APPEAL from the Circuit Court of Warren County; the Hon.
STEPHEN G. EVANS, Judge, presiding.
MR. JUSTICE SCOTT DELIVERED THE OPINION OF THE COURT:
Rehearing denied October 19, 1978.
This is an appeal from a judgment of the circuit court of Knox County which granted a motion of the defendants Madge Keener and Marjorie J. Smith to dismiss the complaint for partition filed by the plaintiff, Charlene Ann Chandler, and which further denied a motion of the plaintiff for summary judgment.
The plaintiff on December 31, 1976, filed a complaint for the partition of two tracts of real estate in which she had an interest as a co-purchaser with her estranged husband, Robert Carroll Chandler. The plaintiff and her husband were purchasing the real estate by contracts for deed entered into with the defendants Keener and Smith. The tract being sold to the Chandlers in joint tenancy by the defendant Keener will be referred to as "Tract I." The track being sold to the Chandlers as tenants in common by the defendant Smith will be referred to as "Tract II." We note that both contracts contain nonassignment clauses and that the contract for Tract I contains a prepayment restriction until 1982, whereas the contract relating to Tract II grants unto the purchasers the right of prepayment.
It is the plaintiff's contention that the trial court committed error in denying her the right to partition the realty since the doctrine of equitable conversion is applicable. The plaintiff's position is that when she entered into the agreements with her husband to purchase the realty, the only interest remaining in the vendors Keener and Smith were the rights to payment of the purchase prices and that as co-purchaser she is entitled to end the tenancies held with her husband in the real estate by partition so as to vest in each vendee tenant a sole estate in the two tracts of land. Plaintiff further argues that contrary to the findings of the trial court there was no agreement between the parties not to partition.
1 We first direct our attention to the doctrine of equitable conversion, the principles of which are described in the case of Shay v. Penrose (1962), 25 Ill.2d 447, 185 N.E.2d 218. In this cited case our supreme court described the doctrine as follows:
"Equitable conversion is the treating of land as personalty and personalty as land under certain circumstances. Hence, as between the parties and those claiming through them, when the owner of land enters into a valid and enforceable contract for its sale he continues to hold the legal title, but in trust for the buyer; and the buyer becomes the equitable owner and holds the purchase money in trust for the seller. The conversion takes place at the time of entering into the contract. It stems from the basic equitable principle that equity regards as done that which ought to be done. The doctrine of equitable conversion has been recognized in Illinois, as it has in practically every other jurisdiction, since earliest times." (Shay v. Penrose (1962), 25 Ill.2d 447, 449, 185 N.E.2d 218, 219.)
The plaintiff argues that the doctrine of equitable conversion is applicable in the instant case and as a result the title of the purchasers (the Chandlers) is equitable and thereby embraces full ownership in fee. It is the plaintiff's reasoning that the defendants Keener and Smith as contract vendors would hold the legal title in trust in their respective properties for her and her husband and that the title would be conveyed to the plaintiff and her husband upon their full performance of the contracts for deeds, to-wit, the payment in full of the purchase prices.
2 In Shay v. Penrose (1962), 25 Ill.2d 447, 185 N.E.2d 218, an action for partition was defeated by the application of the doctrine of equitable conversion, yet a reading of that case clearly discloses that the factual situation present prevents it from being of precedential value in the instant case. We agree with the trial court's statement that there are no Illinois cases which deal squarely and directly with the facts presented in this case. We quarrel not with the doctrine of equitable conversion which has long been recognized in our State and other jurisdictions. (Shay v. Penrose.) We do not, however, believe that the doctrine of equitable conversion should be utilized to permit a partition proceedings in order to circumvent and avoid established principles of law and public policy. Shay v. Penrose; Hartman v. Hartman (1973), 11 Ill. App.3d 524, 297 N.E.2d 199; Eade v. Brownlee (1963), 29 Ill.2d 214, 193 N.E.2d 786.
The plaintiff in arguing against an implied agreement not to partition the realty in effect makes an admission that the contracts for the sale and purchase of the realty would be modified if partition were permitted. This admission is clear when plaintiff in her brief suggests that upon a sale of the premises in a partition action the proceeds from such a sale could be held in trust in order to secure the interest of the vendor defendants-appellees, to-wit, Smith and Keener. The trustee holding the proceeds from the partition sale if such a sale were permitted would make the contract payments to the vendors and plaintiff asserts that if necessary the proceeds would be invested in United States Bonds to assure payment. It goes without saying that the contracts entered into between the vendors Smith and Keener and the vendees the Chandlers made no mention, nor can they be construed, that at the time of their execution any of the parties anticipated a trust fund, and a trustee empowered to make investments in order to assure that the contract payments be made to the vendors.
We are not overly concerned with the effect of a decree of partition as far as the defendant Robert Carroll Chandler, the estranged husband of the plaintiff, is concerned. Martial discord and partition proceedings have long gone together hand in hand, but in such cases the legal title to the realty, not an equitable title, has been vested in the parties. Our paramount concern in the instant case is in regard to the rights of vendors. With good faith they entered into a contract to sell realty to the vendees. The realty was to be the security as far as the fulfillment of the contract on the part of the vendees was concerned. If default occurred on the part of the vendees as to making payments the contracts were to be forfeited, payments which had been made by the vendees were to be retained by the vendors, and the absolute legal title to the realty was to again be vested in the vendors. The vendors were undoubtedly interested in a set rate of financial return from their agreement to sell and there may well have been income tax considerations which influenced their decision to sell their realty on a contract for deed.
3 The plaintiff argues that to deny her the right to partition could be considered a restraint on the alienation of property. It can as well be argued that the law has long looked with favor upon contracts for deed. If such contracts can be modified by a partition proceedings we may well find that they will lose some of their popularity as a medium or method for the sale and purchase of real property.
Needless to say we are aware of the fact that the vendees in the instant case are current with their contract payments and have a large amount of equity in the real estate involved. We are also aware of the fact that the present economy in our State and nation is one which is in part based upon and affected by inflated land values, so in the instant case a partition sale could reasonably be expected to provide enough proceeds to pay in full the unpaid balance on the Smith and Keener contracts. We must further, however, recognize that land values may not always be inflated and to hold that the plaintiff in the instant case has a right to partition may well set a precedent fraught with inherent dangers which could rear its head and plague us in future years.
As previously stated the contract pertaining to Tract I, the vendor, being the defendant Kenner, has a prepayment restriction effective until 1982. This restriction alone is in our opinion sufficient to defeat a partition action. The contract pertaining to Tract II contains no such prepayment restriction, yet for the other reasons set forth we do not feel that partition of this tract should be permitted. As a matter of policy, entirely aside from the legal desirability of a doctrine almost universally accepted, certainty and stability of titles dictate that the ...