Case ID: me_1/html/0352-01.html
Source: Caselaw Access Project
Author: {"author": "Mellen C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

LLOYD v. JEWELL & al.
    In an action upon a promissory note given for the purchase-money of land conveyed by deed with the usual covenants of seisin and warranty, the action being between the original parties, it is not competent for the defendant to set up, by way of defence, a partial or to' al failure of title, or a want of title in the grantor at the time of the conveyance.
    And where the deed contained an express condition thatupon the breach ofany covenant therein, the damages might be payable by cash to the amount received in money, and the residue by delivering up such of the grantee’s notes for the consideration as should remain unpaid; in an action upon one of such notes, some having been paid and others still due, the defendant was not permitted to shew a breach in the covenant of seisin as to parcel of the land, to the value of the note declared on.
    This was assumpsit upon a promissory note dated December 23, 1814, for the sum of $166,67 made by the defendants and payable to the plaintiff or his order in four years from the date; to which the defendants pleaded the general issue.
    At the trial of this issue the defendants offered in evidence a deed from the plaintiff to them, of even date with the note de-dared on, the consideration of which was six promissory notes, of which the note in suit was one, and which, being each for the same sum, amounted in the whole to a thousand dollars, of which three had been paid. The deed contained the following covenants, viz :—“ And I do covenant with the said Jewell and Man- “ ud their heirs and assigns that the premises aforesaid are free “ of all incumbrances by me made, that I have good right to “ sell and convey the same to the said Jewell and Manuel as “ aforesaid, and that I will warrant and defend the same to “ the said Jewell and Manuel their heirs and assigns forever, t( against the lawful claims and demands of any person other “ than the said Jewell and Manuel their heirs and assigns; Upon “ condition that the said Jewell and Manuel their heirs and as- “ signs shall not demand or receive of the said James Lloyd his “ heirs, executors, or administrators by virtue of the grant or “ covenant aforesaid either express or implied, and for the “ breach or non-performance of the same, any greater or further “ sum than the amount of the consideration aforesaid with interest w thereon after two years, payable in cash to the amount receiv. v ‘ ed on said notes and the residue by delivering up to be cancelled “ such of the aforesaid notes as may remain unpaid”.
    The defendants then proved that to_a specific part of the premises described in the deed, the plaintiff, at the time of making the conveyance, had not any title ; but the same was, and still continued to be, in the actual possession of a stranger who was the lawful owner; so that no title, to this parcel passed by the deed to the defendants. They also proved that this specific parcel, being estimated by the price they gave for the whole premises, was of the just value of $191,10, being more than the amount of the note declared on.
    To the admission of this evidence the plaintiff objected ; but the Judge who presided at the trial of this cause, for the purpose of presenting the question to the whole Court, overruled the objection, and a verdict was returned for the defendants.
    The plaintiff thereupon moved for a new trial, for the following reasons, viz :
    1. Admitting there had been a failure of title to any part of the premises described in the plaintiff’s deed, the defendants must resort to the covenants in the deed, and ought not to be permitted to go into the title by way of defence to this action.
    2. If the defendants may set up the facts proved by way of defence to the notes, yet it appears that there are two notes, beside the one in suit, still remaining due and unpaid ; which notes amount to a much larger sum than the deficiency proved, and by the true construction of the covenants in the deed the defendants must first pay for so much of the premises as they have good title, and then, for the sum remaining due, they may set up the deficiency in quantity by way of defence.
    
