Urich v. McPherson

SULLIVAN, C. J.

— This is an appeal from a judgment rendered in favor of the plaintiff for damages on account of an alleged warranty in a deed executed by the defendants to the plaintiff for certain lots in the village of Cottonwood, Idaho county.

The following facts appear from the record:

About the 1st of August, 1908, the defendant, McPherson, entered into a contract with one Beatty whereby he sold to Beatty four town lots for the agreed price of $250, to be paid in monthly payments of ten dollars each. A deed was placed in escrow in the German State Bank to be delivered to said Beatty when the full purchase price was paid. Under that agreement Beatty paid fifty dollars. He then sold said lots to the plaintiff for $400. After Beatty had purchased said lots and before he had sold them to Urich, he caused to be erected on said lots certain buildings and improvements. The plaintiff was informed of the deal between McPherson and Beatty and knew of the improvements which Beatty had placed on said lots prior to his purchase from Beatty, as he lived just across the street from said lots.

Before completing the deal with Beatty, plaintiff had a talk with McPherson and informed him that he could purchase said lots cheap from Beatty and intended to make the deal. Thereupon McPherson advised plaintiff of the possibility of liens on said lots for the improvements which Beatty had placed thereon. The plaintiff went to Judge Duffey, a practicing attorney, to get his advice in regard to liens, and was informed by said attorney that the time for filing liens for the improvements placed on said land had already passed. The plaintiff also had a conversation with the president of the German State Bank (in which bank said deed was placed in escrow), who also advised him to look out for liens on said property. Hendrickson, the contractor who had placed some of said improvements on said lots, also informed the plaintiff of his claim and the claim of another contractor or laborer against said lots on account of said improvements. The plaintiff thereupon advised Hendrickson to come downtown at the time he was to pay the money to Beatty and he would see that he got his money. Hendrickson appeared at the time and place suggested by the plaintiff, but the plaintiff failed to appear. Plaintiff closed said deal with Beatty and paid him for said lots, or paid the balance of the purchase price to McPherson, amounting to about $209, and the balance of the purchase price to Beatty. Thereupon, at the request of Beatty and with the acquiescence of the plaintiff, it was understood between the plaintiff, McPherson and Beatty that as a matter of convenience and to save the recording of the deed from McPherson to Beatty, which had been placed in escrow, the escrow deed should be withdrawn and destroyed and a new deed be made from McPherson to the plaintiff to take the place of said deed in escrow; and it was fully understood and agreed that by said deed from McPherson to the plaintiff Beatty was conveying said lots and improvements to Urich. The purchase by plaintiff was from Beatty and not from McPherson. It clearly appears that McPherson did not intend to warrant or guarantee against any liens or encumbrances on said lots caused by said Beatty. The clear intention was that McPherson was to receive the unpaid balance that Beatty owed him on the lots and the remainder of the purchase price should go to Beatty, and that McPherson should not warrant the title to said lots from the acts of Beatty. The parties to the transaction fully understood the matter as stated.

After the plaintiff had fully investigated the probability of any liens being filed against said property because of the improvements placed thereon by Beatty, and being advised by his own attorney that the time for filing said liens had passed, Urich, the plaintiff, made the deal with Beatty for the purchase of said lots. After the purchase price from Beatty was paid to McPherson, Beatty was entitled to the delivery of said escrow deed and thereunder became the holder of the legal title. By mutual consent said deed was delivered or taken up and the deed referred to was made by McPherson, conveying the land to the plaintiff.

Thereafter liens were filed for labor, supplies and material contracted for by Beatty in the placing of said improvements on said lots, and McPherson was in no manner connected with said- transaction. The plaintiff was thereafter compelled to pay the amount of said liens and brought this suit to recover the amount so paid.

But it is contended by respondent that said deed from McPherson to the plaintiff is a warranty deed, warranting the title against said liens and claims1 and that the terms of said warranty cannot be changed by parol evidence.

Under the facts of this case, we cannot agree with that contention. From the whole record it is clear that McPherson did not intend to warrant the title against said liens. The plaintiff was fully advised of the conditions and facts in regard to said liens, and he took his attorney’s advice to the effect that the time for filing said liens had passed and for that reason they could not be made valid liens against said property. The Banker Nuxoll also advised him to be careful about those claims. The contractor himself advised him that he claimed a lien and the plaintiff arranged with him to be present when he paid the purchase price to Beatty, and that he, the contractor, would at that time receive the money due him for the improvements he had placed on said lots. The plaintiff disregarded said arrangement and paid Beatty with the full knowledge of all the facts in regard to the claims against said lots. McPherson was under no obligation to pay said liens; and he did not intend to, nor did he, under the facts, warrant the title against said lien claims.

