Case ID: va_38/html/0565-01.html
Source: Caselaw Access Project
Author: {"author": "TUCKER, P.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Haffey’s Heirs v. Birchetts &c.
    April, 1840,
    Richmond.
    Deed of Trust to Secure Note — Covenant—Breach— Subrogation to Remedy against Heirs on Warranty of Ancestor. — In order to secure the accommodation indorsers of a note due at hank, the maker conveys land to trustees by a deed in which he covenants for himself and his heirs, with the trustees and the bank respectively, that he is possessed of an absolute estate of inheritance in the premises, and that he will warrant and defend the same against all persons. After the death of the grantor, the indorsers pay the debt to the bank, and the trust property having been sold to satisfy a debt secured by a prior deed of trust thereon, they lile a bill to be subrogated to the rights of the bank under the second trust deed, and to have satisfaction out of other lands of the grantor descended to his heirs. If nun,
    1. Same — Same—Same.—The covenantin the second deed was broken by the sale under the ílrst:
    2. Same — Same—Same—Measure of Damages. — The complainants are entitled to come into equity for satisfaction out of the real assets in the hands of the heirs, to the extent of the damages accru-ingr from the breach of the ancestor’s covenant:
    3. Same — Same—Same—Same—Issue to Ascertain.— The amount of those damages being the sum paid in discharge of the first incumbrance, and so fixed and certain, an issue for the purpose of assessing them is unnecessary:
    Lands Descended to Heirs — Decree of Sale — Terms.— Decree requiring lands descended to heirs to be sold for cash, to satisfy a debt due from ancestor reversed, and sale directed to be made upon a credit of six, twelve, and eighteen months.
    Appeal from a decree of the circuit superior court of law and chancery for Henrico county.
    Roderick Haffey, late of the town of Pe-tersburg, by deed dated the 7th of December 1822, conveyed to Thomas Lambert and Robert Birchett a lot of ground on Sycamore street in the said town, upon trust to sell the same and apply the proceeds in discharge of a debt amounting to 1727 dollars, due from Haffey to a certain George Williamson, in case the said debt should not be punctually paid by Haffey at the expiration of twelve months from the date of the deed. This deed was duly recorded in the corporation court of Petersburg on the 1st of May 1823.
    *By another deed, dated the 25th June 1823, between Haffey of the first part, John P. May and Robert K. Jones of the second part, and the president, directors and company of the bank of Virginia of the third part, — reciting that Haffey was indebted to the bank, at their office of discount and deposit in Petersburg, upon two accommodation notes negotiable there, each for 1350 dollars, upon which notes Robert Birchett, Edmund Birchett and Peter Puryear were then the indorsers, and that, it being expected the said sums would be continued from time to time as loans from the bank to Haffey, upon other notes of the same character, indorsed by the said Birchetts and Puryear, or others, he had agreed to secure the payment thereof, and thereby indemnify the said indorsers, or any other or second in-dorsers, — the' same lot conveyed by the former deed for the security of Williamson’s demand was again conveyed to May and Jones, for the purpose of securing the debt due to the bank as aforesaid, with interest and charges thereon. Haffey, for himself and his heirs, covenanted with May and Jones, and the president, directors and company of the bank of Virginia, respectively, “jointly and severally, that he is possessed <?f an absolute estate of inheritance in the premises, and that he will warrant and forever defend the same against all persons whatever.” This deed also was duly recorded in the corporation court of Petersburg.
    In September 1824, Birchetts and Pur-year filed a bill in the superior court of chancery for the Richmond district, setting forth, that Roderick Haffej' (who was now dead) was in his lifetime indebted to them in a balance of account for goods purchased by the complainants on behalf of themselves and the said Haffey jointly, the complainants being, at the time, merchants and partners in trade, and Haffey being also a merchant and manufacturer; that at the time of executing the deed of the 25th June 1823, (which was exhibited with the *bill,) Haffey owned but one lot on Sycamore street, although two brick tenements were erected on it, and the said deed was intended to convey, and did convey, the whole lot and both tenements, while the deed for the benefit of Williamson conveyed only one half of the lot; that Haffey died leaving three infant children, Margaret, Henry and Jane, and his personal estate had been committed to Roger Mallory, serjeant of Petersburg, for administration; that the complainants had been compelled to pay the debt of 2700 dollars to the bank, with 8 dollars 6 cents for charges of protest, for recovery whereof they had brought an action against Haffey’s administrator, which was yet undetermined; that Haffey’s personal estate would be insufficient to pay the debt; that the moiety of the lot conveyed by the first deed of trust would shortly be sold, and the residue would be the only estate out of which the debts due the complainant could be satisfied. The bill prayed that the heirs and administrator of Haffey, the president, directors and company of the bank of Virginia, and May the survivor of the two trustees in the deed of the 25th June 1823, might be made defendants; that the lot might be sold, and the whole debt due the complainants paid; and general relief.
