Wiggins v. Pender. , 61 L.R.A. 772 ( 1903 )

This action was brought to recover damages for the breach of a covenant of warranty and was heard in the court below upon the following statement of facts agreed upon by the parties: (629)

On 18 December, 1876, John Armstrong, the intestate of the defendant Pender, executed to Preston Justice and D. R. H. Justice a deed for a certain tract of land lying in said State and county, for the recited consideration of $850; that the said deed contained the following covenant, to wit: "And the said John Armstrong and wife, Margaret, covenant that they are seized of said premises in fee and have the right to convey the same in fee simple; that the same are free from all encumbrances, and that they will warrant and defend the said title to the same against the claims of all persons whomsoever." On the same day the said Preston and D. R. H. Justice reconveyed the said premises to the said John Armstrong, by deed of mortgage to secure the purchase price, in fee with all rights, privileges, and appurtenances thereto belonging, with usual power of sale in the event of default; that in the said deed of mortgage to the said Armstrong the said Justice warranted the title to the said land in fee simple for themselves, their heirs and assigns, to the said Armstrong, his heirs and assigns.

The said land was thereafter sold under said mortgage in a foreclosure proceeding under order of the court, and the same was conveyed in fee simple by the commissioner of the court to the ancestor of the plaintiff, "with all privileges and appurtenances thereto belonging, to him, his heirs and assigns," without covenants of warranty; and thereafter said land was allotted and set apart to the plaintiff in the division of his father's estate.

At April Term, 1901, of the Superior Court, A. L. Parrish and wife, Maggie, brought their action against the above-named plaintiff to recover from him the possession of said land and the rents and profits thereof; that the said Maggie claimed said land by virtue of a deed by John Armstrong and wife prior in date to his deed to the said Justices, and in said action it was adjudged that the said Maggie Parrish was entitled to recover the possession of the (630) land and the rents and profits thereof, for that the said Armstrong had only a life estate in the land at the date of his deed to the Justices; that the plaintiff was evicted and ousted from said land, under and by virtue of said judgment, and has since brought this suit and paid to the said Maggie the sum of $250.44 as rents and profits of the land, and paid the further sum of $18 costs of said action that $100 was a reasonable attorney's fee for defending said action against the plaintiff.

John Armstrong died in July, 1885, and on 10 July, 1885, Margaret Armstrong duly qualified as his administratrix, and the said Margaret died in 1892, and thereafter, to wit, on 6 May, 1901, James Pender duly qualified as administrator de bonis non of said John Armstrong. The plaintiff brought his action on 6 May, 1901. Maggie Parrish died in the spring of 1902 leaving a will and one child, and on 27 October, 1902, A. L. Parrish qualified as executor of the will and as guardian of the child.

It is agreed that the amount of damage which the court shall consider in the plaintiff's recovery, if the court be of the opinion that he is entitled on these facts to recover the same, is $850, the purchase price of the land, and the sum of $218.99, being the rent, profits, and costs up to 15 April, 1901, when judgment was recovered against the plaintiff as above stated, and he was ousted, and the interest on $1,068.99 from said date, and the further sum of $50 paid as rent since said judgment, with interest thereon from 5 December, 1901, and the further sum of $100 reasonable attorney's fees paid by the plaintiff in defending the title to the land in said suit.

Judgment was rendered for the plaintiff against the defendant James Pender, as administrator alone, for the sum of $1,166.99, with (631) interest on $1,068.99 from 15 April, 1901, and costs, from which judgment the defendant appealed.

The following are the contentions of the defendant, as appears from the case agreed:

1. That the plaintiff was not the assignee of the covenants contained in the deed from John Armstrong to Preston and D. R. H. Justice, and cannot maintain this action for the breach of same.

2. That the covenants contained in said deed were extinguished by the reconveyance of said land to John Armstrong by the said Preston and D. R. H. Justice, and no right of action accrued thereon to the plaintiff.

3. That any cause of action arising upon the covenants in said deed is barred by the statute of limitations pleaded in the answer.

4. That it does not appear from the "agreed statement of facts" that A. L. Parrish and wife recovered said land of the plaintiffs by reason of a paramount title.

