Close v. Zell , 141 Pa. 390 ( 1891 )

Opinion,

Me. Justice Gtieen:

In the second count of the plaintiffs’ statement, their cause of action is substantially set out as a parol contract of indemnity against a defective title to certain real estate conveyed to the plaintiffs by the defendants’ testator, which was the operative inducement to the plaintiffs to purchase the title from their vendor. The deed contained the usual covenant of special warranty, but no covenant of title, and as there is no breach of any covenants of the deed no cause of action arises under it. This proceeding is therefore not in any sense a proceeding to change, alter, modify, or reform the deed in question in any respect. It is not alleged or claimed that any covenant of stipulation was omitted from the deed by fraud, mistake, or accident, but the deed, just'as it is, is set forth in the statement in substance, together with an allegation that the grantor agreed with the plaintiffs, at the time of the sale and the delivery of the deed, tlíat he would refund to them the whole of the consideration money paid by the grantees to the' grantor, and all interest thereon, and all costs and expenses incurred, in the event that the grantees should not acquire under the deed a good title to the premises sold. The question arises whether such a contract is merged in the deed subsequently executed, or whether it survives the deed, and confers a cause of action which may be enforced upon a failure of the title.

It will be observed that the contract,' which in this case was verbal, precedes and is independent of the deed. It stipulates for indemnity against the consequences of the taking of the title conveyed by the deed. If, notwithstanding the deed and the title thereby sought to be conveyed, the grantees subsequently sustained loss by reason of the fact that they acquired no title by the deed, is there any legal reason why they cannot recover from the grantor the money which he had received from them, and which he promised he would refund to them, in case the title failed ? This is a question which has been several times adjudged by this court.

In Drinker v. Byers, 2 P. & W. 528, we held that a guaranty of title executed and delivered by a vendor to a vendee is not merged in a subsequent deed of conveyance which contains only a special warranty. The facts there were that Henry Drinker, having sold two tracts of land to Jacob Byers, before the deed was executed signed and delivered to Byers a statement or stipulation in these words: “ It being represented to me by John Nisely and Jacob Byers, who have purchased two tracts of land of me situate on Bald Eagle creek, that a certain Derrick Gonsalus makes some pretensions to part of the said two tracts, although I am well persuaded, he has no just claims or rights to any part of the said land, yet, for the satisfaction of the said Nisely and Byers, I hereby engage that I will be answerable to them for any claim or demand of the said Gonsalus; that, if it should appear hereafter there is any justice in his claim, I will indemnify and save harmless the said Nisely and Byers on that account.” Byers accepted, a few days later, an executed deed for the premises from Drinker, and gave him a mortgage for part of the purchase money; and upon a scire facias on the mortgage made defence that Gonsalus had recovered on his title a large part of the land conveyed by the deed, and sought to defeat the mortgage on the ground that the part of the land that was lost was of more value than the whole amount of the mortgage. Objection was made to the agreement for indemnity that it was merged in the deed and conferred no right of action, but the court below and this court decided otherwise, and judgment was entered for the defendant. Mr. Justice Kennedy, in delivering the opinion, said:

“ In the next place, it has been insisted on that the execution and acceptance of the deed of conveyance was a consummation of all previous agreements between the parties relating to the purchase of the lands; that this collateral promise of indemnity was thereby waived, and that the vendor was discharged from his obligation under it. It is certainly true that when articles of agreement for the sale of land are carried into execution by a conveyance from the vendor and bonds from the vendee, the contract in general is considered as closed, unless in extreme cases showing gross misapprehension or fraud; (citing several authorities.) This, however, is but a general rule to which there are exceptions: See Brown v. Moorhead, 8 S. & R. 569; and is founded merely on presumption, which may, as I apprehend, be rebutted by circumstances or parol evidence. In the case of Frederick v. Campbell, 13 S. & R. 136, parol evidence was held admissible to show that, at the time the deed was executed, the vendor declared to the vendee that he had a good title to two hundred twenty-five acres, and would warrant that quantity of land, the deed containing no such covenant or warranty. In the present case, although the promise of indemnity does not appear to have been made at the time of executing the deed of conveyance, yet its date is only three weeks anterior, and would appear from its terms to have been made some time after the agreement for the sale of the land..... It might perhaps, therefore, be reasonably inferred that the vendee, having received this promise of indemnity but a few days before the deed of conveyance, relied upon both as his security, and was induced thereby to give his bonds and mortgage for the payment of the balance of the purchase money.”

