Johnstone v. Stondall Land & Investment Co. , 298 F. 919 ( 1924 )

PHILLIPS, District Judge.

This is an action Drought by the Stondall Land & Investment Company, a corporation, appellee, against John Johnstone and William Johnstone, appellants, to foreclose a vendor’s lien against 320 acres of land situated in Golden Valley county, N. D., . under a contract for the sale thereof entered into between appellee and Andrew Schmidt in January, 1908. Schmidt paid $1,920 on the purchase price when the contract was executed, and the balance of $3,840, -under the contract, was payable in five equal annual installments, none of which have been paid. At the time this contract was made John Johnstone was in possession of the land, claiming under an alleged contract with appellee’s predecessor in title. In 1913 appellee and others, as owners of the legal title to this land, for the benefit of Schmidt, owner- of the equitable title thereto, recovered a judgment and decree in the state court of North Dakota canceling the Johnstone contract, quieting the title in them and awarding them the sum of $679.-75 for the use and occupation of the land by Johnstone. On appeal the Supreme Court of the state affirmed this judgment. While the appeal was pending the Johnstones, with full knowledge that Schmidt had paid none of the deferred payments under his contract, made an agreement with Schmidt by which the latter transferred his interest in the contract and judgment in the state court to Charles T. Langley, who filed a satisfaction of the judgment and gave a quitclaim deed to the land to William Johnstone, all for the benefit of John Johnstone. In 1911, appellee secured an option for the repurchase of the land from Schmidt. This option was renewed in 1914. This court held the option void in Langley et al. v. Stondall Land & Investment Co., 264 Fed. 474 The lower court found the issues in favor of the appellee and entered a judgment and decree foreclosing the lien. From this judgment and decree the Jofinstones appealed.

[1] Appellants first contend that the lien was waived by the giving of the option because as they say the option created a vendor’s lien in favor o.f Schmidt against appellee and extinguished the lien created by appellee’s contract with Schmidt. An examination of the option contract shows it was in fact an option, contemplating a future acceptance thereof by the purchaser, whereupon under its provisions a binding contract was to be made. The option did not create the relation of vendor and purchaser; under it no unconditional obligation rested on appellee to pay Schmidt the purchase price for the land; and a vendor’s lien in favor of Schmidt was not thereby created.

[2] Appellants next contend that, since the state court found and adjudged Schmidt had performed his contract for the purchase of the land from appellee and was the equitable owner thereof, its judgment is res adjudicata of the question of whether or not anything was due on the Schmidt contract to appellee, and that appellee is now estopped from, claiming the unpaid balance of the purchase price. The pleadings and proof in the state court showed that Schmidt had paid only $1,920 on the contract, and that Johnstone had been in possession of the land continuously from the date of the Schmidt contract down to the date of the judgment in the state court. When Schmidt was not put into possession, he was not bound to make further payments until he was given possession. The contract was so construed by appellee and Schmidt, and both agreed to the suspension of further performance until appellee could place Schmidt in possession of the land. See Langley v. Stondall Land & Investment Co., supra. The parties having mutually agreed to a suspension of the payments until Schmidt had been placed in possession, it was not necessary for Schmidt to make the deferred payments in order to hold the equitable title and to be entitled to the immediate possession of the land. In the light of these facts and the issues involved and the other findings made in the suit in the state court, we do not believe the findings and judgment in that court can be construed to mean a finding and adjudication that Schmidt had made all his payments, but merely that he had sufficiently performed under the facts and circumstances to keep his contract binding and enforceable and to entitle him to the immediate possession of the land as the equitable owner thereof. City of Vicksburg v. Henson, Receiver of the Vicksburg Waterworks Co., 231 U. S. 259, 34 Sup. Ct. 95, 58 L. Ed. 209; Cromwell v. Sac County, 94 U. S. 351, 24 L. Ed. 195.

Appellants next contend that John Johnstone’s right to possession had never been legally adjudged against him, for the reason that under the constitution of North Dakota he was entitled to a jury trial on that issue, and that the provision of the judgment in this suit giving the purchaser under the foreclosure sale a right to possession is erroneous. This contention was raised in Rangley v. Stondall Investment Co., supra, and this court held the judgment and decree of the state court had finally adjudicated the matter adversely to Johnstone. In that case the court said:

“All claims based upon bis possession and bis contract of 1906 with tbe Golden Valley Land & Cattle Company we regard as finally settled against him.”

[3] Appellants further contend that the Rangley satisfaction rendered ineffectual the judgment entered in the state court. While the Rangley satisfaction no doubt discharged the money judgment, it could have no effect on the adjudication by the state court of the respective rights and titles of the parties to the land in question. The judgment in the state court is binding on this court, regardless of whether or not it was a correct judgment

Appellants’ contentions relative to the allowance of interest and the provisions contained in the decree for redemption have been considered, and it is our opinion that they are without merit. The decree is

Affirmed.