5. That neither the costs nor attorney's fees incurred by the plaintiff in the suit of A. L. Parrish and wife should be included in the damages, for that no notice was given the defendant to defend said action.

6. That on the facts agreed the plaintiff is not entitled to recover.

The plaintiff also contended in his brief that it does not appear from the agreed facts that any real assets descended to the heirs of Armstrong.

From a judgment for the plaintiff, the defendants appealed. The argument in this case was confined to the first contention of the defendant, namely, that the plaintiff is not the assignee of the covenant contained in the deed from Armstrong to the Justices, as the covenant does not contain the word "assigns," (632) and he cannot, therefore, maintain this action for a breach of the same. This important question was discussed with much learning and ability, but the other exceptions were not argued by counsel, though they were not abandoned, and it is therefore our duty to consider and decide them in connection with the exception just mentioned.

It is a mistake to suppose that the modern covenant for title is to be construed by the same rigid rule as the ancient warranty. The latter never existed in this State, and in England, by Statute of 3 and 4 William IV, the effect of warranty in tolling a right of entry was taken away, and writs of warrantia chartae — when the warrantee was impleaded in an assize, and a voucher or vouchee to warranty in a real action, by the help of which the party wishing to obtain the protection of the warranty might have defended himself or received lands of equal value in place of those he had lost — were abolished, so that the warranty of real estate, which had long been disused, has no practical operation, and indeed we are told by Blackstone that the covenant in modern practice entirely superseded it. 2 Sharswood's Blackstone, 303, and notes.

The defendant's counsel relied on Smith v. Ingram, 130 N.C. 100; but it will be seen by reference to Coke that in the passage quoted in that case, viz., "if a man doth warrant land to another without this word ``heirs' his heirs shall not vouch; and regularly if he warrant land to a man and his heirs without naming assigns, his assignee shall not vouch," he referred to the ancient warranty, for in the very next passage he says, "but note, there is a diversity between a warranty that is a covenant real, which bindeth the party to yield land or tenements in recompense, and the covenant annexed to the land which is to yield but damages, for that a covenant is in many cases extended further than the warranty." Coke, 384b. He further (633) says that even though the assignee is a stranger to the covenant, that is, not a privy in contract, he can nevertheless have an action on the covenant for a breach, because the covenant runs with the land. "In this case the assigns shall have an action of covenant, albeit they were not named, for that the remedy by covenant doth run with the land, to give damages to the party grieved, and is in a manner appurtenant to the land. See, in Spencer's case, before remembered, divers other diversities between warranties and covenants which yield but damages." Coke, 385a. And so it was resolved inSpencer's case that if a man makes a feoffment by words sufficient to imply a warranty, the assign of the feoffee shall not vouch; but if a man make a lease for years by words which imply a covenant, if the assignee of the lessee be evicted, he shall have a writ of covenant; for the lessee and his assignee hath the yearly profits of the land which shall grow by his labor and industry, for an annual rent, and, therefore, it is reasonable when he hath applied his labor, and employed his cost upon the land and be evicted (whereby he loses all), that he shall take such benefit of the demise and grant as the first lessee might, and the lessor hath no other prejudice than what his especial contract with the first lessee has bound him to. The principle does not depend upon tenure, but upon privity of estate. The question involved is whether the parties have sufficient mutual relation to the land which the covenant concerns, or, as it is commonly expressed in the cases, whether there is a privity of estate, which is considered necessary when there is no privity of contract. It will be seen that the necessary relation is something different from the ancient privity of estate, and that in many cases the expression is used in a modern sense. . . . The original and ancient warranty was a real covenant (634) the re medy on which was by voucher or writ of warrantia charta e, and which bound the covenantor to replace the lands, in case of the eviction of the grantee, by others of equal value. The modern covenants of title, which are often spoken of as personal covenants because the action on them is a personal action, have taken the place of this. All of these are for the benefit of the land, and as loss suffered by breach of any usually, if not always, falls on the owner of the land, who suffers loss by a breach of any of them, could have this action against the covenantor. . . . But, however it may be with covenants of seizin and against encumbrances (which are necessarily broken, if at all, when made), a covenant of warranty, that is, the covenant to warrant and defend, is always regarded as a prospective covenant, the benefit of which will run with the land to any successive grantee, and of which there will be no breach until eviction. . . . This covenant of warranty binds the original grantor and his personal representatives to the owner of the land, and any owner during whose possession a breach occurs can sue any or all previous covenantors, even though the deed under which he himself claims has no covenants of warranty. . . . In order that an assign shall be so far identified in law with the original covenantee, he must have the same estate, that is, the same status or inheritance, and thus the same persona quoad the contract. The privity of estate which is thus required is privity of estate with the original covenantee, not with the original covenantor; and this is the only privity of which there is anything said in the ancient books. In this case, privity of estate is considered as something entirely different from tenure. Clearly, the presence of tenure is not necessary to enable covenants, either as to their benefits or their burdens, to run with the land. Spencer's case, 1 Smith L.C. (9 Ed.), 174, and notes.

