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SMS ASSOCS. v. CLAY

November 23, 1994

SMS ASSOCIATES, A DISTRICT OF COLUMBIA LIMITED PARTNERSHIP, Plaintiff V. OZZIE CLAY, et al., Defendants


The opinion of the court was delivered by: RICARDO M. URBINA

 Quieting Title to Property

 I. Case History

 Defendant, Ozzie Clay entered into a contract for the sale of property with the address of 2805 Chesterfield Place, N.W., Washington, D.C., more specifically described as:

 
Lot 63 in George B. Bryan's Subdivision of Lot 54 in Square 2258, as per plat recorded in Liber 85 at Folio 165, of the Records of the Office of the Surveyor of the District of Columbia, (hereinafter "the property") to the plaintiff.

 As a result of defendant Clay's failure to convey the Property pursuant to the contract, plaintiff filed suit on September 1, 1983 in the Superior Court for the District of Columbia against the defendant seeking specific performance of the contract. Pursuant to the Findings of Fact and Conclusions of Law issued in the civil action on July 22, 1985, Judge Kramer granted specific performance and ordered that defendant Clay convey title to the property to the plaintiff in accordance with the terms of the contract. Pursuant to an order signed on June 29, 1992 by Superior Court Judge Kessler, defendant Ozzie Clay was divested of any and all legal and equitable title, right and interest in the property. The Order vested legal and equitable title to the property in the plaintiff. The Order specifically referred to Plaintiff's willingness "to be given title subject to any outstanding liens and encumbrances and to thereafter litigate their validity in a suit to quiet title." Accordingly, this case reaches this Court in the suit to quiet title.

 II. Background

 Plaintiff has filed a motion for summary judgment and the defendants have filed an opposition thereto. Plaintiff claims that upon execution of the contract dated May 17, 1983, equitable title to the property passed to plaintiff. Plaintiff argues that any liens incurred by defendant Ozzie Clay after the execution of the contract would not attach to the property under District of Columbia law. The only liens of record at the time of the execution of the contract and filing of the civil action were two deeds of trust from defendant Ozzie Clay dated May 21, 1980 (recorded May 21, 1980) and September 5, 1980 (recorded October 1, 1980, entitled "H. Stern Deed of Trust"). The notes secured by these Deeds have been purchased for value by plaintiff and therefore, H. Stern & Co. is not a party to this action. Plaintiff claims that the liens held by all other defendants in this action were recorded after the contract for sale was entered into and after the civil action for specific performance was filed. Persons and governmental entities that hold or have held liens against the property include the District of Columbia, the United States, Chester V. McKenzie and Joan C. McKenzie, and Dismer Auxier Company. The District of Columbia and the United States are tax liens creditors of Mr. Clay; defendants Chester V. McKenzie and Joan C. McKenzie are judgment creditors of Mr. Clay; as well as the Dismer Auxier Company.

 Plaintiff, SMS, moved for this action to quiet title and Judge Lamberth entered an order on March 18, 1994, requiring the defendants and "all persons having an interest in the property located at 2805 Chesterfield Place, N.W. Washington, D.C. known for the purposes of assessment and taxation as lot 63 in Square 2258, including possible dower interest of the spouse of Ozzie Clay, their unknown heirs and devisees, or any other persons having an interest in said property, to cause their appearance to be entered on or before the twentieth day, excluding Sundays and legal holidays, occurring after the day of the last publication of this order; otherwise, the cause will processed with as in case of default". The publication was to run for six consecutive weeks from the date of the order, which was March 18, 1994.

 III. The Law

 The doctrine of equitable conversion holds that "equity regards as having been done that which ought to be done, and which equity would order done--namely, the conveyance of the title to the buyer and payment of the price to the seller." ROGER A. CUNNINGHAM, WILLIAM B. STOEBUCK, DALE A. WHITMAN, THE LAW OF PROPERTY, 735 (2nd ed. 1993) [hereinafter CUNNINGHAM]. The District of Columbia both recognizes and adheres to the doctrine of equitable conversion. See Liberty National Bank of Washington v. Smoot, 135 F. Supp. 654, 659 (D.C. 1955) (holding that "the District of Columbia follows the general rule that a contract of sale of land effects an equitable conversion of the [the land] into personalty . . ."); see also Gustin v. Stegall, 347 A.2d 917 (D.C. 1975).

 
Equitable conversion makes sense because of the willingness of court to grant specific performance of an enforceable real estate contract. [As has presently occurred]. Because parties to a real estate contract are able to obtain a decree ordering specific performance of their contract, they can under the doctrine qualify as equitable owners of the title to the property or purchase money even before they bring an action for specific performance of the contract.

 6A RICHARD R. POWELL & PATRICK J. ROHAN, THE LAW OF REAL PROPERTY, at 81-98 (1994) [hereinafter POWELL & ROHAN]. In all equitable conversion situations, three prerequisites must be met. First, the contract must be valid. Second, the contract must be enforceable. Third, the contract must affect real estate. Id. at 81-99 to 81-100. All three requirements have been met in this case.

 Defendant's argument that plaintiff was not accorded equitable title in the land pursuant to the contract of sale entered into in 1983, but rather that plaintiff acquired title when Judge Kessler ordered specific performance of the contract, cannot be credited by the Court. "Equitable conversion results in the conceptualization that the purchaser becomes the equitable owner of the property and the vendor is equitably entitled to the purchase money promised in the contract as soon as a valid, enforceable contract arises. " *fn1" [emphasis supplied] POWELL & ROHAN, supra, at 81-96.


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