Mette v. Dow

Cooper, J., delivered the opinion of the court. In this agreed case the Circuit Court rendered judgment in favor of Dow against Mette, and the latter appealed. — 94 — On November 17, 1859, Anthony Street conveyed a lot in Memphis to M. J. Wicks in trust to secure two promissory notes described. On May 22, 1862, M. J. Wicks reconveyed the lot by quit-claim deed to Street, although the secured notes had npt been paid. On May 28, 1862, Street sold and conveyed the lot to H. H. Potter and H. H. Mette, for the consideration of $11,000 paid, with covenants of seizin, against encumbrance, and of general warranty. On November 25, 1865, Mette, in consideration of $4,500, sold and conveyed his undivided half interest in the land to Potter by deed with like covenants. On October 6, 1868, Harlow Dow filed a bill in chancery against H. H. Potter to recover a debt evidenced by note for $1169.25, and attached the lot upon the gi’ou'nd that Potter had fraudulently disposed, or was about fraudulently to dispose of his property. On March 2, 1869, Potter conveyed the lots to J. M. Portis in trust to secure an alleged debt of $6000 due to Portis. On July 30, 1870, Dow filed an amended bill against Potter and Portis, attacking the trust conveyance from Potter to Portis as fraudulent. On May 15, 1871, the original bill of Dow was dismissed, and the attachment sued out thereon quashed, upon the plea in abatement of Potter, the decree providing that the dismissal should not affect the amended bill, which was retained for further proceedings. On the 23d of August, 1871, Potter was adjudged' a baukrupt, the lot being included in the schedule of his effects, and, on April 3, 1872, obtained his discharge in bankruptcy. On October 4, 1871, Dow suggested in his chancery — 95 — suit the proceedings ia bankruptcy, and amended his bill so as to make the assignee, John Wassell, a party defendant. In February, 1873, Portis and wife re-conveyed the property to Potter. On June 21, 1874, Wassell, as assignee, appeared in Dow’s suit, and answered his bill, consenting that the suit might proceed to judgment upon condition that he be held free from costs, and that any surplus arising from the sale of the lot over Now’s debt be paid to him. He had previously, on April 2, 1872, sold the lot at a regular bankrupt sale to Potter for $1.50, and mada him a deed. On the 14th of January, 1875, a decree was rendered in the case of Dow against Potter and Por-tis, setting aside the deed to Portis as fraudulent, fixing the amount of Dow’s debt against Potter at ■$1596.08, declaring it a lien on the lot, and ordering the land to be sold in. satisfaction thereof unless paid in a given time. On May 7, 1875, an agreement was entered into between Dow and Potter, by which Potter agreed to acquiesce in the decree, and Dow agreed to pay $3008.08 for the lot, and, on the same day, Potter conveyed the lot to Dow for that consideration. On the next day, the lot was sold under the decree and Dow became the purchaser at $1610. The master reported the sale, and added that Dow’s decree being for more than his bid after deducting costs and back taxes, Dow proposed to pay the- costs and taxis and ■credit his decree with the residue. The report was confirmed, and title divested out of Potter and Wassell, his assigne, and vested in Dow. The residue of the purchase price' as agreed upon by the parties, after de — 96 — ducting the costs, taxes and the recovery, was paid by Dow to Potter. No question arises upon the probate or registration of any of the foregoing instruments. Dow went into. possession of the lot at once under his purchase, and continued to hold until evicted as hereinafter mentioned. On January 31, 1871, one Selby, as the holder of the notes secured by the deed of trust of Street to Wicks of the 17th of November, 1859, filed his bill to subject the lot to the satisfaction of his debt, and such proceedings were had in the cause that a decree was rendered in his favor for the amount due, the land sold in satisfaction thereof, and Dow evicted from the lot on July 10, 1877. The lot was worth at that time $3000. Potter and Mette had joint possession of the lot after their purchase from Street until Mette sold to Potter; then Potter continued in the sole possession until he sold to Dow; and Dow, as we have seen, was thenceforward in possession until evicted under the Selby decree. No rents were claimed by, or allowed to Selby. Upon these facts, the trial court rendered a judgment in favor of Dow against Mary E. Mette, as the executrix and sole devisee of H. H. Mette, who had died, for $4500, the consideration for his moiety of the lot in the sale to Potter, with interest from July 10, 1877, the date of eviction. The defendant appealed. ' It has been settled in this State, in accord with the current of authority, that the measure of damages for the breach of the covenant of general warranty of — 97 — title in a conveyance of land, where there has been no fraud on the part of the seller, is the original consideration, when it can be ascertained, or the value of the land at the date of the sale, with interest: May v. Wright, 1 Tenn., 385; Talbot v. Bedford, Cooke, 447; Elliott v, Thompson, 4 Hum., 99; Shaw v. Wilkins, 8 Hum., 