It is said by Mr. Rawle in his excellent work on Covenants, (635) that "In the earliest days of the law of which we have accurate knowledge, warranty, which like homage was a natural incident of tenure, passed with the transfer of the estate and inured to the benefit of the owner for the time being. When, later, deeds were introduced and the warranty was either express or was implied from the word of grant, dedi, neither the heir nor the assign of the grantee could take advantage of the warranty unless expressly named. But while this was so as to warranty, it was not so as to certain covenants — and chiefly among those were the covenants for title — the benefits of which passed with the land to the heir or the assign, though not expressly named. Just why or how this was so is nowhere started in the old books with such precision as would preclude argument. In more modern times, amidst much differences of opinion, the doctrine has been variously supposed to depend upon privity of tenure, or privity of estate, upon the nature of the estate, upon the nature of the covenant and upon the relation of the covenant to the estate; and the difficulty of the questions themselves is not less great than the practical importance of their results. But whatever may have been the grounds on which the doctrine was originally based, it has been from the earliest time consistently held, both with regard to the ancient warranty and the modern covenants for title, that they run with the land to its owner for the time being — that is to say, the owner of the land is considered entitled to the benefit of all the warranties and covenants which the prior owners in the chain of title may have given." Rawle on Covenants (5 Ed.), p. 292, secs. 203, 204. He further says, quoting from Coke the passage above mentioned: "As respects the rights of theassignee, a distinction always existed between warranty and the covenants for title. Thus the warranty implied by the word dedi could not (636) be taken advantage of by the assignee of him who had received it, but, ``if a man made a lease for years by the word concessi, or demisi (which implies a covenant), if the assignee of the lessee be evicted, he shall have a writ of covenant.' So, with respect to the warranty and the covenant when expressed in words. ``Regularly,' says Coke, ``if a man warrant land to another and his heirs, without naming assigns, his assignee shall not vouch'; but with respect to a covenant, the rule is different, and the assignee could take advantage of it, though not named." Rawle, supra, sec. 318.

We have the authority of Chancellor Kent for saying that the remedy by the ancient warranty never had any practical existence in this country, and the personal covenants have superseded the old warranty, the remedy upon them being by action of covenant against the grantor or his representatives to recover compensation in damages for the land lost by the eviction for failure of title. Upon eviction of the freeholder, no action of covenant lay at common law upon the warranty. The party has only a writ of warrantiachartae upon his warranty to recover a recompense in value to the extent of the value of his freehold. The covenant of warranty and the covenant of quiet enjoyment are not strictly personal, like the covenant of seizin, which is broken when the deed is delivered if the title is defective, but they are prospective in their operation, and an ouster or eviction is necessary to constitute a breach. These covenants are, therefore, in the nature of real covenants and run with the land conveyed, and descend to the heirs and vest in assignees or purchasers. 4 Kent (13 Ed.), p. 471 (538) etseq.

