later, Grace Owens executed a second written assignment to the Defendant, Burris (Burris), regarding oil and gas leases. Burris secured an abstract of title from the deeds office. However, neither his personal inspection nor title reflected the first assignment to International Tours. The controversy on appeal is between International Tours and Burris over ownership of one oil and gas lease. Tours contends the general clause of his assignment conveyed every oil and gas lease in Grace Owen’s possession. Burris claims that although it may have been a valid transfer between the two of them, if failed to give constructive notice to subsequent purchasers. The trial court found for Burris and the appellate court reversed.

Rule: An innocent subsequent purchaser without constructive notice as to the rights of an initial purchaser will have rights to the land superior to those of the initial purchaser.

Holding: Reversed. The subsequent purchaser, Burris, did not receive constructive notice of International Tours’ rights in the land.A single instrument, properly executed, acknowledged and delivered can convey separate tracts by specific description and can convey separate tracts by general description as well. The purpose of a statute authorizing the recording of instruments of conveyance is to impart to a subsequent purchaser notice of instruments, which affect title to a specific tract of land in which the subsequent purchaser may consider buying.To give the subsequent purchaser constructive notice, the instrument needs to describe the land with sufficient specificity so that the land can be identified.

Orr v. ByersCourt of Appeal of California, Fourth District, 1988

Procedural History: In June, 1985, Orr argued that the defendants had constructive notice of the abstract of judgment through application of the doctrine of idem sonans. The trial judge acknowledged the doctrine’s existence, but he concluded it was inapplicable and announced his intended decision to deny Orr’s request for declaratory relief. A formal judgment was filed in Feb. 21, 1986 and this appeal followed.

Issue: Whether an abstract of judgment containing a misspelled name imparts constructive notice under the doctrine of idem sonans?

Facts: In October, 1978, Orr obtained a judgment in excess of $50K against William Elliott. The judgment prepared by Orr’s attorney identified in error client as “William Duane Elliot.” In November, 1978, an abstract judgment was recorded in the Orange County Recorder’s Office identifying Elliott as “William Duane Elliot” and “William Duane Eliot.” This abstract was listed in the combined grantor-grantee index under both those names. Elliot then obtained title to a parcel of property which was encumbered with Orr’s judgment lien. Elliott then sold the property to Rick Byer’s in July 1979. A title search however failed to disclose the judgment lien over the property. The preliminary title did ID the lien over the property and because of this, the proceeds from the sale did not go towards the discharge of Orr’s lien over the property. In Feb. 1981, Orr commenced suit against Byers, Elliott, Pomona First Federal Savings & Loan Assoc. and Imperial Bank seeking a declaration of the rights and duties of all parties. Orr essentially was seeking a judicial foreclosure of his judgment lien.

Rule: Idem Sonans remains viable for purposes of identification but it has not been applied to give constructive notice to good faith purchasers for value.

Holding: We conclude the burden is properly on the judgment creditor to take appropriate action to ensure the judgment lien will be satisfied. As respondents succinctly state Orr asks use “to change the law of constructive notice to accommodate [his] error in such a way that future title searches will be required to be performed only by trained individuals with elaborate and expensive equipment at their disposal or else go uninsured in a world where prudence demands title insurance. Neither result is satisfactory, especially considering that the simple alternative is to require judgment creditors simply spell the names of their judgment debtors properly. Judgment affirmed.

Recording ActsMessersmith v. Smith

Supreme Court of North Dakota, 1953

Procedural History: Action to quiet title. Trial court found “that such deeds, or either of them, were not procured through fraud or false representation.” The evidence does not warrant this court in disturbing that finding. That determination however does not entitle Seale (defendant) to triumph against the plaintiff in the action.

Issue: Does a BFPV who takes a deed not having been properly acknowledged as required by the recording statute from a grantor who had no interest in the conveyed land still take title to land?

Facts: Caroline Messersmith and her nephew, Frederick Messersmith inherited property together. On May 7, 1946, Caroline executed and delivered to her nephew a quitclaim deed to the property which was not recorded until July 7, 1951. On April 23, 1951 Caroline executed a lease to Herbert Smith which was recorded on May 14, 1951. On May 7, 1951, Caroline conveyed to Smith a mineral deed containing a warranty of title, an undivided ½ interest in and to all oil, gas and other minerals in and under or that may be produced on the land. This deed was recorded May 26, 1951. On May 9. 1951 Smith executed a deed conveying to E.B. Seal an undivided ½ interest in the same. This deed was recorded on May 26, 1951.

