McClaugherty v. Croft

BRANNON, JuDGIS : McClauglierty brought a suit in chancery against Croft to sell one undivided fourth in a. town lot, to pay a balance of purchase money, for which a lien was reserved upon the property in the deed conveying it. Croft answered, setting up a deed of trust and numerous judgments against McClauglierty, as prior liens, as defense' to the suit, and asking that the lienors he made parties, and that the money. — 272 — ill his bauds be applied to discharge them, particularly a judment of Straley & Co. against McClaugherty. The court, refused to require the lienors to be made parties, or to ascertain liens by reference, and decreed the debt, to McClaugherty without making provision for its application on any lien, and directed the property to be sold. Croft, appeals. This is not a case to sell land for purchase money under an executory contract not carried into execution by conveyance of the legal title, but is a suit to sell land for purchase money, under a lien reserved in a conveyance, and different principles apply in the latter case. In the former a court, will not compel an unwilling purchaser to accept a title, unless it is clear, reasonably free from adverse claim or incumbrance; but in the latter the contract has been executed by the parties, the purchaser lias agreed to take the land with the covenant of general warranty, thus agreeing to pay unpaid purchase money, and to risk the solvency of the warrantor in case he shall lose his land. Our cases have relaxed this rule of English equity, our rule being that a vendor cannot compel payment, of the purchase money if the title be shown to be defective, or a suit to recover or subject it. to a lien be pending,- or a suit be threatened, or there be an actual incumbrance, and the vendor be insolvent. I understand that the vendor’s insolvency is an indispensable element to enable the vendee to resist payment. It seems unreasonable to compel the purchaser to pay out the money, and run the hazard of the vendor’s future insolvency, where actual liens are shown; but if the purchaser took a covenant, of general warranty, and no covenant against incumbrances or other covenant, it. is so. Wamsley v. Stalnaker, 24 W. Va. 214; Neely v. Ruleys, 26 W. Va. 686; Kinports v. Rawson, 29 W. Va. 487 (2 S. E. 85); Heavner v. Morgan, 30 W. Va. 345 (4S. E. 406); Faulkner v. Davis, 18 Grat. 660. But I do not think this case is governed by principles announced in those cases. In the Wamsley-Stalnaker Case it would appear from Judge Greene’s language “that, there was no showing at all towards the insolvency of the vendor, or that, ai^ suit, was brought or threatened to subject, the land to the payment of the judgments set. up by the defendant., nor in any single fact stated in the bill that tended in any — 273 — degree to .show that there was the least probability that any suit would be. brought to subject the land to any of the judgments; and the evidence shows that there was not the least probability of it, and it shows, indeed, that it was impossible that the land could ever be subjected to the payment of any of the judgments, there being lands liable to be first, subjected, greatly exceeding the value of the judgments.” How different this present case! The defendant alleged that his purchased land was in danger to answer a large judgment greater than the money in Croft’s.hands, which the plaintiff’s .bill admitted to be unpaid. Plaintiff’s bill admitted this large’judgment, and stated that the plaintiff himself desired the purchase money due from Croft to be paid for the very purpose of satisfying the large judgment which the bill specified as existing as a lien thereon, thereby virtually saying that.,the plaintiff had no other lands, or indeed any property or estate to discharge that very considerable judgment. Otherwise, why the necessity of calling upon the defendant for its payment? There was no affirmative charge of insolvency, it is true, in the bill; but we may say, by strong implication, that the defendant was not unquestionably, as in the Wamsley Case, able otherwise than through this debt to discharge that judgment. And, as the bill itself asked the payment of this debt by Croft to go on that judgment, it showed an interest in the judgment creditor, calling upon the plaintiff to bring him before the court, in order that the proper amount due might be judicially fixed, to the safety of the defendant, and in order that the money might be paid into his hands. Without his presence, how could the court do this? • How could the proposition of the bill to pay this judgment, be carried out without his presence? Instead of bringing him before the court, and decreeing the proper amount into his pocket in discharge of that judgment, the court decreed it into the pocket of the plaintiff, without provision for its discharge; and we think that the court ought to have made him a party. We .think, under the covenant of general warranty, that should have been done, under the particular circumstances shown by the bill in this case. We do not intend to impugn the cases cited above at all. We only say that we think this present case, on the showing made by the bill, called for the presence of this creditor. — 274 — But there is another important feature in this case. The deed contains a covenant for further assurance, and it bound the vendor to a conveyance free of incumbrance, and lie cannot enforce payment of purchase money without clearing up incumbrances. Code 1891, c. 72, s. 18; Rawle, Cov. §§ 104, 105; 19 Am. & Eng. Enc. Law, 984; 2 Minor, Inst. 721. It requires the removal of judgments. 