Case ID: va_41/html/0643-01.html
Source: Caselaw Access Project
Author: {"author": "BALDWIN, J. ALLHN, J. STANARD, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Findlay v. Toncray.
    August, 1843,
    Lewisburg.
    (Absent Cabell, P., and Brookk. J.)
    Elegit — Lien of - Land Conveyed in Trust General Warranty* — Right of Blegit Creditor against Purchaser under Deed.- -Under a deed of trust conveying land with general warranty to secure debts, the land is sold for more than enough to pay those debts. The purchaser institutes a proceeding against the grantor for unlawful detainer, and obtains a judgment against him. And then the purchaser insists, 1. that he was not bound to pay his purchase money (and therefore cannot be charged with interest on the same) until he obtained possession; and 2. that he may retain part of the surplus of purchase money to pay the costs recovered by the judgment on his complaint for unlawful detainer. The claims of the purchaser are objected to by a creditor of the grantor, who obtained a decree against him after the deed of trust, and sued out an eligit within the year. Held (per totam curiam) the claims so made by the purchaser cannot be allowed. — The purchaser further claims to apply other parts of the surplus to extinguish a dower right in the property existing at the time of the warrar ty, and to pay taxes assessed on the property before the sale was made. Held by two judges (dissentiento Stan-aed, J.) these claims also must be disallowed.
    Case Approved. — The case of Foreman v. Loyd and others. 2 Leigh 284. recognized as a binding authority.
    Rufus Soule executed deeds of trust on certain houses and lots in the town of Abingdon, to secure particular debts specified in those deeds. Afterwards a decree and various judgments were rendered against him. The decree was obtained by Lewis Toncray the ISth of October 1836, and upon it an elegit issued the 13th of June 1837, upon which the sheriff made the following return: “The defendant has no real estate but what is so encumbered by deeds of trust that it could not be extended, and no personal estate liable to this writ.” The judgments were rendered some before and some after the decree. Upon all 375 the judgments writs *of capias ad satisfaciendum issued, which were levied on the body of the defendant. Some of them were levied before the decree and some after it; but in no case was the oath of insolvency taken until after the decree. Upon the levy of each the defendant obtained the benefit of the prison bounds, and he remained a prisoner in execution until the 31st of July 1837, when he was discharged as an insolvent debtor.
    In January 1838, Toncray exhibited a bill in the circuit court of Washington, setting forth, that the houses and lots conveyed by the deeds of trust were sold in May 1837, and purchased by' Alexander Findlay, the trustee in one of the deeds, for 3125 dollars. That the creditors of Soule disputing the validity of the sale, the property was again advertised, and a second sale made in September 1837, when Findlay purchased it for a less sum; but he Findlay admitted that he was bound to make good the first sum. That the debts secured by the deeds of trust, together with the expenses of sale, amounted only to 2964 dollars 65 cents, and the surplus of 160 dollars 35 cents was paid over by Findlay to Jacob Lynch, one of the trustees. That Findlay afterwards drew from Lynch 93 dollars 36 cents, that he might retain 4 dollars 60 cents, part thereof, for the town tax upon the property for 1837, which was charged by the town to Findlay, and might retain another part for a sum paid by him to extinguish the dower claim of Sarah Graham in said property, and the residue thereof as the amount of a judgment he had obtained against Soule, upon a warrant of forcible entry to recover possession of the property. That 66 dollars 99 cents yet remained in the hands of Lynch. The complainant insisted that the lien created by his decree upon the property was superior to that of any of the judgment creditors, and that he had .a right to the 160 dollars 35 cents. The complainant farther stated, that in paying over the money, 376 Findlay retained *the interest for 6 months, amounting to 61 dollars 99 cents, which the complainant believed he had no right to retain. Findlay, Lynch and the judgment creditors were made defendants.
    John D. Mitchell was allowed to answer with Findlay. Their answer stated, that Soule had conveyed to the trustees in the several trusts under which these respondents purchased, with general warranty, and.that all which had been retained by them had been retained as upon contracts running with the land. Upon this ground, they claimed to retain 75 dollars paid mrs. Graham for her dower; the taxes charged on the lots for 1837; the costs of the proceeding, made necessary by Soule’s own act, to oust his possession, and interest on the amount of the several debts paid, from the day of payment till the date at which possession of the property was rendered. With their answer they exhibited a statement, whereby it appeared that if interest were charged on all the debts to the 25th of September 1837 (the time of obtaining possession), and the other deductions made as contended for by them, a balance would be due them of 34 dollars 97 cents. They insisted that whatever they might retain against Soule, they might also retain against the complainant, especially as Soule was insolvent.
    The other defendants, though served with process or proceeded against by publication, did not answer.
    The cause came on to be heard the 11th of October 1839. On consideration whereof, the circuit court was of opinion that the decree of the 15th of October 1836 constituted a lien in favour of the complainant, subject onlj' to prior liens; that the sale of May 1837 being the one under which Findlay claimed, his claim for interest to September 1837 on the purchase money paid was unfounded; that he had no claim valid against the complainant for the costs of the warrant on the complaint for unlawful detainer; and that as, at the sale, 377 *he purchased only Soule’s right to the property, his subsequent purchase of the dower of Sarah Graham gave him no claim to retain any portion of the purchase money. It appearing that after disallowing these claims, there was a surplus in the hands of Findlay of 116 dollars 75 cents, and in the. hands of Lynch of 66 dollars 99 cents, the court decreed in favour of the complainant against them respectively for the same, and decreed that Findlay pay the complainant’s costs, with the exception of the cost of serving’ the process and printing the order of publication as to the other defendants.
    On the petition of Findlay an appeal was allowed.
    The cause was submitted (without argument) by B. R. Johnston for the appellant, and M’Comas for the appellee Toncray.
    And as the record contained no copies of the deeds of trust, decree and judgments mentioned in the bill and answer, they agreed that the same were correctly set forth therein, and were to have the same effect as if copied at large.
    
