Funk v. Creswell

Stockton, J. Tbe deed from the defendants to the plaintiff, contains no express covenant that tbe premises are free from incumbrances; and tbe cause has been argued by tbe counsel on both sides, as though tbe conveyance was in tbe form given by tbe Code, (section 1232,) by which tbe grantor conveys tbe premises to tbe grantee, and covenants to “warrant tbe title against all persons whomsoever.” It is as to tbe meaning and effect of this covenant, that we are now to inquire, and to decide whether it includes a covenant that tbe premises are free and clear of incumbrances, at tbe date of tbe deed. Tbe modern covenants for title, which have usurped tbe place of tbe common law wa/rrcmtia cha/rtce, are: 1. Seisin; 2. Right to convey; 3. Freedom from incumbrances; 4. — 64 — For quiet enjoyment; and 5. To warrant and defend the title against all lawful claims. Each of these covenants has its proper office, meaning and effect, into the consideration of which it is not, perhaps, necessary for us, at this time, to enter. Of the covenant, against incumbrances, we may, however, say, that it is understood to bind the grantor to make good his warranty; and he is held by it to pay a sum of money which will put the plaintiff in as good a state as if he had kept his covenant. Thayer v. Clemence, 22 Pickering, 490. If the grantee extinguishes the incumbrance, he may recover the amount so paid. If not extinguished, he can recover nominal damages, only. Delaverque v. Norris, 7 Johns. 358; Deforest v. Leete, 16 Ib., 122; Leffingwell v. Elliott, 10 Pick., 204. For such incumbrances as the grantee cannot remove, he may recover a just compensation, for the real injury resulting from the incumbrance. Batehelder v. Sturgis, 3 Cushing, 205. If the grantee is permanently kept out of the estate, by reason of the incumbrance, he may recover back his purchase money, and interest. Chapel v. Bull, 17 Mass., 213. Where there is a special covenant in the deed against incumbrances, the grantor is not required to wait until he is evicted, before he can have an adequate remedy against his grantor. He may extinguish the incumbrance, and call upon the grantor for indemnity. So, it is not necessary to allege an actual ouster or eviction, as the breach of a covenant against incumbrances, but only that the incumbrance is a good and subsisting one. Prescott v. Truman, 4 Mass., 629. In the case of Funk v. Voneida., 11 S. & R., 109, it was held that where, under the law of Pennsylvania, the words “grant, Icwgaán, and sell, were a covenant against incumbrances done or suffered by the grantor, a mortgage upon the premises, at the time of the conveyance, was a subsisting incumbrance, and the covenant was broken without an eviction; that, when the mortgage money was not due, but the grantee chooses to pay it, he should be allowed, as damages, the fair price it necessarily cost him; — 65 — and that it would be a most inconvenient doctrine to hold, that the vendee must wait ten years, until the last instalment became due, when his grantor might be a beggar. The breach of the covenant, was the existence of the incumbrance. It did not require an eviction to constitute the breach. Eviction was but the consequence of the breach. The Court held, in the same case, that if the grantor had notice to remove the incumbrance, and refused, equity would compel him to raise it, and decree a general performance of the covenant of indemnity, though it sounds only in damages. See also 4, Kent’s Com., 476. The question in this case is, whether the covenant of general warranty, in the form in which it is given in the Code, section 1232, includes a covenant against liens or incumbrances, outstanding at the time of the conveyance. We are of opinion that it does. The covenant of warranty, by. all innovation upon the common law, has been converted into a personal covenant, and furnishes a remedy, as well against a defective ' title, as any disturbances thereupon. It is not used in conveyances in England, where the covenant for quiet enjoyment is the sweeping covenant in the deed, and the main assurance of title. In the United States, the covenant that the grantor will “warrant and defend the title,” is, (says Chancellor Kent), the concluding and sweeping covenant in a deed, 4 Kent’s Com., 472. This covenant is, in general, only broken by actual ouster, or eviction. As an eviction is, however, equally a breach of the other covenants of a deed, the covenant of general warranty, may, in a certain sense, be said to embrace them all. Technically, an eviction, is a lawful disturbance of possession, or dispossession by judgment of law. 2 Hiliard Real Prop’y, 404. Eviction by judgment of law, is not, however, necessary. The party may voluntarily yield the possession to him who has the better title, or may purchase and hold under it. This is a sufficient ouster or disturbance, to sustain an action on the warranty. Loomis v. Bedell, 11 N. H. 74; Greenvault v. Davis, 4 Hill, 643, — 66 — Stone v. Hooker 9 Cowen, 154; Fowler v. Powling, 6 Barb. 165. So a judgment in ejectment, is a sufficient breach of the covenant of warranty, without actual eviction. 