Cover v. . McAden , 183 N.C. 641 ( 1922 )

CLARK, C.J., dissenting. Civil action to recover damages for alleged breach of warranty title. The parties waived a trial by jury, and agreed that the court, after hearing the evidence and the argument, should answer the issues. The plaintiff introduced in evidence the following:

1. A deed from Edwin B. Olmsted and wife to Levi Stevens, dated 7 February, 1868, purporting to convey about 5,000 acres of land in Cherokee County.

2. A deed for the same land from Levi Stevens and wife to the United States of America, dated 15 March, 1869.

3. An agreement between J. H. McAden, trustee, and F. P. Cover, dated 29 October, 1902, by which McAden was to sell and Cover was to buy certain tracts in Cherokee and Clay, containing several thousand acres.

4. A deed, with several, but not joint, covenants of warranty, from H. M. McAden and others to S.E. Cover and others, dated ____ February, 1905, executed in pursuance of said agreement.

5. A deed, with the usual covenants of warranty, from S.E. Cover and others to the Hiawassee Lumber Company, conveying the land described in the deed from McAden to Cover. It was admitted that the plaintiffs are the children of F. P. Cover. It is not necessary to (643) refer particularly to the orders making additional parties, or to the special proceedings for the sale of the interest of minors.

Plaintiffs introduced, also, a judgment of the District Court of the United States for the Western District of North Carolina, rendered at March Term, 1919, in an action entitled "United States v. Hiawassee LumberCompany," adjudging that the plaintiff in that action was the owner of the land conveyed in the Olmsted and Stevens deeds. This is a part of the land conveyed by McAden and others to the Covers, and by the Covers to the Hiawassee Lumber Company.

The plaintiffs alleged that the United States was seized in fee of the land described in grant No. 3110 at the date of the deed from McAden and others to the Covers, and that the makers had no title to convey, and that after the District Court adjudged the United States to be the owner of this land, the plaintiffs paid to the Hiawassee Lumber Company the amount received as the purchase price, with interest at 6 per cent from date of receipt to date of payment, namely 22 May, 1919. The plaintiffs have sued to recover $5,922 with interest. His Honor answered the issues, finding that defendants, except the minors, covenanted to warrant and defend the title to the lands described in the complaint; that title vested in the United States by virtue of the Olmsted and Stevens deeds; that the plaintiffs and defendants had notice of the action of the United States against Hiawassee Lumber Company; that plaintiff's accounted to the Hiawassee Lumber Company for the loss caused by its breach of warranty; that the judgment of the District Court and plaintiff's settlement with Hiawassee Lumber Company constituted an ouster, and assessed certain damages. His Honor answered the seventh issue as follows:

"Is the cause of action of the plaintiffs barred by the statute of limitations, as alleged in the answer? Answer: Yes, the court being of the opinion that plaintiffs are estopped by reason of the judgment in United States Circuit Court in the case of United States v. Hiawassee LumberCompany to deny that their cause of action arose upon the execution of the deed to them by the defendants in 1905; and the court further is of the opinion, and so holds, that under the judgment above mentioned the title to the lands in controversy, insofar as plaintiffs and defendants are concerned, was in the United States, and the plaintiffs and defendants having neither of them been in the actual possession of any part of said property that the plaintiff's cause of action arose immediately upon the execution and delivery of the said deed to them by the defendants."

Judgment; all parties appealed. The United States acquired its title on 15 March, 1869. In February, 1905, McAden and his cotenants executed (644) their deed to the Covers, and on 17 May, 1906, the Covers made a conveyance to the Hiawassee Lumber Company, reserving certain timber and minerals, with right of entry for purposes designated in the deed. On 19 August, 1910, the United States brought suit against the Hiawassee Lumber Company in the District Court for the Western District of North Carolina, and at the March Term, 1919, recovered a final judgment declaring the plaintiff in that action to be the owner of the land in controversy. In answer to the fourth issue his Honor concluded that the District Court had adjudged the United States to be the owner of 2,632 acres of the land embraced in the deed executed to the Covers by McAden and his cotenants. This land was included, also, in the deed from the Covers to the Hiawassee Lumber Company. After rendition of the final judgment in the District Court, the plaintiffs refunded to the Hiawassee Lumber Company the consideration received by them and their predecessors, with interest from the date of payment, and on 16 December, 1919, instituted the present action to recover of the defendants the sum of $5,922, the amount refunded, with interest thereon from 1 March, 1905, as damages for the defendants' alleged breach of warranty. Among other defenses, the defendants pleaded the statute of limitations in bar of the plaintiffs' recovery; and this plea necessarily involves the preliminary question whether the plaintiffs' alleged cause of action is defeated by lapse of time.