      
      Covenant of Warranty--How treated. The principal case is cited in Marbury v. Thornton, 82 Va. 705, 1 S. E. Rep. 909, to the point that a covenant of warranty can never be treated as a covenant against mere incumbrances. See monographic note on “Covenants’- appended to Todd v. Summers, 2 Gratt. 167.
      Covenant of Title — When Action Lies — Actual Eviction. — The principal case is cited in Jones v. Richmond, 88 Va. 234.13 S. E. Rep. 414, for the proposition, that a covenant of title is supposed to be in fact and in essence substantially the same as a covenant for quiet enjoyment, and it is believed that no action lies upon it until actual eviction, or at least disturbance of the possession.
      Same — Same—Same—Principal Case Disapproved.— But in Sheffey v. Gardiner, 79 Va. 315, the court said: “There are, undoubtedly, authorities which hold that there can be no breach of warranty of title, or warranty lor quiet enjoyment, and there seems to be no difference between these warranties upon this point, until there has been an actual eviction, and this view has received some slight support from the dieta of certain of the judges in this state. Dickinson, v. Hoomes, 8 Gratt. 353; Findlay v. Toncray, 2 Rob. 374. But such is clearly not now the accepted doctrine, nor is it supported by the weight of reason or authority, as a brief reference to a few of the many cases, elsewhere decided, in which this ■subject has come under review, will show.”
      Purchaser at Public Sale — Title-Special Warranty— Caveat Emptor. — A purchaser at a public sale of land, made by a trustee, must look to the title of the grantor of the land; and he is entitled only to a deed with special warranty of title. To such a sale the principle of caveat emptor applies. Fleming v. Holt. 12 W. Va. 163, citing Petermans v. Laws, 6 Leigh 529; Saunders v. Pate, 4 Rand. 8; Sutton v. Sutton, 7 Gratt. 237; Findlay v. Toncray, 2 Rob. 374; Rawles on Covenants, p. 118; Goddin v. Vaughn, 14 Gratt. 117.
      The principal case is cited in Jones v. Thorn, 45 W. Va. 193, 32 S. E. Rep. 176. See foot-note to Goddin v. Vaughn, 14 Gratt. 103.
    
   BALDWIN, J.

I think there is no reason to doubt that the plaintiff’s decree in October 1836 was a lien upon the debtor Soule’s equity of redemption under his deed of trust; for though the equity of redemption could not be sold under a fi. fa. and was not extendible, yet the decree constituted an equitable lien thereupon, entitled to priority over subsequent liens by judgment or otherwise. 1 Sugd. on Vend. 542 ; Haleys v. Williams, 1 Leigh 140; Coutts v. Walker, 2 Leigh 268. This equitable was. equivalent to a legal lien, and paramount to the rights, subsequently accruing, of the schedule creditors. Foreman v. Loyd &c., 2 Leigh 284. It placed the plaintiff in the stead of his debtor, and entitled him to have his debt discharged out of the surplus moneys in the hands of the trustees. 1 Sugd. *on Vend. 545. And as this right is by force of the lien on the equity of redemption, it has relation to the date of the decree. The circumstance that the plaintiff’s elegit was not sued out till after the sale under the deed of trust, is immaterial; for it is the judgment that gives the lien, which lien continues during the capacity to issue an elegit, except against an elegit actually levied. Coleman v. Cocke, 6 Rand. 629; United States v. Morrison &c., 4 Peters 124.