647. And, as the covenant runs with the land, any subsequent vendee who is evicted', may . sue for the breach: Hopkins v. Lane, 9 Yer., 79; Kenney v. Norton, 10 Heis., 384. But where the cases speak of the measure of damages being the consideration money or the value of the land, they mean, says Mr. Rawle, that this is the extent to which damages can be recovered upon the covenant under any circumstances: Rawle on Cov., p., 331, 3d ed. Within this limit, there are rules which diminish the recovery to a lower sum. Interest, for example, is allowed to counter-balance the mesne profits which the owner of the paramount title may recover. If, therefore, the statute of limitations prevent a recovery of mesne profits for more than a certain number of years, interest will not be allowed for any longer time: Caulkins v. Harris, 9 Johns., 324; Cox v. Henry, 32 Penn. St., 19. So, if. the recovery of mesne profits is limited by the' date of the accrual of the paramount title, as where it is held under a patent from the State: Kyle v. Fauntleroy, 9 B. Men., 620. So, where the eviction is pro tanto by the payment of a judgment which is an incumbrance : Kenney v. Norton, 10 Heis., 388; Austin v. McKinney, 5 Lea, 488. So, where there is no recovery of mesne profits for a eer98 tain period by reason of a life estate in tlie vendor: Crittenden v. Posey, 1 Head, 312. So, as in the case before us, upon the same principle, .where by reason of the character of the paramount title, the mesne profits are not needed, or not allowed to the claimant. The trial judge did not err, therefore, in refusing to allow interest on the recovery except from the date of the plaintiff's eviction. The consideration of Mette’s sale to Potter for his moiety of the land was $4500. The consideration of Potter’s sale of the whole lot to Dow was only $3008.08 at the utmost. And the first question which arises on this state of facts is, whether Dow is entitled to recover from Mette’s estate the whole of the original consideration of the conveyance from Mette to Potter, or only the one-half of the consideration paid by Dow to Potter for the entire lot? If the trial judge was correct in giving the former sum, it is clear that Dow will be largely more than re-imbursed for his own outlay for the property, and will recover more than he would be entitled to in a direct action against his immediate vendor upon the covenant of warranty in his deed. The result is somewhat startling, and should be sustained, both by reason and authority, to commend itself to our sense of justice.- The argument submitted in its favor is that the covenant sued on admits of the measure of damages ■claimed, if sued upon by the original grantee, and that the plaintiff, as assignee of the covenant, must necessarily be entitled to the same recovery. The measure of damages, as between the original parties, is un — 99 — •doubtedly the consideration, with interest. But, as we have seen, this is the full extent to which damages can be recovered under any circumstances. Tt' does not follow that the full measure of damages shall be recovered in every case. On the contrary, as we have also seen, the damages may be cut down so far as the interest is concerned, whenever, upon the principle that interest is in lieu of mesne profits, the plaintiff has not been compelled to account for mesne profits. Strietly, the plaintiff is entitled, as held by the supreme court of Massachusetts, to recover the whole amount, subject to a deduction of the mesne profits received by him for which he was not held to account to the paramount owner: Whiting v. Dewey, 15 Pick., 428. Inasmuch, however, as the law, by a presumption which is not allowed to be disputed, treats the profits as equivalent to the interest, the limitation of the recovery of interest to the period for which the meme profits are rendered, reaches precisely the same result: Rawle on Cov., 93, 3d ed.; Guthrie v. Pagsley, 12 Johns., 126; Spring v. Chase, 22 Maine, 502; Patterson v. Stewart, 6 W. & S., 528; Rich v. Johnson, 1 Chand., 20. If, now, the measure of damages may be cut down by a deduction of the interest when necessary to attain the ends of justice, no reason occurs why a deduction of the principal may not also be made in. a proper case. The covenant is a peculiar one, and not like an ordinary covenant for so much money. It is rather in the nature of a bond with a fixed sum as a penalty, the recovery on which vill be satisfied by — 100 — the payment of the actual damages. Each vendor, subject to this rule, may be treated as the principal obligor to his immediate vendee, and as the surety of any subsequent vendee to hold him harmless by reason of the failure of title, and the ultimate vendee, when evicted, is entitled to be subrogated to -the rights of his immediate vendor against a remote vendor to the extent necessai’y to indemnify him. Such a vendee, to use the language of the supreme court of North Carolina, sues a remote vendor on the covenant to re- . dress his, the plaintiff’s, own injuries, not the injuries, of the immediate vendee of such remote vendor. Accordingly, that court held, in a case like the one before us, that the measure of damages was the consideration paid by the plaintiff to his immediate vendor with interest, and not the consideration paid by such vendor to the defendant. In other words, the-damages recovered were limited to the actual injury-sustained: Williams v. Beeman, 4 Dev., 483. The industry of counsel has found .some dicta in cases not involving the question, but no direct authority in conflict with this decision.