Urich v. McPherson , 27 Idaho 319 ( 1915 )

MORGAN, J.,

Dissenting. — I dissent from the conclusion reached by the majority of the court in this case and find myself entirely unable to follow the reasoning employed in reaching it.

Both the appellants and the respondent fully understood that the improvements which had been made for which the liens were subsequently filed had not been paid for at the time of the execution and delivery of the deed from McPherson and wife to Urich, and they all erroneously believed the time for filing such liens had expired. The record discloses nothing from which it may be inferred that any of the parties understood at the time the deed was made that any act of Beatty had created a lien or encumbrance upon the property. Upon the other hand, it clearly appears that the appellants thought they were giving and the respondent thought he was receiving a clear title. Laboring under this misunderstanding, the appellants made, executed and delivered to respondent a deed in which the following is recited: “That the parties of the first part .... do by these presents grant, bargain, sell, convey and confirm to the said party of the second part his heirs and assigns forever all the following described lots, pieces and parcels of land situated in the county of Idaho and state of Idaho, known and described as follows, to wit: . . . . And that said parties of the first part and their heirs the said premises in the quiet and peaceable possession of the said party of the second part, his heirs and assigns, shall and will forever warrant and defend.”

Sec. 3120, Rev. Codes is as follows:

“From the use of the word ‘grant’ in any conveyance by which an estate of inheritance, possessory right, or fee simple is to be passed, the following covenants, and none other, on the part of the grantor, for himself and his heirs, to the grantee, his heirs and assigns, are implied, unless restrained by express terms contained in such conveyance:

“1. That previous to the time of the execution of such conveyance the grantor has not conveyed the same estate, or any right, title or interest therein, to any person other than the grantee;

“2. That such estate is at the time of the execution of such conveyance free from encumbrance done, made or suffered by the grantor, or any person claiming under him. Such covenants may be sued upon in the same manner as if they had been expressly inserted in the conveyance. ’ ’

The case of Polak v. Mattson, 22 Ida. 727, 128 Pac. 89, is cited in support of the position “that implied covenants in a deed by the use of the word ‘grant’ do not include encumbrances done, made or suffered by the grantor unless he was under personal obligation to pay it.” I am unable to construe that decision as establishing a general rule, applicable to all cases, to the effect above stated, for said ease only decides that certain taxes which became a lien upon the property before the grantor acquired title to it were an encumbrance “done, made or suffered” by her or by any person claiming under her.

"Whatever interest in the property Beatty had at the time the indebtedness was incurred, to secure the payment of which the liens were filed, was by virtue of the deed in escrow from appellants, and whatever claim he had was a claim under them.

It is believed the Chief Justice has quoted sufficiently from the case of Young v. Stampfler, 27 Wash. 350, 67 Pac. 721, to distinguish it from this. No element of fraud enters into this ease and the appellants did what they intended to do, i. e., gave the respondents a title which they warranted to be clear of encumbrance. Their present cause for complaint arises from their misunderstanding as to the validity of the claims of lien.

The Indiana cases and the case of Watts v. Welman, 2 N. H. 458, cited in the majority opinion, are to the effect that a covenant of warranty in a deed does not extend to a known encumbrance which the grantee agreed to discharge, particularly if the amount of the encumbrance has been deducted from the purchase price or consideration for which the transfer was made, and that parol evidence may be introduced to establish such facts and to show the real consideration. Probably no authority can be found which extends the rule further than above stated, and it is a departure from well-established principle to hold that the grantor in a warranty deed may escape the consequence of his covenant of warranty because neither himself nor the grantee knew of the existence of an encumbrance or other defect in the title at the time the deed was made.

It nowhere appears in the record that the amount of the claims for which the liens were filed was discussed between the parties or deducted from the purchase price or that respondent assumed or agreed to pay them. It does, however, appear that he insisted upon a warranty deed and an abstract showing a clear title. These the appellants gave him.

It is clear that the claims for which the liens were filed were encumbrances as defined in sec. 3121, Rev. Codes, and it is equally clear that they were “done, made or suffered” by Beatty at a time when he was claiming under the appellants, who were grantors in the deed to respondent, and since there is nothing expressed in the deed in any manner modifying or restraining the covenants of warranty implied by the use of the word “grant,” it follows, as a matter of law, that the agreement of the parties was to the effect that the grantors, appellants here, would hold the grantee therein named, the respondent in this ease, harmless from sneh liens should they he filed and enforced.

I encounter equal difficulty in attempting to follow the reasoning employed by Justice Budge in his concurring opinion.

Assuming that at the time the appellants executed and delivered their deed to respondent the title was not in them, but was in Beatty (which I do not deem it necessary here to decide) , the maker of a warranty deed is, by said opinion, placed in position to contend as follows: “ I attempted to convey by warranty deed property which I had already conveyed away and the grantee, being aware of the facts, must have, as a matter of law, inferred that I had no title to convey and none to warrant. ’ ’ Such a defense is anticipated and prevented by subdivision 1 of see. 3120, supra.

The rule of law applicable to this case is clearly stated in 11 Cyc. 1066 as follows: “The fact that either or both of the parties knew at the time of the conveyance that the grantor had no title in a part or in the whole of the land does not affect the right of recovery for a breach of covenant.

“Knowledge on the part of the purchaser of the existence of an encumbrance on the land will not prevent him from recovering damages on account of it, where he protects himself by proper covenants in his deed.....Manifestly there is no breach where the grantee knowingly assumes the encumbrance.”

I believe the judgment of the trial court should be affirmed.