The retainer claimed by the purchasers out of the surplus proceeds of the trust sale can be regarded only by way of setoff, and is therefore subordinate to the lien of the plaintiff. The only item of the claim which can have the colour of a lien is the money paid to extinguish a claim of dower in the property; and that must be, if at all, by force of the covenant of warranty in the trust deed. But how can that covenant be applied to the surplus proceeds of the sale? It was of course no lien upon the property conveyed by the deed, but a personal covenant to secure the title to that property. If the sale had been of enough only of the property to satisfy the trust, the covenant could not have operated as a lien upon the residue; and when the whole property was sold, as a matter of necessity or convenience, the conversion of the surplus from realty into personalty could have no effect upon the question of lien. If the purchasers have a right to retain the value of the dower right out of the surplus, it must be upon the idea that they did not obtain the whole subject purchased, and so there was a partial failure of consideration. But this is not true in point of fact: they did obtain all that they purchased. They purchased subject to the claim of dower. The trustee sold nothing more than was vested in him by .the deed, and with special warranty only. The dower right was not conveyed by the deed, which could not convey or assure % greater right or estate than the grantor might lawfully convey or assure. 1 R. C. of 1819, ch. 99, 1 20, p. 368. The purchasers were compensated for the incumbrance of the dower right by the consequently diminished price which they had to pay for the property ; and if they are to retain the value of that incumbrance out of the surplus, then the3’- will be twice compensated for the same defect of title. I deem it unnecessary 1:o consider whether an action on the covenant of warranty could in any event be maintained by the purchasers, as assignees of the trustee, against the grantor, by treating it as a covenant running with the land. It is certain that they could maintain no such action until after eviction. 4 Kent’s Comm. 471; Mitchell v. Warner, 5 Conn. R. 497. Until then the covenant is unbroken, and the extinguishment of the dower right by purchase can give no right of action against the covenantor, and much less the right to retain out of the surplus proceeds of the trust sale. A covenant of warranty cannot be treated as a covenant against mere incumbrances; and if it could, a covenant against incumbrances is a personal covenant, not running with the land •or passing to the assignee.

I think the decree of the chancellor ought to be affirmed.

ALLHN, J.

Upon the only question in regard to which there is a difference of opinion in the court, it seems to me that the purchaser at the sale made by the trustee is entitled, as assignee of the trustee, to the benefit of the covenants of warranty contained in the deed of trusj:; that as between the purchaser and the first vendor, the sale is to be considered as though the conveyance had been made directly to the purchaser by the debtor, instead of being made, as it was, through the intervention of the trustee. So regarding the transaction, the purchaser acquired the vendor’s title to the *land, with a covenant of warranty to protect him against an outstanding superior title. As against his vendor, he could not be considered as purchasing subject to incumbrances. He had a right to rely on the covenant of the vendor to protect him against such in-cumbrances, and whenever evicted, could maintain his action on the covenant. His claim, however, to compensation rested in action until eviction. The purchaser, upon the faith of his title and warranty, agreed to give a specific sum for the property. Upon the surplus after satisfying the deed of trust, the lien of the judgment creditor attached before any breach of the covenant of warranty. Having so attached, it could not be destroyed by a subsequent breach, much less by a mere retainer to satisfy an outstanding incumbrance, when there never had been an eviction, and non constabat that there ever would be. I think the decree should be affirmed.

STANARD, J.

The judgment creditors are not contesting before this court the priority that the decree has given to the claim of Toncray, and if they were, that contest would in all probability, under the authority of Foreman v. Loyd &c., 2 Leigh 284, be unavailing. Is the decree right as between Toncray, claiming a lien on the surplus under his decree against Soule, and Findlay the purchaser under the deed of trust, and for whose purchase the alleged surplus, if any, arises?

