Iowa Loan & Trust Co. v. Fullen

ELLISON, J. Andrew J. Morgan owned a tract of land in Putnam county in 1866. He died in that year leaving several children, and Elizabeth S. Morgan as his widow, the latter becoming owner of a life estate in the land under the homestead law of 1863. Elizabeth afterwards married John Fullen, the defendant in this case. Elizabeth, afterwards, in 1889, sold the land to Jacob E. Torrey for $500, the deed being a general warranty with covenants of seizin, the defendant, her husband, joining in the deed and the covenants. Torrey, the grantee, obtained of plaintiff, a loan company in Iowa, a loan of $1,100, due in five years, for which he executed his note and a deed of trust on the land in 1892 to secure the same to C. A. Dudley as trustee. Torrey conveyed the land by warranty deed in 1893 and so it was successively conveyed until it reached Mrs. Addie Culler in 1896. Elizabeth died in 1893, which put an end to her life (or homestead) estate, and the full title became vested in her children by Morgan, her first husband. One of these children acquired the title of the others and brought ejectment against Mrs. Culler. — 638 — He obtained, judgment and ousted her from the land in 1901. Default was made in the payment of the note given by Torrey to this plaintiff and, in consequence, a substituted trustee sold the land under the deed of trust in 1902, and this plaintiff bought it in for ten dollars. Plaintiff then brought this action against defendant, John FuIIen, on his covenants in the deed from him and his wife Elizabeth to Torrey, as above stated, to recover the five hundred dollars consideration which Torrey paid for the land. The question for decision is: Is the defendant liable to a remote grantee on his covenant in the deed he and his wife made to Torrey, their immediate grantee? In the first place we will say that, if defendant’s covenant is such as to run along with the land to successive grantees, it is no objection to his liability that, in this case, the plaintiff is a grantee through a trustee’s deed under a sale made in the foreclosure of a deed of trust. A sheriff’s deed will transfer such right (Dickson v. Desire, 23 Mo. 166) and so will a quitclaim deed (Johnson v. Johnson, 170 Mo. 48), and we can see no reason why a deed from a trustee under power of sale in a deed of trust should not. Though it has long been a matter of discussion, it is now settled by the weight of authority that for a covenant to run with the land there must be privity of estate or of contract between the covenantor and the remote grantee. But, even though there is no title in the grantor, if he delivers his grantee possession of the premises, such possession is sufficient to create privity of estate, and the grantor’s covenant will run along to subsequent or remote grantees. But, if no title of any kind is conveyed and no possession is delivered, the grantor’s covenant reaches no further than his immediate grantee, which the latter may,' of course, assign. The covenant in such case is the covenant of a stranger to the title and to the premises and is merely personal — 639 — between him and the grantee, to whom he makes it. [Mygatt v. Coe, 152 N. Y. 457.] There was dissent to the view taken by the majority in that case at each of the considerations it received. The dissenting judges took the view that any covenant, even by a stranger, which related to the estate, conveyed and tended to enhance its value, attached to the land as a part of the estate and passed to subsequent grantees. But the Supreme Court of this State ha,s not entertained that view and, on that point, have held in harmony with the Court of Appeals of New York in the case cited. Thus, in Dickson v. Desire, 23 Mo. 166, it is held that a covenant by a grantor, where possession went with the deed, would run with the land. And in Chambers v. Smith, 23 Mo. 179, it is held that, “If there be a total defect of title, defeasible and indefeasible, and the possession have not gone along with the deed, the covenant is broken as soon as it is entered into, and cannot pass to an assignee upon any subsequent transfer of the supposed right of the original grantee. ... If, however, the possession pass, although without right — if an estate in fact, although not in law, be transferred by the deed, and the grantee have the enjoyment of the property according to the terms of the sale, the covenant runs with the land and passes from party to party, until the paramount title results in some damage to the actual possessor, and then the right of action upon the covenant vests in the party upon whom the loss falls.” And so, in Allen v. Kennedy, 91 Mo. 324, the court stated that the covenant ran with the land, if the covenantee took any estate, however defeasible, or if possession accompanied the deed. So, undoubtedly, it is the law in this State that the conveyance containing the covenant must transfer some estate, however defeasible or imperfect, or the possession (-which is a form of estate) must be transferred to the covenantee before the covenant will pass beyond the original covenantee, or, in other words, run with the land. It is true that it is held in Allen v. Kennedy that — 640 — where there is such a covenant as will run with the land and there is a breach of such covenant, it becomes a chose in action in the hands of the person owning the premises at the time of the breach, and does not further run with the land as a covenant. And, being a chose in action, it may be assigned by the covenantee, and that the ordinary warranty deed would operate as an assignment from grantor to grantee successively. The result of such view is that, notwithstanding a covenant which runs with the land will cease to so run at the time there is a substantial breach, yet the covenantee, in whose hand the breach occurs, and subsequent covenantees may transfer or assign it down the line by their warranty deeds, so that it may be sued on by any remote grantee at any time short of the period of limitations. A substantial breach occurring, the covenant runs no further, though the covenants, or rather the right of action on the covenant, will be