Earle v. De Witt

Chapman, J. This action is brought to recover back money paid by the plaintiff to the defendant, on the ground that there has been a failure of consideration. The plaintiff took from the defendant a quitclaim deed of “ all the right, title and interest in one undivided half of the real and personal estate in Oxford, formerly belonging to Henry D. Stone, of Worcester, this day conveyed to me by William M. Bickford and Fitzroy Willard, as assignees of said Stone, which I have under and by virtue of said deed from said Bickford and Willard.” Then follows a covenant of warranty against all persons claiming by or under De Witt, and an exception of his title under certain mortgages from the operation of the deed and the warranty. It thus appears that he simply quitclaimed to the plaintiff the title that he derived from Bickford and Willard, by virtue of their deed to him, such as it was, and warranted against titles under himself only. It afterwards proved that Bickford and Willard had no authority as assignees of the estate of Stone to convey his title to the land, (see Grafton Bank v. Bickford, 13 Gray, 564,) and for this reason the title failed. The property consisted of woollen and cotton factories with the machinery in the same. If the plaintiff had paid her money for a mere quitclaim deed, there being no evidence or even allegation of fraud, but merely a mistake of the parties as to the title of Bickford and Willard, it is well settled that the plaintiff could not, upon the failure of title, recover back the consideration paid. The English doctrine on this subject is stated in 2 Kent Com. (6th ed.) 468. The learned author says: “ I apprehend that in sales of land the technical rule remits the party back to his covenants in his deed; and if there be no ingredient of fraud in the case, and the party has not had the precaution to secure himself by covenants, he has no remedy for his money, even on failure of title. This is the strict English rule, both at law and in equity.” He states the same doctrine in Abbott v. Allen, 2 Johns. Ch. 523, — 527 — and in Frost v. Raymond, 2 Caines, 188. In the latter case he states the rule to be that, if there be no covenant of title in the deed, the purchaser takes at his own risk the goodness of the title; and he remarks that, after this rule has been so long understood and practised upon, it would be of the most mischievous consequence to establish a contrary doctrine. For the parties to deeds know that a warranty is required to hold the seller to warrant the title, and they regulate their contracts accordingly. If there be any fraud in the sale, the purchaser has his remedy. In Holden v. Curtis, 2 N. H. 61, the distinction is stated between sales of real and personal property. As to personal property, it is held that the purchase money may be recovered back if the title fails; but Woodbury, J. says that in sales of real estate, as the title appears on record and may be secured by covenant, the rule is otherwise ; and the cases which "have been thought contradictory, among which he mentions Shearer v. Fowler, 7 Mass. 31, are not really so. The same doctrine has been held in Vermont, in Higley v. Smith, 1 D. Chip. 409 ; in Pennsylvania, in Kerr v. Kitchen, 7 Barr, 486, and the earlier cases there referred to ; in Maine, in the cases of Joyce v. Ryan, 4 Greenl. 101, Emerson v. County of Washington, 9 Greenl. 88, and Soper v. Stevens, 14 Maine, 133. In the latter case, the court refer with approbation to Gates v. Winslow, 1 Mass. 65, where the same doctrine was held. And this is the doctrine which ought to prevail. It has not only been so long practised upon as to be understood, but it is plain and simple, and in conformity with the language of the deed, which does not profess to do more than convey such right, title and interest as the grantor has. And the convenience of business requires that such a class of conveyances shall exist, by which a person may quitclaim his title without being subject to litigation if it fails. With such a doctrine, a grantee can always protect himself against mistakes, by declining to purchase unless the grantor will insert such covenants as may be necessary. It is much better to let the deed, which is the written contract between the parties, settle the question which party took the risk of mistakes as to the validity of the title, than to open the matter to the — 528 — uncertainty and litigation which the admission of paroi evidence would occasion. There are probably very few cases in which any considerable sum is paid for a quitclaim deed, where it could not be proved by paroi, either directly or indirectly, that both parties believed the title to be valid. There is occasion, ally a case like that of Kerr v. Lucas, 1 Allen, 279, where a mutual mistake cannot be made to appear. In such cases, though the title fails, the contract is not nudum pactum, and the grantor may recover the consideration, because by the contract the grantee took the risk. It is in harmony with this doctrine to hold that where both are mistaken the grantee cannot recover back the purchase money, because by the terms of the contract he took the risk. But the present case is stronger than that presented by a mere quitclaim. The defendant’s deed contains a covenant of warranty against all persons claiming by or under him. This express covenant operates as an exclusion of all other covenants or agreements ; and in this respect it is like the case of Joyce v. Ryan, ubi supra. In that case, the defendant, being licensed