That Toncray’s decree formed an equitable lien on Soule’s equity of redemption in the property conveyed by the deed of trust, before the sale under the trust, and on what is properly to be deemed the surplus after the sale, is, I think, free of reasonable doubt. The equity of redemption having been converted before the assertion of the lien, and being represented, when the lien was asserted, by the surplus that might remain after the satisfaction of the claims secured by the trust, *it is to that surplus that the lien in this case attaches. It is, I think, equally free from doubt, that this lien overreaches the lien of any creditor of Soule subsequently accruing, either general by subsequent judgment or decree in favour of other creditors, or specific by subsequent conveyance of the debtor. . The consequence is that a purchaser under the deed of trust could not, were he a creditor of Soule, absorb by his debt the surplus of such purchase over the debts and charges secured by the trust, unless the debt constituted an elder lien. In other words, unless the debt, even if due to another, would be entitled to priority, a creditor of Soule could not, by becoming a purchaser at the sale under the trust, put his debt in, advance of other debts in favour of which there were elder liens, and thereby give a destination to the surplus different from that it would have had if another had been the purchaser.

Applying these principles to the case under consideration, the result would be, that if the abatements claimed by Findlay from the purchase money were in the nature of retainer or setoff for responsibilities of Soule to him, such abatements Ought not to be allowed in derogation of the prior and superior lien which Toncray has by virtue of his decree. The question then is, are the abatements claimed by Findlay of this nature? That which is claimed for the costs of the proceeding for unlawful de-tainer, is, I think, obviously of this nature, and ought not to be allowed. The claim for interest during the time possession was withheld, (which is in substance a claim for the detention of the possession, the interest being the equivalent for the use and occupation lost during such detainer,) partakes of the nature of the claim for costs incurred to obtain possession; and that too was properly disallowed. But I cannot agree that the abatement claimed for the incumbrances from which the purchaser has had to relieve the property, is in the nature of setoff of a distinct claim against an ^amount ascertained to be due as purchase money, so far as the question affects the surplus. To my apprehension, it enters into and forms an essential element in the enquiry (at least so far as respects the ascertainment of a surplus) what is the amount of purchase money that the grantor in the deed of trust, ánd his judgment creditor claiming under him with an investiture of all his rights and exempt from his independent responsibilities, can justly claim as due from.the purchaser? So entering into that enq.diry, the amount of purchase money cannot be correctly ascertained until due allowance is made for these incumbrances; and that only can properly be regarded (at least in equity) as the amount of the purchase money in respect to the debtor, ánd his judgment creditor claiming his equity of redemption or its avails, which' is left after abatement for the incumbrances against which he warranted. The deed of trust conveyed the property with general warranty of the grantor. The deed subjected the property to be sold, and the surplus of the proceeds which might remain after discharging the enumerated debts was to be paid to the grantor. The trustees held under the deed beneficially for the creditors to the extent of their claim, ‘and for the grantor to the extent of the surplus. In the execution of the trust by. sale, the creditors, so far as they were concerned, may be regarded as vendors with special warranty,' and to the extent of their interest the purchaser was bound for the purchase, though there might be a defect of title: and though for that defect the grantor was responsible on his warranty, that could not impair the obligation which the purchaser incurred to the creditors by his purchase. But how is it in respect to the surplus? The grantor to whom that surplus enured, and under whom it is claimed by his judgment creditor by virtue of the lien of his judgment, was, through the agency of the trustee, vendor with general warranty. Any defect in or *incumbrance upon the subject sold' was, pro tanto, a failure of the consideration, inseparably connected with the contract' of purchase, and operating on the nominal amount of the purchase money, not as a setoff of a distinct liability of the vendor against a liquidated amount of purchase money due from the vendee, but as an essential element to be taken into account in ascertaining the amount of the purchase money originally demandable of the purchaser. Suppose a sale with warranty had been directly made by the grantor, instead of being (as it was) a sale by him through the agency of the trustee, and there were a defect, either from deficiency of quantity or from an incumbrance within the scope of the warranty; would not the responsibility of the purchaser on his purchase, in a suit to charge him with the purchase money, be the amount stipulated to be paid for the full quantity and unincumbered title, minus the amount of the deficiency or incumbrance? In such a case I think it could not, with any propriety of legal language, be said that the purchaser is indebted the whole price of full quantity and unincumbered title, and the vendor indebted to him the value of the deficiency or the incumbrance, and that the abatement from the price on account of the deficiency or incumbrance is the setoff of the debt for that against the debt for the purchase. The case supposed and that under consideration are substantially the same. My opinion therefore is, that an abatement should have been made from the nominal amount of the purchase, for the taxes and dower right from which the purchaser has had to disincum-ber the property, and that the decree, which has denied this abatement, is erroneous.

Decree affirmed.