In view of the plaintiffs' contention, it may be advisable to note the distinction between a covenant of seizin and a covenant of warranty. The former is a covenant in praesenti, or a covenant that a particular state of things exists when the deed is delivered — juris et seisinaeconjunctio — and if it does not exist the delivery of the deed containing such a covenant causes an instant breach. A covenant of warranty is prospective. It is an agreement or assurance by the grantor of an estate that the grantee and his heirs and assigns shall enjoy it without interruption by virtue of a paramount title, or that they shall not by force of a paramount title be evicted from the land or deprived of its possession. Rawle on Covenants, sec. 205; Burdick on Real Prop., sec. 301;Wiggins v. Pender, 132 N.C. 634. This distinction is further observable in the conditions or circumstances that usually characterize the breach of each covenant. If the grantor is not seized, or if an encumbrance exists, the covenant of seizin is broken immediately upon the execution of the deed; but generally speaking, a covenant of warranty, being prospective in its nature, is broken only by eviction, actual or constructive, under a paramount title existing at the time the conveyance is made. Burdick, supra, 814; Wiggins v. Pender, supra; Price v. Deal, 90 N.C. 290; Coble v. Wellborn, 13 N.C. 388; Britton v. Ruffin, (645) 123 N.C. 67; Griffin v. Thomas, 128 N.C. 310; Cedar Works v. Lumber Co., 161 N.C. 614.

We must, therefore, inquire whether at the time the plaintiffs and the defendants executed their respective deeds there was a paramount title in the United States, and if so, whether the Hiawassee Lumber Company, after vouching in the plaintiffs, was actually or constructively evicted from any part of the purchased premises by virtue of such title. Although there is no contention that the judgment of the District Court does not conclude the Hiawassee Lumber Company, it is necessary to decide whether it likewise concludes the plaintiffs. The answer depends in part on the question of notice and the relation existing between the plaintiffs and the Hiawassee Lumber Company at the time the judgment was rendered. At common law the lord, when vouched in or notified, was required to appear and protect his vassal in the enjoyment of his fief, and, failing to do so, to give to the vassal another fief of equal value. If the warrantor had no lands or tenements, and if there was neither voucher nor writ of warrantia chartae (warranty of deed or title), there could be no recovery in value; but in the modern law a covenant of warranty is treated as an agreement of the warrantor to make good by compensation in money any loss directly caused by failure of the title which his deed purports to convey. It is not always essential to the grantee's right of action on the covenant that he should give his covenantor notice to come in and defend the title. But if no notice is given, the covenantee, in his suit against the covenantor for breach of warranty, does not make out a prima facie case by showing judgment and eviction; he must show, in addition, that he was evicted under a paramount title, unless the covenantor was a party to the suit that brought about the eviction. 15 C. J. 1265, sec. 97. In Jones v.Balsley, 154 N.C. 68, Walker, J., approved the doctrine stated in Carroll v. Nodine, 41 Oregon 412, to this effect. "Before an indemnitor can be expected to defend, he must have reasonable notice of the pendency of the suit or action by which he is to be bound, and afforded an opportunity to participate in or interpose such defense as he may desire; and it is only by complying with such conditions that the party to be indemnified can estop the indemnitor to controvert the matter anew in an action against him upon the indemnity contract or obligation." True, inMartin v. Cowles, 19 N.C. 101, approved in Wilder v. Ireland, 53 N.C. 85, it was held that a judgment in ejectment against the vendee is no evidence of a defect in the title of the vendor, when the latter is sued upon his covenant by the former; but Justice Walker observed that these cases were decided under the system of pleading, practice, and procedure prevailing at common law, when the ejectment suit was regarded with respect to the covenantor as res inter alios acta, and he could not for that reason become a party to it. The learned justice remarks, also, that the great weight of authority in England (646) and in this country is to the effect that it is sufficient to conclude the vendor by the judgment if he is made constructively a party by substantial notice to come in and defend his title, and that it is not necessary that he be actually a party to the suit. Jones v. Balsley,supra, 69. Answering the third issue, his Honor found as a fact that both the plaintiffs and the defendants had been given due notice of the action prosecuted by the United States against the Hiawassee Lumber Company and an opportunity to defend the title, and that they were bound by the judgment in that action. We hold, therefore, that the plaintiffs have shown, for the present purpose, an outstanding paramount title to the lands recovered against the Hiawassee Lumber Company in the District Court.

