Solberg v. Robinson

PORREY, J. On the 27th day of January, 1906, one C. C.’ Robinson and wife executed and delivered to- W. J. and J. R. Smith a certain warranty deed, purporting to convey to- -said Smiths, with other property, a quarter section of land in Hughes County. On the 9Ü1 day of January, 1907, said Smiths executed and delivered to plaintiffs a warranty deed, purporting to convey — 60 — said land to plaintiffs, but neither the Robinsons nor the Smiths were ever in the actual possession oí the land. Thereafter, one Ve-sey commenced1 an action against plaintiffs for the purpose of quieting title t'o said premises and to- enjoin plaintiffs in this action from asserting further claim thereto-. Said1 action was defended by planitiffs but, om the trial, it developed' that, from a time long prior to the attempted conveyance from -the Robinsons to- the Smiths and1 down to the time of the trial, said Vesey was the absolute owner in fee of the land in question; that, while Robinson’s- title appeared to come through Vesey, the deed which purported to divest him. of his titl-e proved to- be a forgery and be had judgment as prayed for. Upon appeal t-o this court,, said judgment was affirmed: Vesey v. Solberg, 27 S. D. 618, 132 N. W. 254. In the deed from' Robinson to the Smiths, Robinson and wife covenanted with the ’ Smiths : “Their heirs and assigns that they are well seized in fee of the lands' and premises aforesaid -and have good right t-o sell and convey the same -in manner and form -aforesaid,” and that “the above bargained and granted -lands and premises in quiet and peaceable possession of the said parties of the second part, their heirs and -assigns, -and against all persons lawfully -claiming or to claim the whole or any part thereof the said -parties of the first part will warrant and fo-rever defend.” The deed from -the S-mit-hs to- plaintiffs contained ooven-ants of similar import. After the .affirmance of the judgment quieting title to the said -premises in Vesey, plaintiffs1 commenced this- action against the defendant as administrator of the estate of the said C. C. Robinson, who 'had- died in the meantime, for the purpose of recovering on the above quoted covenants in the Robinson deed of January 27, 1906. During a-11 of this time, the land in queston was vacant an-d unoccupied. The Smiths were named as- defendants in the summons, but only one of them was ever served, and, as to him, theikction was dismissed. Plaintiff seeks to recover the amount Robinson -had received for the land with interest, together with -the expenses necessarily incurred in defending -the V-esey -case in ith-e circuit court, upon appeal to this court and upon motion for rehearing, including attorney’s fees- for -conducting -all of th-es-e proceedings. Plaintiffs had judgment in- the circuit court — 61 — for $1183.98. From this judgment and the order denying a new trial, defendant appeals. [1] It is contended by appellant that, as Robinson had neither possession nor right of possession at the time he executed the deed to the Smiths, the covenants sued upon were broken as soon as made and, therefore, did not run with the land nor inure to the benefit of his remote grantees. As to the covenant of seizin, this contention is undoubtedly correct. Our statute, §1139 .Civ. Code, enumerates certain covenants as those which run with the land, but no mention is made of the covenant of seizin, and this ■covenant does not run, with the land: Gale v. Frazier, 4 Dak. 196, 30 N. W. 138. Under a statute like ours it would appear that it is only the immediate grantee of the covenantor who can recover on this covenant. Plaintiffs oould have recovered from the Smiths upon the breach of this covenant, and they, in- turn, could have recovered from defendant, provided they brought their action within the period of the statute of limitations: 3 Wash. Real Property, 5th Fd. 504. But there was no such privity of contract between plaintiffs and defendant’s intestate as would entitle them to recover against defendant. [2] The other covenant set out in plaintiff’s complaint (that of quiet enjoyment) presents a different proposition. By express statute, this covenant does run with the land: Civ. Code §1.139. This covenant is made for the benefit of remoto as well as immediate grantees, and, unless there is something in the facts connected with this case to relieve appellant from liability on the covenant, the plaintiff is entitled to recover, and the judgment should be affirmed. This is conceded by appellant, but, to avoid liability, he contends that, because his intestate had no estate whatever in the premises at the time of making the covenant, and because 'his intestate’s grantee did not go into possession of the land, there was nothing to which the covenant could attach to carry it f» the covenantor’s remote grantees. H]e also contends that, the covenantor having neither possession nor right of possession at the time he made the covenant, a constructive eviction took place at once and that the covenant immediately ripened into a cause of action in favor of his covenantee that neither ran with the land nor passed to 'his covenantee’s grantee, and that, in any event, more than six — 62 — years had elapsed since the breach of the covenant and plaintiffs’ action is barred by the six years statute of limitations. In other words, that, in this particular case, the effect of both covenants is exactly the same, and plaintiffs are not entitled to recover on either. If appellant’s position is correct, the covenant for quiet enjoyment contained in the Robinson deed could never, under the facts in this case, become the basis for a recovery by anyone except