5 Ohio, 158; 1 Aiken, 233. It is also held that the covenant of general warranty, covers an eviction by title, derived by sale under a judgment against the grantor, existing at the time of the conveyance. Smith v. McCampbell, 1 Black. 100. So if a party make a mortgage, and afterwards convey the land to a purchaser, without notice, this is an eviction, though the rnortgagee had never been in actual possession. 3 Fairfield, 499. The covenant of general warranty, is a covenant against eviction by reason of any incumbrances outstanding. In Thayer v. Clemence, 22 Pick., 493, it was held, that although the special covenant in the deed against incumbrances, did not run with the land, and could not be sued by the assignee; yet the covenant to “warrant and defend,” was infwbu/ro, running with the land; and whenever the assignee of the land was evicted by-title paramount, he had his remedy against the covenantor. What interest in the property conveyed, passed to the grantee by the deed of the defendants ? Was it only the interest that the grantors had at the time, without reference to liens or incumbrances outstanding ? or was it the fee simple estate, indefeasible by any act done or suffered by the grantors ? The covenants are not to be so construed, as to enlarge the estate granted in the premises of the deed; but when a question arises as to the quantity and quality of the estate granted, theymay be resorted to, to help out the construction. If there is ambiguity, the construction is to be most strongly against the grantor. Where a party conveys all his right, title and interest in the lands described in the deed, and covenants to warrant and defend the premises against all lawful claims arising under him, the covenant refers to the lands described, and not to the right and title of the grantor. Loomis v. Bedel, 11 N. H. 74. So, where the party conveyed all the right and title to the lands described, which he owned by virtue of — 67 — a cei’tain deed to him, and covenanted that he was “ seized of the premises in fee simple; that he had good right to sell the same; that they were free from all incumbrances ; and that he would warrant and defend them against the lawful claims of all persons,” it was held that the thing granted was the land itself, and not simply such title to it as tire grantor had at the time, and that he was ' liable for any breach of the covenants. Mills v. Catlin, 22 Vermont, 101. The covenant of general warranty, is a warranty of not merely such title as the grantor has in the land, but of the title in fee simple. By the deed in this case, not the interest merely of the grantors passed to the grantee, but by their covenants they agree to warrant the title against all persons whomsoever. If the plaintiff had suffered the premises to be sold for taxes; if the purchaser had perfected his title under the tax sale, and the plaintiff had yielded the possession to the claimant under it, there can be no doubt but that the covenant of warranty would have been broken, even according to the narrowest construction sought to be given to it by the defendants. The lien of the taxes was of such a nature, that it might have ripened into a title paramount to that acquired by the plaintiff, under his deed. It is not claimed that the taxes on the property, paid by the plaintiff, were not a valid incumbrance and lien. See Code, section 195. Must the grantee, then, whatever may be the incumbrance — whether a tax, judgment or mortgage — -wait until a perfect title has matured, and until he is disturbed or ousted of his possession, before the covenant is to be deemed broken, and before the grantor can be required to afford him any adequate indemnity ? We cannot think that such is the rule. It is not for the interest of either party, that such should be the law. If there is a valid incumbrance upon the estate, it is for the interest of both parties that it should be extinguished immediately. The important inquiry is, who shall discharge it ? Can it be insisted that the grantor in making, or the grantee in receiving, the — 68 — deed, with the covenant of warranty, did not suppose that it covered all outstanding liens and incumbrances at the date of the deed ? — that tbe words were understood by tbe parties, only in tbe sense of warranty against eviction, or disturbance by reason of failure of title ? It would not be difficult to maintain tbe proposition, tbat by tbe words,— “I warrant tbe title against all persons,” — is understood, a covenant warranting, not less against all manner of defects of title, than against all incumbrances existing at tbe date of tbe deed. If such is not tbe construction to be placed upon tbe covenant given in tbe Code, (section 1232,) then tbe profession, as well as tbe community generally, have been grievously deceived. There bas been an evident disposition to encourage and promote greater simplicity in tbe forms of conveyances, not less in modern legislation, than in tbe later judicial decisions. In England, a system bas grown into favor unknown to tbe common law. In tbe United States, tbe covenant for further asstuance, in favor in England, bas gone into disuse, while tbe covenant of general warranty, unknown to English conveyancing, may be said to have been universally adopted, as tbe main assurance of a perfect title. The legislature bas provided in tbe Code, (section 1232,) suitable forms for conveyances, in apt words — short, simple and intelligible — free from tbe verbiage and formalities of tbe old system; but retaining all tbat was valuable or essential, in meaning or substance. Erom these, tbe form “ for a deed in fee, with warranty, ” bas been adopted by tbe present parties, with tbe covenant of warranty in tbe language of tbe statute. The form is not prescribed to be used by those who do not choose or prefer it; nor having adopted it, are parties precluded from inserting other covenant of warranty; or from restraining, in express terms, those adopted, as they may desire. All tbat is claimed for it is, tbat it shall have tbe very effect and meaning designed and understood by tbe parties, and contemplated by tbe legislature, viz: to include and imply all tbe usual covenants in a deed of conveyance in fee simple. — 69 — As early as the year 1840, (Laws of 1840, 35,) the legislature of the territory of Iowa, providedby law, that in all conveyances in which any estate of inheritance in fee simple was limited, the words, “ grant, hargam and sell ” should, unless restrained by express words in the conveyance, be construed to be the following express covenants on the part, of the grantor and his heirs, to the grantee and his heirs and assigns: 1. That the grantor at the time of the conveyance, was seized of an indefeasible estate in fee simple, in the premises granted. 2. That the estate was, at such time, free from incumbrance done or suffered by the grantor, or any one claiming under him. 3. Eor the further assurance to be made by the grantor and his heirs, to the grantee, his heirs and assigns. These provisions were enacted in the law of February 16,1843, (Rev. Stat. of 1843, 204, section 6,) and it is declared that the deed may be sued upon in the same manner as if such covenants were expressly inserted in it. Such continued to be the law in this state, until the taking effect of the Code, by which the form of conveyance, with the covenant of warranty, is given as adopted by the parties to the present suit. Looking to the language used therein, and taking the same in connection with the law as it existed at the time of the adoption of the Code, we are of opinion, that the covenant given in the form “for a deed in fee, with warranty ” — wherein the grantor covenants to “ warrant the title against all persons whomsoever ” — was intended to include the usual covenant against incumbrances; by which we understand a covenant that .the estate was free, and should remain free from incumbrances done or suffered by the grantor, or those under whom he holds, and which was broken, iff the incumbrance existed at the time of the.conveyance, though there had been no interruption to the grantee, nor claim or demand made upon him on account of the same; and the measure of damages for the breach of which, is the amount paid to remove the incum — 70 — brance, with interest, provided the same do not exceed the amount of the purchase money and interest. Foote v. Barret, 10 Ohio, 317, and note of Reporter. We think that defendants cannot complain that such effect is given to their covenant of warranty. They have undertaken to convey to plaintiff a fee simple title to the property, and to warrant the same to them against all persons whomsoever. This is the highest estate known to the law, and as it includes every lesser estate, so the covenant of general warranty, in the form and words of the statute, must be understood to include and imply every lesser covenant of title. It will not be permitted to the party, to allege that he covenanted against any eviction or disturbance, by paramount title, but not against incumbrances done or suffered by him, which in regular and legal sequence, may ripen into such title. If incumbrances exist, then the grantee does not acquire a perfect legal title, and the grantor must respond in such sum as shall be sufficient to make him whole, in the complete sense in which one' may claim to be made whole, who takes a conveyance for the fee simple title, with covenants of general warranty. Judgment reversed. Upon the filing of the foregoing opinion, Starr & Phelps, for the appellees, presented the following