In the case of Richardson v. Gosser, 26 Pa. 335, we held that where a vendor who conveys to his vendee by deed of general warranty, promises to indemnify him for any improvements he may make upon the premises, in the event of the title proving worthless, such promise is not nudum pactum, but will support an action of assumpsit. The deed did not alter the situation of the parties in this respect, being entirely distinct from the contract sued on. Black, J., after stating the facts of the case, said:

“ This suit is brought by B (the vendee) against A (the vendor) for the expense of improvements put on the land by the plaintiff both before and after the date of the conveyance. It was proved on the trial that A promised to pay B for the improvements, in case the title failed. This promise was often repeated before the improvements were made, at the time they were in progress, and after they were finished, and as well previous to the deed as subsequently. The plaintiff knew the title to be doubtful, and it is apparent that he would not have expended his labor and money as he did, except on the faith of the defendant’s promise to keep him harmless. It is hard to see how we could deny the plaintiff’s right to recover, and at the same time satisfy the demands of common justice. The transaction between these parties was a plain contract on a subject-matter which no law forbade them to bargain about in any way they pleased. We can scarcely conceive of another case in which more palpable wrong would be wrought, or a worse example set, by suffering an agreement to be broken with impunity. The defendant’s promise was not nudum pactum. The consideration was sufficient. It is true that, as things turned out, neither of the parties received any benefit from the improvements ; but that was not the plaintiff’s fault. ..... Here was a person making a purchase of land. He had so little faith in the title that he would neither pay the purchase money, nor make improvements which were necessary to its profitable use, without some guaranty against the ultimate loss of his whole outlay. But he had confidence in his vendor, and was willing to accept his personal warranty in place of a good title. The vendor gave him that by his covenant in the deed and by his parol promise that he should not lose a dollar. When the title failed, the vendee had a right to fall back on the retreat which both had agreed to provide for him.....The deed did not alter the situation of the parties, or make any change in the title, for the grantor had no title to convey. At all events, it was a totally distinct thing from the bargain on which this suit is founded.....It is urged that this contract about improvements was merged in the deed..... But to us it appears that the contract on which this suit is founded has no such relation to the deed referred to. It does not concern the sale or the transfer of the title. It is a promise to do another thing.”

The foregoing oases have been extensively quoted because they fully illustrate everything necessary to be considered in disposing of the present case. In both of them the contract, as in this, was for indemnity against a defective title. In the last, there was a special, verbal agreement to compensate for the cost of improvements in case the title failed, and although there was a general warranty of title, that covenant would not carry a right of recovery for the cost of improvements. Hence, there could be no action for that particular loss founded on that covenant, and this court upheld an action of assumpsit on the verbal agreement, holding that it was not merged in the subsequent deed. In the case of Drinker v. Byers, supra, there was a special warranty only, and as there could be no recovery upon that covenant, we upheld the prior agreement for indemnity, which was the equivalent of a general warranty.

In Cox v. Henry, 32 Pa. 18, Lewis, C. J., said, in delivering the opinion: “ Two repugnant measures of damages cannot exist in the same action, between the same parties, relative to the same subject-matter: Seitzinger v. Weaver, 1 R. 385. It follows, that where there is a covenant of warranty entered into at the time of the contract for the sale of land, and a similar covenant is embodied in the deed afterwards accepted, the first covenant is merged in the last, so far as regards the measure of damages: Drinker v. Byers, 2 P. & W. 528. But where, at the time of tbe contract of sale, a special covenant is entered into, with security, to indemnify the vendee ‘against all costs, charges, and damages, on account of any and every lawsuit that may be brought against him to recover the land, by any and every claimant,’ and this instrument is retained'in the possession of the vendee after receiving the conveyance (in which there is no covenant relative to the same matter,) the deed is not an extinguishment, or a merger of the covenant for such indemnity.” In this case there was a sufficient covenant of warranty in the deed to relieve against a failure of title, but not sufficient to justify a recovery for “ all the costs, charges, and damages ” caused by the suit which produced the eviction, and hence it was decided that an action might be maintained on the special agreement for indemnity on that account. That agreement was held not to be merged in the deed.

In Anderson v. Washabaugh, 43 Pa. 115, the deed for the premises was executed and delivered in March, 1854, and contained a clause of general warranty. Subsequently, in December, 1855, some doubts about the title having arisen, the grantor gave a bond of indemnity to the grantee to keep him “ clear and indemnified ” and “ to make him secure and safe in the title ” to the land. Afterwards there was an ejectment against the grantee in which about five sixths of the land was recovered from him, and then an action on the bond and a recovery, not only of the proportionate part of the value of the land-, but also of counsel fees and costs incurred in defending the title-, and that judgment was sustained by this court. Strong, J., said: “ The plaintiffs in error mistake in treating this case as if it were an action to recover damages for a breach of some one of the five ordinary ‘ covenants for title.’ The extent, of- the liability of Anderson’s estate is to be measured by the conditions of his bond. They imposed upon him greater .obligations than he would have assumed had he merely covenanted-for the quiet enjoyment of the land conveyed.” In this case the agreement contained in the bond of indemnity was not raade until nearly two years after the deed for the land was delivered, -apd thp deed itself contained a covenant of general warranty. Notwithstanding this, a recovery was sustained on the bond, and included all counsel fees, costs, and charges incurred in defending the title.