This court held in Polak v. Mattson, 22 Ida. 727, 128 Pac. 89, 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 them. McPherson was under no obligation to pay for said improvements. He had already executed a deed to said lots and placed it in escrow to be delivered upon the payment of the purchase price. The doctrine is well established that parol evidence is admissible to show the true facts existing at the time of a conveyance and that the land taken was conveyed subject to encumbrances of which the purchaser had full knowledge, and to show that while the warranty deed was given, the maker of the deed should not be held on a warranty when it was understood and agreed between the parties that he was not to be so held.

In Allen v. Lee, 1 Ind. 58, 48 Am. Dec. 352, the trial court held that parol evidence to show that the purchaser purchased the land subject to the lease of one Prichard was in contradiction to the terms of the warranty in the deed, and therefore inadmissible. The supreme court, in regard to that matter, said:

“We think this view of the ease was erroneous.....We are of the opinion that if the covenant had been properly-worded, the evidence rejected should have been admitted, not to contradict the deed or to give a construction to the contract contrary to the written terms of it, but as a part of the res gestae to prove the state of facts existing at the time of the conveyance, and that the encumbrance in question was not within the purview of the contract.”

In Maris v. Iles, Administrator, 3 Ind. App. 579, 30 N. E. 152, the court held that under a deed of general warranty it may be established by parol that the grantee undertook to pay any particular lien or discharge any encumbrance as part of the consideration, where the deed is silent upon the subject.

Now, it is evident under the facts of this case that McPherson never intended to warrant against the liens referred to-, and it is equally clear that the plaintiff knew that he did not intend to do so; that in regard to that he relied upon the advice of his attorney to the effect that the time for filing said liens was passed. As bearing on this question, see, also, Hays v. Peck, 107 Ind. 389, 8 N. E. 274; 11 Cyc. 1123.

Plaintiff did not in terms agree to discharge said liens, but proceeded upon the theory that there were no liens, and he well understood that McPherson did not intend to warrant against such liens. The plaintiff stands in the same position that he would if he had agreed to pay said liens himself. (See, also, Watts v. Welman, 2 N. H. 458.)

The rule laid down in the case of Young v. Stampfler, 27 Wash. 350, 67 Pac. 721, is clearly the rule applicable to the case at bar under the facts presented. In that ease a grantee in a warranty deed sued for a breach of the covenants against encumbrances, and it was there held that parol evidence was admissible to show that the grantor having purchased on execution sale and the land having been redeemed by the execution debtor, the warranty deed was given to plaintiff at the request of the debtor on an understanding that the same was merely a redemption deed and that it should have no effect as a warranty. The court said:

“Under our system equitable relief is given in actions at law. The evidence to support the affirmative defense of the defendants was not introduced to control or vary the covenant in the deed, but to prevent the enforcement of the same, because it was obtained in such a manner that it would be a fraud upon the covenantors to allow the enforcement of the covenants. In such a case oral evidence is admissible. .... Equitable estoppels are based on the ground of promoting the equity and justice of the individual case by preventing the party from asserting his rights under a general technical rule of law when he has so conducted himself that it would be contrary to equity and good conscience for him to allege and prove the truth. ’ ’

Now, in the case at bar, Beatty purchased from McPherson, and if Beatty had paid the balance due on the purchase price and recorded the escrow deed, McPherson would not have been liable for said liens, and in executing said deed to the plaintiff at the request of Beatty and consent of plaintiff, he had no intention of warranting the title against any acts done by Beatty subsequent to the time said deed was placed in escrow, and it would be most inequitable and unjust, under the facts in this ease, to require McPherson to pay the amount of said liens out of the purchase price of $250 agreed to be paid by Beatty to him for said lots. It was not McPherson’s intention to guarantee the title against said liens, and the plaintiff well knew that McPherson did not intend to warrant the title against such liens, but concluded, on the advice of his attorney, that such liens did not exist or that the time for filing them had passed. And it would be most unjust and inequitable, under the facts of this case, to require McPherson to pay the amount of said liens when he never intended to warrant against them, and the purchaser well knew that he did not intend to do so.

The judgment must therefore be reversed and the cause remanded, with instructions to enter judgment in favor of the defendants in accordance with the views expressed in this opinion. Costs awarded to the appellants.