Summary of Lohmeyer v. Brower, Supreme Ct. of KS (1951)
Parties: Lohmeyer (purchaser who entered into a K) v. Bowers (sellers of a home on lot 37).
Cause of action/remedy sought: The remedy sought was rescission (equitable remedy) and the Bower’s in their cross-complaint sought specific performance.
Procedural History: Trial court rendered judgment for Bowers and decreed specific performance. This court reverses with directions to cancel and set aside the K and render a new judgment which is equitable under the issues raised by the pleadings.
Facts: PL’s entered into real estate agreement w/DF. K said the land was merchantable, but after the agreement was entered, PL found that there was a restrictive covenant placed on the lot of land by the original subdivider. Additionally, PL’s lawyer, after further examination, learned the city placed a zoning ordinance regarding building to the end of a lot. DF’s who built the house somewhere else, had it moved to the deeded location.
Issue(s): Under KS property law, does a property subject to encumbrances or other burdens make the title unmerchantable, or, alternatively, if these encumbrances were excepted by the provision in the K that the title was subject to all restrictions and easements applying to the property?
Holding: Yes. The court found that the violation of the restrictions imposed by the ordinance and the dedication declaration (not the existence of the restrictions) rendered the title unmarketable. No, to the alternative argument.
Court’s Rationale/Reasoning: The rule made it pretty clear to the court that after reading the rule, and noting that a party cannot convey more interest in land than it presently has, that DF could not convey encumbered land and represent it to the contrary. The contract, after rescission, should either be reworked so that the title is marketable under the chain of title (under provision for more time to fix the K), or the parties should go their own ways.
Rule: Marketable title leaves no question as to who the owner is. It is the title which a reasonable buyer, knowledgeable of the facts and their legal implications and acting in a reasonable manner, would be willing to accept. A title insurance company should be retained to insure that the title is marketable. (rule from KS case)
Did court avoid issues?: No.