It is said in Minor's Institutes: "Covenants which run with the land are those which affect the nature, quality, or value of the thing granted, where there is a privity of estate between the contracting parties, as a covenant to be answerable for the title. Covenants of this description pass with the land and are binding on, and in favor of, the assignee, although assigns be not expressly named. The (637) most important by far of covenants which run with the land are those which relate to the title." 2 Minor Inst., p. 718. "Covenants for title are termed real covenants and pass to the assignees of the land by the common law, who may maintain actions on them against the vendor and his real and personal representatives; and as to covenants relating to the land, it seems that an assignee may maintain an action on the covenants, although the covenants were entered into with the original grantee and his heirs only." 2. Sugden on Vendors (9 Ed.) p. 89. "A covenant which has for its object something annexed to or inherent in or connected with real property, such as a covenant for quiet enjoyment, for repairs, for payment of rent, runs with the thing demised, and the assignee, though not named therein, is bound thereby and entitled to the advantages of it." 1 Leigh Nisi Prius, p. 620; Sacheverelle v. Froggath, 3 Saunders, 371; Bally v. Wells,Wilson, 25; Tatem v. Chaplin 2 H. Blk., 133; 3 Washburn on R.P., pp. 497-504. Certain covenants are appurtenant to the estate granted by the deed in which such covenants are contained and bind the assignees of the covenantor, and vest in the assignees of the covenantee in the same manner as if they had personally made them. In England, all covenants for title are considered as appurtenant to the land, and to run with it. But in this country, the covenants for title, considered as running with the land, are those for quiet enjoyment, for further assurance, and of warranty. 2 Devlin on Deeds, sec. 940; Myggatt v.Coe, 142 N.Y. 86. In Bradford v. Long, 7 Bidd., 225, the Court says: "In this country, the covenant of warranty is considered as only binding the party to give damages as a compensation for the loss of the land warranted; and such a covenant is in this respect more extensive than the ancient warranty, for the assign, though not named in the covenant, may have a remedy for breach of it," citing Coke, secs. 386b and 385a, supra. "The covenant of general warranty is one that runs with the estate in reference to which it is made, (638) and may be availed of by any one to whom the same may come by conveyance sufficient to transfer the title to the land." Chandler v.Brown, 59 N. H., 370. "It is of the nature of this covenant to partake of the estate in the land and to pass with it by descent or purchase, so long as it remains unbroken." Ford v. Waldsworth, 19 Wend., 337. "It is a convenient incident to the estate, made for its security and protection, and beneficial to the person to whom the estate should come, but to no other." White v. Whitney, 3 Metc., 86.

The above authorities establish the proposition that the covenant of warranty is a covenant real, in the sense that it is annexed or incident to the estate conveyed by the deed and runs with it inseparably for the benefit of all who may succeed to the title by purchase, and who sustain the relation toward the original covenantee of privies in estate, whether those who succeed to the title as assignees are expressly named as such in the covenant or not. Lewis v. Cook, 35 N.C. 193; Markland v. Crump,18 N.C. 94; 27 Am. Dec., 230.

In this State the warranty has been treated as a personal covenant annexed to the estate and running with it as a safeguard and protection to the grantee and his heirs or the assignees or purchasers of the estate in question, and is not regarded strictly as a covenant real within the meaning of the old law and the operation of the principles concerning real actions. A more liberal construction is given to it with the view of "meeting more fully the intention of the parties and the ends of justice."Spruill v. Leary, 35 N.C. 419; Southerland v. Stout, 69 N.C. 449; Markland v. Crump, 18 N.C. 94; Blount v. Harvey,51 N.C. 186.

But in this case we think the covenant, by a clear and necessary implication, must insure to the benefit of the plaintiff as assignee, (639) although the word "assigns" was not used in the warranty. The words "heirs and assigns" are used in the habendum, and the grantees are also named in the habendum, but not in the warranty. Can it be supposed that the grantor did not intend a covenant for the benefit of the grantee? Yet this must be true unless it is held that the covenant should be construed as made for the benefit of him who is named in the habendum. In Herrin v. McEntyre, 8 N.C. 410, this Court held that, when the habendum in a deed is to a man and his heirs forever, he may recover for an eviction on a general warranty, though his name is not mentioned in the warranty, and though it is not stated in the clause of warranty to whose benefit it shall inure, for, "it is the nature of a warranty to run with the estate, and," as Coke says, "though in the clause of the warranty it be not mentioned to whom, etc., yet shall it be intended to the feoffee." Coke, sec. 384. If it inure to the feoffee, when not named in the warranty, why not as well and with equal reason to the heirs and assigns to whom the estate is limited in the habendum, when they are not named in the warranty?