to sell the lands of the testator at auction for the payment of debts, gave a deed to the plaintiff with a covenant touching the regularity of his own proceedings. The action was brought to recover back the purchase money, on the ground that the testator had no title. No fraud was alleged. The court say: “ It is a sufficient answer and defence to this action that the plaintiff took his deed with the covenants agreed upon at the time by the parties......And to his action on those covenants he must look for his remedy. If those covenants are not broad enough to meet the exigencies of his case, we cannot enlarge them. Nor can we add to them, or supply their deficiencies indirectly in the form pursued in this case by the plaintiff; for to do so would still be to make a contract for the parties, and not to enforce one which they at the time thought proper to make for themselves.” The doctrine that if a grantee takes an express covenant he is limited to such remedies as it furnishes is founded on an elementary principle, expressio unius, exclusio alterius; it is sustained by many authorities, and is clearly just and proper. — 529 — For if it is a limited covenant, it is manifest that the parties agreed upon the extent to which the covenantor should be liable, and the risks which the grantee should take. In the present case it is manifest that it was in the power of the plaintiff to decline making the purchase without a covenant against Stono and all persons claiming by or under him. But the deed, which is the exclusive evidence of what the contract was, shows that she required no such stipulation, but took upon herself the risk of everything except claims under the defendant. There is a class of cases which may seem on a superficial view to conflict with this doctrine. Hitchcock v. Giddings, 4 Price, 135, is one of this class. It was a bill in equity seeking relief from a bond given for the purchase of an interest in remainder. The tenant in- tail had, without the knowledge of either party, suffered a recovery, and thus destroyed the estate in remainder. The bill was maintained on the ground that the subject of the sale had no existence at the time of the sale. And it was compared to a sale of land which the parties supposed to exist, but which had been swept away by a flood. The relief was granted on the ground that there was a mutual mistake, not as to the validity of the title, but as to the existence of the subject of the sale. There are also cases in which the purchase money has been recovered back where it was given for the purchase of land that had no existence, though the deed was one of quitclaim. Gardner v. Mayor, &c. of Troy, 26 Barb. 423, is a case where the money was recovered back, because the estate for a term of years which was sold did not exist; but in that case Harris, J. admits that, upon a sale of land in existence, the purchaser must, upon failure of title, look to his covenants; and if he has not had the precaution to protect himself in that way, he cannot recover. The case of Martin v. McCormick, 4 Selden, 331, is put upon the same ground, that the subject matter of the sale, which was a term of years, had no existence. There is also a class of cases like that of the present plaintiff against Bickford, post, 549, to which the doctrine does not apply. Nor does it apply to sales of personal property. Holden v Curtis, ubi supra. — 530 — But the foregoing considerations do not exhaust the whole case. The plaintiff was not content to pay her money for the mere consideration stated in the deed. She required of the defendant another instrument, which was an agreement by him in writing, and is called by the parties a bond. The property conveyed was subject to several mortgages. One of them was held by Henry H. Chamberlin, who was connected with the plaintiff in the purchase. He had entered for foreclosure under this, and was then in possession. Two others were held by the defendant ; one was held by the Worcester County Institution for Savings, and one by Delano Pierce. By the written agreement, the defendant agreed with the plaintiff and Chamberlin that no claim should be made upon them for payment of either principal or interest upon his mortgage notes till June 24, 1859; and then, upon payment of a specified part, a further time was to be given for the balance. He also agreed that he would not enforce the power of sale contained in his mortgage, and that if it should become necessary, to prevent other parties from enforcing their mortgages, he would pay them and take an assignment to himself, and give a specified time of payment upon them to the plaintiff and Chamberlin. This was a good and valuable consideration. Forbearance is itself sufficient; but here was the additional consideration of labor, expense, and an obligation to advance sums of money that might be large. In respect to this, there has been no failure of consideration, and it is now impossible to estimate its value, or to place the defendant in statu quo. But in order to rescind a contract of sale, and maintain an action for the purchase money, the vendor must be placed in the same situation he was in before the sale. Conner v. Henderson, 15 Mass. 319. It is so even where there has been fraud. Kimball v. Cunningham, 4 Mass. 502. In this case it would be extremely difficult for a court or a jury to apportion the consideration; for it was apparently in the power of the defendant, by enforcing his power of sale, to have perfected a title to the equity of redemption, long before the invalidity of