Hawthorne v. City Bank

Mitchell, J.

The question involved in this appeal is the construction to be given to Gen. St. 1878, c. 40, § 35, which reads: “Whoever conveys real estate by deed or mortgage containing a covenant that it is free from all incumbrances, when an incumbrance appears of record to exist thereon, whether known or unknown to him, shall be liable, in an action of contract, to the grantee, his heirs, executor, administrator, successors, or assigns, for all damages sustained in removing the same.” Appellant claims that this was intended to change the rule which limited the measure of damages for a breach of the covenant by the consideration money for the conveyance. On the other hand, respondent claims that the object of the statute was to declare, contrary to what was the prevailing doctrine of the American courts, that an action on a covenant against incumbrances might be maintained by the assignee of the grantee. If either of these was the intention of the legislature, they have certainly failed to express it in apt language. No conceivable reason can be suggested why they should establish a different rule as to the measure of damages for a breach of the covenant against incumbrances from that which obtains for breaches of other covenants of title. On the other hand, if the object was as contended by respondent, no good reason can be suggested why they should give a right of action to an assignee of the grantee in case of a covenant against incumbrances, and not in ease of other covenants in prcesenti, as of seizin or of right to convey; and, under either construction suggested, we can see no possible reason why they should have limited the application of the rule to incum-brances that appear of record, or why they should have further limited it to eases where the incumbrance has been removed, and leave another rule to apply where it ripens into title, and the land has been lost. With all due deference to the able counsel, we think they are both in error as to the construction of this statute. We think it has reference solely to incumbrances appearing on the record to exist, but nót existing in fact, as In the ease of a recorded mortgage which has been fully paid, but not discharged on the record. In such a case, an incumbrance “would appear of record to exist,” although none existed in fact. A covenantee in such a case could not, but for this statute, recover from the covenantor, because there was in fact no incumbrance, and yet he might be put to trouble and expense in removing the cloud from his title. The object of the statute was to give a right of action in such cases against the covenantor for “all damages sustained in removing the same.” See Crocker, Notes Pub. St. Mass. 229.

The respondent concedes that, under the doctrine of Kimball v. Bryant, 25 Minn. 496, without reference to this statute, an action on a covenant against incumbrances can be maintained by an assignee of the grantee. It is true that in that case the covenant was one of seizin, but the reasoning of the opinion is equally applicable to all covenants in prcesenti, and especially to one against incumbrances, which is a covenant of indemnity.

The result is that the order denying a new trial must be affirmed.