Rule: The recording of an instrument affecting title to real estate which does not meet the statutory requirements of the recording laws affords no constructive notice.

Holding: The judgment appealed from is reversed. The deed that Seale relied upon was defective and thus could not give notice and is invalid. A deed must be acknowledged. To constitute acknowledgment, the grantor must appear before the officer for the purpose of acknowledging the instrument and make an admission to the officer of the fact that he had executed such instrument.

Comments: The court’s analysis focused on the material defect in the recording of the instrument. First, the court noted that Ms. Messersmith had no title to convey to Seale. Second, the deed Seale sought to record was defective. Although it had the stamp of the notary, the notary had not personally witnessed Ms. Messersmith sign the deed and thus it was defective. In the court’s decision not to rehear the case, the court again stated that because the deed was defective, the court could not analyze whether Seale was an innocent subsequent purchaser entitled to protection.

Chain of Title ProblemsBoard of Ed. Of Minneapolis v. Hughes

Supreme Court of Minnesota, 1912

Procedural History: The complaint alleged that plaintiff owned the lot, and the answer denied this, and alleged title in defendant L.A. Hughes. The trial resulted in a decision in favor of plaintiff, and defendants appealed from an order denying a new trial.

Issue: Did the deed from Hoerger to Hughes ever become operative and if so, is Hughes a subsequent purchaser whose deed was first duly recorded, within the language of the recording act?

Facts: The Hoergers first owned the property in question. In 1906, the Defendant was the first to approach the Hoergers about purchasing the property. The Defendant sent a check for the price of land to the Hoergers along with a deed to be signed by them with the name of the grantee left blank. Later that same year, the Hoergers signed the deed without filling in the grantee space on the deed and sent it back to the Defendant via mail. Defendant recorded the deed years later on December 16, 1910. However, prior to the Defendant’s recording in 1909, real estate brokers approached the Hoergers and obtained a warranty deed to the same land as Defendant and recorded their interest on December 21, 1910. Plaintiffs obtained title from the real estate brokers and recorded on January 10, 1910. Plaintiffs filed suit and the trial court found for the Plaintiff. Defendant appealed.

Rule: When the grantor received and retains consideration, and delivers the deed in the condition described to the purchaser, authority to insert his name as grantee is presumed. Any other rule would be contrary to good sense and to equity. We base our decision on the ground of implied authority.

Holding: Reversed. Defendant was the subsequent purchaser in good faith and is protected by the recording of his deed before the prior deed was recorded.A deed that does not name a grantee is a nullity and wholly inoperative as a conveyance until the name of the grantee is legally inserted. Therefore, Defendant’s deed was legally inoperative until his name was inserted. When the grantor receives and retains the consideration for the property and delivers the deed to the purchaser, authority to insert one’s own name as the grantee is presumed. The deed of the first grantee must be recorded before the deed to a subsequent grantee is recorded.

Chain of Title: RestrictionsGuillette v. Daly Dry Wall, Inc.

Supreme Judicial Court of Mass., 1975

Procedural History: Appealed from an ADR hearing, (Arbitration?) A final decree was entered enjoining defendant from constructing any structures designed, intended, or suited for any purpose other than a dwelling for a one family and which…[do] not conform to the restrictions contained in a deed from the grantor to the defendant.”

Issue: Is the defendant bound by a restriction contained in deed to its neighbors from a common grantor, when it took without knowledge of the restrictions an under a deed which did not mention them?

Facts: There are two lots located in a subdivision in controversy. One has a recorded deed containing references to a plan and restrictions that are applicable to every lot in the subdivision. The second later deed from the same grantor did not refer to the restrictions, but did refer to the plan. Plaintiffs brought suit to enjoin the Defendant from constructing an apartment building on their lot, citing to the restrictions contained in their deed. The trial court found for the Plaintiffs and Defendant appealed.

Rule: Each of the several grantees if within the scope of the common scheme, is an intended beneficiary of the restrictions and may enforce them against the others.

Holding: In the present case, the defendant’s deed referred to a recorded subdivision plan, and the deed to the Guillettes referred to the same plane. A search for such deeds is a task which is not at all impossible. Decree affirmed with costs of appeal.