his immediate grantee. Although thei&eed purporting to divest Vesey of his title was a forgery and conveyed no title in fact, it appeared upon its face to.be a valid conveyance and the apparent chain of title from Vesey to plaintiffs was perfect. For aught plaintiffs knew, or could know until Vesey asserted 'his title, they were the absolute owners of the fee and could have gone into the physical possession of the land at any time. Supposing plaintiffs had taken possession and afterward had learned the facts relative to the title to the land, and, before they had been disturbed1 by Vesey, had brought 'this suit -against defendant for breach of the covenant for quiet enjoyment, he could- have said: “You have not been disturbed in your rightful possession of' the land and you may never be disturbed-. While your deed may riot be -good, it -is yet color of title, and if you are not disturbed by Vesey within the- time for bringing an action for that purpose, your present title, although defective, will ripen into a title that can never be -disturbed by anyone. In other Words, you 'have no cause of action until you have been actually ousted by a decree of court.” This would be a complete -defense to plaintiff’s demand, or the most -they could recover would' be nominal damages only. That the proposition that covenants found in deeds purporting to convey title to land do not run with ■ the land unless the covenantor was possessed of some -estate in the land to which the covenant could attach is supported by many, if not the great weight of, judicial -decisions is not questioned. Notable am'ong the more recent decisions to this -effect is Bull v. Beiseker, 16 N. D. 290, 110 N. W. 870, and- reported with an extended note, in 14 L. R. A. (N. S.) 514; Mygatt v. Coe, 147 N. Y. 456, 42 N. E. 17, a New York case; and Wallace v. Pereles, 109 Wis. 316, 85 N. W. 371, 53 L. R. A. 644, 83 Am. St. Rep. 898. In Bull v. Beiseker, supra, the court said: — 63 — “The action was brought and 'the complaint framed' upon the mistaken theory that- the covenants contained in defendant’s deed to Johnson were covenants running with the land, and therefore passed to Washburn by the deed from- Johnson to him. This probably would be -true if any title or possession was transferred by such conveyances; but, under the facts alleged in the complaint, neither title nor possession, actual or -constructive, passed under the deeds, and hence there was nothing for the covenants to run with. There was a constructive eviction of the grantee immediately upon the execution and delivery of the deed to Johnson; and a cause of action for breach of the covenants in such deed at once arose in his favor against the Beisekers to recover damages therefor; and the deed from Johnson to Washburn did not operate to assign to the latter such cause of action.” And, in Wallace v. Perles, supra, the Wisconsin court said: “We therefore -hold that where the record -shows that the grantor 'had no title and no possession, and there is no proof that the grantee took -possession, the covenants of the grantor are personal to the grantee, and are not transmitted to subsequent grantees by a mere conveyance of the land.” And, again, in Mygat-t v. Coe, -supra, we find: “It must he regarded as the law of this case, that privity of estate is essential to carry covenants of warranty -and quiet enjoyment to 'subsequent grantees in order to- support a right of action by them against the original covenantor, when there is an eviction by paramount title.” These cases are fully supported by very many, if not all, of the preceding decisions on the.same subject. The covenants usually fo-un-d in -deeds of conveyance of real property are the subject of legislative -enactment in many of the states. Our statute, §1138 Rev. Civ. Code, reads as follows: “Every -covenant contained in a grant of an -estate in real property, which is made for the direct benefit of the property, or some pant of if then in existence runs with the land1.” §1139. “The last section includes covenants of warranty, for quiet enjoyment, or for further assurance on the p-art of a grantor * * *” But these statutes -do- not seem to have changed the rulé -that, in order that the covenant -will run with the land so as- t'o inure — 64 — to t:he benefit of a remote grantee, the covenantee must have received some estate in the land to which the covenant could attach. It seems to be generally held that, where the covenantor delivers the possession of the land to his grantee and he, in turn, puts his grantee in possession, this constitutes a privity of estate sufficient to carry the .covenant with the land. And it may be taken as true that the reason for the rule originated at a time when physical possession of land was the- chief muniment of title thereto. But- this reason no longer exists. A person who has a grant of land from 'the owner of the fee becomes the absolute owner 'thereof and is entitled to all tíre benefits that can be derived therefrom, even though neither of them was ever in the actual possession thereof. This being the case, why should it be necessary that actual, as distinguished from constructive, possession should be delivered in order to carry a covenant with the land when the covenantor was without title? It is for the purpose of protecting the covenantee and his grantees in their fight of possession of the land, and to protect them against defective title thereto that the covenant is made. The right of quiet enjoyment of a piece of land is- its most valuable attribute, and a covenant from a grantor that his grantee shall be protected in the quiet enjoyment thereof adds materially to -the value of the land itself, and