[No. 400,

LUCILLE M. HARDING v. JA LAUR CORPORATION et al.

Decided February 15, 1974.

Charles W. Bell and Michael J. Ragland, with whom were John T. Bell, Frank S. Cornelius and Bell & Bell on the brief, for appellant.

Courtland K. Townsend, Jr., and Stephen P. Johnson, Assistant County Attorney for Montgomery County, with whom were Richard S. McKemon, County Attorney for Montgomery County, Alfred H. Carter, Deputy County Attorney for Montgomery County, and Nadonley & Townsend on the brief, for appellees.

September Term, 1973.]

The cause was argued before Gilbert, Menchine and Davidson, JJ.

Gilbert, J.,

delivered the opinion of the Court.

A demurrer to the third Amended Bill of Complaint that had been brought by Mrs. Lucille M. Harding against Ja Laur Corporation, Macro Housing, Inc., a corporation and Montgomery County, Maryland, a municipal corporation, was sustained without leave to amend. The bill alleged that a deed 1 had been obtained from the appellant through fraud practiced upon her by the agent of Ja Laur Corporation. The bill further averred that the paper upon which the appellant had affixed her signature was “falsely and fraudulently attached to the first page of a deed identified as the same deed” through which the appellee, Ja Laur Corporation, and its assigns, the other appellees, claim title.

The issue presented by this appeal is, did the Bill of Complaint allege a forgery, thus requiring the demurrer to be overruled. Our answer is, for the reason stated infra, in the affirmative.

There is no dispute that the appellant signed some type of paper. Her claim is not that her signature was forged in the normal sense, i.e., someone copied or wrote it, but rather that the forgery is the result of an alteration. Mrs. Harding alleges that at the time that she signed a blank paper she was told that her signature was necessary in order to straighten out a boundary line. She represents that she did not know that she was conveying away her interest in and to a certain .1517 acres of land in Montgomery County.

The parcel of land that was conveyed by the allegedly forged deed is contiguous to a large tract of real estate in which Ja Laur and others had “a substantial interest.” It appears from the bill that Mrs. Harding’s land provided the access from the larger tract to a public road, so that its value to the appellees is obvious. Mrs. Harding excuses herself for signing the “blank paper” by averring that she did so at the instigation of an attorney, an agent of Ja Laur, who had “been a friend of her deceased husband, and . . . represented her deceased husband in prior business and legal matters, and that under [the] circumstances [she] did place her complete trust and reliance in the representations made to her . . .” by the attorney.2 The “blank paper” was signed “on or about April 2, 1970.” Mrs. Harding states that she did not learn of the fraud until the “summer of 1972.” At that time an audit, by the Internal Revenue Service, of her deceased husband’s business revealed the deed to Ja Laur, and its subsequent conveyance to the other appellees.3

In Smith v. State, 7 Md. App. 457, 460-61, 256 A. 2d 357, 360 (1970), we said that:

“Forgery has been defined as a false making or material alteration, with intent to defraud, of any writing which, if genuine, might apparently be of legal efficacy or the foundation of a legal liability. Reddick v. State, 219 Md. 95, and authorities cited at page 98. More succinctly, forgery is the fraudulent making of a false writing having apparent legal significance. Nelson v. State, 224 Md. 374. It is thus clear that one of the essential elements of forgery is a writing in such form as to be apparently of some legal efficacy and hence capable of defrauding or deceiving.” (Footnote omitted). (Emphasis supplied).

Perkins, Criminal Law ch. 4, § 8 (2d ed. 1969) states, at 351:

“A material alteration may be in the form of (1) an addition to the writing, (2) a substitution of something different in the place of what originally appeared, or (3) the removal of part of the original. The removal may be by erasure or in some other manner, such as by cutting off a qualifying clause appearing after the signature.” (Footnotes omitted). (Emphasis supplied).

A multitude of cases hold that forgery includes the alteration of or addition to any instrument in order to defraud. See 2 Wharton’s Criminal Law and Procedure § 632, n. 7 (Anderson ed. 1957). That a deed may be the subject of a forgery is beyond question. Md. Ann. Code Art. 27, § 44; Maskell v. Hill, 189 Md. 327, 55 A. 2d 842 (1947); People v. Sharp, 53 Mich. 523, 19 N. W. 168 (1884); State v. Fisher, 65 Mo. 437 (1877); Clark and Marshall, A Treatise on the Law of Crimes § 12.31 (6th ed. Wingersky rev. 1958).

The Bill of Complaint alleges that the signature of Mrs. Harding was obtained through fraud. More important, however, to the issue is whether or not the bill alleges forgery. In our view the charge that appellant’s signature was written upon a paper, which paper was thereafter unbeknown to her made a part of a deed, if true, demonstrates that there has been a material alteration and hence a forgery.4 While the articulation of the “forgery” in the Bill of Complaint leaves much to be desired, it, nevertheless, is sufficient to state the claim.

It is elementary that a demurrer, for the purpose of the demurrer only, has the effect of admitting the truth of the facts alleged in a Bill of Complaint. Hall v. Barlow Corporation, 255 Md. 28, 255 A. 2d 873 (1969); Parish v. Milk Producers Assn., 250 Md. 24, 242 A. 2d 512 (1968); Killen v. Houser, 239 Md. 79, 210 A. 2d 527 (1965); Brack v. Evans, 230 Md. 548, 187 A. 2d 880 (1963); Bldg. and Sav. Assn. v. Gorsuch, 180 Md. 185, 23 A. 2d 672 (1942). Applying that principle to the instant case, the allegation of forgery in the Bill of Complaint was admitted, and the hearing judge should not have sustained the demurrer as to the appellee, Ja Laur Corporation.

We turn now to the discussion of whether vel non the demurrers of Macro Housing, Inc. and Montgomery County, the other appellees, should have been sustained. There was no allegation in the bill that their agent had perpetrated the fraud upon Mrs. Harding. If they are to be held in the case, it must be on the basis that they are not bona fide purchasers without notice. The title of a bona fide purchaser, without notice, is not vitiated even though a fraud was perpetrated by his vendor upon a prior title holder. Silver v. Benson, 227 Md. 553, 177 A. 2d 898 (1962); Banking Co. v. Fed. and Dep. Co., 165 Md. 657, 170 A. 544 (1934); Houston v. Wilcox, 121 Md. 91, 88 A. 32 (1913). A deed obtained through fraud, deceit or trickery is voidable as between the parties thereto, but not as to a bona fide purchaser. A forged deed, on the other hand, is void ab initio.

In Maskell v. Hill, supra, the Court of Appeals had before it a case wherein one Alexander Maskell, a married man, and Miss Kidd lived together as man and wife. During that period of time Maskell and Kidd acquired a tract of land in Baltimore County under the assumed names of “Harry A. Hill and Bertha V. Hill.” They took title to the property as tenants by entireties, a status reserved for husband and wife. Approximately three years later the illicit relationship terminated and a deed, purported to have been signed by “Harry A. Hill and Bertha V. Hill” his wife, was recorded in the Circuit Court for Baltimore County. By the terms of that deed the title to the land was transferred to Maskell. Miss Kidd complicated the facts by marrying William Hill so that she actually acquired the name “Bertha Hill.” Maskell transferred the property to one Van Slyke, a straw party, who in turn reconveyed the property to Maskell and Maskell’s lawful wife. After learning of the transactions, Mrs. Hill instituted a Bill of Complaint in which she asked that the pretended deeds be declared void. A demurrer was filed, but it was overruled. The Court, after turning aside an argument that “equity should refuse to aid the appellee in the enforcement of rights based on illicit cohabitation”, said that the deed from “Harry A. Hill and Bertha V. Hill,” his wife, to Maskell was a forgery, and a nullity. The Court stated, at 335:

“No judicial action is necessary to ‘annul’ this nullity. Nevertheless, in view of the recording laws, the appellee doubtless would be entitled to have an apparent cloud on her title removed by a decree declaring the deed to be a forgery.”

We glean from the Maskell v. Hill decision that the common law rule that a forger can pass no better title than he has is in full force and effect in this State. See also Banking Co. v. Fed. and Dep. Co., supra. A forger, having no title can pass none to his vendee. James v. Stratton, 203 S. W. 386 (Tex. Ct. Civ. App. 1918). Consequently, there can be no bona fide holder of title under a forged deed. A forged deed, unlike one procured by fraud, deceit or trickery is void from its inception. The distinction between a deed obtained by fraud and one that has been forged is readily apparent. In a fraudulent deed an innocent purchaser is protected because the fraud practiced upon the signatory to such a deed is brought into play, at least in part, by some act or omission on the part of the person upon whom the fraud is perpetrated. He has helped in some degree to set into motion the very fraud about which he later complains. A forged deed, on the other hand, does not necessarily involve any action on the part of the person against whom the forgery is committed. So that if a person has two deeds presented to him, and he thinks he is signing one but in actuality, because of fraud, deceit or trickery he signs the other, a bona fide purchaser, without notice, is protected. On the other hand, if a person is presented with a deed, and he signs that deed but the deed is thereafter altered e.g. through a change in the description or affixing the signature page to another deed, that is forgery and a subsequent purchaser takes no title.

In the instant case, the Bill of Complaint, for the reasons above stated, alleged a forgery of the deed by which Ja Laur took title from Mrs. Harding. This allegation, if true, renders that deed a nullity. Maskell v. Hill, supra. Ja Laur could not have passed title to the other appellees, Macro Housing, Inc. and Montgomery County. Those two appellees would therefore have no title to the land of Mrs. Harding.

The demurrer should not have been sustained. In so holding we do not express an opinion on the merits of this case but confine our discussion to the question of Mrs. Harding’s right to have the merits litigated.

Order sustaining demurrer with­out leave to amend reversed and case remanded for further proceeding.

Appellees to pay the costs.

1

The deed was not part of the record.

2

Not counsel of record.

3

There is no explanation as to the payment of the property taxes for the years 1971 and 1972.