      R. Williams, being about to argue for the plaintiff in support of his motion, was stopped by the Court.
    
      Allen, for the defendants.
    Public policy dictates that the defence should be made in this action, if it can be done consistent with the rules of law, as circuity of action will thereby be avoided. The rule that the consideration of a note of hand may be inquired into, as between the original parties, has been too long established to be brought now in question. But it is said that the covenants in the plaintiff’s deed forra a consideration for the note, to which the defendants must resort for their remedy. The question, however, is not whether the defendants might not have a remedy on the covenants, but whether they are so confined to that remedy that they cannot offer the defence here. Courts have latterly been inclined to permit a defence to be set up in certain cases where there was another remedy, though the older opinions were otherwise. Everett v. Gray, 1 Mass. 101. Taft v. Montague, 14 Mass. 282. Barton v. Butler, 7 East 479. Sill v, Rood, 15 Johns. 230. 1 Campb. 190. Winter v. Livingston, 13 Johns. 54. In Bliss v. Negus, 8 Mass. 46. the Court strongly intimate their opinion against the objection to such a defence. But Frisbec v. Hojfnagle, 11 Johns. 50. is expressly in point. It was an action on a note, the consideration of which was a deed of a tract of land with a covenant of warranty; and the defendant was permitted to prove that there had been a failure of title. And though the defendant had never been evicted or disturbed, the Court held that the defence was good, observing that to allow a recovery in this case would lead to a circuity of action, for the defendant on this failure of title would be entitled immediately to recover back the money. So in debt for rent where there is a lease for a term of years, and the lessor covenants for quiet enjoyment, the defendant after being evicted by a paramount title may plead in bar that the plaintiff had no title to the premises leased, notwithstanding he might have a cross remedy by action on the covenant. Haines v. Mallby, 3 D. & E. 438.
    The peculiar terms and stipulations contained in this deed are of a nature to remove the objection relied on. The notes are particularly described in the deed as forming the consideration, and the covenant is to pay for any defect of title by can-celling notes if they should remain unpaid at the time of the breach, By this reference in the deed, to the notes, they become as one instrument, and this renders it proper that when an action is founded on one part, the other should be received in evidence.
    The inconvenience arising from trying the title to real estate in an action brought to recover the consideration-money, is imaginary ;—it is no greater than arises from trying the title to personal estate in an action on a note given for its value, which is a case of frequent occurrence. Special pleading may always be resorted to, whenever it is desirable to prove by the record the precise nature of the subject in controversy. The record in this case, with those averments which it would be competent for the plaintiff to make and prove, would be a bar to any action which the defendants might bring on the covenants, which would be virtually, in the terms of the deed, “ giving up the notes to be cancelled.”
    Nor is the objection that the evidence does not apply to this, but to the last note, of any more validity. That would be altering the terms of the credit from six to five years, in consequence of a breach of the plaintiff’s own covenant. We contend that, it is at the defendants’ election to apply this evidence to either note. But if the election was with the plaintiff, he has waived it by not exercising it, and thus has given the right to the defendants. The other notes may be transferred to bona fide in-dorsees, without notice, and thus the defendants be deprived of that equitable offset which justice obviously requires, and which the parties themselves intended, as is evident from the stipulations in the deed.
    
      R. Williams, for the plaintiff.
    
    Public policy does not seem to require that the defendants be admitted to this defence. On the contrary numerous mis-chiefs would result from it. It is true in general that mutual demands may be set off against each other; but this doctrine has never been extended beyond mutual assumpsits. Nor could a judgment for the defendants in this action be a bar to an action on the covenants'in the deed. For how could the present plaintiff avail himself of it ? It would not be an accord, for a judgment is rendered in invitum ;—nor a satisjaction, because nothing would be paid;—neither would it be an extinguishment of the covenant, because no security would be given by the defendants to the plaintiff!, of as high a nature as the deed. 3 East 252. Neither would the record shew' to ivhich covenant in the deed the matter of this defence was applied. And if the defendants should aliene the land, and their grantee be evicted from the parcel in question, the plaintiff would be liable a second time, to such grantee, as assignee of the covenants. This defence also goes to abridge the plaintiff’s remedy against his warrantor, by depriving him of the right of voucher; for even if he should notify his warrantor of the pendency of this suit, the record could be no evidence in a subsequent action against him.
    As to the question to which note the covenant should apply, this is at the election of the plaintiff. If his covenant is broken, he is to pay the damages in notes or money, at his own election ; and if he elect notes, it is with him to choose which of them he will deliver up,
    Orr, m reply.
    
    The case finds that the plaintiff’s covenant was broken at the moment it was made, there being an actual adverse occupancy of part of the land. The plaintiffinstantly became debtor to the defendants, to the amount of the incumbrance. The covenant being thus broken, of which the plaintiff was bound to take notice, he had an election in what manner to pay the’damages ; but he should have elected immediately, and notified the defendants, tendering the notes or money to the value of the breach. Such a tender might have been shewn in bar to an action on the covenant. But where the debtor has an election which he neglects to make, it results to the creditor, who may make it, even at the time of trial; and such election the defendants now make, by insisting on the right to set off the damage against the note in suit,
   Mellen C. J.

delivered the opinion of the Court at the succeeding term in Cumberland, as follows.

In the argument of this cause several questions were presented for consideration, which may be resolved into the three following.

