Estep v. Bailey

BEAN, J. — 1. As plainly stated in appellants’ brief: All tbe questions to be determined on this appeal cluster about and will necessarily be disposed of by tbe determination of tbe last-named point. Tbe plaintiff in tbe case at bar in addition to tbe amount of the Corrieri judgment recovered $50 for attorneys ’ fees in tbe former action. Tbe reasonableness of this fee was not questioned in tbe former action, so there was no necessity for submitting that part of the case to tbe jury; the defendants’ contention being that they were not liable therefor. 2. It is urged by counsel for defendants that tbe crops on a portion of tbe land were personal property owned by Corrieri, and no title thereto passed by the deed, and that tbe defendants are not liable under their covenant for tbe damages for tbe conversion of such crops by plaintiff. It is also contended by defendants that in any event tbe true measure of damages in the present case is tbe fair rental value of tbe land for the unexpired term of tbe lease. It appears that tbe lease from tbe former owner to Corrieri was not in writing, and that Mr. Bailey did not know of its existence while be owned tbe land. There was no reservation of tbe — 64 — crop in the deed to plaintiff. It' is practically conceded in this case that the claim of Corrieri to the crop in the action therefor was based upon the outstanding lease from Cabella, the former owner of the premises. “An ‘encumbrance’ is a burden on land which depreciates its value, as a lien, easement, or servitude, and includes ‘any right to or interest in the land which may subsist in third persons, to the diminution of the value of the land, but consistent with the conveyance' of the title’ 2 Words and Phrases, Second Series, p. 1018. See, also, Friendly v. Ruff, 61 Or. 42 (120 Pac. 745); Rawle on Covenants for Title (5 ed.), p. 90, § 75. An outstanding lease upon premises at the time of conveyance constitutes an encumbrance: 7 R. C. L. 1164; Beutel v. American Machine Co., 144 Ky. 57 (137 S. W. 799, 35 L. R. A. (N. S.) 779). The existence of a valid lease to Corrieri at the date of the deed from the defendants to the plaintiff was a breach of the covenant against encumbrances, quoted above, and entitled Mrs. Estep, the covenantee, to recover damages: 7 R. C. L., p. 1164, § 79. 3. According to the rule of the common law, growing crops pass with the title to the land on a conveyance thereof in fee, unless they are reserved by the vendor. This rule is based upon the principle that a deed is to be construed most strongly against the grantor, and if the crop is not reserved the grantor is presumed to have intended it to pass with the possession. If the rule were otherwise, a purchaser of land would be subject to the intrusion of the grantor to gather the crop, which, in the absence of a stipulation granting such privilege, would be a trespass, and there would be presented the situation of the ownership by one of personal property on the land of another without the — 65 — right to enter and take it: 8 R. C. L., p. 358, § 5; note to Beutel v. American Machine Co. (Ky.), 35 L. R. A. (N. S.) 779. As between the Baileys, the vendors of the land and Mrs. Estep, the purchaser, a deed to the property upon which a crop was then growing would convey to the purchaser the growing crop as part of the real property, unless the same was reserved by the vendor in the deed: 8 R. C. L., p. 358, § 5; 12 Cyc. 977; Jones v. Adams, 37 Or. 473, 475 (59 Pac. 811, 62 Pac. 16, 82 Am. St. Rep. 766, 50 L. R. A. 388); 8 Am. & Eng. Ency. of Law (2 ed.), 303. This is true even if Mrs. Estep, the purchaser of the land knew that there was an outstanding lease upon a portion of the premises at the time she purchased: Corbett v. Wrenn, 25 Or. 305 (35 Pac. 658); Clark v. Fisher, 54 Kan. 403 (38 Pac. 493). 4-6. As between Corrieri and his landlord, Cabella, and his successors, Corrieri as a tenant was entitled to the annual crops raised on the leased land during the tenancy. As between them such crops are not part of the freehold, but are the property of the tenant in the absence of any stipulation affecting it: 8 R. C. L., p. 362, § 8; Opperman v. Littlejohn, 98 Miss. 636 (54 South. 77, 35 L. R. A. (N. S.) 707); Colville v. Miles, 127 N. Y. 159 (27 N. E. 809, 24 Am. St. Rep. 433, 12 L. R. A. 848); Olin v. Martell, 83 Vt. 130 (74 Atl. 1060, 138 Am. St. Rep. 1072). In the case of Clark v. Fisher, 54 Kan. 403 (38 Pac. 493), which is very much in point, as the facts were similar to the case at bar, the syllabus is as follows: “When the premises conveyed by a deed from a grantee to a grantor with a covenant against encumbrances have a growing crop thereon at the delivery of the deed, belonging to a tenant of the grantor, and the grantee is deprived of the possession on account — 66 — of the unexpired term of the lease of the tenant, the value of the crop, less the cost and expense of the taking care of and the harvesting the same, may be considered in estimating the real injury to the grantee arising from being deprived of the possession of the premises until after the crop is harvested and taken away. ’ ’ In Newburn v. Lucas, 126 Iowa, 85 (101 N. W. 730), it was held that in an action for breach of covenants of warranty in a deed, the deed governs and the grantor cannot defeat the covenants by parol evidence of the grantee’s knowledge of an encumbrance; also that in an action on a covenant of warranty for damages sustained by reason of the grantor’s vendor in possession of the premises at the time of the conveyance claiming the growing crops, the measure of damages is the value of the growing crops at the time of the conveyance. It seems that the measure of damages in the Corrieri case was taken to be the value of the crop less the expense of harvesting the same. In the absence of special circumstances, the general rule is that the measure of damages for the breach of a covenant by reason of an outstanding lease is the value of the use of the premises during the remainder of the life of the lease. A grantee in a deed like the one from defendants to plaintiff is entitled to expenses incurred in defending title against the claim of the third party: Note to Beutel v. American Machine Co. (Ky.), 35 L. R. A. (N. S.) 779; 15 C. J. 1332; Balte v. Bedemiller, 37 Or. 27, 33 (60 Pac. 601, 82 Am. St. Rep. 737); Ellis v. Abbott, 69 Or. 234, 240 (138 Pac. 488). 