Dimmick v. Lockwood

By the Court, Savage, Ch. J. The question upon this record is whether, in an action upon the covenant against encumbrances, the plaintiff is confined in his recovery to the amount paid by him as the consideration of the purchase, or whether he is also entitled to the enhanced value of the lot in consequence of improvements made upon it. Where it is intended to convey a fee, it is usual to insert the following several covenants: 1. That the grantor is lawfully seised; 2. That he has good right" to convey; 3. That the premises are free from encumbrances ; 4. That the grantee shall quietly enjoy the same ; 5. That the grantor will warrant and defend the title against all persons lawfully claiming the same; and sometimes, 6. A covenant for further assurances. it has been settled in this court, in Staats v. Ten Eyck, 3 Caines, 111, that in an action upon the first and second covenants, to wit, tho covenants of seisin and right to convey, the rule of damages is the consideration and interest for so long a term (not exceeding six years) as the grantee loses the enjoyment of the premises, or is compelled to pay mesne profits after eviction. This is the rule also in Pennsylvania, 4 Dallas, 442, and in Massachusetts, 2 Mass. R. 459. The same rule of damages prevails in this state upon a breach of the covenants for quiet enjoyment and of warranty, with the addition of the costs of the eviction. 4 Johns. R. 1. 13 id. 50, 105. In an action on the covenant against encumbrances, the rule of damages is that the plaintiff shall recover the amount he has paid; without payment of the encumbrances, he would be entitled to nominal damages only, because an outstanding encumbrance does him no harm until he is evicted under it, or until he pays it, which he may do without waiting to be evicted. 7 Johns. R. 359. 13 id. 105. 2 Wendell, 405. The reasons which influenced tire court in adopting the rule as to the — 150 — measure of damages in the cases of the covenants of seisin, quiet enjoyment and warranty are, 1. That the measure of compensation at common law upon a writ of warrantia charts was the value of the land when the warranty was made; 2. That upon the sale of lands, the purchaser usually examines the title for himself, and the seller discloses his proofs and knowledge of his title: the want of title therefore is a case of mutual error; and 3. That it would be ruinous and oppressive to make the seller respond in damages for any accidental rise in the value of the land, or the increased value in consequence of improvements by the purchaser. These arguments apply to the principal covenant—that of seisin, which relates to the title; the other covenants of quiet enjoyment, &c. are said to relate to the enjoyment of that title, and it was supposed to be unreasonable and inconsistent that the plaintiff should recover upon a breach of the covenant which affected the whole title, the whole value of the estate, and under another covenant in the same deed, which is considered an inferior and subordinate covenant, distinct and increased damages, because he was not permitted to enjoy that estate. If the grantee recovers the value of the land under the principal covenant, that extinguishes the whole claim. This course of reasoning had relation to the covenants for quiet enjoyment, of warranty, and for further assurance. The covenant against encumbrances was said by Mr. Justice Van Ness to stand upon a different footing; that, he said, was strictly a covenant of indemnity, and the grantee may recover to the full extent of any encumbrances upon the land which he shall have been compelled to discharge, which he says is the same rule which prevails in relation to the other covenants, viz. that the party recovers what he has paid, with interest, and no more. The first case which appears in our boobs as to the covenant against encumbrances is Delavergne v. Norris, 7 Johns, R. 358. It does not appear in that case what the consideration was, and the only question decided was that the plaintiff might recover the encumbrance which he had paid, but not one which remained unpaid, and the court refer to the case of Prescott v. Freeman, 4 Mass. R. 627, which was an action upon the covenant against encumbrances. The encumbrance was an — 151 — outstanding paramount title in other persons. Chief Justice Parsons, in discussing the measure of damages and concluding that where the encumbrance was not extinguished the damages would be nominal only, reasons thus : “ For the plaintiff shall not recover the value of the land against the grantor, and still hold the land on a contingency that he may never be disturbed in his possession; neither shall the grantor, after having once paid the value of the land, be after-wards called on by the plaintiff on a subsequent eviction. But if it should appear to the jury who may inquire of the damages, that the plaintiff has at a just and reasonable price extinguished this title, so