OAKS v. KENDALL (1937)

The plaintiffs have appealed from a judgment which was rendered in their favor in a suit to quiet title to real property. The decree quieted title in plaintiffs subject to a lien thereon to secure the payment of a former judgment which was rendered in another suit in favor of Evelyn Brown Erwin, who is a codefendant and cross–complainant in this action. It is contended the court erred in quieting title to the real property subject to the lien to secure the payment of the former judgment for the reason that the judgment debtor in the former action held only an equitable title to the property under a conditional sales contract to purchase the land, which equitable interest under the provisions of section 674 of the Code of Civil Procedure is not subject to a judgment lien.

This is a suit to quiet title to certain real property in Shasta county which was previously sold on an executory contract to Thomas R. Kendall and wife. Evelyn Erwin, formerly Evelyn Brown, who is a party defendant, filed an answer to the complaint denying the material allegations thereof. She also filed a cross–complaint setting up the judgment of $853 which she secured against Thomas R. Kendall and claiming a lien upon the real property which is involved in this suit to secure the payment of her judgment. Mr. and Mrs. Kendall failed to appear or answer in this action and their default was duly entered. Upon trial of this cause the judgment and proceedings in the ejectment suit between Oaks and Kendall, and the judgment in the suit between Evelyn Brown Erwin and Kendall were received in evidence. The court adopted findings to the effect that plaintiffs are the owners and entitled to possession of the real property as against Mr. and Mrs. Kendall, subject, however, to a lien thereon to secure the payment of the former judgment against Kendall and in favor of the cross–complainant Evelyn Brown Erwin, in the sum of $853 and interest thereon at the rate of 7 per cent. per annum from March 28, 1930. Judgment was accordingly rendered quieting title to the property in plaintiffs, “subject, however, to the lien of the judgment recovered by the defendant Evelyn Erwin against the defendant Thomas R. Kendall in the action entitled ‘Evelyn Brown, plaintiff, vs. Thomas R. Kendall, et al., defendants' numbered 7553, in the files of this court, which lien is hereinafter described and decreed.”

It is asserted the findings and judgment are not supported by the evidence, since it appears without conflict that plaintiffs are the owners of the land in question and that Thomas R. Kendall and wife merely held a conditional contract to purchase the land which they forfeited for nonpayment of the agreed purchase price thereof, and that they held a mere equitable title which is not subject to lien under the California statute.

The evidence is uncontradicted. The plaintiffs are the owners of the land in question. July 19, 1923, they executed an agreement to sell a portion of the land to the defendants, Thomas R. Kendall and wife upon specified terms and conditions. The title to the land never passed to the purchasers thereof, but pursuant to the conditional contract of sale, the Kendalls took and retained possession of the property. The Kendalls were in default with respect to certain payments under the contract, and these plaintiffs previously brought a suit of ejectment against them. The Kendalls appeared in that suit and denied the allegations of the complaint, and also filed a cross–complaint therein, claiming damages against the vendors for trespass in a specified sum and praying that the plaintiffs be required to execute and deliver to them a deed of conveyance to the property subject to the payment of the balance of the purchase price of the land. The court found that the Kendalls were entitled to damages in the sum of $1,625, and that the unpaid balance of the purchase price of the land then amounted to the sum of $1,506.33. Judgment was thereupon rendered in that suit denying plaintiffs' prayer for ejectment and directing that they execute and deliver to the Kendalls a good and sufficient deed of conveyance to the real property subject to payment of the balance of the purchase price thereof. No appeal was taken from that judgment and it became final. A deed of conveyance of the property was executed and tendered, but the balance of the purchase price was not paid, and the title to the property never passed to the Kendalls.

In March, 1930, the defendant in this suit, Evelyn Brown, now Evelyn Erwin, recovered judgment in another suit against Thomas R. Kendall for the sum of $853. These plaintiffs were not parties to that action. It was brought to recover the value of an automobile which Evelyn Brown earned pursuant to an agreement with Kendall, as a prize for securing the largest subscription list to a Redding newspaper which he then owned and operated. That judgment also became final. An abstract of that judgment was recorded under section 674 of the Code of Civil Procedure. It is contended the judgment in that suit vested a lien in favor of Evelyn Erwin upon the equitable interest in the land which was then held by Kendall and his wife under the conditional contract to purchase the land. Execution was issued in that case and returned unsatisfied. There was no effort to sell the equitable interest in the land to satisfy the judgment.

The findings and judgment in this case to the effect that the respondent Evelyn Brown Erwin, is entitled to a lien upon the land which is involved in this suit to secure the payment of a judgment which she formerly recovered against Thomas R. Kendall, and quieting title to the land in plaintiffs subject to that lien, is not supported by the evidence. That judgment is clearly contrary to law. The mere equitable interest in real property which is acquired under a conditional sales contract to purchase land, is not such ownership of real property contemplated by the provisions of section 674 of the Code of Civil Procedure, as will vest a lien thereon to secure the payment of a judgment held by a stranger to the contract. Belieu v. Power, 54 Cal.App. 244, 201 P. 620, 621; Poindexter v. Los Angeles Stone Co., 60 Cal.App. 686, 214 P. 241; People v. Irwin, 14 Cal. 428; 34 C.J. 593, § 909; 2 Freeman on Judgments (5th Ed.) 1970, § 937; 3 Tiffany on Real Property (2d Ed.) 2782, § 670.