Persons Protected by the Recording SystemDaniels v. Anderson

Supreme Court of Illinois, 1994

Procedural History: Trial court held that Zografos was not a BFPV because he had actual notice of the option when he took title in August 1986. The trial court ordered the defendant to convey the Contiguous Parcel to Daniels and ordered Daniels to pay Zografos the full purchase price of $60,000 plus $11000 in property taxes paid by Zografos. The appellate court affirmed the trial courts judgment.

Issue: When during the executory period of a real estate installment contract does the buyer become a bona fide purchaser?

Facts: In 1977 Daniels contracted to buy two lots from Jacula. The contact of sale also gave Daniels a right of first refusal if Jacula ever decided to sell an adjacent parcel (Contiguous Parcel) for the same price as any prospective buyer offered. The contract of sale was not recorded however the deed was. 8 years later, in 1985, Zografos contracted with Jacula to buy the adjacent lot for $60K. Daniels was not notified of this offer. Zografos also paid $10K initially and gave a note for the remaining balance to Jacula. In Feb. 1986, Zografos paid $15K and another payment of the same in March, 1986. In June 1986, Daniels wife told Zografos of Daniels right of first refusal on the parcel. Zografos knowing this then paid $20K in August and received and recorded a deed to the property thereafter. Daniels brought suit against Zografos asking for specific performance of his preemptive option. Zografos contended that he was a BFPV without any notice of the option.

Rule: A majority of jurisdictions now applying a relaxed pro tanto rule which protects the buyer to the extent of the payments made prior to the notice, but no further.

Holding: Plaintiff will reimburse Defendant for the full purchase price and property taxes paid on the property and Defendant will convey the lot in question to Plaintiff.We agree with the appellate court that the trial court’s disposition on this issue between Daniels and Zografos satisfied these well settled principles in equity. We cannot say that the trial court abused its discretion...Affirmed.

Comments: Three methods to apply pro tanto rule1. Award the land to the holder of the outstanding interest and award the buyer the

payments that he or she made (most common)2. Award the buyer a fractional interest in the land proportional to the amount paid

prior to notice3. Allow the buyer to complete the purchase but to pay the remaining installments to

the holder of the outstanding interest

Lewis v. Superior CourtCalifornia Court of Appeal, Second District, 1994

Procedural History: In September, 1993, the Lewises were served in Fontana’s lawsuit and learned about the lis pendens. The Lewises brought suit for summary judgment to remove the lis pendens and clear their title. The trial court denied the motion. The Lewises appealed.

Issue: When was the lis pendens considered properly recorded, thus giving notice to purchasers of the land

Facts: In Feb. 1992, The Lewis’s contract to buy a residence from Shipley for 2.3 Million. After the Lewis’s opened escrow and a few days before they acquired title, Fontana Films recorded a lis pendens (notice of lawsuit affecting title to the property) against Shipley. The lis pendens wasn’t recorded until Feb. 24 but wasn’t indexed until Feb. 29 which was the day after the Lewis’s acquired title. Under the contract, the plaintiffs paid their predecessor in title $350K on Feb. 25, the closing took place on Feb 28 and the deed was also recorded on the same. The plaintiffs then gave the Shipley’s $1.95 Million in March 1992. They also spent an additional $1050000 in renovating the property. In September, 1993 the Lewis’s were served with Fontana’s lawsuit and leared about the lis pendens.

Rule: If a purchaser has already received title by the time a lien is recorded and was not on constructive notice at the time he received title, he is protected.

Holding: Reversed. The lis pendens was not properly recorded until indexed, which occurred the day after the title passed to the Plaintiffs. Any purchaser without notice who makes a down payment and obligates himself to pay the balance, has every reason to believe that his rights are secure in the property. Plaintiff had already received title by the time the lis pendens was recorded and was not on constructive notice at the time he received title, thus was a subsequent bona fide purchaser for value.

Comments: The court discussed the unique nature of property and the specific type of reliance a purchaser has when they expend money for a down payment. The court was able to maneuver around case precedent, which would have directed an opposite result in this case, by citing to this specific reliance and modern trends to protect buyers who had not fully paid for the property, but had put down payment.

Inquiry NoticeHarper v. Paradise

Supreme Court of Georgia, 1974

Procedural History: Appeal involves title to land. It is from a judgment and directed verdict granted to the appellees and denied to the appellants in the Superior Court of Oglethorpe County.