4

In oral argument we were advised that the “paper” was not notarized at the time of signing, but that an acknowledgment now appears in the “deed.”

Supreme Court of Missouri. Division No. 1.

No. 44385.

Rose L. WALTERS, Appellant, v. Charles D. TUCKER, Sr., and Myrtle Tucker, his Wife, Respondents.

July 11, 1955.

Motion for Rehearing and to Transfer to Court en Banc Denied Sept. 12, 1955.

All concur.

L. A. Robertson and Alexander & Rob­ertson, St. Louis, for appellant.

David J. Tompkins, St. Louis, for re­spondents.

HOLLINGSWORTH, Judge.

This is an action to quiet title to certain real estate situate in the City of Webster Groves, St. Louis County, Missouri. Plai­ntiff and defendants are the owners of ad­joining residential properties fronting northward on Oak Street. Plaintiff’s prop­erty, known as 450 Oak Street, lies to the west of defendants’ property, known as 446 Oak Street. The controversy arises over their division line. Plaintiff contends that her lot is 50 feet in width, east and west. Defendants contend that plaintiff’s lot is only approximately 42 feet in width, east and west. The trial court, sitting without a jury, found the issues in favor of defendants and rendered judgment accordingly, from which plaintiff has appealed.

The common source of title is Fred F. Wolf and Rose E. Wolf, husband and wife, who in 1922 acquired the whole of Lot 13 of West Helfenstein Park, as shown by plat thereof recorded in St. Louis County. In 1924, Mr. and Mrs. Wolf conveyed to Charles Arthur Forse and wife the follow­ing described portion of said Lot 13:

“The West 50 feet of Lot 13 of West Helfenstein Park, a Sub-division in United States Survey 1953, Twp. 45, Range 8 East, St. Louis County, Mis­souri, * * *."

Plaintiff, through mesne conveyances car­rying a description like that above, is the last grantee of and successor in title to the aforesaid portion of Lot 13. Defendants, through mesne conveyances, are the last grantees of and successors in title to the remaining portion of Lot 13.

At the time of the above conveyance in 1924, there was and is now situate on the tract described therein a one-story frame dwelling house (450 Oak Street), which was then and continuously since has been occu­pied as a dwelling by the successive owners of said tract, or their tenants. In 1925, Mr. and Mrs. Wolf built a 1 1/2-story stucco dwelling house on the portion of Lot 13 retained by them. This house (446 Oak Street) continuously since has been occupied as a dwelling by the successive owners of said portion of Lot 13, or their tenants.

Despite the apparent clarity of the de­scription in plaintiff’s deed, extrinsic evi­dence was heard for the purpose of enabling the trial court to interpret the true meaning of the description set forth therein. At the close of all the evidence the trial court found that the description did not clearly reveal whether the property conveyed “was to be fifty feet along the front line facing Oak Street or fifty feet measured Eastward­ly at right angles from the West line of the property * * * ”; that the “difference in method of ascertaining fifty feet would result in a difference to the parties of a strip the length of the lot and approximately eight feet in width”; that an ambiguity existed which justified the hearing of ex­trinsic evidence; and that the “West fifty feet should be measured on the front or street line facing Oak Street.” The judg­ment rendered in conformity with the above finding had the effect of fixing the east-west width of plaintiff’s tract at about 42 feet.

Plaintiff contends that the description in the deed is clear, definite and unambiguous, both on its face and when applied to the land; that the trial court erred in hearing and considering extrinsic evidence; and that its finding and judgment changes the clearly expressed meaning of the description and describes and substitutes a different tract from that acquired by her under her deed. Defendants do not contend that the description, on its face, is ambiguous, but do contend that when applied to the land it is subject to “dual interpretation”; that under the evidence the trial court did not err in finding it contained a latent ambiguity and that parol evidence was admissible to ascer­tain and determine its true meaning; and that the finding and judgment of the trial court properly construes and adjudges the true meaning of the description set forth in said deed.

Attached hereto is a reduced copy of an unchallenged survey of Lot 13, as made by plaintiff’s witness, Robert J. Joyce, surveyor and graduate (1928) in civil engineering at Massachusetts Institute of Technology, for use in this litigation. Inasmuch as the two properties here in question front northward on Oak Street, the plat is made to be viewed from the bottom toward the top, which in this instance is from north to south.

It is seen that Lot 13 extends generally north and south. It is bounded on the north by Oak Street (except that a small triangu­lar lot from another subdivision cuts off its frontage thereon at the northeast corner). On the south it is bounded by the Missouri Pacific Railroad right of way. Both Oak Street and the railroad right of way extend in a general northeast-southwest direction, but at differing angles.

Joyce testified: The plat was a “survey of the West 50 feet of Lot 13 of West Helfenstein Park”. In making the survey the west boundary line of Lot 13 was first estab­lished. Lines 50 feet in length (one near the north end and one near the south end of the lot, as shown by the plat) were run eastwardly at right angles to the west line of the lot, and then a line was run parallel to the west line and 50 feet, as above meas­ured, from it, intersecting both the north and south boundaries of the lot. This line, which represented 50 feet in width of Lot 13, made a frontage of 58 feet, 2⅜ inches, on Oak Street, and 53 feet, 8¾ inches, on the railroad right of way. The line, as thus measured, comes within 1 foot, 1¾ inches, of the west front corner of the stucco house (446 Oak Street), within 1 foot, 7 inches, of the west rear corner thereof, and within less than 1 foot of a chimney in the west wall.

The trial court refused to permit the wit­ness to testify, but counsel for plaintiff offered to prove that, if permitted, witness would testify that the methods used by him in making the survey were in accordance with the practices and procedures followed in his profession in determining the bound­aries of lots such as was described in the deed. The witness further testified that the method used by him was the only method by which a lot such as that described in the deeds in question could be measured having precisely and uniformly a width of 50 feet; and that a 50 foot strip is a strip with a uniform width of 50 feet.

Defendants also introduced in evidence a plat of Lot 13. It was prepared by Elbring Surveying Company for use in this litiga­tion. August Elbring, a practicing surveyor and engineer for 34 years, testified in behalf of defendants: “In view of the fact that the deed (to the west 50 feet of Lot 13) made reference to the western 50 feet, and in view of the fact that the line which would have been established construing the dimension to be 50 feet at right angles, coming within a foot or so of an existing building (the stucco house), we felt that the line was in­tended to have been placed using the fron­tage of 50 feet on Oak Street and thence running the line (southward) parallel to the western line of Lot 13.” The line so run, as being the east line of plaintiff’s tract, was 8.01 feet west of the northwest corner of the stucco house and 8.32 feet west of its southwest corner. The Elbring plat does not show the actual width of plaintiff’s tract as thus measured. But, concededly, there is no point on it where it approximates 50 feet in width; and, while it “fronts” 50 feet on Oak Street, its actual width is between 42 and 43 feet.

Both plats show a concrete driveway 8 feet in width extending from Oak Street to plaintiff’s garage in the rear of her home, which, the testimony shows, was built by one of plaintiff’s predecessors in title. The east line of plaintiff’s tract, as measured by the Joyce (plaintiff’s) survey, lies 6 or 7 feet east of the eastern edge of this driveway. Admittedly, the driveway is upon and an appurtenance of plaintiff’s property. On the Elbring (defendants’) plat, the east line of plaintiff’s lot, as measured by Elbring, is shown to coincide with the east side of the driveway at Oak Street and to encroach upon it 1.25 feet for a distance of 30 or more feet as it extends between the houses. Thus, the area in dispute is essentially the area between the east edge of the driveway and the line fixed by the Joyce survey as the eastern line of plaintiff’s tract.

Plaintiff adduced testimony to the effect that she and several of her predecessors in title had asserted claim to and had exer­cised physical dominion and control over all of the 50 feet in width of Lot 13, which in­cluded the concrete driveway and 6 or 7 feet to the east thereof. Defendants ad­duced testimony to the effect that they and their predecessors in title had asserted claim to and had exercised physical dominion and control over all of Lot 13 east of the drive­way. The view we take of this case makes it unnecessary to set forth this testimony in detail.

The description under which plaintiff claims title, to wit: “The West 50 feet of Lot 13 * * * ”, is on its face clear and free of ambiguity. It purports to con­vey a strip of land 50 feet in width off the west side of Lot 13. So clear is the meaning of the above language that de­fendants do not challenge it and it has been difficult to find any case wherein the mean­ing of a similar description has been ques­tioned. See Mississippi County v. Byrd, 319 Mo. 697, 4 S.W.2d 810, 812 [5]; Adkins v. Quest, 79 Mo.App. 36.

The law is clear that when there is no inconsistency on the face of a deed and, on application of the description to the ground, no inconsistency appears, parol evidence is not admissible to show that the parties intended to convey either more or less or different ground from that described. But where there are conflicting calls in a deed, or the description may be made to apply to two or more parcels, and there is nothing in the deed to show which is meant, then parol evidence is admissible to show the true meaning of the words used. Meinhardt v. White, 341 Mo. 446, 107 S.W.­2d 1061, 1064 [4, 5]; Detroit, Grand Haven & Milwaukee R. Co. v. Howland, 246 Mich. 318, 224 N.W. 366, 68 A.L.R. 1, and annota­tion; 16 Am.Jur., Deeds, §§ 412-414, pp. 673-674; Thompson on Real Property, Vol. 6, §§ 3280-3287, pp. 454-468. “The office of extrinsic evidence as applied to the description of a parcel is to explain the latent ambiguity or to point out the property described on the ground. Such evidence must not contradict the deed, or make a description of other land than that described in the deed.” (Emphasis ours.) Thompson on Real Property, Vol. 6, § 3287, p. 468.

