Wood v. Donohue

Brief Fact Summary.

Defendant purchased a house and property from Plaintiff under an installment contract. The property was located near a uranium plant. Later, a class action suit was filed against the uranium plant. Both parties in this case filed claims in that action. The suit reached a settlement agreement, and Plaintiff/Defendant was eligible for about $10,000, depending on the value of the affected property on a particular date. Plaintiff brought suit against Defendant alleging that she was entitled to a portion of the payout, in the amount of the installment contract Defendant has not paid yet. The trial court held for Plaintiff, and Defendant appealed.

Synopsis of Rule of Law.

Under a land installment contract, the purchaser constitutes the equitable owner of the land the moment the contract is executed.

Facts.

In 1983,Betty Lou Wood (“Plaintiff”) sold Steven Donohue (“Defendant”) a house and property under an installment contract. This property was located near a uranium plant. In 1985, a class-action suit was brought against the uranium plant. The parties, Plaintiff and Defendant,both filed claims in the suit. The suit reached a settlement agreement. Under the agreement, the owner of the Plaintiff/Defendant property was eligible for about $10,000. The payouts based on the value of affected properties as of December 18, 1984. Plaintiff brought suit against Defendant on the grounds that she was authorized to receive part of the settlement payment in the amount for which Defendant had not yet paid under the terms of the installment contract. The trial court held in Plaintiff’s favor. Defendant appealed.

Issue.

Whether, under a land installment contract, the purchaser constitutes the equitable owner of the land the moment the contract is executed.

Held.

Yes, under a land installment contract, the purchaser constitutes the equitable owner of the land the moment the contract is executed.

Discussion.

Under a land installment contract, the purchaser constitutes the equitable owner of the land the moment the contract is executed. In the other hand, a seller, under an installment contract,holds title to the property as a security interest, not as an equitable ownership interest in the property. Thus, the purchaser of the land bears the risk of loss and may obtain any benefits that occur to the land. Here, the trial court improperly held that Plaintiff was eligible to receive a portion of the settlement agreement because the moment the installment contract was issued Defendant became the equitable owner of the property. Moreover, Defendant is authorized to obtain any benefits that occur to the property. Therefore, the trial court’s decision is reversed.