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Elmando Sewer v. Martin

decided: March 3, 1975.



Seitz, Chief Judge, Van Dusen and Rosenn, Circuit Judges.

Author: Seitz

Opinion OF THE COURT SEITZ, Chief Judge.

Prior to December 6, 1967, plaintiff Elmando Sewer was the owner of 25 Rjerings Gade, St. Thomas. Defendant-appellant, Rita Martin, then the wife of Clifton Martin ("Martin"), owned the adjacent lot on which a commercial building was located. In 1967 Martin began negotiations with plaintiff for the purchase of 25 Rjerings Gade, on which plaintiff lived and from which he received rental income of $105.00 per month.

After several unsuccessful efforts, Martin and plaintiff reached agreement on a plan whereby plaintiff would sell the property for $12,000 plus support for the rest of his life. On December 6, 1967, plaintiff executed a deed conveying the lot to the defendant alone for $12,000 "and other valuable consideration." On December 8, 1967, plaintiff and Martin executed a separate agreement ("December 8 agreement") in which Martin "for valuable consideration received" promised to pay plaintiff $200.00 per month from January 1, 1968, until his death and to provide him with an efficiency apartment "or similar habitation" for life. Martin also agreed to pay $2,000 to a nominee of plaintiff upon the latter's death.

The Martins obtained the $12,000 consideration recited in the deed through a loan from the Virgin Islands National Bank for which they were jointly liable, and the defendant executed a mortgage on the property to secure repayment of the loan. Only $11,389.60 was, however, paid to plaintiff. It appears that defendant, divorced from Martin in 1968, assumed sole responsibility for the monthly mortgage payments of $126.00 payable presumably from the same $300.00 per month which she received in rent from the property.

The Martins initially permitted plaintiff to remain in his former home for some months. Martin thereafter provided plaintiff a room for approximately one year in a guest home which Martin was leasing. When his lease expired, Martin persuaded his wife to allow plaintiff to occupy a room in the building owned by Mrs. Martin on the adjacent lot, 26 Rjerings Gade. There plaintiff remained, without water or electricity, until March 1971 when defendant sought to evict him.

Martin failed from the outset to honor his obligation to pay plaintiff $200.00 per month. By court actions filed against him in 1968 and 1969, plaintiff recovered $1,775.00 of the money owed him. Martin has made no other monthly payments.

In November 1970 plaintiff instituted this action in the District Court of the Virgin Islands against defendant and Martin seeking cancellation of the deed or an order compelling Martin to fulfill his promises. The district court found that the consideration for the conveyance agreed to by plaintiff and Martin was $12,000 plus the covenants of the December 8 agreement, but that the defendant had been unaware of any promises beyond the $12,000 cash payment until plaintiff first sued her husband for arrearages in the monthly payments. Furthermore, the court found that Martin was not acting as an agent of his wife in concluding the December 8 agreement and that therefore the defendant was not personally liable to Sewer on the contract. The court concluded, however, that defendant could not hold the property free of the promises made to secure the conveyance and held the December 8 agreement to be "in the nature of a purchase money mortgage" and to constitute a lien against the property. Rescission was denied plaintiff because he was unable to return the cash payment.

On May 30, 1973, the district court entered judgment for the plaintiff (1) against defendant and Martin for $610.40, the unpaid portion of the $12,000 cash payment, plus interest from December 6, 1967, and (2) against Martin alone in the sum of $10,825 for arrearages on the monthly payment through March 1973. Martin was ordered to fulfill his obligation to provide an efficiency apartment for the remainder of plaintiff's life. The court foreclosed the "purchase money mortgage" and authorized the sale of 25 Rjerings Gade to satisfy judgment. Attorney's fees of $500.00 were awarded to plaintiff.

Defendant Rita Martin alone filed a motion to amend judgment. Her motion was denied by the district court on May 8, 1974, and she filed notice of appeal from that order. On appeal, she challenges only establishment and foreclosure of the lien and requests reduction of the attorney's fees if the lien is voided.

Our review of the record convinces us that substantial evidence supports the district court's determinations that the covenants of the December 8 agreement were an integral part of the consideration agreed to by plaintiff and Martin and that defendant was unaware of the terms of the agreement at the time it was executed. The question to be resolved is whether, given that defendant lacked knowledge of and had no personal liability under that contract, she nevertheless holds the property subject to a lien in favor of plaintiff to secure enforcement of the promises contained therein.

A grantor's or vendor's lien*fn1 of the nature recognized by the district court in this case was early established in England and is recognized in the majority of American jurisdictions. 4 J. Pomeroy, Equity Jurisprudence § 1249 (5th ed. 1941); 55 Am. Jur. Vendor and Purchaser § 462. The lien is the equitable right which a grantor who takes no other security retains to subject the land conveyed to the payment of the purchase price. So long as a portion of the purchase price remains unpaid, the law presumes the existence of a lien unless the terms of the agreement or attending circumstances demonstrate that the parties intended no lien to be present. Zumwalt v. Goodwin, 133 F.2d 984 (10th Cir. 1943).

No court decision or statute speaks to the existence of such a lien in the Virgin Islands. However, the lien is widely recognized in American law and is a salutary remedial device to do equity where necessary. We conclude that such a remedy may be invoked in the courts of the ...

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