ALPHA PORTLAND CEMENT CO. et al. v. SHIRK, 227 F. 966

KOHLSAAT, Circuit Judge (after stating the facts as above). The main contentions here are: First, were appellants, under the facts as stated, entitled to a decree for the $25,000 paid as earnest money to appellee, and to the sum paid out as expenses incurred in investigation of said title and the quality and quantity of the stone deposit on said land? and, if not, second, was appellee entitled to a decree of specific performance of said contract against appellants?

Without determining, the legal effect of the facts set out, it is clear from the allegations of the bill and answer, considered in connection with the evidence, much of which is undisputed, that, while the title to premises in question is one that may be made good, and for defensive purposes may be shown to be good in appellee, it is not shown to be good and merchantable and free from all liens and incumbrances of record, nor by the abstracts furnished, nor in fact. The defects as set out are not such as could be cured by oral testimony.

In order to make it a complete chain of title, legal proceedings would be necessary. Appellee insists that, because the abstract shows in regard to some of the parcels of land composing said tract that appellee claims under prescription titles covering more than 20 years, therefore the abstracts show said title to be good and merchantable. This we are unable to concede. Howe v. Coates, 97 Minn. 385, 107 N. W. 397, 4 L. R. A. (N. S.) 1170, 114 Am. St. Rep, 723; Fagan v. Hook, 134 Iowa, 381, 105 N. W. 155, 111 N. W. 981. It can hardly be claimed that there are no conditions under which that would not be the case.

It would not be true as against an insane or idiotic person. Appellee himself undertook to cure some'of the said defects, but ceased when notified that the title and conditions of the land were such that appellants declined to accept the property, as not complying with the terms of the contract. Undoubtedly a title by prescription is as high as any known to the law, but the facts upon which it is based should be legally established.

We do not deem the title as shown to some of the tracts as merchantable or marketable, for the purposes of these proceedings, in the absence of the decree of some competent tribunal declaring the unrecorded and unestablished facts, such as competency of parties barred, open and adverse possession, and the like. Fagan v. Hook, supra; Gerstell v. Shirk, 210 Fed. 223, 225, 127 C. C. A. 41. The property in question being one plant, the rule of law that failure in title to any material part of the land releases appellants from the obligation to take it prevails. Ankeny v. Clark, 148 U. S. 345, 358, 13 Sup.

Ct. 617, 37 L. Ed. 475. The contention of appellee that a good and merchantable title is established when an equitable title is tendered is without merit in the present case. The contract calls for a legal title, not one which could be made such by a lawsuit. An equitable title is not a merchantable title. Maupin on Marketable Titles to Real Estate (2d Ed.) page 731; Sugden on Vendors (14th Am. Ed.) vol. 1, p. 579; Murray v. Ellis, 112 Pa. 485, 3 Atl. 845; Day v. Mountin, 137 Fed. 756, 764, 70 C. C. A. 190. In Abel v. Heathcote, 2 Ves.

Jr. 100, it was held that such a title would not sustain' an action in ejectment. This is not a proceeding to establish title to the said property, and we are not charged with that task, but only to determine whether the title to said lands; and all of them, was at the date of the contract good and merchantable, or became such within the periods prescribed or agreed on to that end.

We are of the opinion that while, other things being satisfactory, appellants might have been safe in taking said title, yet it was not such a title as would support a suit for specific performance or be deemed a compliance with the terms of the contract on appellee’s part.

The far more vital questions, however, are those which pertain to the conditions of the lands involved as to the quality and quantity of the limestone contained therein with reference to the availability of the property for a Portland cement manufacturing plant The justice of appellants’ cause turns mainly upon the sufficiency of the examination made of the conditions there existing.

Both parties seem to have entered honestly upon that undertaking, and not until a considerable lapse of time from the date written notice was served of appellants’ refusal to take the land and perform the contract did appellee raise the contention that the tests made were inadequate. The parties were working together to ascertain the truth. The work had, under the contract, to be carried on during the winter months, when digging and drilling were difficult.

While the contract required drilling, it did not exclude other methods, especially such as interpreted the results of the drilling — examination of outcroppings, digging of trenches, and any other steps which would throw light upon the subject. It is more than conceiyable that identification of core materials with those shown in outcroppings, quarry faces, and shallow trenches would be almost indispensable aids in interpreting the significance of the strata revealed by the cores.

Appellees’ witness Blatchley, state geologist of Indiana, so testified, with others, and the proposition seems to be one of common knowledge, which should have had weight with the court. The proposition that there should have been drilled at least 60 holes does not appeal to reason. To> expend $60,000 on drillings alone would make testings in such cases prohibitive. There seems to be plausibility in the corroborating data procured from the different methods used by appellants. Bands of dolomite and beds of limestone are traced in a satisfactory manner.

Dolomite or magnesia limestone constitutes a part of the limestone deposit just as truly as pure calcium carbonate or practically pure limestone. ' The contract warrants the limestone to contain 90 per cent, of carbonate of lime. This degree of purity is essential for successful operation of a Portland cement manufacturing plant. The evidence shows that a considerable part of the main bed of limestone averaged much less than 90 per cent. — some of it very much lower.

It also shows that there was in places dolomite above the limestone 30 feet in thickness, and that the overburden exceeds 8 per cent, of the total height of the stone deposit above the level of the bottom of the present quarry. Appellee suggests that the dolomite is above and not in the limestone. The debased quality of the limestone indicates that the magnesia stone is in as well as over the limestone in many places. His contention that the contract does not refer to magnesia stone upon the limestone bed is not a reasonable construction of the contract.

Even were it so, the burden of the material lying above the limestone far exceeds the limitation fixed by the contract. Appellants sunk their drill holes at an elevation of over 60 feet above, the top of the present quarry. If, as appellee contends, the contract refers only to the limestone strata at a depth of over 100 feet from the surface at the place where the drilling was done, not even down to the floor of the present quarry, appellee, who is shown to have been advised of what was being done by appellants, should and probably would not have allowed the drilling to have been made at that'altitude.

His action was inconsistent with his present position. We are convinced that there is a stone deposit on this land extending in thickness about 110 feet above the bottom of the present quarry and that therein are strata of 'magnesia limestone of an average aggregate thickness of over 30 feet, and that this stone in the overburden exceeds the proportions prescribed by the contract, and that the properties of the land are not such as the contract guarantees. The evidence as to the claim of appellants that appellee agreed to .refund the $25,000 seems fairly well established.

All the evidence considered, we are satisfied that appellants have maintained their bill and are entitled to a decree establishing and enforcing their vendee’s lien in accordance with the former opinion of this court in Gerstell v. Shirk, 210 Fed. 223, 127 C. C. A. 41, to the amount of $25,000 and expenses as stated, with interest. For the reasons stated, appellee is not entitled to any relief upon his counterclaim.

The decree of the District Court in No. 2216 is reversed, with direction to enter a decree for appellants, and the decree in No. 2260 is affirmed. <&wkey;>For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes