Gilbert v. Rushmer

Opinion by Gkeen, C.: On the 24th day of May, 1881, the plaintiffs in error in this case conveyed to H. J. Rushmer the south half of lots 3, 4, and 5, in block 6, in Lane’s first addition to the city of Lawrence, in Douglas county. By the terms of the deed, the grantors covenanted that they were then the lawful owners of the premises, and that the same were free and clear of all incumbrances, and that they would warrant and defend the same in the quiet and peaceable possession of the grantee, his heirs and assigns, against all persons lawfully claiming the same. The consideration expressed in the deed was $1,150, paid by the grantee to George W. E. Griffith for the grantors. The plaintiffs in error obtained the title to the property under foreclosure proceedings. At the time they foreclosed their mortgage, and for some time prior thereto, J. H. Gower, as trustee, held a mortgage, which was subsequent to the mortgage of the plaintiffs in error, upon the conveyed premises, together with other lands, for a large sum of money. • It seems that Gower was not made a party in the foreclosure suits brought by plaintiffs in error. Gower, as trustee, afterward brought an action to foreclose his mortgage, but did not make the plaintiffs in error parties in his suit. The plaintiffs in error obtained a judgment and decree of foreclosure on the 23d day of April, 1878; and Gower, as trustee, recovered a judgment and de — 639 — cree of foreclosure on the 19th of November of the same year. On the 15th day of January, 1879, under an order of sale issued in the case of the plaintiffs in error,.the sheriff sold the property to them, and the sale was afterward confirmed, and a sheriff’s deed was executed for the premises. On the 25th day of June following, the property was sold by the sheriff under an order of sale issued in favor of Gower as trustee, which sale was duly confirmed, and a deed executed to Gower, as trustee. The plaintiffs in error took possession of the land upon the confirmation of the sale to them, and held the same until the execution of the deed by them to Rushmer, who took possession of the land under his deed, and continued in possession of the same until the 17th day of October, 1882, when he and his wife sold the premises to Ella Henley for $2,300. After the sale Gower died, and J. D. Bowersock was appointed and qualified as trustee, and Henley then discovered that Bowersock had a deed for the same property she had purchased from Rushmer, and refused to accept a deed and pay for the land until the title held by Bowersock was obtained; and, in order to obtain such title, it was necessary to pay Bowersock $700 for a quitclaim deed, that sum being the least amount he would accept for his interest. This sum was paid by Henley to Bowersock and deducted from the purchase-price. This action was brought in the district court of Douglas county by the administrator of H. J. Rushmer against Gilbert & Gay, to recover the $700 which he alleges Rushmer paid to Bowersock through Henley to make the title to the real estate free and clear of all incumbrances, and to purchase the title which Bowersock, as trustee, had in the land at the time Gilbert & Gay deeded the land to Rushmer. Certain facts were agreed to by the parties in the trial of the case below, and the court found certain other facts, and rendered judgment in favor of the plaintiff below for the amount claimed in the petition. The plaintiffs in error bring the case to this court. — 640 — It is claimed that the court below erred in admitting the evidence of J. D. Bowersock, who was called as a witness for the plaintiff and asked, “Was $700 the least sum that you would take and make a deed to this property?” It is contended that what Bowersock was willing to take was wholly immaterial; that if Bowersock had a claim, the question at issue was whether the amount paid to remove the alleged incumbrance was a fair price for the interest acquired. It seems to be conceded by counsel for the defendant in error, that the amount which the covenantee would be authorized to pay to remove the incumbrance must be reasonable, and must be the least sum for which he could procure a discharge of such incumbrance. The controlling question in this case, then, is the competency and sufficiency of Bowersock’s testimony to establish the fact that the price paid by Rushmer was the fair and reasonable value of the outstanding title or incumbrance. The witness stated, in answer to the question: “ The amount which I accepted was a compromise, and was the least that I was willing to take at the time, in consideration of this deed, whatever the amount was — $650 or $700. I should say it was just $700.” There was no other evidence as to the value of Bowersock’s interest in the property. We think the court, in its fourth conclusion of law, adopted the true rule of construction when it said: “When the premises are of such value that the covenantee can better afford to pay the amount required to discharge the incumbrance than to suffer a redemption and eviction, he