It is true that specific statutes in some other jurisdictions provide that judgment liens may attach to both legal and equitable titles to real property. Section 674, formerly 671, of the Code of Civil Procedure, which provides that, “An abstract of the judgment or decree of any court of record of this state, * * * may be filed with the recorder of any county and from such filing the judgment or decree becomes a lien upon all the real property of the judgment debtor, not exempt from execution, in such county, owned by him at the time, or which he may afterwards and before the lien expires, acquire,” has been repeatedly construed to limit the vesting of such lien to legal titles to real property to the exclusion of equitable interests therein. In 3 Tiffany on Real Property, supra, it is said: “The equitable interest of the vendee of land who has not yet received a conveyance is obviously not subject to the lien in those states in which no equitable interests are so subject.”

In 2 Freeman on Judgments, supra, it is said in that regard: “At common law a judgment lien did not attach to a mere equity, though the equity was accompanied by possession. This rule of the common law prevails in several of the United States, and is generally applied, in the absence of any statute undoubtedly creating a different rule. Thus though a statute provided that a judgment should ‘be a lien on all real property of the judgment debtor, not exempt from execution, owned by him in the county at the time of docketing’, it was held not to make a judgment a lien on the equitable title of the defendant.”

In accordance with the rule last announced, the Belieu Case, supra, in which a hearing by the Supreme Court was denied, specifically determined that a judgment does not attach to the equitable interest in real property acquired by a vendee under a contract to purchase the land, where a part of the purchase price, only, has been paid. It is there said: “While many classes of property may be taken on execution, only two classes are subject to the lien of a judgment––real property owned by the debtor at the time of docketing and real property that he may afterwards acquire. While any interest in real property, legal or equitable, may be seized and sold under execution, only real property actually owned by the judgment debtor will support a judgment lien. That a mere equitable interest in real property acquired under a contract of purchase and sale is not such ownership as is contemplated by section 671 [now 674] was clearly decided in the early history of the state.”

Moreover, the plaintiffs held a vendor's lien on the real property to secure the payment to them of the unpaid portion of the purchase price of the land (section 3046, Civ.Code; 25 Cal.Jur. 739, §§ 208 and 209), which was prior and superior to any subsequent lien which might be acquired by a judgment creditor of the vendee of the property. 66 C. J. 1245, § 1130; 27 R.C.L. 477, § 192. In 66 Corpus Juris, supra, it is said: “The vendor's lien is superior to the rights of all persons, except bona fide purchasers for a valuable consideration without notice, * * * It takes precedence over claims * * * and liens of judgment and attachment creditors of the purchaser, and purchasers at execution sale.”

In 27 Ruling Case Law, supra, it is said: “The judgment or execution lien extends only to the interest of the purchaser and is inferior to the claim of the vendor for the purchase money, and likewise the purchaser at the execution sale will take subject to the rights of the vendor.”

It follows that Evelyn Erwin, the judgment creditor of Kendall, could acquire no lien on the property in question which could defeat the plaintiffs' prior right to their vendor's lien to secure the fulfillment of their contract with respect to the sale of the real property, and that the court therefore erred in quieting title to the property in plaintiffs, subject to the payment of her judgment.

The briefs on appeal contain much controversy over the question as to whether the trial court has correctly construed the provisions of the judgment in the former ejectment case of Oaks v. Kendall. The decree in this case does provide that: “The judgment for the sum of $1625.00 awarded to the defendant, Thomas R. Kendall against the plaintiff, G. E. Oaks by the judgment in the action entitled ‘G. E. Oaks, plaintiff, vs. Thomas R. Kendall, defendant,’ numbered 7641, was a separable judgment on a cause of action for tort * * *. That the cross–plaintiff Evelyn Erwin is entitled to have her said judgment against Thomas R. Kendall in the amount of $853.00 and accrued interest, as aforesaid, paid and satisfied by said cross–defendant G. E. Oaks out of said sum of $1625.00 awarded to said cross–defendant Thomas R. Kendall by the Judgment in said action.”

The judgment in the ejectment case did provide: “That plaintiff take nothing by his Complaint in said action; that defendant do have and recover judgment for damages against plaintiff in the sum of $1625.00” and that “upon the delivery of said deed to defendant, the defendant pay to plaintiff the sum of $1506.33 to cover the balance due plaintiff on the purchase price of said real property.”

It does appear that the court determined in the ejectment suit that there was an unpaid balance of $3,131.33 due on the purchase price of the property, upon which Kendall was entitled to a credit of $1,625 on account of damages, leaving a balance of $1,506.33 due to the vendor on the purchase price of the land. In view of what has been said regarding the invalidity of a subsequent judgment lien, it is not necessary for us to determine whether the court properly construed the judgment in the ejectment suit. Regardless of the construction of the former judgment, it remains true that Kendall still owed plaintiffs $1,506.33 on the purchase price of the land, no part of which has been paid, and that Kendall never received a deed to the land, nor held more than an equitable interest therein. Since this equitable interest in the land is not subject to a judgment lien under the California authorities, it is immaterial how the judgment in the ejectment suit should be construed.

Assuming, without so deciding, that the respondent should have a legal right to foreclose her judgment lien upon the equitable interest of Kendall in the real property to satisfy her claim of $853 and accrued interest, it would be inequitable for her to do so until the vendor of the real property was first paid the ascertained unpaid balance of the purchase price in the sum of $1,506.33. The doctrine of a vendor's lien entitles the plaintiffs to that payment undiminished by any subsequent claim. It is superior to the rights of all persons, except bona fide purchasers for a valuable consideration without notice. It takes precedence over all claims and liens of judgment and attachment creditors of the purchaser. We are therefore of the opinion the respondent's claim by virtue of her assumed judgment lien is without merit.

The judgment is reversed, and the court is directed to render judgment quieting title in plaintiffs to the real property free from the asserted lien of the respondent.

PER CURIAM.