We conclude, therefore, that the plaintiff can maintain this action for the breach of the covenant, unless barred of a recovery for some other reason set up in defense. The reconveyance of the land by mortgage from the Justices to Armstrong did not have the effect of extinguishing the covenant, but the mortgagee was entitled to the benefit of the covenant in the mortgage as an indemnity against the acts of the Justices, in so far as necessary to protect the estate he held as security for the debt from any defect of title which might arise from said acts. There was no estoppel or rebutter, and, when the land was sold, the benefit of the original covenant passed to the purchaser. This subject is fully discussed in Rawle on Covenants, secs. 266, 217, and 218, and the cases are there collated. See, also, 3 Washburn (640) on Real Property; Resser v. Carney, 52 Minn. 397; Lewis v. Cook, supra; Markland v. Crump, supra. "Where land is conveyed by deed of warranty, and the same premises, at the same time, are reconveyed in mortgage with like covenants, the covenants in the mortgage deed will not operate to preclude the maintenance of an action on the covenants of the absolute deed." Brown v. Staples,28 Maine, 497. "Nor will they operate by way of rebutter to prevent circuity of action." Haynes v. Stevens, 11 N. H., 28; Sumner v.Barnard, 12 Metcalf, 459; Hubbard v. Norton, 10 Conn. 422.

The plaintiff's cause of action is not barred by the statute of limitations. It did not accrue until there was an eviction, which took place in 1901, and the statute does not commence to run until the right of action has accrued.

We are also of the opinion that it sufficiently appears in the case that there was an eviction by one holding a paramount title. It is admitted that Mrs. Parrish brought her action against the plaintiff and recovered judgment, and that, by process issuing upon said judgment, the plaintiff was evicted. Both parties claimed under John Armstrong, and Mrs. Parrish held a deed from Armstrong prior in date to the deed from him to the Justices, under which the plaintiff in this action claims. As the parties were estopped to deny the title of John Armstrong, the older deed of Mrs. Parrish was sufficient to show that she held the better title, as between her and the plaintiff.

The next question in the case relates to the damages, and especially to the right of the plaintiff to have counsel fees, which he paid out in defending the suit of Parrish v. Wiggins, included in the recovery. The covenant of warranty is a contract of indemnity, and while the usual rule is that the plaintiff recovers only the amount of the purchase money and interest, it is held by many courts outside of this State that he can recover also any amount he is compelled to pay, as costs and expenses, in defense of the title, so that he may be (641) fully indemnified against any loss by reason of the breach of the covenant — provided, always, the cost and expenses so paid by him are reasonable. It seems to be conceded in some of the cases that he is entitled to recover as a part of his compensation or damages the cost of defending the suit in which the judgment against him for the possession of the premises was given, and also that attorney's fees may be included when the warrantor has been notified of the suit and requested or vouched to come in and defend the title; and it is held in the greater number of cases that he is entitled to recover attorney's fees whether the covenantor was notified or not. The reason for this rule, as gathered from the cases, would seem to be based upon the following considerations: If the covenantee defends the suit in good faith and with proper diligence, what he does is for the benefit of the covenantor, and such expenses as are necessarily incurred by him are, therefore, inseparably connected with his claim of indemnity. It would be too much to require the grantee in a deed of warranty to decide at his peril on the validity of a title set up in opposition to that which the grantor undertook to convey. By the covenant, the grantor agrees not only to warrant, but to defense or suffer a judgment by default, he should recover in an action on the covenant, as it is a contract of indemnity, what he has thus been compelled to pay out. Smith v.Compton, 23 E. C. L., 106; Sumner v. Williams, 8 Mass. 162, 5 Am. Dec., 83; Rickert v. Snyder, 9 Wendell, 416; Ryerson v. Chapman.66 Me. 557; Meservy v. Snell, 94 Iowa 222, 58 Am. St., 391; Hardingv. Larkin, 41 Ill. 420. Whether these considerations should induce us to allow counsel fees as a part of the damages is a question we need not decide until it is actually presented in a case before us. While, as we have already said, it seems to be held in a majority of the (642) cases that the covenantee may increase his damages by the amount of reasonable costs and counsel fees paid by him in defending the suit for the recovery of the land without giving notice to the covenantor, we prefer to adopt the rule which appears to us to be more in consonance with reason and right, and to recognize and enforce the just principle that a man should be heard before he is required to pay, or to have his day in court or at least a chance to have it. We think that the covenantor was entitled to notice to come in and defend the suit, and that he should not be adjudged to pay any counsel fees without having had an opportunity to comply with his contract and defend the suit himself, or, if he desired to do so, to submit to a judgment and save any additional costs and expenses, if he should discover that his title was so defective as to render useless further resistance to the suit. This view is well expressed in the case of Chestnut v. Tyson, 105 Ala. 163: "If notice had been given to the appellants (covenantors), they might have thought proper to defend the suit and employ their own counsel, or they might have come to the conclusion that the title of the plaintiff in the ejectment could not be successfully resisted, and they might, therefore, have determined not to incur useless expense in making a defense, and preferred to perform their covenant by paying to the appellees the amount of damages to which they might be entitled. Of course, this rule would not apply to such of the costs of the ejectment suit as would be adjudged against the defendant therein, though no defense was made, as upon default, for instance; and these, we apprehend, might be recovered on the covenant notwithstanding notice to the covenantor had not been given, since it is only the expense of defending the suit which he would have, upon notice, the election of incurring or not."Chrisfield v. Storr, 36 Md. 129-151.