1. In an action on a promissory note, payable at a given day, brought by the promissee or his representatives against the maker or his representatives, given for the price of real estate conveyed by the promissee to the promissorby deed containing the usual covenants of seisin and warranty, is it competent for the defendant to shew by way of defence a total or partial failure of title, or want of title in the grantor, at the time of his making the conveyance ?

2, If not, then is it competent for the defendant in this case to do it, in consequence of the special language of the plaintiff’s covenants in his deed as to the limitation of his liability in damages, and the mode of paying them ?

3. If so, is it competent for him to avail himself of any advantage from the special language of the covenants in an action on the particular note sued in this case ; two other notes, given at the same time, and for part of the consideration of the land sold, still remaining due, and not yet demanded ?

As to the first point, we would observe that for a long series of years the practice in Massachusetts has proceeded upon the principle that the covenants in the deed of conveyance, or, if no deed had been given, but only a bond or covenant to give a deed, then such bond or covenant constituted a good and valuable consideration for the note, and of course a want or failure of title would be no legal defence to an action on such note; and we had considered such to be the true principle of law in relation to this question ; but the cases decided in Kew-York cited from Johnson by the counsel for the defendants, in which such a de-fence was considered substantial, have induced us to look carefully into those cases, and to examine the point with more attention, respecting, as we do, the high character and learning of the Court which pronounced those decisions.

It is a principle of law, universally acknowledged, that assump-sit will not lie where the debt is due by specially, for in such case the specialty ought to be declared upon. Bul. N. P. 128. It is equally clear that if a debt due by simple contract be after-wards secured by specialty, the original cause of action is merged. Hence it is plain in the case before us, that whatever claim the defendants have upon the plaintiff is secured by the covenants in his deed ; and if they can avail themselves, in this action of assumpsit, of the failure of title by way of defence, it is more than they could do in character of plaintiffs demanding damages. These propositions require no authorities to support them. It is also plain that the defence proposed cannot be made by way of set-off against the plaintiff’s demand ; because our statute upon this subject is not so broad as the English statute, and does not in any case authorize a defendant to set off a debt secured by a specialty or a promise in writing.

Where there are several covenants, promises, or agreements, which are independent of each other, one party may bring an action against the other, without averring performance on his. part, and it is no cause for the defendant to allege in his plea a breach of the covenant on the part of the plaintiff. 1 Saund. 320. note 4. Yelv. 134. note 1. and. cases there cited. In those cases in the books in which the question was whether the promises or covenants were mutual and independent, or dependent, the contract or undertaking on both sides was of the same character and grade ;—not covenant on one side, and assumpsit on the other, as in the case at bar. Another well established rule of construction is that the intent of the parties, and not the mere arrangement of the words, ought to govern. 1 Saund. 320. note 4. Thus, if a day be appointed for payment of money, and the day is to happen, or may happen before the thing which is the consideration of the money is to be performed, an action may be brought for the money when payable, and before performance; for it appears the party relied on his remedy, and did not intend to make the performance a condition precedent. Same note 4. In the case supposed in the point under consideration, the note is payable on a certain day; and yet the covenant to warrant and defend might not be broken for many years after. Another objection against allowing, the de-fence proposed in an action on the note arises from the amount of damages which may become due in consequence of the failure of title to the lands conveyed. By our law, in case of eviction, the grantee or his assignee, as the case may be, is entitled to recover the value of the lands at the time of eviction. This may be twice the amount of the consideration secured by the note,—and it may be not half that amount. Hence also the propriety of considering each contract separately and independently of the other, so that each may have its proper operation and no more, and both parties be subjected to their respective legal liabilities, according to the principles laid down in Boon v. Eyre, 1 H. Bl. 273. n. 1. and Duke of St. Alban's v. Shore, ib. 270.