assigned by the warranty deed of the covenantee. There is another consideration, which here suggests itself and should be noticed. Even though the covenant, on account of the character of estate to which it relates, is a mere personal covenant with the immediate grantee and not running with land, yet, if a substantial breach of it occurs while the land is still in the hands of such immediate grantee, he, of course, has a right of action on such covenant and his warranty deed will assign such right of action to his grantee, and the latter to his grantee, and so on, until it should become barred by the statute of limitations. When this defendant joined his wife Elizabeth in the warranty deed to the lands in question, he had no estate or title in or to such lands. Elizabeth owned a life estate in them, but he was without any interest whatever. Therefore, unless he transferred the possession of the land to Torrey, his immediate grantee, there was no privity of estate between him and Torrey and, — 641 — consequently, his covenant did not run with the land and was only personal to Torrey. Since possession was given to Torrey when he received the deed, it may be suggested that possession was given him by defendant. But it was not. Defendant might be said to be, in some sense, in possession of the premises when he joined his wife in the deed, but he was not so in a legal sense. He was Elizabeth’s husband and his character of possession was merely incidental to his relationship as her husband. He was, more properly speaking, in part occupancy of the premises. The possession transferred to Torrey was the possession that was sustained by Elizabeth’s life estate and she, as vendor of such estate, transferred the possession. A contention similar to the suggestion here made was urged on the Court of Appeals of New York (Mygatt v. Coe, supra) and we have drawn what we have just said from the answer made by Judge O’Brien in writing the opinion in that case. He stated: “The conception of possession in the husband in such cases may be traced largely to that instinct of the mind which so readily attributes to the husband, by reason of his headship of the family, the possession and dominion of the family home. That conclusion, however, will be dissipated by an application to the question of the legal principles that grow out of the right of the wife to hold and convey real property. The actual possession of the property is one of the incidents that flow from this right, and it must be in the wife in most if not in all cases where she has the legal title, and when possession is once delivered to her, it is not lost or impaired by permitting her husband to exercise acts of care, management or agency with respect to the property.” And he added that no authority had been found during the protracted period of the pendency of that case, where a husband had been held liable upon such a covenant in the deed of his wife. Neither can it be said that, conceding that by reason — 642 — of defendant not being in possession, Ms covenant was personal between himself and Torrey as his immediate grantee, under the view which we have expressed, Torrey could assign his right of action under such covenant, and that he did assign it to plaintiff when he executed the deed of trust. But there was no cause of action in Torrey to assign, since there was no breach while he held it. The breach did not occur until Mrs. Culler (the last grantee) was ousted, wMch was in 1901, whereas Torrey made Ms deed of trust nine years before that time and sold it by warranty deed eight years before. But plaintiff cites the cases of Pratt v. Eaton, 65 Mo. 157, and Foote v. Clark, 102 Mo. 394, as announcing a different view as to the effect of covenants made by those who do not own the land which they attempt to convey. We regard those cases as in harmony with the view we have taken. We have said there must be privity of estate in order.to carry the grantor’s covenant along with the land to remote grantees, and that putting the immediate grantee in possession was sufficient to establish such privity though the grantor had no other title than mere possession. We have further said that, where the grantor granted neither title nor possession, his covenant bound him to his immediate grantee and to those to whom such grantee might assign his cause of action on it. In other words, that such covenant was the covenant of a stranger to the title, wMch could not run with the land, and amounted to no more than an obligation to the immediate grantee and Ms assigns. Such covenants are broken when made and the immediate grantee’s right of action is substantial and complete, which he may assign and which he does assign by his warranty deed. But such cause of action is the cause of action of the original grantee, thus assigned by him, and the statute of limitations would run against it from the time it accrued in the hands of the original grantee. Whereas, the covenant of the grantor which runs .with the land is a covenant wMch accompanies the estate — 643 — through successive grantees until a substantial breach occurs, when it becomes a right of action in the holder at the time of the breach; not as having been assigned to him by the original grantee, but by reason of the original contract of covenant passing with the land down to him as the party on whom the loss has fallen. In Pratt v. Eaton the action was brought by Pratt,, the immediate covenantee, and what was said of the husband’s liability on his covenants in the joint deed of himself and wife had reference to his liability to Pratt. When Pratt removed the incumbrance of $1,000 on the land conveyed by the Clarks, the substantial breach occurred. Such covenant would not run with the land as against the husband, but the right of action under it might have been assigned by Pratt and sued upon by the assignee as such. In the case of Foote v. Clark there was privity of estate, since possession was delivered by the grantor in the deed containing the covenants to which the opinion in the case refers. Plaintiff’s case showing that it has no cause of action against defendant, the judgment will be affirmed. All concur.