7. The crop of wheat and vetch was a part of the real estate sold and conveyed by defendants to plaintiff and the title to the grain should have passed by the deed to the plaintiff. The defendants covenanted — 67 — that they were the owners of the property including the crop. On account of the outstanding lease at the time of the conveyance, and in order for plaintiff to obtain the benefit of the fruit of the land which she had purchased, and to which she was entitled, and to remove the effect of the encumbrance, she was compelled to pay $208.15. Therefore the plaintiff was actually damaged by reason of the breach of the covenant in that sum. The rental value of the three acres for the unexpired term of the lease from January, 1917, until the crop was removed would not be a fair compensation for plaintiff’s damages as nearly one half of the time between the planting and harvesting of the crop had elapsed at the time of the purchase and conveyance. Plaintiff by reason of her purchase and deed was entitled to the benefit of the time that had elapsed, as well as to the result of the labor in preparing the land and planting the crop and the seed therefor. Therefore, under the peculiar circumstances' of this case, the rental value rule could not well be applied. She was entitled to recover compensation for the injury resulting to her by reason of the breach of the warranty. The case comes within the exception to the rule where ‘ * special circumstances ’ ’ exist. The underlying principle in cases of this character is that the damages should be estimated according to the real injury caused by the existence of the encumbrance. This would include compensation for trouble and expense caused plaintiff on account of such encumbrance: Fritz v. Pusey, 31 Minn. 368 (18 N. W. 95); Musial v. Kudlik, 87 Conn. 164 (87 Atl. 551, Ann. Cas. 1914B, 1172); Sarlls v. Beckman, 59 Ind. App. 638 (104 N. W. 598). 8. The defendants having been notified to defend the action brought by Corrieri against the plaintiff being ultimately liable for the damages sustained by plain — 68 — tiff by reason of the outstanding lease at the date of plaintiff’s deed, are bound by the judgment in that case to the same extent as though they had been a party to the record. If the defendant desired to contest the case as to the amount of damages or as to the existence of the Corrieri lease, it was incumbent upon them when duly notified of the institution of this action to appear and defend. They having failed and refused to make such defense, the judgment in that case is conclusive upon them' as to the following issues in the present case: First. That there was a valid existing and outstanding lease from Cabella, a former •owner of the land, to Corrieri of three acres of the land conveying to plaintiff. Second. That by reason of the existence of such lease and the enforcement of Corrieri’s right thereunder, the plaintiff, in order to protect her title and obtain the full enjoyment of the use and occupation of the land to which she was entitled under her deed, was compelled to pay the amount of the Corrieri judgment, $158.15, and that plaintiff was thereby damaged in that sum: 15 R. C. L. 1020; Astoria v. Astoria & Columbia River R. Co., 67 Or. 538 (136 Pac. 645, 49 L. R. A. (N. S.) 404); Corvallis etc. R. Co. v. Portland etc. Ry Co., 84 Or. 524, 542 (163 Pac. 1173). 9. The defendants having failed to make a defense in the Corrieri case after they were noticed to do so cannot now litigate the matters which were the subjects of controversy and adjudicated in the former action. Where a party against whom an ultimate liability is claimed is fairly and fully notified of the claim, and that the action is pending and given full opportunity to defend or to participate in the defense, if he then neglects or refuses to make any defense he may claim to have, the judgment will bind him in the same way and to the same extent as if he had been made party — 69 — to the record: Oceanic Steam Nav. Co. v. Campania Transatlantica Espanola, 144 N. Y. 663 (39 N. E. 360); Washington Gaslight Co. v. District of Columbia, 161 U. S. 316 (40 L. Ed. 712, 16 Sup. Ct. 564, see, also, Rose’s U. S. Notes). 10, 11. The plaintiff being also obliged to incur the expense of,$50 for attorneys’ fees in defending Corrieri action, the amount of which is not contested, is entitled to recover therefor. The judgment in the Corrieri action being binding upon the defendants, it is unnecessary for us to ascertain whether or not the exact rule as to damages , was applied in that case, as the judgment therein has become final. It is also unnecessary to consider the question in regard to the introduction of oral evidence as to what was said in relation to the crop at the time of the negotiations between the plaintiff and defendants for the sale of the ten-acre tract, as the written covenant in the deed governs in the premises. There was no error in the trial court holding that the defendants are bound by the judgment rendered against plaintiff in the action instituted by Corrieri for damages. The judgment of the lower court is therefore affirmed. Affirmed. McBride, C. J., and Johns and Bennett, JJ., concur. '