Lighty v. Shorb

The opinion of the court was delivered by Gibson, C. J. Caveat emptor is a maxim which enters into every purchase, where the contrary is not stipulated; and equity cannot relieve against it, because it cannot relieve against the common law or the terms of a bargain. The contract, however, is considered to be in fieri while it remains unexecuted by a conveyance, the final.accomplishment and consummation of all previous stipulations; after which, the purchase money may not be detained, according to the English law, or recovered back, but by force of a'covenant or fraud, for any incumbrance or defect of title whatever. On the other hand, an incumbrance, discovered before the execution of the conveyance, must be discharged by the vendor, whether there be an agreement to covenant against it or not, unless it be contingent, and then if it be agreed in the articles that the vendor shall covenant against it, the vendee having reserved that particular remedy, shall not resort to the additional one of detaining the purchase money ; but if actually evicted, he may detain or recover it back, though the intended covenants would not have extended to the particular incumbrance or defect by which the eviction was occasioned. This is the English law, according to which the criterion of the right to [451] equitable interference, is, incontestably, the execution of the conveyance; for it seems pretty clear, that the anonymous case in 2 Ch. ca. 19, in which the purchaser is said to have been relieved, on the foot of an eviction, after the conveyance was executed, is not entitled to a moment’s consideration. Not only is the authenticity of the report questionable, as not having been taken by the reporter himself, but the principle of the case has been repudiated by every writer since, and there is little doubt that it would be promptly overruled were the point again presented for decision in that country. Yet that is the only case in the books which serves to give colour to the doctrine; for the decision in Tourville v. Naish, 3 P. Wms. 307, as well as the dictum, in 2 Freem. 106, had evidently no relation to the case of a conveyance executed. This criterion seems, however, to have no place in our law, as regards detention: though it undoubtedly has, as regards recovery back. Steinhauer v. Witman, 1 Serg. & Rawle, 483, and Hart v. Porter, 5 Serg. & Rawle, 201, were both cases of detention, after the acceptance of a conveyance: while Dorsey v. Jackman, 1 Serg. & Rawle, 42, was a case where recovery back, in the like circumstances, was denied. In the first of these, cases, a faint effort was made by the Chief Justice, to found our practice on English authority, but in the second, he admitted that he came into the support of it with extreme reluctance; while Mr. Justice Yeates put it on the only ground capable of sustaining it — long and uninterrupted usage. It is úseless now to inquire into its origin or .effect, with a view to change or abolish it, as it has become too firmly fixed for that;.but it seems proper to remark, that it produces here, where lands are sold on long credits; very nearly the same inconvenience as would be produced by a recovery back elsewhere; which, it has been said, would be a serious one, “as every contract, however bounded or guarded in its terms, would be liable to be opened at any distance of time. ” I Fonb. B. 1 ch. v. § 8, note g. In fact there is no distinction in principle between them; and one-is at a loss for the reason of Mr. Justice Yeates’ alacrity in recognizing the principle of Bree v. Holbeck, Doug. 654, by which purchase money paid, may not be recovered back; and his hearty concurrence, at the same time, in the propriety of detaining it, when but secured. But the greatest practical evil of the doctrine is, that it subjects the contract to the control of a jury, prone to forget, that to cut a man loose-from his bargain for motives of humanity, is the rankest injustice;, and for this, it would seem sound policy to extend it no further than it has already been carried. . That it may be qualified by circumstances, was directly affirmed in Hart v. Porter, in Which it was-said, that where a purchaser knows of a defect or incumbrance ,at the time of the bargain, without stipulating for a covenant or other security against it, he necessarily consents to take the risk of it on452 himself^ Ait intendment to that effect, is consistent not only with the reality of the transaction, but with the analogous principle of Vane v. Lord Barnard, Gilb. Eq. Rep. 6, in which the purchaser, having taken an agreement for a special covenant against a contingency that might never happen, was not allowed to detain the purchase money as an additional security, because his consent to Rely on the covenant alone, was thought to. be deducible from the very nature of’the transaction. Is not his consent to bear a risk known to him at the time, and not provided against, equally deducible from the nature, of the transaction? Not only every scriviner but every purchaser, is aware of the value of a covenant, when a defect is. known Q'r suspected-. But it seems‘to be the. fact of knowledge, and not the omission or the exaction of a covenant, that is the moro, material, consideration. Wherethe purchaser is aware o£aflaw;and.provides not against it, he takes the risk of it on himself; and where he does so provide, he. is referred to the legal effect of his security, as in Furhman v. Loudon, 13 Serg. Rawle, 386, which was in principle the present case, unless the event covenanted against, has happened in the meantime, and then he is allowed to retain what would'be immediately recoverable back, and this, to prevent circuity; as was done in Christy v. Reynolds, 16 Serg. & Rawle, 258. There the warranty was special, b.ul. broken by actual eviction, under the title of the vendor; consequently the money might have been recovered back the next instant; and the. case, therefore, did notxequire a principle so broad, as the one applied to it, which, in the case of a known defect, is to be taken with this limitation, that the contingency guarded against, has happened. Poke v. Kelly, 13 Serg. & Rawle, 165, which was. the case of.a known incumbrance, warranted against, and paid off by compulsion, falls short of the principle in its extreme breadth, when asserted in such a case, without reference to an actual breach of the covenant; and this qualification is actually consistent with the position assumed by my brother Huston in delivering the opinion of the Court iff Christy v. Reynolds. But I am unable to concur in a dictum, in that case, that the English law of vendors is inapplicable to this country. Hów different soever may be the English system of-conveyancing as regards form, the principles, of the contract of sale are the same every where, as regards the justice and merits of-the transaction; to. give effect tó which, the conveyance is but an instrument, and its. form a subordinate consideration. The result of our own cages, then, seems' to be this. Where there was a known defect, hut no, covenant or fraud, the vendee can avail himself of nothing, being, presumed to have been compensated for the risk in the collateral ad-' vantages of the bargain. But where there is in fact a covenant against a known defect, he shall not detain the purchase money, unless the covenant has been broken: in other words, he shall bn. [453] bound to perform his engagement, wherever his knowledge and the state of the facts continue to be the same they were at the time of the conveyance. What remains, then, is to apply this principle to the case before us. A recital in the patent gave notice, that the ownership of the land was in the wife of the patentee, who, after her death, conveyed it to two of his daughters and their husbands, who, in turn, conveyed tq Lighty, the endorser of the plaintiff, giving him the bond of the patentee as a security for the title; and this bond was handed over to Barnitz and Shorb when Lighty conve}’ed tq them. It is impossible, after that, to doubt of their having had, not merely constructive, but actual notice of the defect in the title, and of theye having been a mutual understanding, that the purchase money should not be detained as a security for it. The mercantile character, too, of the security given for the purchase money — a draft of one of the partner venders on thé firm, at twenty-two days— sufficiently attests, that nothing — but punctual and prompt payment was considered to stand with the contract. The vendees have not heen evicted, nor has the vendor broken his warranty; and yet without any intermediate change of circumstances for a pretext, the vendees refuse to pay at the time stipulated for it, with full knowledge of the facts, or even to restore the vendor to his possession; so that, unless he happens to be in a condition to do more than he covenanted to do, by purchasing the adverse claim, and presently making an indefeasible title, he is to lose his land and the price of it, while the vendees are cutting off the timber for their iron works, without having paid, or intending to pay, any one a shilling. Such a purchase might readily be mistaken for a trick to get into possession. Under the circumstances here, every principle of law and justice, entitled the plaintiff to a verdict. Judgment reversed, and a venire de novo awarded.