No ambiguity or confusion arises when the description here in question is applied to Lot 13. The description, when applied to the ground, fits the land claimed by plaintiff and cannot be made to apply to any other tract. When the deed was made, Lot 13 was vacant land except for the frame dwelling at 450 Oak Street. The stucco house (446 Oak Street) was not built until the following year. Under no con­ceivable theory can the fact that defendants’ predecessors in title (Mr. and Mrs. Wolf) thereafter built the stucco house within a few feet of the east line of the property described in the deed be construed as com­petent evidence of any ambiguity in the description. Neither could the fact, if it be a fact, that the Wolfs and their suc­cessors in title claimed title to and exer­cised dominion and control over a portion of the tract be construed as creating or revealing an ambiguity in the description.

Whether the above testimony and other testimony in the record constitute evidence of a mistake in the deed we do not here determine. Defendants have not sought reformation, and yet that is what the decree herein rendered undertakes to do. It seems apparent that the trial court con­sidered the testimony and came to the con­clusion that the parties to the deed did not intend a conveyance of the “West 50 feet of Lot 13”, but rather a tract fronting 50 feet on Oak Street. And, the decree, on the theory of interpreting an ambiguity, undertakes to change (reform) the descrip­tion so as to describe a lot approximately 42 feet in width instead of a lot 50 feet in width, as originally described. That, we are convinced, the courts cannot do.

The judgment is reversed and the cause remanded for further proceedings not in­consistent with the views expressed.

Loughran v. Kummer, Appellant.

April 22, 1929:

Argued March 21, 1929.

Before Moschzisker, C. J., Frazer, Walling, Simpson, Kephart, Sadler and Schaffer, JJ.

F. C. McGirr, with him Ritter, Ruffennach & Ruffen­nach, for appellant.

Charles A. Poth, with him Walter F. Campbell, for appellee.

When plaintiff executed, acknowl­edged and delivered to defendant the deed in this case, he was perfectly aware of what he was doing, and in­tended to make the deed and gift conclusive.

The mere fact that plaintiff, after he had executed, acknowledged and delivered the deed to defendant, said, “Remember, this deed is not to be recorded until after my death,” does not attach a condition to the delivery which would entitle plaintiff to afterwards revoke the deed: Cragin’s Est., 274 Pa. 1; Simonton’s Est., 4 Watts 180; Weisenberger v. Huebner, 264 Pa. 316.

Where a gift inter vivos has been perfected by suffi­cient delivery and acceptance, it cannot be revoked: Mc­Hale v. Toole, 258 Pa. 293; Myers’s Case, 248 Pa. 76; Fassett’s App., 167 Pa. 448; Greenfield’s Case, 14 Pa. 489; Barnard v. Kell, 271 Pa. 80; Russell’s App., 75 Pa. 269; Edwards v. Edwards, 170 Pa. 212; Pringle v. Pringle, 59 Pa. 281; Eckman v. Eckman, 68 Pa. 460.

The general rule is that delivery of a deed cannot be made to the grantee conditionally.

The nature of the transaction, and the ques­tion whether or not the deed was an absolute gift to ap­pellee, depends on the intention of the parties and is gathered from all the circumstances of the case.

The deed being a voluntary deed, in the absence of proof of a distinct intention to make the gift irrevocable, the conveyance will be set aside if the other circum­stances of the case warrants it: Miskey’s App., 107 Pa. 611; Madole v. Miller, 276 Pa. 131; Russell’s App., 75 Pa. 269; Frederick’s App., 52 Pa. 338; Longenecker v. Church, 200 Pa. 567; Wolfe’s Est, 284 Pa. 169.

Opinion by

Mr. Justice Kephart,

Appellee, a bachelor sixty-seven years of age, con­veyed, for one dollar, land in Pittsburgh to Mrs. Rum­mer, appellant, who was one of his tenants. A bill was filed to set aside this deed; the grounds laid were con­fidential relationship, undue influence and impaired mentality. Inasmuch as the facts must again be consid­ered, we will mention only such as raise the legal ques­tion on which the case was decided; we venture no opin­ion on the other facts.

The court below found from the evidence that a deed absolute on its face had been executed, acknowledged and delivered to appellant by appellee, on condition that it should not be recorded until the latter’s death; that undoubtedly in his mind this meant that the deed was not to take effect until after his death; and that he, de­manding the return of the deed within a very few days after the delivery, thus revoked it and with that revoca­tion revoked the gift. Appellant deceived appellee when she stated the deed had been destroyed. The excuse given was appellee was worried and she wanted to ease his mind by making him believe that it had been destroyed. The foregoing reasons given for the cancellation of the deed were not averred in the bill. See Luther v. Luther, 216 Pa. 1. No specific findings were made on the gen­eral complaints of the bill, the court holding, “I do not consider that the question of undue influence or of con­fidential relationship of the defendant to the plaintiff is important in this case. I have found as a fact that the deed was executed and delivered to the defendant on the consideration that it should not be recorded until after the death of plaintiff.”

The question we are asked to consider is whether a deed absolute on its face, acknowledged, executed and delivered under circumstances as here indicated, vested such title in the grantee as could be revoked for the above reasons. It amounts in substance to this, that the grantor said the deed should not be recorded until after his death, and the grantee in accepting the deed, took it on that condition. The evidence on which this finding was based was all oral and the scrivener and defendant denied any such condition was imposed when the deed was delivered. All control over the deed was relin­quished when it was handed appellant. The presump­tion must be that at that time it was the intention to pass title. “The general principle of law is that the formal act of signing, sealing and delivering is the con­summation of the deed, and it lies with the grantor to prove clearly that appearances are not consistent with truth. The presumption stands against him, and the burden is on him to destroy it by clear and positive proof that there was no delivery and that it was so un­derstood at the time. Where we have, as here, a deed absolute and complete in itself, attacked as being in fact otherwise intended......, there is a further presump­tion that the title is in conformity with the deed, and it should not be dislodged except by clear, precise, con­vincing and satisfactory evidence to the contrary”; Cragin’s Est., 274 Pa. 1, 5.

The gift here was executed, and that defendant was not to record it was not of the slightest consequence when viewed as against these major actions, delivery and passing of title. It was merely a promise the keep­ing of which lay in good faith, the breach of which en­tailed no legal consequences. To have effected the grantor’s purpose, the intervention of a third party was absolutely essential. There are circumstances where ac­knowledgment, together with physical possession of the deed in the grantee, does not conclusively establish an intention to deliver, and the presumption arising from signing, sealing and acknowledging accompanied by manual possession of the deed by the grantee is not irre­buttable (Kanawell v. Miller, 262 Pa. 9, 14; Smith v. Markland, 223 Pa. 605, 629; Clauer v. Clauer, 22 Pa. Su­perior Ct. 395, 399; Lewis v. Merryman, 271 Pa. 255), but this presumption can be overcome only by evidence that no delivery was in fact intended and none made. Such evidence is not present in this case. Here the grantor by his own testimony intended the grantee to get the land. The only question was when it was to take effect.

Here is one of the instances in which the law fails to give effect to the honest intention of the parties for the reason that they have not adopted the proper legal means of accomplishing their object. Therefore, the legal effect of such delivery is not altered by the fact that both parties supposed the deed would not take effect until re­corded, and that it may be revoked at any time before record, or by contemporaneous agreements looking to the reconveyance of the property to the grantor or to the third party upon the happening of certain contin­gent events or the nonperformance of certain condi­tions: 8 R. C. L. 983; 21 C. J. 874; 16 C. J. 731.

The reason for these rules is obvious. It is quite pos­sible to prove in most deliveries that some parol in­junction was attached to the formal delivery of the deed; if they are to be given the effect here contended, there would be no safety in accepting a deed under most cir­cumstances. It opens the door to the fabrication of evi­dence that would inevitably be appalling and go far to­ward violating the security of written instruments. We have so held in matters of less import than the convey­ance of land: First Nat. Bank of Hooversville v. Sagerson, 283 Pa. 406; Second Nat. Bank of Reading v. Yeager, 268 Pa. 167. The rule must not be relaxed as to realty. Such conveyances are vastly more important as they involve instruments of title and ownership which are used as a means of extending credit. Title to land ought not to be exposed to the peril of successful attack except where the right is clear and undoubted, and what­ever may be our desire to recognize circumstances ar­gued as unfortunate we cannot go to the extent of over­throwing principles of law governing conveyances of real estate that have stood the test of ages.

In Cragin’s Estate, supra, the deeds were in a tin box for more than twenty-three years in an envelope en­dorsed with the words, “to be recorded upon Mrs. Cragin’s death, if before me.” The deed was in grantee’s possession and it was urged the delivery was conditional. We said that endorsement may have been placed on the envelope for other reasons than to defer the transfer of title. In the present case it was evident appellee did not want his relatives to learn of the conveyance. Record­ing would be necessary to pass a title-examiner’s inspec­tion, but nonrecording did not prevent the title from passing. It has been quite generally held that an oral understanding on the delivery of a deed that it should not be recorded will not affect the absolute character of the conveyance if free of other conditions: Lewis v. Brown, 22 Cal. App. 38; citing many authorities as fol­lows: Lawton v. Sager, 11 Barb. (N. Y.) 349, 351; Fair­banks v. Metcalfe, 8 Mass, 230; Alexander v. Wilkes, 79 Tenn. 221; Mowry v. Heney, 86 Cal. 471; Riley v. North Star Mining Co., 152 Cal. 549; Hammond v. McCul­lough, 159 Cal. 639; Whitney v. Dewey, 10 Idaho 633. An agreement to deliver a deed in escrow to the person in whose favor it is made, and who is likewise a party to it, will not make the delivery conditional. If delivered under such an agreement, it will be deemed an absolute delivery and a consummation of the execution of the deed: Simonton’s Est., 4 Watts 180; Cragin’s Est., su­pra. See also Weisenberger v. Huebner, 264 Pa. 316.

