This section is from the book "The Law Of Land Contracts", by Asher L. Cornelius. Also available from Amazon: Michigan Law Of Land Contracts.
Where the vendee has been put into possession of the land by the vendor and continues to retain that possession from the vendor, he is estopped from setting up in his defense, in contesting any action brought against him by the vendor based on the contract of sale, that the vendor is not owner of the property in question.52
51. Form 32 prepared by the Committee on new rules under the Judicature Act appointed by the State Bar Association, consisting of Alva M. Cummins, Edison R. Sunderland, Alfred J. Mills, William W. Potter and Judge Chester L. Collins. Draft of this declaration was prepared by Professor Edison R. Sunderland, acting for the committee.
52. He had recognized her title and was not in a position to disavow it or to obtain for his own benefit a title hostile to it. By his conduct he held the land in trust for her, and equity will compel him to transfer it to her. Galloway v. Finley, 12 Pet. (U. S.) 264; Kirk-patrick v. Miller, 50 Miss. 521; Stephens v. Black, 77 Pa. 138; Peay v. Capps, 27 Ark. 160; Cromwell v. Craft, 47 Miss. 44; Mitchell v. Chisholm, 57 Minn. 148. See also, Thredgill v. Pintard, 12 How. (U. S.) 24.
"The vendor and vendee (of land) stand in the relation of landlord and tenant; the vendee cannot disavow the vendor's title." Galloway v. Finley, 12 Pet. (U. S.) 295.
"After doing homage to his vendor's title by purchase and entry under it, the vendee will not be tolerated to repudiate his allegiance to it, and transfer it to another title acquired whilst thus in possession. If such after-acquired title should be paramount the vendee shall be esteemed as holding it in trust for his vendor, as having provided it to support and maintain his possession, and his right under his original vendor.
"Whilst a court of equity holds the vendee to entire good faith to his vendor, and will not allow him to get in an outstanding title or encumbrance and set it up in opposition to his vendor, yet it will lend its aid to reimburse all reasonable
But where the vendee has been ejected from the land by a paramount title, or has surrendered possession of the land to one who holds a title superior to that of the vendor, the vendee may, in any action between him and the vendor, prove that the latter had no title to the land, or if he had a title the same had been terminated.53
In those cases where the vendor has not the power to make a merchantable title, the vendee may perfect the title at his own risk and expense, and the courts will require the vendor to reimburse him for his expenses thus incurred.54
Where a vendee acquires a paramount title while holding possession under the vendor, equity will treat such vendee as a trustee for the vendor because he holds under the latter.55
 
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