Issue: Does reference in a later deed to an earlier deed put a subsequent purchaser on inquiry notice?

Facts: Appellants claim title as remainderman under a deed to a life tenant with the remainder interest to the named children of the life tenant. The deed was delivered to the life tenant but was lost/misplaced and wasn’t recorded until 35 years after its recovery. On Feb. 1, 1922 Susan Harper conveyed by warranty deed a 106.65 acre farm in Oglethorpe County to her daughter in law Maude Harper, for life with the remainder in fee simple to Maude Harper’s named children. This deed was lost/misplaced until 1957 when it was found by Clyde Harper, a named remainderman and promptly recorded. Susan Harper died between 1925-27 and was survived by her legal heirs. In 1928, all of her living heirs except one joined in executing an quitclaim instrument to Maude Harper which was recorded on March 19.1928. This deed made mention of the previously lost deed as well as its intentions of replacing the same. On Feb. 27, 1933 Maude Harper executed and recorded a security deed which purported to convey in fee simple to Ella Thornton a $50 loan. Once the loan defaulted, Ella Thornton foreclosed on the property via a sheriff’s deed executed and recorded in 1936. From this point on, there is an unbroken chain of title to the appellees Lincoln & William Paradise who claim the property as grantees under a warranty deed executed and recorded in 1955. In addition, they claim the property via adverse possession since 1940. Appellees trace title back to Susan Harper but not via the 1922 deed to Maude Harper. The latter deed however would only have conveyed a life estate because that was the only possible interest Maude Harper could have conveyed. Appellees contend that the 1928 deed by Susan Harpers heirs must be treated under Code §67-2502 as having been executed by S. Harpers heirs thereby making both the ’22 & ’28 deeds derivative of the same source. In essence, appellees contend the ’28 deed takes precedence over the ’22 deed because it was recorded first while also relying upon code section § 29-401.

Rule: A deed in the chain of title, discovered by the investigator, is constructive notice of all other deeds which were referred to in the deed discovered, including an unrecorded plat included in the deed discovered.

Holding: Yes, The trial court erred in granting appellee’s motion for directed verdict and in overruling the appellants’ motion for directed verdict. The judgment of the trial court is reversed with direction that judgment be entered in favor of the appellants….Judgment reversed with direction.

Comments: No adverse possession because remainderman had no interest until death of life tenant in 1972. Prescription does not begin to run in favor of a grantee under a deed from a life tenant, against a remainderman who does not join in the deed, until the falling in of the life estate by the death of the life tenant.

Waldorf Insurance & Bonding, Inc. v. Eglin National BankDistrict Court of Appeal of Florida, First District, 1984

Procedural History: Waldorf appeals the supplemental final judgment of foreclosure entered against it in favor of Eglin Nat. Bank on a condo. Unit in Destin. Appellant argues that the trial court erred in not finding its interest in the condominium unit superior to the liens of two mortgages held by the Bank.

Issue: Whether Plaintiff had constructive notice of Defendant’s interest in the unit when it agreed to each separate mortgage when Defendant was in physical possession of the unit.

Facts: The Defendant entered into a written purchase agreement for a property contained in a condominium unit. On three separate occasion: 1973, 1974 and 1975, the owner of the condominium unit executed mortgages with Plaintiff, which included Defendant’s property. In 1975, after Defendants mortgage had been recorded, the owner of the condominium complex executed a quitclaim deed for the Defendant, which was recorded. To finalize the purchase of the unit, Defendant ‘wrote off’ a debt owed to it by the owner of the condominium complex. This write-off was treated as payment by the Defendant of the final amount due on the purchase price of the unit. In 1976, the Plaintiff brought a foreclosure action against the owner and Defendant. The trial court found for the Plaintiff and ruled that the Defendant did not have an interest in the unit superior to that of the Plaintiff. Defendant appealed.

Rule: Physical possession is constructive notice to all the world and anyone having knowledge of said possession. When possession is open, visible and exclusive, it will put upon an inquiry responsibility to those wishing to acquire interest in the property.

Holding: Yes, Reversed and Remanded. Plaintiff had a duty to inquire because Defendant by physically occupying the premises was constructive notice of Defendant’s interest.

Comments: The court discussed that it is difficult for a purchaser or lien holder to inquire about every unit in a complex, but it must do so if it would like to effectively protect its interest. Further, once a purchaser is in actual possession, it is a fact that becomes legally operative as constructive notice.