    The president, directors and company of the bank of Virginia, and May the trustee, answered, admitting that Haffey’s debt to-the bank had been paid by the complainants as indorsers.
    The heirs of Haffey, by their guardian assigned ad litem, answered, denying the allegation that their ancestor owned but one lot on Sycamore street; insisting that he held two adjacent lots on that street at the time of his deed to May and Jones, which conveyed but one of them, the same that had been previously conveyed for the security of Williamson’s demand; and claiming the other lot as their own property, free from the claim of the complainants.
    *As to Haffey’s administrator, the bill was taken pro confesso.
    . The complainants, having obtained leave to amend their bill and make new parties, accordingly filed an amended bill in December 1826, in which they stated, that since the institution of this suit, the lot conveyed by the deed for Williamson’s benefit had been sold under the provisions of that deed, and purchased by Joseph C. Swann; and they impeached the sale, as having been irregularly made. They further insisted, that even if they were mistaken in supposing the whole lot on Sycamore street to have been conveyed by the deed of the 25th June 1823, yet as that deed was expressly made for the purpose of indemnifying them as the indorsers of Haffey, they were entitled to' the benefit of Haffey’s covenant of warranty entered into with the trustees and the bank, and that covenant having been broken, they might rightfully claim indemnity out of the other portion of the lot, which was the only real estate in the hands of the heirs. To this bill, the heirs and administrator of Haffey, Thomas Lambert trustee in the first deed, George Williamson the creditor thereby secured, and Swann the purchaser of the trust property, were made defendants.
    The heirs of Haffey answered, submitting to the court whether the complainants were entitled to the benefit of the warranty contained in the deed to May and Jones ; contending however, that if it could under any circumstances enure to their benefit, yet as they had full notice of the existence and contents of the prior incumbrance, that incumbrance ought to be taken as excepted from the scope and intent of the warranty.
    Swann answered, insisting upon the fairness and regularity of his purchase under the first deed of trust; of which he contended that the complainants had actual notice, inasmuch as one of them, Robert Birchett, was one of the trustees in that deed.
    '“'Heither Williamson nor the administrator of Haffey answered the bill.
    In the progress of the cause, the court made an order referring to a commissioner, for settlement, the accounts between the complainants and Roderick Haffey, the account of Mallory’s administration upon Haffey’s estate, the account of the assets descended to Haffey’s heirs, and the account of the product and application of the fund conveyed in trust by the deed for the benefit of Williamson. By the commissioner’s report it appeared, that there was in the hands of Mallory, the administrator, the sum of 9S0 dollars 21 cents, due the estate of his intestate: that the real estate claimed by the heirs of Haffey was of the annual value of 300 or 400 dollars: that the proceeds of the lot conveyed by the first deed of trust amounted to 2459 dollars 5 cents, of which 2035 dollars 56 cents, the amount of Williamson’s claim, had been paid to him, and the residue to the complainants ; after crediting which, there remained due to the complainants 239 dollars 62 cents on account of their other transactions with Haffey in his lifetime, and 2746 dollars 11 cents on account of the bank debt.
    The circuit court of Henrico (to which.the cause had been regularly transferred) held, that the deed of trust under which the plaintiffs claimed, dated the 25th June 1823, only conveyed the tenement included in the prior deed of the 7th December 1822, and that the adjacent tenement was not conveyed by either of those deeds; but that the plaintiffs were entitled in equity to be substituted to the right of the president, directors and company of the bank of Virginia under the deed first mentioned, and to have satisfaction out of the real assets descended to the heirs of Haffey, to the extent of the damages sustained by the plaintiffs under the covenant of warranty in the first deed contained. Wherefore the court, confirming the report of the commissioner in *all respects, decreed that the administrator of Haffey should pay to the complainants the sum in his hands, due the estate of his intestate; and that unless the heirs of Haffey should, within six months from the date of the decree, pay the complainants so much of the sum of 2035 dollars 56 cents (the amount paid to Williamson the first incum-brancer) as should be equal to the balance remaining due to them after applying the personal assets in the hands of the administrator of Haffey as aforesaid, the land descended to the said heirs should be sold by commissioners named in the decree, at public auction, for cash, in order to satisfy that balance.
    From this decree, the heirs of Haffey appealed to this court.
    Spooner, for appellants.
    May, for appellees.
    