that it can never afterwards prejudice the grantor, they will consider this price as the measure of damages.” He was then speaking of an encumbrance which was a paramount title, and which of course took the whole estate; but no intimation was given, nor was any called for, that greater damages could be given. The next case in our court is Hall v. Dean, 13 Johns. R. 105, where the consideration appears to be $4,625, and the encumbrance paid $3,700 ; it was held that the outstanding judgment was a breach of the covenant against encumbrances, and that the plaintiff might recover the amount paid by him, but without paying it, he could only have recovered nominal damages. There are other cases to the same point, but they contain no intimation of what would be the true rule of damages in a case like the present. It has been seen that in the state of Massachusetts the rule of damages upon breach of the covenant of seisin is the same as in this state, to wit, the consideration and interest and costs of eviction, where there has been an eviction. But upon the other covenants of quiet enjoyment and warranty, they hold the rule to be the value at the time of eviction. The case of Gore v. Brazier, 3 Mass. R. 523, was an action upon a deed containing the covenants of seisin, against encumbrances and of warranty. It is not important to state the facts of the case; the court considered them a breach of the covenant of warranty, and proceeded to state the rule of damages, it being conceded that at the time of the sale the premises were worth $9000, and at the time of the ouster $15,000. In discussing — 152 — the subject of damages, Chief Justice Parsons recognizes the common law rule upon the ancient remedy by warrantia chariot, but states that the remedy by an action for covenant broken is of ancient date, and that in a personal action of covenant broken, the general rule is that damages shall be recovered which shall be adequate to the injury sustained, and that the general practice has been to give the value of the land at the time of eviction; and they gave the plaintiff judgment for $15,000. In Caswell v. Wendell, 4 Mass. R. 110, the rule of damages upon the covenant of seisin is again said to be the value of the land at the time the deed was executed, as agreed by the parties, with interest. The case of Chapel v. Bull, 17 Mass. R. 213, was an action of covenant, alleging a breach of the covenants of seisin, against encumbrances and of warranty. At the trial, the judge was of opinion that the facts shewed a breach of the covenant against encumbrances, and instructed the jury to give as damages the value of the land at the date of the defendant’s deed. It appeared that the consideration money was $2000, but the premises had, been sold under proceedings in partition and conveyed to one Kirkland for $3000. The court said the true rule of damages was the consideration money paid and interest, because there had been no eviction, in which case the rule would be the value at the time of eviction. The case of Jenkins v. Hopkins, 8 Pick. 346, was similar in principle to that of Chapel v. Bull. The deed contained the covenants of seisin, warranty, and freedom from encumbrances. The declaration states that a judgment was a lien on the land in the hands of the person from whom the defendant derived title. The land lay in Ontario county, New-York, and had been sold upon the judgment and conveyed by the sheriff, though the purchaser had not taken possession. The court held that the judgment was an encumbrance which was a breach of the covenant against encumbrances, but that that alone would only entitle the plaintiff to nominal damages; but proceedings had been had which defeated the plaintiff’s title, and they held that where the encumbrance is changed into an adverse and indefeasible title, the plaintiff was entitled to recover the money he paid for the — 153 — land, with interestj for the plaintiff cannot remove the encumbrance, nor can he enjoy the land. Chancellor Kent in treating of the usual covenants in deeds says, that the covenants of seisin, of right to convey and against encumbrances are personal covenants not running with the land, or passing to the assignee, for if not true, there is a breach of them as soon as the deed is executed, and they become choses in action which are not technically assignable ; but the covenants of warranty and quiet enjoyment are prospective, and eviction is necessary to constitute a breach of them. 4 Kents Comm. 471, 2d ed. In discussing the subject of damages on the personal covenants, he says, that when they were introduced as a substitute for the remedy on the voucher and warranty, the measure of damages was not varied. In relation to encumbrances, if they absorb the value of the land, and the quiet enjoyment be disturbed by eviction, by paramount title, the measure of damages is the same as under the covenants of seisin and warranty. The uniform rule is to allow the