We call attention to the following cases on the general question: Fassett’s App., 167 Pa. 448; Bernard v. Kell, 271 Pa. 80; Russell’s App., 75 Pa. 269; Edwards v. Ed­wards, 170 Pa. 212; Pringle v. Pringle, 59 Pa. 281; Eck­man v. Eckman, 68 Pa. 460, 471. We need not further discuss revocation of a gift inter vivos which has been perfected by delivery and acceptance. See Greenfield’s Est., 14 Pa. 489; 28 C. J. 649, section 45. While a per­fected gift may not be disturbed for reasons here given, the evidence relied on may be important when the gift is attacked on other lines. The court below erred in de­creeing a revocation of the deed for the reason given. As stated above, we do not pass on the main questions involved in the bill which the court below has not passed on. We leave the court below free to act on them when the case comes before it.

The decree of the court below is reversed and the rec­ord is remitted with a procedendo.

A06A1603.

(638 SE2d 421)

McMURRAY et al. v. HOUSWORTH et al.

Decided November 6, 2006.

Ruffin, C. J., and Smith, P. J., concur.

Fortson, Bentley & Griffin, Jeffrey W. DeLoach, for appellants.

Russell, Stell, Smith & McLocklin, John E. Stell, Jr., for appellees.

Phipps, Judge.

Michael and Deborah Housworth sold a twenty-four-acre tract of land which the purchasers—Lance and Melanie McMurray, and James and Alberta McMurray—subdivided into two tracts. A lake created by a dam is situated on the property. The McMurrays brought this suit against the Housworths for breach of their general warranty of title upon discovering after purchasing the property that the owner and operator of the dam holds a floodwater detention easement that burdens the tract. The superior court awarded summary judgment to the Housworths on the ground that this easement is not such an encumbrance on the property as breaches the title warranty. We disagree and reverse.

Lance and Melanie McMurray purchased one of the twelve-acre parcels from the Housworths for $120,000 in 2004. On the same date, James and Alberta McMurray purchased the other parcel for the same price. The parcels were conveyed by warranty deeds that contained general warranties of title without any limitations appli­cable here. The McMurrays informed the Housworths that they were buying the property to build single-family residences on each parcel.

Apparently, however, the McMurrays failed to discover that recorded within the chain of title to their property in 1962 was a “floodwater retarding structure” easement which had been granted to the Oconee River Soil Conservation District. This easement is for construction, operation, and maintenance of a floodwater retarding structure or dam; for the flowage of waters in, over, upon, or through the dam; and for the permanent storage and temporary detention of any waters that are impounded, stored, or detained by the dam. It also reserved in the grantor and his successors the right to use the easement area for any purpose not inconsistent with full use and enjoyment of the grantee’s rights and privileges, i.e., it is nonexclu­sive. After learning of the easement following their purchase of the property, the McMurrays demanded that the Housworths compen­sate them for the damages they would suffer as a result of the restrictions thereby placed on their usage.

Because the Housworths failed to comply with these demands, the McMurrays brought this suit against them seeking damages for breach of their warranties of title. The McMurrays moved for partial summary judgment on the question of whether the floodwater deten­tion easement constitutes an encumbrance on the property breaching the warranties of title. The Housworths filed a cross-motion for summary judgment on the ground that, as a matter of law, the easement does not breach the warranties of title.

In agreement with the Housworths, the superior court awarded summary judgment to them and denied the McMurrays’ motion for partial summary judgment. The court concluded that floodwater detention easements, like easements for public roadways and zoning regulations, do not breach a general warranty of title. Moreover, the court found that the McMurrays had notice of the easement because it was recorded within their chain of title and because the dam is visible on their property. The court concluded that the McMurrays were therefore under a duty to inquire about any use restrictions resulting from the easement. Additionally, the court held that the Housworths have not breached their general warranty of title be­cause the McMurrays have not been evicted from their property, as the easement is nonexclusive and houses may be built in easement areas if certain requirements are met.

1. The McMurrays contend that the superior court erred in analogizing the floodwater detention easement to a public roadway easement or zoning regulation and in thereby concluding that a floodwater detention easement is not the type of easement that breaches a general warranty of title.

(a) Each of the deeds in this case contained a general warranty of title in which the grantors agreed to “defend the right and title to the above described property, unto [the grantees], their heirs, assigns, and successors in title, against the claims of all persons.” Under OCGA § 44-5-62, “[a] general warranty of title against the claims of all persons includes covenants of a right to sell, of quiet enjoyment, and of freedom from encumbrances.” “An incumbrance has been defined as ‘Any right to, or interest in, land which may subsist in another to the diminution of its value, but consistent with the passing of the fee,’ and this definition . . . encompasses an easement or right of way.”1 OCGA § 44-5-63 provides that “[i]n a deed, a general warranty of title against the claims of all persons covers defects in the title even if they are known to the purchaser at the time he takes the deed.”2

(b) The rule in Georgia, as established in the early case of Desvergers v. Willis,3 is that the existence of a public road on land, of which the purchaser knew or should have known at the time of the purchase, is not such an encumbrance as would constitute a breach of a general warranty of title.4 The Desvergers rule is thus an exception to the general rule stated in OCGA § 44-5-63 that a general warranty of title by deed covers even defects known to the purchaser at the time he takes the deed.5

Although the Desvergers rule is not uniform throughout the country, it is the majority rule.6 In adopting the rule, the court in Desvergers concluded that a contrary holding would produce a “crop of litigation” that would be “almost interminable.”7 The reason, as later explained by the Supreme Court of Iowa in Harrison v. The Des Moines & Ft. Dodge R. Co.,8 was that the immense number of warranty deeds then in existence rarely contained exceptions as to public roadways because of the universal belief that roadway access was a benefit rather than a burden to land. Therefore, a determina­tion that public roadway easements were warranty-breaching en­cumbrances would have created innumerable liabilities where none had been thought to exist.

Courts in other states have also based their adoption of the Desvergers rule on the broader ground that where easements are open, notorious, and presumably known to the purchaser at the time of the purchase, that knowledge will exclude the easement from operation of a title warranty.9 These courts have reasoned that where the encumbrance involves an open and obvious physical condition of the property, the purchaser is presumed to have seen it and fixed his price with reference to it. In view, however, of the Georgia rule that knowledge of a title defect will not exclude it from operation of a general warranty of title, creation of an exception for easements for public roadways or other purposes must be based on other grounds.10 And courts in other states have ultimately concluded that public roadway easements should not be regarded as encumbrances on the additional ground that “public highways are not depreciative, but, on the contrary, they are highly appreciative, of the value of the lands on which they constitute an easement, and are a means without which such lands are not available for use, nor sought after in the mark­ets.”11

For a number of reasons, we do not find the floodwater detention easement in this case analogous to a public roadway easement. (1) We do not anticipate that we would open the litigation floodgates, so to speak, by holding that a floodwater detention easement breaches a general title warranty. (2) Moreover, a floodwater detention ease­ment does not benefit the land to which it is subject. Although the property is benefitted by the lake or other body of water that creates the need for the easement (to the extent that the one enhances the value or enjoyment of the other), the easement burdens the property by permitting the impoundment of water on it to prevent flooding or increased water runoff on other property located downstream. (3) The McMurrays brought this action for damages because of the easement, not the lake. And even though the lake is certainly open and obvious, the same cannot necessarily be said of the easement.12 Although the superior court found that the dam is visible on the McMurrays’ property, the McMurrays correctly point out that there is no evidence of record to support this finding.13 As argued by the McMurrays, not every lake is created by a dam or burdened by a floodwater detention easement. (4) And although the McMurrays’ constructive notice of the easement by reason of its recordation within their chains of title would provide a compelling reason for exempting the easement from operation of the warranty deed, OCGA§ 44-5-63 provides otherwise. (5) The recording of the easement certainly renders it binding on the McMurrays insofar as concerns the rights of the easement holder;14 but the question here is whether the existence of the easement gives rise to a claim against the grantor for breach of the warranty against encumbrances. For these reasons, the superior court erred in con­cluding that the floodwater detention easement should be excepted from the rule of OCGA § 44-5-63 in view of the exception for public roadways.

(c) The McMurrays also contend that the superior court erred in equating floodwater detention easements with zoning regulations, which have been held not to breach a general warranty of title.15 Because the floodwater detention easement does not function in the same manner as a zoning regulation in all respects, we agree with this contention.

The floodwater detention easement does more than impose zoning-type restrictions on development activities on the property. It also grants the county soil and water conservation district rights for the storage and detention of impounded waters on the property. And it grants the district a right of ingress and egress upon the property. Easement rights such as these constitute an interest in property that must be acquired either by agreement of the property owner or by condemnation.16 And although the easement does impose limitations on the McMurrays’ use of their property that duplicate restrictions imposed under zoning-type regulations applicable to the property, the two do not appear to be coextensive.

In this regard, although the easement does not by its terms impose any restrictions on building or construction activities, and although it is not exclusive, it does operate to prohibit erection of a residence or other improvements in the area of the easement to the extent that they would substantially interfere with the rights of the easement holder.17 In addition, the National Resource Conservation Service has promulgated guidelines for proposed development of property subject to floodwater easements held by local soil and water conservation districts.

The limitations thereby imposed on the McMurrays’ property do appear to overlap certain regulatory provisions which are applicable to it and which are arguably in the nature of zoning regulations. These provisions are found in the Uniform Development Code (UDC) for Jackson County, which designates certain areas of the county as water supply watershed districts. One is the Sandy Creek Reservoir district, in which the McMurrays’ property lies. Within such districts, no land-disturbing activity, construction or other development other than certain exempted activities inapplicable here maybe conducted without a county permit. To the extent that the restrictions imposed by the floodwater detention easement merely duplicate limitations that would otherwise apply under zoning-type regulations, the ease­ment does not constitute an encumbrance on the property in any real sense or damage the owner of the property subject to the easement. But to the extent that the easement imposes additional restrictions, it does encumber the property and thereby damage the owners. Because the extent of the overlap between the easement restrictions and the zoning-type regulations cannot be determined from the record, the superior court erred in equating the two.

