Cole v. Steinlauf

Brief Fact Summary. The Plaintiffs and the Defendant entered into a contract for the sale of real estate, for which the Plaintiffs made a deposit of $420 and spent $50 to hire an attorney to make a title search prior to the closing date. The title search found a defect in title and Plaintiffs refused to buy the property, after which Defendants refused to return the deposit.

Synopsis of Rule of Law. The defect in title alleged herein by Plaintiffs is sufficient to raise a reasonable doubt as to the soundness of the title, and the Plaintiffs should not be forced to buy a potential lawsuit due to the alleged defect.

Facts. The Plaintiffs and the Defendant entered into a contract for the sale of real estate, for which the Plaintiffs made a deposit of $420 and spent $50 to hire an attorney to make a title search prior to the closing date of July 1, 1955. The title search found a defect in title and Plaintiffs refused to buy the property, after which Defendants refused to return the deposit. The attorney found that a deed to a predecessor in title to the Defendant made in 1945 had ran to the grantee “and assigns forever.” No mention of “heirs” was made as would be customary and necessary in a fee simple conveyance made in Connecticut. The Plaintiffs, on the basis that the prior deed failed to mention “heirs,” refused to close the deal with Defendant and demanded that Defendant return the deposit of $420 plus expenses for the title search, which the parties agreed had cost $50. The Plaintiffs sued to recover the deposit and the cost of the title search. The trial court found the issues for the Defen
dant on the basis that the former deed did convey a fee simple title. The Plaintiff appealed.

Issue. Does the 1945 deed convey the totality of the fee to the grantee without a defect which would render the title offered to the Plaintiffs unmarketable?

Held. No. Judgment reversed and set aside, remanded with instructions to find for Plaintiff and award $470.
The Court noted that the law of the jurisdiction was that, in order to convey an estate of inheritance in land by deed, it is necessary to include the word “heirs.” The Court found that the common law rule was in effect which was that a grant to a grantee “and his assigns forever” vests only a life estate in the grantee. In other words the grantee may assign the property, but at his death, the title of the property could arguably revert back to the grantor.
The Court found that there was an exception to the common law rule requiring the word “heirs” in a deed, which was that where the intent of the parties to a defective grant can be conclusively established as intending to create a conveyance of a fee, the deed can be reformed to vest a fee in the grantee. Here, the Court pointed out that the necessary parties to an adjudication regarding the intent of the parties to the 1945 deed were not present, and that the case could not be decided on the basis of the intent of the parties to the 1945 deed.
The Court held that there was a reasonable doubt as to the marketability of the title which the Defendants wished to convey to the Plaintiffs, and that it would not be just to require the Plaintiffs to accept the potentiality of a lawsuit where the title is not marketable.
Concurrence. The concurrence pointed out that the intent of the parties to the 1945 deed could be shown in a proceeding at equity, but that since the only issue presented was whether the Plaintiffs were being offered marketable title by Defendant, that this was not the proper forum for such an adjudication.

Discussion. Consider the effects of the lack of the word “heirs” in the deed. It is important to have a working knowledge of the operation of all the terms in this case, such as, fee, life estate, heirs and assigns. Also, the concurrence was doubtless referring to a suit in equity to quiet title, in which a judge can reform a deed by decree.