We are next concerned with the question whether the plaintiffs have shown an eviction under this title. In Shankle v. Ingram, 133 N.C. 255, the plaintiff alleged that the defendant had conveyed to him 245 acres of land, with covenants of warranty; that the defendant had previously conveyed 41.8 acres of this land to Jesse Reynolds; that Reynolds was in possession of his tract, holding adversely at the time the plaintiff acquired his deed. Upon plaintiff's suit for breach of warranty, it was said that since Reynolds held adverse possession under a good title at the time the plaintiff received his deed, such adverse possession was equivalent to an ouster. If the plaintiff had entered upon the possession of Reynolds he would have committed a trespass; and in Coble v. Wellborn, supra, Ruffin,J., said: "No man is compelled to be a trespasser, and, therefore, when it has been judicially ascertained that another is in better title, it follows that he is kept out; which is equal to being turned out." Grist v. Hodges, 14 N.C. 200; Wiggins v. Pender,supra. The immediate question, then, is this: At the date of the deed executed by the plaintiffs to the Hiawassee Lumber Company, were the circumstances under which the United States held title tantamount to a constructive eviction of the plaintiffs' grantee? In effect, the final judgment of the District Court was an adjudication that the United States acquired its title under the Stevens deed before the execution of the McAden deed or plaintiffs' conveyance to the Hiawassee Lumber Company. It is admitted that none of the grantors or grantees in the deed from the McAdens to the Covers ever had actual possession of the land therein described, and that the Hiawassee Lumber Company never had actual possession of the land embraced in its deed from the Covers. Nor was the United States in the actual occupation. Ordinarily the mere existence of an outstanding paramount title to land will not authorize a recovery by the grantee in an action for breach of the covenant. There must be an eviction, actual or constructive, but not necessarily under legal process. 15 C. J. 1288, sec. 157(b); Coble (647) v. Wellborn, supra; Price v. Deal, supra; Hodges v. Latham, 98 N.C. 240; Britton v. Ruffin, supra; Ravenal v. Ingram,131 N.C. 549. In other words, to warrant recovery there must be some hostile assertion of the adverse title, unless the superior title is in the State. 15 C. J. 1288, sec. 157. But the authorities hold that where the paramount title is in the State or the United States it is not essential to a constructive eviction that such title be formally asserted. "A grantee by a warranty deed executed by a private person to lands owned by the United States cannot take possession without becoming a wrongdoer, and is not required to take or attempt to take possession, and his right of action accrues immediately to recover for a breach of warranty not dependent on eviction or any future event." 7 R. C. L. 1151, sec. 63. In Crawford County Bank v. Baker (Ark), 130 S.W. 557, McCulloch,J., said: "It is well settled in this State and elsewhere that when the title to land is in the State or the United States, that of itself is such a hostile assertion of the paramount title as will amount to a constructive eviction, sufficient to authorize a purchaser to maintain an action against his vendor for breach of the covenants of warranty." Seldonv. Dudley Jones Co., 85 S.W. 778; Dillahunty v. Ry., 59 Ark. 629; Rawle on Covenants, sec. 140; 2 Tiffany on Real Property, 1701(n); Compiled Sts., sec. 4980. In Pevey v. Jones, 71 Miss. 647, Campbell,C. J., discussing the question, said: "As to the land belonging to the United States, the covenant of warranty was broken the instant it was made, and a right of action on it then accrued, and was barred when this action was commenced. The true doctrine is that the United States are always seized of their lands, and cannot be disseized as private owners may be; that land belonging to the United States cannot lawfully be the subject of sale and conveyance by individuals, so as to confer any right; that a grantee of such land by another than the United States cannot take possession without becoming a wrongdoer, and liable to summary ejection; and, therefore, that a covenant of warranty, in a conveyance of land belonging to the United States, must be viewed differently from one where the ownership is by a private person; that the grantee is not required to take possession, or to attempt to get it, and that a right of action immediately accrues to recover for a breach of the warranty, not dependent on any future event, but fixed by the fact of ownership of the land by the Government. In this case the grantee acquired nothing whatever as to the land owned by the United States; and, by virtue of the transaction, his vendor, on receipt of the purchase money, thereby at once became liable to him for money received to his use. We are not aware of any direct authority for this view, but it seems to result necessarily from what is well settled, and we do not hesitate to make a precedent so fully supported by reason."

Applying these principles, we conclude that neither the plaintiffs nor the defendants had title to the land when their respective (648) deeds were executed, that the paramount title of the United States constituted such hostile assertion as amounted to a constructive eviction, and that the plaintiffs' alleged cause of action accrued at the time of the ouster. Since the summons was issued on 16 December, 1919, it follows that the plaintiffs' action is barred by the statute of limitations. C. S. 437(2).

In view of the decision rendered at this term in Fibre Co. v. Cozad,ante, 600, we deem it proper to remark that we are not inadvertent to the probate of the Olmsted and Stevens deeds. While the probate of these deeds may be subject to the criticism set forth in that decision, we need not consider the question here, for his Honor concluded from the evidence that the plaintiffs and the defendants were bound by the judgment of the District Court. From this finding it results that the parties to this action are precluded from contesting the validity of the probate.

The judgment of his Honor is

Affirmed.