2. The McMurrays contend that the trial court erred in conclud­ing that the Housworths have not breached their general warranty of title because the McMurrays have not been evicted from their prop­erty. We agree.

A general warranty of title against the claims of all persons includes three separate covenants: (1) a covenant of a right to sell, (2) a covenant of quiet enjoyment, and (3) a covenant of freedom from encumbrances.18 To constitute breach of the covenant of quiet enjoy­ment, an eviction or equivalent disturbance by title paramount must occur.19 The McMurrays, however, are complaining of breach of the covenant of freedom from encumbrances. In State Mut. Ins. Co. v. McJenkin Ins. & Realty Co.,20 we recognized that “a general warranty of title includes the warranty of freedom from incumbrances, and it is not necessary to show actual eviction.” Moreover, McJenkin found that because an easement is an assertion of a paramount qualified interest in the land, its effect may cause an eviction of the owner of the property burdened by the easement insofar as his exclusive use of the easement area was concerned.21

Where an encumbrance is a servitude or easement which can not be removed at the option of either the grantor or grantee, damages will be awarded for the injury proximately caused by the existence and continuance of the encum­brance, the measure of which is deemed to be the difference between the value of the land as it would be without the easement and its value as it is with the easement.22

Because the evidence shows without dispute that the Hous­worths breached their general warranties of title, the superior court erred in awarding summary judgment to the Housworths and in failing to grant the McMurrays’ motion for partial summary judg­ment. Questions of fact exist as to damages.

Judgment reversed.

1

Walter L. Tally, Inc. v. Council, 109 Ga. App. 100, 102 (135 SE2d 515) (1964) (citations omitted).

2

See Myers v. Funderburk, 254 Ga. App. 779, 780 (1) (564 SE2d 27) (2002).

3

56 Ga. 515 (1876).

4

Hood v. Spruill, 242 Ga. App. 44, 45 (1) (b) (528 SE2d 565) (2000) and cits.

5

Adams v. Belote, 263 Ga. App. 640, 642 (1) (588 SE2d 827) (2003).

6

See Goodman v. Heilig, 72 SE 866 (N.C. 1911). There has been a dearth of litigation in this area since the early twentieth century.

7

56 Ga. at 516.

8

58 NW 1081 (Iowa 1894).

9

Schwartz v. Black, 174 SW 1146 (Tenn. 1914); Ireton v. Thomas, 113 P. 306 (Kan. 1911); Vanness v. The Royal Phosphate Co., 53 So. 381 (Fla. 1910).

10

See Harrison, supra.

11

Id. at 1082; see Sandum v. Johnson, 142 NW 878 (Minn. 1913).

12

Compare Smith v. Tolbert, 211 Ga. App. 175 (438 SE2d 655) (1993).

13

Compare State Soil & Water Conservation Comm. v. Stricklett, 252 Ga. App. 430, 433-436 (2) (555 SE2d 800) (2001).

14

See id.

15

Barnett v. Decatur, 261 Ga. 205 (2) (403 SE2d 46) (1991).

16

See Stephens County Soil & Water Conservation Dist. v. Wright Bros. Constr. Co., 215 Ga. App. 352 (451 SE2d 802) (1994); Walker v. City of Warner Robins, 262 Ga. 551 (1) (422 SE2d 555) (1992).

17

See Stricklett, supra, 252 Ga. App. at 430-433 (1); see also Folk v. Meyerhardt Lodge, 218 Ga. 248 (127 SE2d 298) (1962).

18

OCGA § 44-5-62.

19

Whited v. Issenberg, 261 Ga. App. 787, 788 (584 SE2d 59) (2003).

20

86 Ga. App. 442, 443 (1) (71 SE2d 670) (1952), disapproved on other grounds, Teems v. City of Forest Park, 137 Ga. App. 733, 734 (1) (225 SE2d 87) (1976).

21

86 Ga. App. at 444.

22

Beaullieu v. Atlanta Title & Trust Co., 60 Ga. App. 400, 403 (4 SE2d 78) (1939) (citation and punctuation omitted).

Supreme Court of South Dakota.

Nos. 19963, 19966.

1997 SD 124

Karen S. ENGELHART, Plaintiff and Appellee, v. Crystal Kay KRAMER, Defendant and Appellant.

Decided Oct. 29, 1997.

Argued Sept. 10, 1997.

Rehearing Denied Dec. 1, 1997.

MILLER, C.J., and SABERS, AMUNDSON and KONENKAMP, JJ., concur.

James A. Craig of Craig Law Office, Sioux Falls, for plaintiff and appellee.

Dennis Duncan and Jeffrey A. Cole of Zimmer, Duncan and Cole Parker, for defen­dant and appellant.

GILBERTSON, Justice.

A $34,800 judgment was rendered against Crystal Kay Kramer based on viola­tion of SDCL ch 43-4 and for failure to properly disclose a defect in the home she sold to Karen Engelhart. The case was tried without a jury before the Second Judicial Circuit Court. Kramer appeals the award claiming that Engelhart did not show that Kramer failed to meet the required standard in completing the seller’s property disclosure statement.1 We affirm.

FACTS AND PROCEDURE

In May of 1991, Crystal Kay Kram­er purchased a home in Sioux Falls, South Dakota for $35,000. Over the next few years Kramer made several improvements. Four days prior to putting the home on the mar­ket, in September, 1993, Kramer enlisted the support of friends and family and began an extensive cleaning of the basement. There were several large cracks in the basement’s cement walls and pieces of various sizes had fallen off. They removed old sheet rock and put up wood paneling over the basement walls. The basement project was memorial­ized by Kramer with several photographs depicting the before, during and after condi­tion of the walls.

During this period Karen Engelhart was searching for a home commensurate with her income level. Engelhart was a first-time home buyer and was assisted by Dorothy Ecker, a real estate agent. Engel­hart viewed Kramer’s home, became inter­ested, and then decided to purchase it.

Kramer was represented by Shirley Ullom, a Century 21 Advantage, Inc. real estate agent. Kramer completed the de­tailed “property condition disclosure state­ment” form required by SDCL 43-4-44. Part two of the form required the seller to disclose certain structural information. Spe­cifically, question 2 asked “Have you experi­enced water penetration in the basement ... within the past two years?” Kramer replied, “Small amt of H20 penetration in NW + NE corners [when it] rains.” (emphasis added). In answering question 3 “[a]re there any cracked walls or floors?” Kramer responded “basement floor, some spots in basement walls, East bedroom walls.” Under § 5, Mis­cellaneous Information, Kramer was required to disclose any additional problems that were not previously mentioned. Kramer offered, “basement cement walls have some crum­bling, behind paneling, basement floor cracked [and] uneven in spots.” (emphasis added).

The trial court found that Engelhart relied upon, among other things, Kram­er’s disclosure statement with regard to the condition of the basement walls and that Engelhart believed “some spots” and “some crumbling” to mean the problems were mini­mal. Kramer allegedly offered to remove the paneling to expose the basement walls but the trial court concluded that the offer was “a gambit, or a bluff ... without any real intention of performing” and that the typical buyer in Engelhart’s position would be “reluctant to remove paneling from some­one else’s house.” Kramer admitted taking photographs before installing the paneling and that showing the photos to a potential purchaser would have been easier than re­moving it. Kramer could not explain why she did not offer the photos.

Engelhart purchased the property in October 1994. In March of 1995, she discovered water seepage through the south wall of the basement. The paneling was removed and water was discovered running through cracks in the south wall. Also noted were several other large cracks, including a large horizontal crack running around the basement. Engelhart hired a structural en­gineer, Chester Quick (Quick) to diagnose the problem. Quick issued a report in which he found the basement walls “very badly cracked” and testified that the cement had “leeched out” which allowed dirt and water to pass into the basement.2 Further, Quick noted that the concrete was showing “consid­erable disintegration especially at the south wall” which was not repairable. He conclud­ed that the foundation had to be replaced and that “As bad as [the walls] are cracked they could collapse at any time.” When asked whether the disclosure statement adequately described the condition of the basement Quick testified that, although accurate in part, “some crumbling” did not adequately describe the damage that existed behind the paneling.

Engelhart brought suit against Kramer based upon misrepresentations made in the disclosure statement. The trial court ruled in favor of Engelhart on failure to comply with South Dakota’s Disclosure Stat­utes and fraud. Kramer appeals the $34,800 award entered against her.

STANDARD OF REVIEW

Our standard of review of the trial court’s findings of fact is under a clearly erroneous standard. Jasper v. Smith, 540 N.W.2d 399, 401 (S.D.1995); Muhlenkort v. Union County Land Trust, 530 N.W.2d 658, 660 (S.D.1995). The trial court’s findings will not be disturbed unless the court is “firmly and definitely convinced a mistake has been made.” Jasper, 540 N.W.2d at 401. Conclusions of law, on the other hand, are reviewed under a de novo standard, giving no deference to the trial court’s conclusions of law. Id. Questions of law, including statutory construction, we re­view de novo. West Two Rivers Ranch v. Pennington County, 1996 SD 70, ¶ 6, 549 N.W.2d 683, 685.

LEGAL ANALYSIS AND DECISION

Whether Kramer failed to com­plete the disclosure statement in good faith as required by SDCL Ch 43-A?

In 1993 the South Dakota legisla­ture enacted specific requirements for disclo­sures in certain real estate transfers. SDCL §§ 43-4-38 to -44. SDCL 43-4-38 provides:

The seller of residential real property shall furnish to a buyer a completed copy of the disclosure statement before the buyer makes a written offer. If after delivering the disclosure statement to the buyer or the buyer’s agent and prior to the date of closing for the property or the date of possession of the property, whichever comes first, the seller becomes aware of any change of material fact which would affect the disclosure statement, the seller shall furnish a written amendment disclos­ing the change of material fact.