      
      Sale of Land — Covenant of Title — Breach.—See the principal case cited and approved in Sheffey v. Gardiner, 79 Va. 318 ; Rex v. Creel, 22 W. Va. 375.
    
    
      
       Same — Same — Same — Measure of Damages. — In Moreland v. Metz, 24 W. Va. 138, it is said : “ If a covenantof warranty is broken in Virginia or west Virginia, the measure of damages, when the land is entirely lost to the vendee, is the purchase money with interest from the date of the actual eviction, the costs incurred in defending the title and such damages as the vendee may have paid or may be shown to be clearly liable to pay the person who evicted him. But if the actual value of the land at the time of the sale he proven to be greater than the purchase money with interest, Ac., perhaps this actual value might be recovered in lieu of the usual measure of recovery. Stout v. Jackson, 2 Rand. 132 ; Threlkeld v. Fitzhugh, 2 Leigh 451; Jackson v. Turner, 5 Leigh 119 ; Haffey v. Birchetts, 11 Leigh 83.”
      Judicial Sales — Terms.—On this question, the principal case is cited in foot-note to Kyles v. Tait, 6 Gratt. 45 ; Pairo v. Bethell, 75 Va. 833. See monographic notes on “Judicial Sales” appended to walker v. Page, 21 Gratt. 636.
    
   TUCKER, P.

The only questions of importance in this case are those which arise out of the warranty in the deed of trust to May and Jones. The effect of that covenant of warranty was to give to the bar-gainees of the trust premises, in case of eviction, a right of recovery in value from the bargainor if living, or, if he be dead, to charge his heirs for the damages sustained by the breach of covenant, lo the value of the assets descended to them. Moreover, in the case of an incumbrance on the land anterior to that in question, the covenant is broken so soon as the bar-gainee has been turned out of possession by the first incumbrancer, or even so soon as he has been compelled in invitum to pay off the first incumbrance. 2 Romax’s Dig. 273; Hamilton v. Cutts, 4 Mass. Rep. 349. There is no necessity for him to involve himself in a law suit, to defend himself against a title which he is satisfied must ultimately prevail. Sprague v. Baker, 17 Mass. Rep. 586. For the ’’covenant to warrant and defend implies a covenant for quiet enjoyment, Emerson v. Proprietors of land in Minot, 1 Mass. Rep. 464, and it is broken by any lawful disturbance of a third person. In this case, therefore, the rights of the prior incum-brancer having been enforced by sale, and the incumbrance of 1he bargainees May and Jones thereby altogether defeated, the covenant of warranty may well be considered as broken.

The next question is as to the measure of damages. In case of a sale, the measure is the value at the time of the same, and the test of this value is the purchase money. But in case of an incumbrance, this principle can have no application, for price is not a subject of adjustment in the treaty for a security. Adequacy alone is inquired into. The true measure of damages, therefore, in case of eviction by superior title, is the value of the mortgaged or trust subject at the time of eviction, provided it do not exceed the amount of the debt secured; for it is obvious the creditor can never be damaged to a greater amount than that. If this view of the matter be correct, then it is clear that there is no error herein to the prejudice of the appellants; for the damages are taken to be 2035 dollars only, while the debt was 2700 dollars.

It is said, however, that the right of the parties to damages for breach of this covenant could only be asserted at law', and that a court of equity could not properly estimate them. As a general principle, this is true; but here the plaintiffs, having no rights but by the equitable principle of substitution, could assert no remedy at law. They could only get relief in equity. Moreover, although it is generally true that damages should be inquired of by an issue at law, yet here that could not be necessary, since the damages were fixed and already certain. The damage was the value of the land lost, and that value was ascertained by what it sold for. The debt of Haffey to Williamson was paid *out of a trust subject to which the second incumbrances had title, and Haffey could not complain, nor can his heirs complain, at reimbursing the second incumbrances to the full value of what has been paid for him to their prejudice. In this view of the matter, an issue must have been superfluous.

The decree, however, is erroneous .in directing a sale for cash. .

As to the other errors assigned, there is nothing in them, as they were not made objections in the circuit court.

On the whole, I am of opinion to reverse the decree, as to the direction to sell for cash, and affirm for the residue.

The other judges concurred.

The decree entered in the court of appeals was as follows:

“The court is of opinion that the legal effect and operation of the deed of trust from Haffey to May and Jones, and of the covenant of warranty therein contained, was, to entitle the parties for whose benefit it was executed, or those who might be substituted to their rights, to charge the real assets descended with such damages as may have arisen from a breach of that covenant. The court is further of opinion that the sale of the trust property under an anterior deed of trust was a breach of the covenant, and that the measure of damages was not (so far at least as the appellants were concerned) improperly fixed at the price for which it sold. The court is further of opinion that as the plaintiffs claim by substitution only, their .remedy was properlj" in a court of equity, where only the principles of substitution can be properly enforced. The court, however, is of opinion, that though in this case the long time that would elapse, before the application of the *net amount of rents from year to year to the discharge of the appellees’ claim would satisfy it, forbade a resort to that mode of providing the means of satisfying that claim, and justified the court below in accelerating that satisfaction by- a sale; jret, in the proper exercise of judicial discretion, the court below ought not to have decreed such sale to be made for cash, but such sale should have been made on a reasonable credit, which in this case is deemed to be a credit of six, twelve and eighteen months for equal instalments of the purchase money.” Therefore, decree reversed so far as it directs the sale to be for cash, and affirmed-in other respects, with costs to appellants ; and cause remanded for further proceedings.