- The case _ of Lawrence v. Robertson, 10 Rich., turns upon the wording of a statute. In Hopkins v. Lane, 9 Yer., 79, the facts, as given by the Reporter, show a sale and conveyance of land by Hopkins to Cox for $2328, and a sale and conveyance of the land od the same day to the plaintiff Lane for $1700. The recovery is stated to have been for the former sum with interest. It does not appear why there was such a difference in the consideration of the two conveyances executed — 101 — on tbe same day, and it is certain tbat no argument was submitted, nor ruling made by the court on the point thereby raised, and now under consideration. On the other hand, in the recent case of Aiken v. Suttle, 4 Lea, 103, 133, the principle settled tends to sustain the North Carolina decision. There, a married woman had filed a bill to recover land which had been sold under a power of attorney executed by. her in connection with her husband, and subsequently resold several times. The sale was held to be void as to the mar- • ried woman, and her right to the land declared, to be enjoyed in possession at the death of her husband. But it was also held that she should account to the then holder of the land for the purchase money received and appropriated by her, with interest, to the extent necessary to re-imburse such holder the purchase money paid by him to his immediate vendor, with interest from the death of the husband. Thisj it was said, is, in legal contemplation, indemnity for the' loss of the land, since it is all he, the holder, could recover from his vendor if he had a warranty of title. “This limitation,” it was added, “may seem to operate somewhat arbitrarily, and it may sometimes permit the reclaimant to retain some of the consideration received for the land reclaimed, but, upon the whole, it appears to be equitable, and it is based upon an obvious analogy.” The analogy referred to was, in the view of the learned special judge who delivered the opinion of the court, precisely that of a recovery upon a warranty of title to land, citing Elliott v. Thompson, 4 Hum., 99, but without having in his mind the state — 102 — of facts now before us. It is only the principle announced, therefore, and not the dictum in the illustration which can aid us in the present case. The principle is in point. The great difficulty in regulating the damages on the covenant of warranty of title, was in finding some measure which would indemnify the purchaser without bearing too heavily on the vendor. In this country, where lands,, as a rule, were enhancing in value and being rapidly improved, it was found, that to give the value of the-land at the time of eviction, the only mode of securing full indemnity, would be ruinous to the vendor, and often make him liable for an amount which the parties could not have contemplated at the time of the contract. The measure of damages adopted, it. was. thought, would more nearly meet the difficulties of the-subject than any other. Indemnity was, however, all that any vendee could reasonably ask, and if ' this could be obtained by a recovery within the limit of' the measure adopted, it is clear that the ends of jus--tice would be met. The recovery in this case, should, therefore, be cut down to the one-half of the purchase-money paid by the plaintiff for the lot, with interest. The learned counsel of the appellee insists that the recovery should be cut down still further, his argu-. ment being based upon the title acquired by the ap-pellee, according to his view of the- facts, and the-effect of the proceedings in bankruptcy. But the lien of the appellee was prior and superior to that of the-assignee in bankruptcy. For, although his original bill was discussed, the so-called amended bill, which. — 103 — was in reality a supplemental bill based upon the new fact of the fraudulent conveyance by Potter to Portis, was retained, and the lien thereby acquired also antedated the proceedings in bankruptcy. No attachment was necessary: Code, sec. 4288; August v. Seeskind, 6 Cold., 166, 172. Besides, the conveyance to Portis was good as between the parties, and the title thus acquired has never been sought to be set aside by the assignee. .His re-conveyance to Potter after his discharge in bankruptcy, again clothed the latter with the original title, and his conveyance to Dow would carry the covenant of warranty. The agreed facts do not show that the profit on city script in which the taxes were paid, diminished the consideration actually paid for the land by Dow. And the fact that the . U. S. currency, in which Potter paid Mette the price of his moiety of the land, was worth at the time only fifty cents in gold, if it ever could have cut any figure in the case, has ceased to be of importance by reason of the conclusion reached as to the measures of recovery. The judgment below will be reversed, and a judgment rendered hei;e in accordance with this opinion.