Evans v. McLucas

The opinion of the court was delivered by Willard, C. J. The only objection for want of parties taken by the answer is that a mortgagee, prior to the plaintiff, is not joined. We held in Warren v. Burton, 9 S. C. 197, that a prior encumbrancer was not a necessary party to a suit for foreclosure. That case disposes of all question as to the alleged defect of parties, for the defendant not having raised any other question as to defect of parties, either by demurrer or answer, such an objection is waived. Code, § 171. The objection to the judgment, based on an alleged agreement to pay off all encumbrances on the premises, requires consideration. It appears that the plaintiff sold and conveyed to the defendant, with the usual covenant of warranty, and took back [62] a mortgage for the purchase money, which he is now seeking to foreclose. The defendant alleges outstanding encumbrances existing at the date of the conveyance with warranty, both by mortgage and judgment. He also alleges a parol agreement on the part of the plaintiff to pay off and discharge these incumbrances. The Circuit judge does not pass directly upon the question of fact of the existence of such a parol agreement. It is placed in doubt by the evidence whether any distinct agreement of the character alleged, independent of what was accomplished through the covenant of warranty, was made between the parties. The covenant of warranty was itself a contract to pay the encumbrances in question. It is settled in this state, beyond dispute, that the general covenant of warranty, since the act of 1795, must be construed as containing the various covenants in use prior to that time in conveyances of land. In Jeter v. Glenn, 9 Rich. 374, Wardlaw, J., held that the covenant of warranty embraces all the five English covenants, namely, that the vendor is seized in fee; that he has a right to convey; that vendee shall quietly enjoy; against encumbrances, and for further assurance. .In McCrady v. Brisbane, 1 N. & McG. 104, the existence of a covenant against encumbrances, as included in the ordinary covenant of warranty, was distinctly recognized. In Johnson v. Veal, 3 MoC. 449, the same was held with regard to the covenant of seizin, and in reference to both the covenants of seizin and quiet enjoyment in Furman v. Elmore, 2 N. & McC. 189. The proposition above stated is based upon a construction of'the act of 1795, and is so Avell settled and understood that it needs no particular consideration. Inasmuch, then, as there Avas an express covenant, under seal, between the parties, by which, in effect, the vendor bound himself to pay off all encumbrances on the land, the testimony as to a parol understanding may Avell be referred to this express contract as the contemplated means of enforcing that obligation. A parol contract, in addition to this formal one, Avould have been senseless and useless. We therefore conclude that the covenant of warranty Avas the obligation to Avkich the parties looked as fixing63 the duties of the vendor as it regards the discharge of encumbrances affecting the title to the land in question. It appears that encumbrances, consisting of a mortgage and judgment, existed affecting the title of the land at the time of its conveyance by the vendor with warranty. Whether the mere fact of conveyance, with warranty, of an encumbered title constituted a breach from the moment of such conveyance, or only from the time when the covenantee sustained damage from the existence or enforcement of the encumbrance, need not be considered in this case. In Massachusetts and New York it is held that under such circumstances the covenant is broken from the time of the transfer of the encumbered title, but that covenantee can get only nominal charges, unless he has either been at cost to extinguish the encumbrance, or has suffered through its enforcement. Prescott v. Trueman, 4 Mass. 627; Delavigne v. Norris, 7 Johns. 358. It may be a question whether the case of McCrady v. Brisbane, 1 N. & McC. 104, assuming it to hold that the covenant is not broken until actual damage sustained, should not be restricted to contingent liabilities like that involved in that case, namely, a contingent right of dower dependent on surviving a husband, but it is not important to determine that question in the present case. The question is not directly that of the right to maintain an action for the breach of' the covenant, independent of the question of damages, but whether the defendant has sustained any damage that should be allowed by way of counter-claim to the plaintiff’s demand. It is very clear in all the authorities that no damage can be recovered until the vendee has either extinguished the encumbrance-in whole or in part, and in that case to the extent of payment for the purpose and interest, or unless he has lost the land in whole or in part under such encumbrance. McCrady v. Brisbane, 1 N. & McC. 104; Prescott v. Trueman, 4 Mass. 627 ; Delavigne v. Norris, 7 Johns. 358. It is well settled in this state that under the former practice, damages arising from a breach of covenant in conveyance of land, could be set up by way of discount against a claim for the purchase money, whether that claim was based on a parol contract or one linder seal. Bell v. Huggins, 1 Bay 326 ; Sumter v. [64] Welsh, 2 Bay 558; O’Neall in Van Lew v. Parr, 2 Rich. Eq. 321; Garwin v. Cohen, 13 Rich. 153; Carter v. Carter, 1 Bail. 217; Taylor v. Fulmore, 1 Rich. 52. Such a defence can be made available under the code by way of counter-claim. But the defendant does not allege or prove any damage that can be deducted from the purchase money secured by the mortgage, and, therefore, the plaintiff was entitled to have his decree for the amount due on his mortgage, and for the sale of the mortgaged premises for foreclosure. The decree below must be affirmed and the appeal dismissed. Decree affirmed. Haskell, A. J., and Wallace, A. A. J., concurred.