SDCL 43-4-41 requires that “The seller shall perform each act and make each disclo­sure in good faith.” SDCL 43-4-40 absolves sellers of liability for defects in certain cir­cumstances by providing:

Except as provided in § 43-4-42, a seller is not liable for a defect or other condition in the residential real property being transferred if the seller truthfully com­pletes the disclosure statement.

(Emphasis added). The disclosure form mandated by SDCL 43-4-44 establishes that beyond the above obligations, there is no warranty passing from the seller to the buy­er:

THIS STATEMENT IS A DISCLOSURE OF THE CONDITION OF THE ABOVE DESCRIBED PROPERTY.... IT IS NOT A WARRANTY OF ANY KIND BY THE SELLER OR ANY AGENT REP­RESENTING ANY PARTY IN THIS TRANSACTION AND IS NOT A SUB­STITUTE FOR ANY INSPECTIONS OR WARRANTIES THE PARTIES MAY WISH TO OBTAIN.

(Capitals in original).

Kramer relies on SDCL 43-4-40 and contends that even if her description of the basement was inadequate or under Kramer’s phraseology, an innocent misrepre­sentation, that it was truthful nonetheless and therefore no liability should attach. It is important to note that in SDCL 43-4-40, the terms “truthfully” and “complete” do not op­erate independently to the exclusion of the other. A plain reading of the terms together evince a more exacting standard than truth alone. Ellis v. City of Yankton, 526 N.W.2d 124, 126 (S.D.1995) (must construe words in statute that are related together; must de­rive the intent of the statute from reading it as a whole); Kelley v. Duling Enters., Inc., 84 S.D. 427, 433, 172 N.W.2d 727, 730 (1969) (“In construing a particular word or term in a statute reference will be had to the mean­ing of the words with which it is associat­ed.”).

Until today, this Court has not addressed the scope of the disclosure stat­utes at issue. Of central concern to our resolution is what is required by the term “good faith,” in the absence of a definition in SDCL 43-4-41, and whether the disclosure of “some crumbling” violates that standard? We recognize that the concept of “good faith” may, at times, seem as elusive as the “rea­sonableness” that is spoken of in the law of torts. However, there exists several sources from which meaning can be found.

Statutory guidance can be found at SDCL 2-14-2(13) which states that “good faith” is:

an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of law, together with an absence of all infor­mation or belief of facts which would ren­der the transaction unconscientious;

Black’s Law Dictionary 693 (6th ed 1990) offers the following: Case law decided under different contexts has provided additional meaning to the term “good faith” to include “honesty in fact,” Garrett v. BankWest, Inc., 459 N.W.2d 833, 841 (S.D.1990) (contractual context; meaning of good faith “varies with the context and emphasizes faithfulness to an agreed com­mon purpose and consistency with the justi­fied expectations of the other party”), and an “honest belief in the suitability of the actions taken.” B.W. v. Meade Co., 534 N.W.2d 595, 598 (S.D.1995), (in the context of reporting and investigating child abuse). In the case now before us the trial court properly relied upon the definition found in SDCL 2-14-­2(13).

Good faith is an intangible and abstract quality with no technical meaning or statu­tory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable ad­vantage. ... In common usage this term is ordinarily used to describe that state of mind denoting honesty of purpose, free­dom of intention to defraud, and, generally speaking, means being faithful to one’s duty or obligation.

Kramer contends that since she described the condition of the basement walls as having “some spots” and “some crumbling,” she fulfilled her duty of good faith by truthfully completing the Disclosure Statement. Kramer argues that to hold oth­erwise would, in effect, result in a strict liability standard on sellers of real estate. We disagree.

SDCL 43-4-42 provides:

A transfer that is subject to §§ 43-4-37 to 43-4-44, inclusive, is not invalidated solely because a person fails to comply with §§ 43-4-37 to 43-4-44, inclusive. Howev­er, a person who intentionally or who negligently violates §§ 43-4-37 to 43-4-44, inclusive, is liable to the buyer for the amount of the actual damages and repairs suffered by the buyer as a result of the violation or failure. A court may also award the buyer costs and attorney fees. Nothing in this section shall preclude or restrict any other rights or remedies of the buyer.

(Emphasis added).

Kramer relies on Amyot v. Luchi­ni, 932 P.2d 244 (Alaska 1997), for the propo­sition that a disclosure statement can be truthful yet not “perfect” and that “innocent misrepresentations” do not violate good faith. However, it must be noted that Kramer’s representation of the issue to this Court in­correctly assumes that the misrepresentation of the basement walls was found merely inno­cent by the trial court. To the contrary, the trial court specifically found that the Kram­er’s paneling of the walls four days before putting the house on the market was not “solely for aesthetic purposes” and was com­pleted deliberately3 in an attempt to hide their true condition. Kramer’s colorful at­tempt to characterize her description of the basement as an innocent misrepresentation is inaccurate.

In 1993, Alaska enacted residential real property disclosure statement statutes (substantially similar to that of South Dakota enacted the same year). Alaska Stat. §§ 34.70.010 to 34.70.090 (Michie 1996).4 The Amyot court stated:

Prior to the enactment of [the mandatory disclosure statutes], sellers of real proper­ty were not required to make any repre­sentations about the property. However, sellers were strictly liable for those repre­sentations they made. (Citation omitted.) Under the disclosure statute a seller is now required to make representations about a wide range of the property’s fea­tures and characteristics. We conclude that the legislature intended to offset the seller’s increased disclosure responsibilities by the lower liability standard for misrep­resentations.

Amyot, 932 P.2d at 246.

We agree with the Amyot court and hold that strict liability is not the requisite standard under South Dakota’s dis­closure statutes. A plain reading of SDCL 43-4-42 tells us that liability will not attach unless an intentional or negligent violation occurs. The legal maxim “expressio unius est exlusio alterius” means “the expression of one thing is the exclusion of another.” Black’s Law Dictionary 581 (6th ed.1990). The maxim is a general rule of statutory construction. Aman v. Edmunds Cent. Sch. Dist. No. 22-5, 494 N.W.2d 198 (S.D.1992); Argo Oil Corp. v. Lathrop, 76 S.D. 70, 74, 72 N.W.2d 431, 434 (1955). Applying the gener­al rule to SDCL 43-4-42, we find the lan­guage “intentionally or ... negligently” is exclusive and negates strict liability.

It is fair to presume that sellers know the character of the property they convey. At present, when Kramer became aware of Engelhart’s concern over the base­ment she could have simply shown the pic­tures of its true condition. Her failure to do so was unreasonable and amounts to negli­gence. SDCL 43-4-42. It must be noted that Kramer admitted taking the photo­graphs before installing the paneling and that showing the photos would have been easier than removing it. Kramer could not explain why she did not offer the photos.

We hold that with the adoption of South Dakota’s detailed disclo­sure statutes the doctrine of caveat emptor has been abandoned in favor of full and complete disclosure of defects of which the seller is aware. We are not inferring, as Kramer suggests, that a seller must possess the expertise of a structural engineer to pass good faith muster. Nor are we suggesting that a seller will be liable for defects of which she is unaware. Those claims are clearly disposed of in the closing section of the man­dated disclosure form of SDCL 43-4-44:

The Seller hereby certifies that the infor­mation contained herein is true and correct to the best of the Seller’s information, knowledge and belief as of the date of the Seller’s signature below_ THE SELL­ER AND THE BUYER MAY WISH TO OBTAIN PROFESSIONAL ADVICE AND INSPECTIONS OF THE PROP­ERTY TO OBTAIN A TRUE REPORT AS TO THE CONDITION OF THE PROPERTY AND TO PROVIDE FOR APPROPRIATE PROVISIONS IN ANY CONTRACT OF SALE AS NEGOTIAT­ED BETWEEN THE SELLER AND THE BUYER WITH RESPECT TO SUCH PROFESSIONAL ADVICE AND INSPECTIONS.

(Capitals in original). It is clear that, as per SDCL § 43-4-41 and 43-4-44, a seller’s “good faith” is determined under a reason­able person standard.

Affirmed.

1

Kramer also argues that the trial court erred in finding Kramer’s actions constituted fraud and deceit. In light of our disposition of the case on the disclosure requirement issue, the fraud and deceit issue need not he addressed. See Wood v. City of Crooks, 1997 SD 20, 559 N.W.2d 558 n. 2 (citing Poppen v. Walker, 520 N.W.2d 238, 248 (S.D.1994) ("Principles of judicial restraint dic­tate that when an issue effectively disposes of the case, other issues that are presented should not be reached.”)). Both parties appeal the trial court's award of attorney's fees. We need not address this issue since neither party properly preserved the record on this issue. State v. Handy, 450 N.W.2d 434, 435 (S.D.1990).

2

Quick testified that the wall was "a mixture of sand, cement [which holds the mixture together], and usually some rock, and over time with excess water and cracks the cement 'leeches out' of the mixture and you wind up with nothing but sand and rock.”

3

The trial court relied on Kramer’s deposition and trial testimony in that when she purchased the house "[t]he walls were crumbling with cracks in places,” that the residue she had dis­covered on the basement floor was "Part of the basement wall ... whatever makes up the wall was there in a pile” and further that Kramer admitted in her disclosure statement that no wa­ter ever came in on the south wall.

4

The Alaska disclosure statutes did not define "good faith” but held that "good faith” envi­sioned an "honest and reasonable belief.” Id. at 247. Amyot is distinguishable from the present facts in that the court held an "innocent misrep­resentation” did not violate the good faith stan­dard. South Dakota does not attach liability in this context unless the seller's conduct amounts to an "intentional or negligent” violation the disclosure statutes. SDCL 43-4-42.

Supreme Court of Colorado, En Banc.

No. 01SC267.

BRUSH GROCERY KART, INC., a Colorado corporation, Petitioner, v. SURE FINE MARKET, INC., a Colorado corporation, Respondent.

June 3, 2002.

Edward L. Zorn, Fort Morgan, CO, Attor­ney for Petitioner.

Robert B. Chapin, Brush, CO, Attorney for Respondent.