It thus appears from the cases now cited that, whether the agreement for indemnity was made before or at the time of the sale, or afterwards, the right to recover indemnity in an action on the special agreement is sustained, and that whether the agreement was by writing of* in spoken words is a matter of indifference. Such an agreement is not merged in the deed if made before or at the time of the deed, and is not destroyed by a covenant of general warranty in the deed if made thereafter. The same doctrine was applied in the case of Robinson v. Bakewell, 25 Pa. 424, in an action upon a similar bond, given one day after the deed and although the deed contained a-covenant of general warranty, and a recovery was had for all-costs, charges, and expenses, including counsel fees, incurred in defending the title. Wo again enforced the same doctrine in the case of Walker v. France, 112 Pa. 203, where the warranty set up was entirely in parol, and preceded the execution of the written agreement for the sale of the land from which this part of the contract was omitted. We held the proof sufficiently clear to be submitted to the jury, and sustained a recovery for tbe breach of the verbal stipulation. Gordon, J.,, said: “ That a written agreement may be modified, explained* reformed, or altogether set aside by parol evidence of an oral, promise or undertaking material to tbe subject-matter of the contract, made by one of the parties at tbe time of tbe execution of the writing, and which induced the other party to put his name to it, must now be regarded as a principle of law so-well settled as to prechide discussion.” It is not at all necessary to invoke the support of this principle to sustain the present proceeding. There is no question here of altering the-deed for the lots in question by inserting a clause left out of it by mistake, fraud, or accident. The case is only cited to show that where the parol stipulation is the inducing causo to-the execution of the written instrument, the law is sufficiently flexible to give relief in this manner, if tbe evidence is of a perfectly clear and satisfactory character. But the case is of authority on the point that a contract in the nature of guaranty as to the quality of the land conveyed, is not merged in the conveyance and may be enforced independently of it.

In the present case Zell, the grantor in the deed, was dead ■at the trial, and the plaintiffs could not testify. But the proof was very clear that the sale had been made to Close and Kershner upon the express condition that Zell would refund them the money if the title failed. Judge Bruckman testified as to what was said by Zell to Close in a conversation some time after the deed was delivered, as follows: “He said in the presence of Mr. Close and myself that if they (meaning Close and Kershner) should fail in holding on to this property at Thirteenth and Cotton, which they had bought from him, that he would refund to them the money that they had paid for it; that they should lose nothing. I think that Mr. Zell drew my attention to what he was saying; at least he looked at me when he said to Mr. Close that he should lose nothing. I -was sitting by, and the conversation was more particularly carried on between Mr. Close and Mr. Zell.” George E. Smith, to whom Zell had offered the property for $800 but was refused, said he saw a good deal of the parties, and knew about the negotiations going on between Zell and Close and Kershner for the sale of the property both before and just after the sale. He was asked: “ Q. Did you have any conversation with Mr. Zell afterwards ? A. Yes, sir. Q. In which he said to you that he had entered into this agreement? A. Yes. After this sale was consummated, after they had bought, Mr. Zell said he had sold; he twitted me, and said I had missed a bargain in not buying, and I told him that I did not want to buy a lawsuit. He said there would be no trouble about that. He said ‘ he offered to give you back your money and make you whole in every respect; we gave it to these people in the same way; I promised the same and I will do it.’ He said, ‘You see, what makes it necessary is, it is better for them to fight, if there is to be a fight about it. It is better for me. They stand in a better light.’ Mr. Bland said that to me, too. They were trying to sell it to me.” He also said this conversation took place a few days after _ the sale, probably not more than three. He was also asked: “ Q. What else did he say besides what you have said? A. He said they had no risk to run, that they would make it whole ; that he would stand everything. Q. Is that what he said, that they had no risk to run and that he would make it whole ? A. Yes, sir. That they had it the same as he offered it to me. He said he would do it. Q. That they would have no risk to run, and he would make them whole ? A. Yes, sir. Q. Is that all that he said ? A. It was probably repeated two or three times for all I know, in different words; I do not know that they were the exact words, hut that was the way he said it. He said that what he had promised me he had promised them, and he would do so.”

The other circumstances in the case were strongly corroborative of the foregoing testimony, and it was not contradicted. All of the testimony was carefully submitted to the jury by the learned court below, with instructions as to the character of the testimony required in such eases, that it should be clear, satisfactory, and manifest. The testimony was believed by the jury, who found a verdict for the plaintiffs. We do not see how they could have done otherwise. The assignments of error are all dismissed, as we find no error in any of them. The principles and authorities relied upon on behalf of the defendants are quite inapplicable to a case and a question of the character involved here.

Judgment affirmed.