the proceedings in insolvency was established; and if — 531 — this were otherwise, the difficulty of making a just apportionment would hardly be diminished. There is another circumstance which has some importance in this connection. A few days after the plaintiff’s purchase she sold the property to Tower & McGaw, for a large advance, giving to them a quitclaim deed, and taking back their notes for the purchase money, secured by a mortgage of the property. She brought the notes and mortgage into court, and offered to surrender them to the defendant. But this was not an offer to return to him what had once belonged to him; nor could he be under any obligation to receive them. And as to the bond, so called, she had at least assigned her equitable interest in it to her grantees; and the power to discharge that interest was in them, and not in her, so that it is apparently still outstanding against the defendant. Chamberlin, to whom it was given jointly with the plaintiff, does not appear to have released his interest in it. A part of the plaintiff’s claim is for the money which she paid for the original fourth part of the premises which was purchased of Bickford and Willard under the agreement between the plaintiff and Chamberlin and the defendant, before the sale at auction. Under that arrangement the defendant bid off the property; one half for himself and one fourth for each of them. It was bid off for $3200. The defendant paid the whole, and the plaintiff repaid him one fourth, being $800, which he had advanced for her. It is plain therefore that he acted merely as her agent, and that she ratified his act. She must then seek her remedy against the parties with whom he acted in her behalf. Tuckwell v. Lambert, 5 Cush. 23. Ilsley v. Merriam, 7 Cush. 242. Her claim against them will be considered in her action against them. But the plaintiff has alleged in her declaration, and offered to prove at the trial, that at the time of the defendant’s conveyance to her, the defendant agreed by paroi that if she should not acquire a title to the property by virtue of the defendant’s deed, he would repay the money. The evidence was rejected, and it is now contended that the rejection was erroneous. The case of Lapham v. Whipple, 8 Met. 59, is cited in support of this — 532 — position. In that case the defendant had conveyed to the plaintiff one half part of the benefits and advantages of a certain patent right, owned by him, for which he received $1000 ; and it was held that the plaintiff might prove a paroi agreement, made at the time, that if the plaintiff did not realize that sum within three years, he would repay the money, with interest. But it did not appear in that case that the defendant had made any express covenants, and the contract did not relate to real estate; nor is the question much discussed. The case of Holbrook v. Holbrook, 30 Verm. 432, is also cited to this point. In that case, the defendant had given a quitclaim deed of real estate, and the plaintiff was allowed to prove that he made a paroi agreement to repay the purchase money in case the title to a part of the land should fail, and he recovered on that ground. There are several earlier cases in Vermont to the same effect. In the present case, there was a covenant of warranty in the deed, and also a separate agreement in writing, signed by the defendant, and containing important stipulations as to the title; and an agreement to pay back the purchase money in case the plaintiff should not acquire a title to the property by virtue of the defendant’s deed, would amount to an additional warranty against incumbrances ; and, indeed, to a full warranty of the title of Stone. If the evidence had been admitted, and the plaintiff had recovered on that ground, the recovery would have been upon the breach of a paroi warranty made as an addition to the written warranty and agreement of the defendant, and as part of the same transaction. Such a principle would always make it necessary for a grantor to state negatively what he did not warrant, and would nullify the rule of evidence in respect to conveyances, that written agreements shall not be enlarged by paroi evidence. Indeed, if there had been a mere quitclaim, it would be a case where a party paying money for a deed would offer evidence that the deed did not contain the whole contract of the grantor, but that he had made verbal stipulations which the deed did not contain. It would thus be an attempt to enlarge the written stipulations of the deed by paroi. And the evidence "ces not relate to the consideration paid by the grantee, but to — 533 — the obligation of the grantor in case of the failure of title; which is the precise ground that warranties are designed to cover. The remark of Thomas, J. in Howe v. Walker, 4 Gray, 318, is applicable to it: “ Nor can you, under the guise of proving by paroi the consideration of a written contract, add to or take from the other provisions of the written instrument.” In that case the defendant had made to the plaintiff a quitclaim deed, with the usual covenant against all persons claiming by or under him. The plaintiff contended that he had also agreed verbally to pay off an incumbrance existing upon the land, but not created by him. The evidence of such agreement was excluded. The cases in which this ancient rule of the common law has been sustained by this court are very numerous, and of great variety ; and it is doubly important to sustain the rule in all its length and breadth since parties have been made competent witnesses.