Justice COATS

delivered the Opinion of the Court.

Brush Grocery Kart, Inc. sought review of the court of appeals' judgment affirming the district court's determination of Brush's obli­gation on an option contract to purchase a building from Sure Fine Market, Inc. Brush Grocery Kart v. Sure Fine Market, 30 P.3d 810 (Colo.App.2001). The district court found that Brush was not entitled to a price abatement for damages caused by a hail storm that occurred during litigation be­tween the parties over the purchase price of the property. The court of appeals affirmed on the grounds that equitable title to the property vested in Brush when it exercised its option to purchase, whether or not it also had a right of possession, and therefore Brush bore the risk of any casualty loss after that time. Because we hold that Brush was entitled to specific performance of the con­tract with an abatement of the purchase price reflecting the casualty loss, the judg­ment of the court of appeals is reversed.

I. FACTUAL AND PROCEDURAL HISTORY

In October 1992 Brush Grocery Kart, Inc. and Sure Fine Market, Inc. entered into a five-year "Lease with Renewal Provisions and Option to Purchase" for real property, including a building to be operated by Brush as a grocery store. Under the contract's purchase option provision, any time during the last six months of the lease, Brush could elect to purchase the property at a price equal to the average of the appraisals of an expert designated by each party.

Shortly before expiration of the lease, Brush notified Sure Fine of its desire to purchase the property and begin the process of determining a sale price. Although each party offered an appraisal, the parties were unable to agree on a final price by the time the lease expired. Brush then vacated the premises, returned all keys to Sure Fine, and advised Sure Fine that it would discontinue its casualty insurance covering the property during the lease. Brush also filed suit, alleg­ing that Sure Fine failed to negotiate the price term in good faith and asking for the appointment of a special master to determine the purchase price. Sure Fine agreed to the appointment of a special master and counter­claimed, alleging that Brush negotiated the price term in bad faith and was therefore the breaching party.

During litigation over the price term, the property was substantially damaged during a hail storm. With neither party carrying ca­sualty insurance, each asserted that the oth­er was liable for the damage. The issue was added to the litigation at a stipulated amount of $60,000. The court appointed a special master pursuant to C.R.C.P. 53 and accepted his appraised value of $375,000. The court then found that under the doctrine of equita­ble conversion, Brush was the equitable own­er of the property and bore the risk of loss. It therefore declined to abate the purchase price or award damages to Brush for the loss.

Brush appealed the loss allocation, and the court of appeals affirmed on similar grounds. It considered the prior holdings of this court acknowledging the doctrine of equitable con­version and found that in Wiley v. Lininger, 119 Colo. 497, 204 P.2d 1083 (1949), that doctrine was applied to allocate the risk of casualty loss occurring during the executory period of a contract for the purchase of real property. Relying heavily on language from the opinion purporting to adopt the “majority rule," the court of appeals found that our characterization of the rule as placing the risk of casualty loss on a vendee who "is in possession," id. at 502, 204 P.2d at 1086, reflected merely the facts of that case rather than any intent to limit the rule to vendees who are actually in possession. Noting that allocation of the risk of loss in circumstances where the vendee is not in possession had not previously been addressed by an appellate court in this jurisdiction, the court of appeals went on to conclude that a "bright line rule" allocating the risk of loss to the vendee, without regard to possession, would best in­form the parties of their rights and obli­gations under a contract for the sale of land.

Brush petitioned for a writ of certiorari to determine the proper allocation of the risk of loss and the appropriate remedy under these circumstances.1

II. SECTION 38-30-167, 10 C.R.S. (2001)

The General Assembly in this jurisdiction has often codified or altered various aspects of common law doctrines concerning inter­ests in real property. See, e.g., title 38, art. 30, 10 C.R.S. (2001) ("Interests in Land: Ti­tles and Interests"). Although the legisla­ture has not expressly addressed the alloca­tion of casualty loss risk in the context of a sale of real property, in 1979 it added to the revised statutes a provision concerning the remedies available to a vendee upon a failure of the vendor to fully comply due to impossi­bility:

If it is possible for a vendor of real proper­ty to convey a portion of the real property he contracted to convey, the vendee has a right to obtain a conveyance of that portion which it is possible to convey and a right to obtain damages or other equitable relief concerning the portion which it is impossi­ble to convey.

See § 38-30-167, 10 C.R.S. (2001). Brush asserts that this provision implicitly allocates the risk of casualty loss during the executory period of the contract to the vendor.

While this language of the statute could be understood, in its most literal sense, to mean that the vendee is always entitled to damages or other equitable relief for that portion of real property that a vendor has agreed, but is unable, to convey, such a broad reading would lead to absurd results and is clearly not the only permissible understand­ing of the operative language. The section is entitled, "Right of purchaser to obtain partial specific performance," and its central provi­sion insures a purchaser's right to the con­veyance of a portion of the contract property, even if the vendor is no longer capable of conveying all of it. By conjoining the right of partial specific performance and a right to damages or other equitable relief, the statute simply makes clear that the remedy of par­tial specific performance is an additional remedy rather than a substitute for any re­lief to which the purchaser would be entitled for the vendor's inability to fully comply with the terms of the contract.

The fact that the statute provides a differ­ent type of remedy for each "portion" of the property need not mean, however, that the legislature intended to assign liability for ca­sualty loss to the vendor in every case. Such an implication would be contrary to accepted defenses, and would, on its face, entitle a vendee to damages even if he were at fault. Nor is it even clear from the language of the statute itself that casualty loss to improve­ments on the property materially changing their condition from the time of the contract would make it impossible to convey a portion of the real property as contemplated by the statute.

If the language of a statute is not clear, various aids to construction, including consideration of any relevant legislative his­tory, may assist in resolving the ambiguity. Reg'l Transp. Dist. v. Outdoor Sys., Inc., 34 P.3d 408, 414 (Colo.2001). While the testi­mony of the bill's sponsor in committee hear­ings suggests that he did not necessarily consider casualty loss to improvements to be outside the scope of the statute, it also makes clear that the legislation was specifically crafted to entitle a vendee to force a convey­ance of any conveyable portion of the proper­ty rather than merely settle for damages for breach of the contract. See Hearing on Sen­ate Bill 470, Before the Senate Judiciary Committee, 52d General Assembly, 1st Regu­lar Session (hearing tape, Mar. 13, 1979); Hearing on Senate Bill 470, Before the House Judiciary Committee, 52d General As­sembly, lst Regular Session (hearing tape, April 10, 1979). The bill was expressly char­acterized as an attempt to overrule the hold­ing of this court in Atchison v. City of Englewood, 193 Colo. 367, 568 P.2d 183 (1977), which the sponsor understood to eliminate the remedy of partial specific performance, and was apparently never intended to create a separate right of vendees to obtain dam­ages or other equitable relief for any uncon­veyable portion of the property, without re­gard to other considerations. See Hearings on Senate Bill 470.

In light of this clear legislative histo­ry, section 38-80-167 can be reasonably un­derstood only as providing a remedy to vendees of partial specific performance in addition to any right to which they would otherwise be entitled to damages or other equitable relief concerning the portion of the property that could not be conveyed. The legislature has simply failed to assign the risk of casual­ty loss during the executory period of a contract for the sale of real property in this or apparently any other statute. Where no statute controls, interests in real property must be determined by reference to the com­mon law. ALH Holding Co. v. Bank of Telluride, 18 P.3d 742, 745 (Colo.2000).

III. THE RISK OF CASUALTY LOSS IN THE ABSENCE OF STATUTORY AUTHORITY

In the absence of statutory authority, the rights, powers, duties, and liabilities aris­ing out of a contract for the sale of land have frequently been derived by reference to the theory of equitable conversion. People v. Alexander, 663 P2d 1024, 1080 n. 6 (Colo.1983)(quoting III American Law of Property § 11.22, at 62-63 (A. Casner ed.1974)). This theory or doctrine, which has been described as a legal fiction, see Chain O'Mines v. Williamson, 101 Colo. 231, 234, 72 P.2d 265, 266 (1937), is based on equitable principles that permit the vendee to be con­sidered the equitable owner of the land and debtor for the purchase money and the ven­dor to be regarded as a secured creditor. Alexander, 663 P2d at 1030 n. 6. The changes in rights and liabilities that occur upon the making of the contract result from the equitable right to specific performance. Id. Even with regard to third parties, the theory has been relied on to determine, for example, the devolution, upon death, of the rights and liabilities of each party with re­spect to the land, see Chain O'Mines, 101 Colo. at 284-85, 72 P.2d at 266, and to ascer­tain the powers of creditors of each party to reach the land in payment of their claims. Alexander, 663 P.2d at 1030 n. 6.

The assignment of the risk of casualty loss in the executory period of contracts for the sale of real property varies greatly through­out the jurisdictions of this country. What appears to yet be a slim majority of states, see Randy R. Koenders, Annotation, Risk of Loss by Casualty Pending Contract for Con­veyance of Real Property Modern Cases, 85 A.L.R Ath 288 (2001), places the risk of loss on the vendee from the moment of contract­ing, on the rationale that once an equitable conversion takes place, the vendee must be treated as owner for all purposes. See Skell­ty Oil v. Ashmore, 865 S.W.2d 582, 588 (Mo.1963)(criticizing this approach). Once the vendee becomes the equitable owner, he therefore becomes responsible for the condi­tion of the property, despite not having a present right of occupancy or control. In sharp contrast, a handful of other states re­ject the allocation of casualty loss risk as a consequence of the theory of equitable con­version and follow the equally rigid "Massa­chusetts Rule," under which the seller contin­ues to bear the risk until actual transfer of the title, absent an express agreement to the contrary. See, e.g., Skelly Oil, 365 S.W.2d at 588-89. A substantial and growing number of jurisdictions, however, base the legal con­sequences of no-fault casualty loss on the right to possession of the property at the time the loss occurs. Koenders, supra, §§ 6, 7. This view has found expression in the Uniform Vendor and Purchaser Risk Act,2 and while a number of states have adopted some variation of the Uniform Act, others have arrived at a similar position through the interpretations of their courts. See, e.g., Lu­centi v. Cayuga Apartments, 48 N.Y.2d 530, 423 N.Y.S.2d 886, 399 N.E.2d 918, 923-24 (1979); see also Koenders, supra, §§ 6, 7.