The rule we propose to adopt is the safest and best, as it (643) is easy and convenient for covenantor to give such notice, and, besides, important advantages might accrue to him from doing so. There is no hardship in the rule, as there would or might be if a contrary rule were laid down.

The appellant does not except to the allowance of the costs of the other suit in which plaintiff lost the land, but does except to the award of counsel fees as part of the damages, because no notice of the suit was given. As it does not appear in the case that any such notice was served on the defendant, this exception is sustained and the judgment of the court below is modified accordingly.

The last objection to the plaintiff's right to recover upon the facts stated cannot be sustained. It is not necessary, in this case, that real assets should have descended to the heirs of Armstrong. They are not sued in the case for the breach, and, in an action on the covenant, as distinguished from the ancient warranty, the plaintiff is not required to show that the heirs received real assets. The plaintiff is not trying to avail himself of the warranty by way of rebutter. The ordinary covenants for title are personal covenants, in the sense that they are binding on the personal representative of the covenantor and, though they run with the land, they are not strictly real covenants within the meaning of the ancient feudal law. Carter v. Denman,23 N.J.L. 260. This is like any other action on a covenant sounding in damages, and the judgment will be satisfied out of the assets of the covenantor, whether personal or real, in like manner as a recovery upon any other obligation. Under our present procedure, the plaintiff merely recovers judgment for his damages, and he must obtain satisfaction not by execution, but by proceeding to have the assets of the intestate applied to its payment. There must be assets, it is true, before the plaintiff's claim can be satisfied, but the fact that no assets have descended to the heirs will not defeat the plaintiff's right to have a judgment against the administrator. If there are no (644) personal or real assets, the plaintiff will get nothing on his judgment. That is all.

There was no error in the judgment of the court below, as above indicated, and judgment will be entered in accordance with the principles stated in this opinion.

PER CURIAM. Judgment modified and affirmed.

Cited: Smith v. Ingram, post, 963; Houser v. Craft, 134 N.C. 330;Jones v. Balsley, 154 N.C. 67; Culver v. Jennings, 157 N.C. 565; CedarWorks v. Lumber Co., 161 N.C. 614; Weston v. Lumber Co., 162 N.C. 197;Herring v. Lumber Co., 163 N.C. 487; Winders v. Southerland, 174 N.C. 235;Wilson v. Vreeland, 176 N.C. 506; Pridgen v. Long, 177 N.C. 194.