2 Lomax, Dig. 272. Certainly, the removal of incumbrance is a thing necessary to assure and make good the property sold. liawle, Gov. § 98, says that the importance of this covenant, to the purchaser can hardly be over-stated. The remedy, indeed, by action at law for damages, is one seldom sought, and the reported cases are few; but, whatever may be the doubt of a purchaser’s right to the specific enforcement by a court of equity of the other covenants for title, there is little or none with respect to that for further assurance. And equity will entertain a suit to specifically enforce this covenant. Nelson v. Harwood, 3 Call, 342. Rawle (in section (52) says: “As to the covenant for further assurance, tin* rule is somewhat difiere])!. It is not a mere allegation that the title is good; that there is’no incumbrance; not a mere promise to respond in damages. It is a specific undertaking to execute such particular deed'or deeds as may be necessary for the better and 'further assurance of title to the purchaser. If performed, it may make a doubtful title marketable. If unperformed, who can measure the damages to be recovered at law? Who can measure by money the difference between the value of a good title to keep, and yet not good to sell? Hence, it will be found that, from an early day, courts of equity have enforced the specific performance of covenants for further assurance. ” This covenant ought to be given as much force as the special provision in the bond for purchase money, in addition to general warranty, was given by Judge Allen in Peers v. Barnett, 12 Grat. 417. Here it is in the deed itself. I do. not concede the idea that it is consistent with proper practice to provide for the application of the money to liens by later decree. If the creditor ought to be a party, or a reference is necessary, it ought to be before decree, because the decree ought to lix the amount due him so as to bind him, so the debtor and creditors will know what — 275 — the property is to raise. A volume of cases tell us that, where this is necessary, it ought to be before a decree of sale. In this case the answer asked the removal of liens appearing of record, some surely unpaid; and it prayed that the purchase money yet owing be applied thereon, and that the answer be taken as a cross bill, and all relief proper on its facts be decreed. It was error to decree that purchase money into the pockets of the plaintiff, instead of making Straley & Co. parties, and applying the money to the discharge of their debt. Where judgments appear as liens under a covenant of further assurance, I do not see how the plaintiff can avoid making their owners parties, unless they are shown to lie paid, or appear barred by limitation. ■ Most of these judgments appear barred, and though the plea of limitations is generally personal to the debtor, and cannot be used by a stranger, yet I think one who is his privy in estate, as an heir or devisee, grantee, or mortgagee, may defend his property with such plea. Werdenbaugh v. Reid, 20 W. Va. 588; Shipley v. Pew, 23 W. Va. 487; 13 Am. & Eng. Enc. Law, 710; 1 Wood, Lim. § 41; Busw. Lim. 527. All these judgments save one appeared barred and paid, and for that reason I see no error in not making their owners parties. The judgment of Straley & Co. remained unpaid. I do not see how Croft was in default. When this suit was brought, the property was subject to a prior deed of trust, making it necessary that the trustee and creditor under it be parties. Turk v. Skiles, 38 W. Va. 404 (18 S. E. 561). But pending suit a formal common-law deed of release by trustee and creditor was made and recorded, releasing and revesting in the owner the legal title, and thus removing the lien. This rendered their presence, as parties unnecessary, ¡áuch would, I think, be the effect also of a statutory recorded release, under section 4, chapter 76, Code 1891. Though a title be defective at the commencement of a suit, yet if, pending it, it become free of lieu, or clear, so as to be good to the purchaser, the court may go on to decree. Core v. Wigner, 32 W. Va. 277 (9 S. E. 36); Peers v. Barnett, 12 Grat. 410. Eor this reason there was no need of an amended bill. There is no error in closing or reading the depositions of plaintiff. Defendant had ample opportunity for cross-examination. — 276 — I do not now say whether one judgment lienor can plead the statute against- other lienors of a common living debtor. It is not necessary to say here how this is. He is a general lienor, while a mortgagee is alienor on that particular property. It was left open in the opinion in Woodyard v. Polsley, 14 W. Va. 211, and in Lee v. Feamster, 21 W. Va. 111, and Conrad v. Buck, Id. 411.