This court has applied the theory of equi­table conversion in limited circumstances af­fecting title, see Konecny v. von Gunten, 151 Colo. 376, 379 P.2d 158 (1968)(finding ven­dors incapable of unilaterally changing their tenancy in common to joint tenancy during the executory period of the contract because their interest had been equitably converted into a mere security interest and the vendee's interest into realty), and refused to ap­ply it in some circumstances, see Chain O'Mines, 101 Colo. 231, 72 P.2d 265 (holding that even if the doctrine applies to option contracts, no conversion would take place until the option were exercised by the party having the right of election). It has also characterized the theory as affording signifi­cant protections to purchasers of realty in Colorado. See Dwyer v. Dist. Court, 188 Colo. 41, 532 P.2d 725 (1975)(finding personal jurisdiction over out-of-state vendee in part because of the protections afforded vendees of land in this jurisdiction during the executory period of the contract). It has never before, however, expressly relied on the theo­ry of equitable conversion alone as allocating the risk of casualty loss to a vendee.

In Wiley v. Lininger, 119 Colo. 497, 204 P.2d 1083, where fire destroyed improve­ments on land occupied by the vendee during the multi-year executory period of an install­ment land contract, we held, according to the generally accepted rule, that neither the buy­er nor the seller, each of whom had an insurable interest in the property, had an obligation to insure the property for the ben­efit of the other. Id. at 502, 204 P.2d at 1085-86. We also adopted a rule, which we characterized as "the majority rule," that "the vendee under a contract for the sale of land, being regarded as the equitable owner, assumes the risk of destruction of or injury to the property where he is in possession, and the destruction or loss is not proximately caused by the negligence of the vendor." Id. (emphasis added). The vendee in possession was therefore not relieved of his obligation to continue making payments according to the terms of the contract, despite material loss by fire to some of the improvements on the property.

Largely because we included a citation, preceded by the introductory signal, "see," to an A.LR. annotation, describing a "majority rule" without reference to possession, see 101 ALR. 1241 (superseded by Koenders, su­pro ), the court of appeals found our charac­terization of the rule, as imposing the risk on vendees who are in possession, to be uncontrolling. While it may have been unnecessary to determine more than the obligations of a vendee in possession in that case, rather than limit the holding to that situation, this court pointedly announced a broader rule. The rule expressly articulated by this court limited the transfer of the risk of loss to vendees who are already in possession. Had this not been the court's deliberate intention, there would have been no need to mention possession at all because a rule governing all vendees would necessarily include vendees in possession. Whether or not a majority of jurisdictions would actually limit the transfer of risk in precisely the same way, the rule as clearly stated and adopted by this court was supported by strong policy and theoretical considerations at the time, and those consid­erations apply equally today.

Those jurisdictions that indiscriminately include the risk of casualty loss among the incidents or "attributes" of equitable ownership do so largely in reliance on an­cient authority or by considering it necessary for consistent application of the theory of equitable conversion. See Skelly Oil, 365 S.W.2d at 592 (Stockman, J. dissenting)(quot­ing 4 Williston, Contracts, § 929, at 2607: "Only the hoary age and frequent repetition of the maxim prevents a general recognition of its absurdity."); see also Paine v. Meller, (1801) 6 Ves. Jr. 349, 81 Eng. Reprint 1088. Under virtually any accepted understanding of the theory, however, equitable conversion is not viewed as entitling the purchaser to every significant right of ownership, and par­ticularly not the right of possession. As a matter of both logic and equity, the obli­gation to maintain property in its physical condition follows the right to have actual possession and control rather than a legal right to force conveyance of the property through specific performance at some future date. See 17 Samuel Williston, A Treatise On the Law of Contracts § 50:46, at 457-58 (Richard A. Lord ed., 4th ed. 1990) ("[I]t is wiser to have the party in possession of the property care for it at his peril, rather than at the peril of another.").

The equitable conversion theory is literally stood on its head by imposing on a vendee, solely because of his right to specific perfor­mance, the risk that the vendor will be un­able to specifically perform when the time comes because of an accidental casualty loss. It is counterintuitive, at the very least, that merely contracting for the sale of real prop­erty should not only relieve the vendor of his responsibility to maintain the property until execution but also impose a duty on the vendee to perform despite the intervention of a material, no-fault casualty loss preventing him from ever receiving the benefit of his bargain. Such an extension of the theory of equitable conversion to casualty loss has nev­er been recognized by this jurisdiction, and it is neither necessary nor justified solely for the sake of consistency.

By contrast, there is substantial justifica­tion, both as a matter of law and policy, for not relieving a vendee who is entitled to possession before transfer of title, like the vendee in Wiley, of his duty to pay the full contract price, notwithstanding an accidental loss. In addition to having control over the property and being entitled to the benefits of its use, an equitable owner who also has the right of possession has already acquired vir­tually all of the rights of ownership and almost invariably will have already paid at least some portion of the contract price to exercise those rights. By expressly includ­ing in the contract for sale the right of possession, which otherwise generally accom­panies transfer of title, see, e.g., § 88-30-120, 10 C.R.S. (2001)("Conveyance carries right of possession"), the vendor has for all practical purposes already transferred the property as promised, and the parties have in effect ex­pressed their joint intention that the vendee pay the purchase price as promised. Williston, supra, § 50:46 at 454-55.

In Wiley, rather than adopting a rule to the effect that a vendee assumes the risk of casualty loss as an incident of equitable ownership, our holding stands for virtually the opposite proposition. Despite being the equitable owner, the vendee in that case was prohibited from rescinding only because he was already rightfully in possession at the time of the loss. While Wiley could be read to have merely resolved the situation under an installment contract for the sale of land that gave the vendee a right of immediate possession, the rule we adopted foreshad­owed the resolution of this case as well. In the absence of a right of possession, a vendee of real property that suffers a material casu­alty loss during the executory period of the contract, through no fault of his own, must be permitted to rescind and recover any pay­ments he had already made. CL Uniform Vendor and Purchaser Risk Act § 1.

Furthermore, where a vendee is enti­tled to rescind as a result of casualty loss, the vendee should generally also be entitled to partial specific performance of the contract with an abatement in the purchase price reflecting the loss. Where the damage is ascertainable, permitting partial specific per­formance with a price abatement allows courts as nearly as possible to fulfill the expectations of the parties expressed in the contract, while leaving each in a position that is equitable relative to the other. Lucenti, 423 N.Y.S.2d 886, 399 N.E.2d at 923-24 (ap­plying common law rule allowing partial spe­cific enforcement with price abatement for casualty loss in order to effectuate substance of parties agreement). Partial specific per­formance with a price abatement has long been recognized in this jurisdiction as an alternative to rescission in the analogous sit­uation in which a vendor of real property is unable to convey marketable title to all of the land described in the contract. See Murdock v. Pope, 156 Colo. 7, 396 P.2d 841 (1964)(col­lecting cases into the nineteenth century); cf. § 88-30-167.

Here, Brush was clearly not in pos­session of the property as the equitable own­er. Even if the doctrine of equitable conver­sion applies to the option contract between Brush and Sure Fine and could be said to have converted Brush's interest to an equita­ble ownership of the property at the time Brush exercised its option to purchase, see Chain O'Mines, 101 Colo. at 235, 72 P.2d at 266, neither party considered the contract for sale to entitle Brush to possession. Brush was, in fact, not in possession of the proper­ty, and the record indicates that Sure Fine considered itself to hold the right of use and occupancy and gave notice that it would con­sider Brush a holdover tenant if it continued to occupy the premises other than by con­tinuing to lease the property. The casualty loss was ascertainable and in fact stipulated by the parties, and neither party challenged the district court's enforcement of the con­tract except with regard to its allocation of the casualty loss. Both the court of appeals and the district court therefore erred in find­ing that the doctrine of equitable conversion required Brush to bear the loss caused by hail damage.

IV. CONCLUSION

Where Brush was not an equitable owner in possession at the time of the casualty loss, it was entitled to rescind its contract with Sure Fine. At least under the circumstances of this case, where Brush chose to go for­ward with the contract under a stipulation as to loss from the hail damage, it was also entitled to specific performance with an abatement of the purchase price equal to the casualty loss. The judgment of the court of appeals is therefore reversed and the case is remanded for further proceedings consistent with this opinion.

1

Our grant of certiorari was on the following issue:

Whether or not the Colorado Court of Appeals erred in its determination that under Colorado law, a purchaser of real property assumes the risk and burden of casualty loss to the subject real property as of the date of the execution of the contract or other instrument whereby a purchaser has agreed to purchase and the sell­er has agreed to sell the subject real property even though neither possession nor title has passed to the purchaser.

2

Under the Uniform Vendor and Purchaser Risk Act § 1, 14 U.LA. 471 (1968)("Risk of Loss"):

Any contract hereafter made in this State for the purchase and sale of realty shall be inter­preted as including an agreement that the par­ties shall have the following rights and duties, unless the contract expressly provides other­wise:

(a) If, when neither the legal title nor the pos­session of the subject matter of the contract has been transferred, all or a material part thereof is destroyed without fault of the pur­chaser or is taken by eminent domain, the vendor cannot enforce the contract, and the purchaser is entitled to recover any portion of the price that he has paid;

(b) If, when either the legal title or the posses­sion of the subject matter of the contract has been transferred, all or any part thereof is destroyed without fault of the vendor or is taken by eminent domain, the purchaser is not thereby relieved from a duty to pay the price, nor is he entitled to recover any portion there­of that he has paid.