a material portion of the consideration- paid for the grant may be, and as a rule is, paid because of the covenantee’s expectation of the right of quiet enjoyment of the demised premises. If a perfect title is passed to the grantee then he need never avail himself of the covenant in his deed, while, on the other hand,, if it should develop- that the covenantor had no estate whatever in the premises attempted to be^conveyed, the grantee could not, except as again-st his immed-iate"cO'Venantor, avail himself of the covenant. This, at least, is the logical conclusion to be drawn from the decisions -holding that a remote grantee cannot recover upon a covenant unless the covenantor had s-ome estate in the land when the covenant was made. Some cases, notably Kimball v. Bryant, 25 Minn. 496, and Iowa Loan & Trust Co. v. Fullen, 114 Mo. App. 633, 91 S. W. 58, hold that, although a covenantor must have some estate in land at the time -of making the grant to which covenants can attach in order to enable a remote grantee t-o recover on a breach of the covenant, yet, nevertheless, such grantee, however remote, — 65 — who is holding under said grant at the time of the assertion of, and eviction under, the paramount title, may recover the damages occasioned by the lack of title. This is upon the ground that the covenant was broken as soon as made and at once ripened into a chose in action in favor of the covenantee, and that the transfer of the land by successive warranty deeds passed this cause of action along through the successive grantees until such time as an actual eviction by paramount title took place, when the party who suffered damage by reason thereof might enforce the cause of action that accrued in favor of the first grantee against the original covenantor. Against this doctrine, this court is already committed: Hills v. City, 145 N. W. 570. We believe plaintiffs should recover ; but we think they should recover as upon the covenant itself, rather than upon successive assignments of a cause of action that had accrued in favor of some prior grantee. Under the theory adopted by the Missouri and Minnesota courts, unless the eviction take place and the action be commenced within the period prescribed by the statute of limitations for bringing such action, then the right to recover will be barred by the statute, and the party who is holding under the grant at the time of the eviction and the one who suffers the real damage cannot reach the covenantor at all: Iowa L. & T. Co. v. Fullen, supra. [3] But, again, since it is held that a delivery of the possession of the disputed premises is necessary in order that the covenant of a grantor without title may inure to the benefit of his remote grantees, then the constructive possession of the grantee ought to be sufficient to carry the covenant. In this case, while , the Smiths acquired no title to the land by virtue of their deed from the Robinsons, still they had -the apparent title even as against Vesey himself. The county records showed that they had a perfect chain of title, and, therefore, the Smiths and their grantees (plaintiffs in this action), as against the defendant should be held to have had constructive possession of the granted premises, and that plaintiffs are entitled to recover against the defendant because of the eviction by Vesey. This, of course, involves the doctrine of estoppel by deed; and we believe this to be a proper case for the application of this doctrine. — 66 — The rule of estoppel by deed is stated in 16 Cyc. 686, as follows. : “A person who assumes to convey an estate by deed is estop-ped, as against the grantee, to assert anything in derogation of the deed. He will not be heard, for the purpose of defeating the title of the grantee, to say that at -the ¡time of the conveyance Tie had no title, or that none passed :by the deed; nor can he deny to the deed its full operation and effect as a conveyance.” Where a grantor represents 'himself as the owner of the fee to a piece of land and agrees that he will protect his grantee and assigns in their peaceful possession thereof, and it afterward develops that he was not the owner of the fee and cannot defend his grantees in their possession of the land, and they call upon him to respond in damages, why should he not be estopped from saying that he did not have, and convey the constructive possession of the land as he represented he had and for which he had received a valuable consideration, and that, therefore, his covenant did not pass beyond his immediate grantee and that he is not liable to the party who -has suffered by his broken covenant? And why should the rule just quoted not apply? True, no case has been called to our attention where a cov-enantor has been held to be estopped by his deed from claiming that he had no estate in the land, attempted to be conveyed, at the time he made the covenant, and thereby escape liability to a remote grantee who. had been evicted; but neither has any reason been suggested why this should not be done; and we bold that the defendant is estopped by the covenants in his intestate’s deed from denying that his intestate possessed any estate in the land in question at the time the deed was made; and that respondent is entitled to recover upon the broken covenant. [4] The trial court awarded respondent the amount paid for the Robinson deed, with interest thereon for -a period of six years. This is urged -as error. §2296 Rev. Civ. Code fixes the measure of damages for breach of the covenant involved at the price paid to the grantor, with interest thereon during the time the grantee derived no benefit from -the property, not exceeding six years. Appellant bases