is justified in doing so, and may recover the amount so paid, not exceeding the consideration; notwithstanding he recovered and retained an interest paramount to the incumbrance of greater value than the amount which he paid for the interest. It must appear, however, that the lamount was fairly paid, and that the incumbrance substantially affected the value of the property.” We are of the opinion, however, that the evidence did not •establish the fact that the consideration paid was fair and reasonable. This, we think, was essential to éntitle the plain — 641 — tiff below to recover more than nominal damages. The rule has been stated in Devlin on Deeds, § 919: “ It does not follow that the price paid was the fair and reasonable value of the incumbrance. The covenantee is not entitled to the price that he has been compelled to pay or has seen proper to pay, but only to this amount when he has fairly and reasonably paid it. It accordingly results that he has the burden of showing this fact.” It was said, in Anderson v. Knox, 20 Ala. 156, that such payment was an act done, in which the grantee and the party holding the paramount title were alone the actors; that the grantor was neither a party or privy to it; and that as to him “it was clearly res inter alias acta, and, according to the established rules of evidence, inadmissible to fix the amount with which he should be charged, but allowable only as a fact which, if connected with proof of fairness, would entitle the grantee to recover the sum paid.” In Pate v. Mitchell, 23 Ark. 590, it was said: “To recover more than nominal damages, the onus is on the grantee to show what the outstanding title was worth; the fact that he paid a certain sum for it is no evidence of its value.” In Guthrie v. Russell, 46 Iowa, 269, the defendant, who held title by foreclosure of a mortgage, conveyed to plaintiff with covenant against incumbrance. A second mortgagee, who had not been made a party to the foreclosure suit, asserted his claim and the plaintiff paid money to extinguish it. In an action on the covenant, it was held that the measure of damage was not what the plaintiff actually paid to extinguish the incumbrance, but only what he reasonably ought to have paid. As stated by counsel for plaintiffs in error, it appears from the agreed statement of facts that Gilbert & Gay recovered a judgment on the 23d day of April, 1878, for $1,175.25 and $23.25 costs. This judgment drew 12 per cent, interest. From the fifth finding of fact made by the court, it is established that Rushmer negotiated the sale to Henley, who paid — 642 — to Bowersock $700 for his claim. It would have cost the latter to redeem the land from the plaintiffs in error the sum of $1,837.37. The value of the redemption, upon the theory that Bowersock would have the right to pay off the first mortgage, would only be $462.63. We cannot say, upon this view of the case, that the amount, $700, was a reasonable price for Bowersock’s interest. It is urged by counsel for defendant in error that Griffith, who negotiated the sale of the land for Gilbert & Gay, had notice that Rushmer had to pay $700 to have his title made good, so he could effect a sale to Henley, and that he refused to do anything for himself or for the grantors in the deed to Rushmer; and it is argued from this state of facts that Gilbert & Gay’s agent knew of the amount that Rushmer was required to pay to remove the incumbrance, and that they refused to pay any such sum; that an opportunity was then given them to secure the outstanding title at a lower price than the sum asked by Bowersock, and the fact that they did not do so was evidence that they did not regard the amount charged as unreasonable. The answer to this contention is, that the burden was upon the plaintiff below to show in the first instance that what he paid was a fair and reasonable value of the incumbrance purchased. To hold the vendors upon the theory of counsel, notice should have been given to them to pay off the outstanding claim against the conveyed premises within a specified time; otherwise the purchaser would purchase same. This was not done. The evidence does not establish the fact that Griffith was the agent of the plaintiffs in error at the time Henley purchased the property. He testified that he was the agent of Gilbert & Gay to deliver the deed to Rushmer and get the money for them, and that was all the authority he had in this particular case. We think the court erred in the admission of the evidence of Bowersock, as to what he received for his interest in the property covered by the deed from Gilbert & Gay to Rushmer, for the reason that such evidence was not supplemented with other testimony that such sum was a fair and reasonable — 643 — value of his claim upon the conveyed premises, and that the findings and judgment of the court that such sum was fairly and reasonably paid are not supported by the evidence. It is recommended that the judgment of the court be reversed, and a new trial be granted. By the Court: It is so ordered. All the Justices concurring.