It has been urged that public policy requires that the proposed defence should be allowed, and several cases have been cited to support this argument. In the cases of Everett v. Gray and Taft v. Montague the defence grew out’of the unfaithfulness of the work for which the plaintiff’s were seeking compensation ; and so not like the present. In 3 D. & E. 438. the covenant of the plaintiff with the defendant amounted to nothing; it gave him no remedy against the plaintiff, and the permission to the defendant to use the patent frame, gave him no rights. It was not a new invention, and the whole was a fraud. The case of Bliss v. Negus was assumpsit on a promissory note, given for the assignment of all the plaintiff's tight under a certain patent, with a covenant to warrant the same to the defendant; and it was proved that the plaintiff had no right, and that nothing passed by the assignment; and there being nothing on which the covenant could operate, it wras a dead letter, and could not form a consideration for the note. The case of Sill v. Rood, 15 Johns. 230. only decides that in an action on a promissory note given for a chattel, the defendant may shew deceit in the sale, under the general issue. Frisbie v. Hoffnagle, 11 Johns. 50. was an action of trover for certain promissory notes given for lands purchased, the title to which had wholly failed; and the Court decided that the consideration for the notes had also failed, though the lands were conveyed with warranty. This case is admitted to be, in principle, directly in point for the defendants ; but on examination of the cases of Morgan v. Richardson, 1 Campb. N. P. 40 note. Tye v. Gwynne, 2 Campb. 346. and Barber v. Backus, Peake's Ca. 61. all which are cited at the end of Frisbie v. Hoffnagle, it will be found that they are totally different from that case in principle and do not in any degree support it. They related merely to an alleged failure of the whole or a part of the consideration of bills of exchange given for articles which were defective. The other case cited for the defendant wras Winter v. Livingston, 13 Johns. 54. That was assumpsit on three promissory notes signed by Livingston for the price of a tract of land. About a month after the date of the notes Winter covenanted with Livingston to convey the land in fee simple to him, on the express condition that the covenant should be void if several notes should not be paid at the times they should respectively become due. They were not paid. The Court, in delivering their opinion, say—“ By this covenant, however, it was provided that the agreement was to be void, unless “ Livingston paid his notes as they fell due. He did not pay “ them ; and of course the agreement was void, if Winter elect* “ ed so to consider it; and the case shows that he availed him- “ self of this forfeiture, for he went on and sold the land for his exclusive benefit; and Livingston has therefore received “ nothing for his notes, and Winter has a complete and perfect “ title to his lands.” It is clear that this case does not in any degree support the principle it was cited to establish. The only authority, then, opposed to the principle which has been so long recognized in Massachusetts is the case of Frisbie v. Hoffnagle, and that is an insulated case.

In the case of Fowler v. Shearer, 7 Mass. 14. the action was founded on a promissory note, and the defence was a want of consideration. The note was given in payment for land conveyed by a married woman alone, with covenants in the usual form. The only consideration pretended, was this deed by which nothing passed ; and Parsons C. J. said—“ the defendant “ cannot derive any advantage from any covenant in the deed. “ She is not answerable on any of her covenants; I do not “ therefore see any consideration sufficient to support this promise.” It is evident that if the covenants had been good and binding they would have been a good consideration for the note. The case of Smith v. Sinclair, 15 Mass. 171. recognizes and proceeds on the principle that the bond to convey the tract of land for which the note declared on was given, constituted a good consideration for the note, though there was a partial failure of title by a previous mortgage. And in addition to the authority of these decided cases it may not be improper to notice the argument ab inconvenienli urged by the counsel for the plaintiff. It is certainly unusual to try the title to real estate in actions of assumpsit; and in the present case, should the defence be allowed, and the sum now sued for not be recovered, but in evidence set off against the breach of one of the covenants in his deed ; the record would disclose no facts on which the plaintiff could found his action against his warrantor for reimbursement. These, to say the least, are great inconveniences ; which may all be avoided by a steady adherence to settled principles, in preference to consulting individual convenience, or merely preventing circuity of action.

With respect, therefore, to the general question which we have been considering, we all agree in deciding it in the negative,

As to the second question, whether the general principle is changed by the special language in the covenants on the part of the plaintiff, we are well satisfied that it is not. The clause relied on by the defendant was introduced for the benefit of the plaintiff, and the object was to limit his accountability, whatever might be the consequences as to the title, and reserve to himself the liberty of paying the damages which might be recovered against him, in the defendant’s own notes in whole or in part, provided they should not have been paid at the time of such recovery of damages. Viewing the special provision in this manner, it is clear that the defendant has no rights reserved to him by it; and upon no fair construction can it be considered as dispensing with the rules of evidence, or altering the principles of law in the decision of the merits of the cause.

It has now become unnecessary to decide the third question before proposed; though we are inclined to believe that if the defence offered could be made in any form against either of the notes, the plaintiff might elect to have the damages paid by giving up one of the other notes : so as to avail himself of the costs of this action, which was properly commenced. But on this point we give no opinion.

We are all agreed that the evidence on which the defence prevailed was improperly admitted, and accordingly the verdict must be set aside and a new trial granted.