consideration money with interest and costs, and no more. The ultimate extent of the vendor’s responsibility under all or any of the usual covenants in his deed, is the purchase money with interest. Equity, he says/ would compel the seller to raise the encumbrance and Recree a specific performance. idem. 474. These am tüe opinions of a learned jurist, but the case before had not suggested itself to his mind, and there is no ^ase to be found as far as the researches of counsel ha^ extended, which is analagous. It is coi,¿dn<led by the plaintiff’s counsel that the plaintiff is entitled to recover not only the consideration, but the value of the improvements, at least the amount paid to extinguish the encumbrance, and that the covenant against encumbrances is distinguishable from the others in this, that the amount of the encumbrance paid by the plaintiff was paid for the defendant’s benefit, being in payment of his debt. In this particular case that is true; but in the case of Jenkins v, Hopkins, cited from .Mass., the encumbrance was a debt of a previous owner. There are many such cases, and there the defendant derives no benefit from the payment. Perhaps it may be said — 154 — with truth, that in all or nearly all eases where property is lost to the purchaser by reason of previous encumbrances, the debtor himself is not benefitted though his creditors may be; for if he were not insolvent, recourse would not be had to property which had been sold by him for a valuable and full consideration ; and probably this is the reason why so few cases are to be found upon the covenant against encumbrances. There is another difficulty in the way of a recovery for the enhanced value. The covenant was broken as soon as the deed was executed, and before any improvements were made upon the lot, and in covenant the plaintiff recovers damages at the time the covenant is broken ; the plaintiff then had a right of action, and had he then prosecuted or desisted from any expenditure of money, he would not have been left to a doubtful remedy. Again, it may be asked to what extent may a purchaser go under such circumstances in creating a claim against his vendor % In this case, the consideration of half the lot was $125, and the encumbrance was above $3000. Suppose the plaintiff, instead of building a house had paid the $3000 and brought his suit to be re-imbursed % he would bring himself within the language of some of the judges who say that a purchaser is entitled to recover what he has paid ; and yet I apprehend he would not be permitted to recover that amount. But suppose <^ain, what is probably the real state of this case : two persons ait. tenants in common of an acre of ground worth $100, one aweary man, the other insolvent, being tenants in common they un>*. jn a conveyance with the usual covenants—can the purchaser p=v a hen of $3344, a debt due by the insolvent, and recover it his tenant in common, xvho may have no othef earthly connection with him 1 I state this case hypothetically to show how the rule contended for by the plaintiff may work the height of injustice upon a mere stranger. Again, the facts in this case are sufficient to prove a breach of the covenant for quiet enjoyment. Had the plaintiff relied upon that covenant, the rule is well settled that no more than the consideration and interest and costs could be recovered; and is there any thing in the one covenant more than in the other, to indicate an undertaking by the grantor more extensive in one covenant than — 155 — the another t One ground assumed by Ken% when chief justice, in Staats v. Ten Eyck, and also by Chief Justice Tilghman in Bender V. Fromberger, is this: that the title of land rests as much in the knowledge of the purchaser as the seller ; it depends upon writings, which both can examine. So it may be said that encumbrances, which are matter of record, are as much within the knowledge of the purchaser as is the seller’s title. The seller, indeed, ought to know what encumbrances there are upon his property ; but owners are often in utter ignorance upon that subject. They are so, even of judgments against themselves; and it is agreed on all hands that if fraud can be shown, or concealment, which would be evidence of it, that would constitute a good ground of action, in which the purchaser would recover all his damages. Among all the cases which have been cited, there is none in our own court where the purchaser has been permitted to recover beyond the consideration and interest and costs. There is none in Massachusetts, where, under the covenant against encumbrances, the purchaser has recovered anymore, though there the rale allows a recovery for the value at the time of eviction. All the reasoning of our own judges goes to limit the responsibility of the grantor to the consideration, with interest and costs, and I am unwilling to go further, where the principle to be established may lead to greater injustice. Judgment for defendant.