his contention u-pon the ground that there is no evidence in the record to show that the respondents derived no benefit from the land involved; that thejr were entitled to posses — 67 — sion of the land until they were evicted1 and, therefore, are presumed to 'have derived benefit therefrom. In this contention appellant is right in part only. Having already held that the ■appellant is estopped from denying that respondent was1 in the constructive possession of the land and allowed respondent to recover on the covenant upon the theory that respondents and their immediate grantors, believing themselves -to be the absolute owners of the land, were in the constructive possession thereof, it would be inconsistent and illogical to allow respondent to recover interest on the purchase price upon the ground that they were not in possession of the land, and, therefore, derived n0‘ benefit therefrom. As against appellant, respondent’s constructive possession continued so long as they believed themselves to be entitled to the actual possession. When they received notice of Vesey’s title, their constructive possession terminated, and it is from the date of receiving such notice that interest on 'the purchase price should be computed. So far as appears from this record, respondents were first notified of Vesey’s ownership by the commencement of his action against them, and interest should be allowed from that date only. [5] The trial court also> awarded respondent’s costs and expenses, including witness fees, incurred by them in defending their supposed title in the circuit court and the supreme court, and attorney’s fees paid' by them in that action. The allowance of these two items is assigned as error. By the provisions of §2296 Rev. Civ. Code, the respondents are entitled to recover not only the consideration paid for the land and interest thereon, but any expenses properly incurred by 'them in defending their possession. The objection to the allowance of these items is based upon the fact that appellant was not notified of the commencement of the suit by Vesey and required to come.-in and defend in that action. These expenses were properly incurred by respondents in defending their possession and are within the • meaning of §2296, and, unless a condition is read into that section, that was not placed there by its authors, respondents' are entitled ho recover these expenses. It is true that some courts have -held that a covenantee cannot recover from the covenantor the expense's of defending his title unless the covenantor • was notified and required to come in and defend the action in which the expenses were incurred. But the — 68 — courts are by no means in harmony on the subejct; and, at §200 Rawle on Covenants, that learned author says: “Both with respect to counsel fees and such other expenses as are called variously in the cases 'necessary expenses/ 'reasonable costs attending litigation/ 'compensation- for trouble and expenses/ and the iike, these have in -some cases been refused1 unless notice has been given, and in others allowed where notice has been given, in others irrespective of notice, and in others where no notice has been given. * * * “A consideration of these rather conflicting cases1 would seem to suggest as a rule to be deduced front them that the plaintiff’s rights to recover counsel fees as. a part of his costs should, in general, 'be limited to cases where he has properly notified the party bound by the covenant to come in and defend the title, but that the neglect or silence of the latter should inure to the benefit of the plaintiff rather than to his own.” This, of course, is without reference to' any statute. In Dale v. Shively, 8 Kas. 190, Brewer, J., in discussing the liability of a covenantor, says: “He may be charged with the costs and counsel fees paid by the grantee in defending the title conveyed against a suit by the true owner, or in prosecuting a suit to- obtain the possession which had been covenanted but never actually given.” This is without reference to either statute or notice, and our attention has been called to no case that has been decided under a statute like ours. In the case at bar, the expenses of -defending the title attempted to be conveyed were clearly within the contemplation of appellant’s intestate when he made the covenant He knew that, if the title were not such as he covenanted it to be, his grantees would, in all probability, be called upon to defend as against the flightful owner. He. knew that, if such suit were commenced, his grantee must necessarily incur expenses and pay counsel fees. The statute fixed his liability, and this liability is not conditioned upon receiving notice from his grantees of the commencement of a suit by the owner of the paramount tiltle; and it does not now lie in -defendant’s mouth to say that, had he received such notice, he might have complied with his 'covenant by admitting -his liability and paying to 'his gran-tees the damages to which they were entitled, and thus prevented the incurring of the item's — 69 — of expense involved 'herein, for even 'now he is resisting the payment of such damages yvith the same vigor that he is resisting the payment of the costs and attorney’s fees. No. complaint is made that any of the expense's that were allowed 'by the trial court were improperly incurred, or that the defense wa-s not properly conducted, or that the amount paid for counsel fees was exorbitant or unnecessary; and it is our opinion that the items in dispute were properly allowed. The judgment should be modified in regard to the amount of interest allowed respondents as herein indicated, ¡and as so modified it is~affirmed_. - - ■