## Facts

- Useful Homes Corp. owned subdivided lots in South Plainfield, New Jersey and agreed to sell lots 32 and 33 (Block F) to Katryn Timko and her husband on an installment land contract, retaining legal title until full payment.
- Timko made substantial installment payments toward the contract price (reported as $780 of $1,000, or a $300 down payment plus monthly payments).
- Useful Homes later transferred the subdivision (including Timko’s lots) to Sunshine Home Builders, Inc., which assumed collection of Timko’s installments under the same contract.
- In December 1928, Sunshine knowingly conveyed Timko’s two lots to Bertha Madacsi for $1,100, despite Timko’s existing contract and payments; Timko was not told and continued paying installments for years.
- In December 1931, Timko offered to pay the remaining balance and demanded deeds; Sunshine then disclosed it had sold the lots, repurchased them from Madacsi, and tendered deeds to Timko.
- Timko refused the tendered deeds and demanded the $1,100 resale proceeds (plus interest), filing an equity action to recover the proceeds rather than take the land.

## Issues

1. When a vendor holding legal title under an installment land contract wrongfully sells the contract vendee’s lots to a third party and later reacquires them, may the vendee elect to recover the sale proceeds instead of accepting conveyance of the lots?
2. If such an election exists, is it exclusively the beneficiary’s choice such that the trustee cannot defeat it by tendering the reacquired property?

## Decision

- The Court of Chancery entered a decree for Timko.
- Timko was entitled to recover the $1,100 received from the third-party sale, with interest.
- Timko’s right to choose between taking the land and taking the proceeds was an “absolute option” belonging to her; Sunshine could not compel acceptance of deeds after she elected the proceeds.

## Legal Principles

- Under an executory land sale contract with performance begun, the vendor’s retained legal title may be treated in equity as held for the purchaser’s benefit, imposing trustee-like duties on the vendor and its successor who assumes the position.
- A trustee’s intentional conveyance of trust property in breach of duty renders the trustee accountable for the proceeds, which are impressed with a constructive trust in favor of the beneficiary.
- When trust property is wrongfully sold, the beneficiary may elect either to follow the property (specific relief) or to claim the sale proceeds (monetary relief); the election belongs exclusively to the beneficiary, not the trustee.
- A trustee’s later reacquisition of the property and tender of reconveyance does not extinguish the breach or strip the beneficiary of a timely election to claim the proceeds.
- Interest may be awarded from the date of the wrongful sale as part of the trustee’s accounting for misuse of trust property and profits derived from the breach.

## Conclusion

The court held that a contract purchaser, treated in equity as the beneficial owner, may elect to take the proceeds of a trustee’s wrongful resale of the contracted land, and that election cannot be defeated by the trustee’s later reacquisition and tender of the property; the trustee must account for the resale price with interest.


Timko v. Useful Homes Corp., 168 A. 824 (N.J. Ch. 1933)