Court Opinion

ID: 8296969
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:08:25.24968+00
Date Added: 2024-06-11T16:44:07.179156
License: Public Domain

Eeeeman, J.,
delivered the opinion of the court.
In 1872, complainant purchased from respondent the banking, house in which the latter bank had carried on its business for some years before. At the date of the purchase, there existed a lien in favor of S. Watson, trustee for the Bank of Tennessee, for unpaid purchase money, due for the property sold. It had been purchased by the Exchange and Deposit Bank at a sale made by Watson, together with other real estate adjoining, and then this banking house sold to the respondent. The consideration has been paid by complainant, and a deed with general warranty of title conveyed, has been made to the purchaser. The consideration stated on the face of the deed is twenty-five thousand dollars. The purchaser is still in possession, never having been evicted up to the present time.
The bill seeks as its leading object, and this is certainly the gravamen of its charges, a rescission of the contract on the ground of fraudulent concealment of the existence of the incumbrance in form of a lien for unpaid purchase money. The fact that such lien exists, was known, or might and should have been known by the vendor, is clearly made out in the record, and that the fact was not communicated to the purchaser. There is no evidence of any purposed fraud in this, as it clearly appears the vendor assumed the *422lien had been or certainly would be removed by payment, and would never embarrass the title conveyed. This turns out to be a mistake, and the whole remains to this day an existing incumbrance, to the satisfaction of which the property is liable, but has not been as yet subjected.
The chancellor decreed a rescission of the contract as then sought by complainant. He further made the proper order as incident to the relief decreed, directing an account and report of the purchase money paid for-the house and lot, with the reasonable value of the rents while occupied by complainant, less taxes paid on the' same. This was necessary, as a matter of course, in order to effectuate and complete what had been decreed, and end the litigation between the parties.
It appeared in the answer of the respondent, as well as clearly from the proof, that the value of the house and lot was only estimated in the negotiation between the parties at about $15,000, while the other advantages and benefits obtained or purchased from respondent, included under the idea of. good will, made up the other ten thousand dollars of the consideration stated on the face of the deed. The chancellor took this view of the facts — the only one really to have been taken from the case as made out in the pleadings and proof before him.
The good will in this case evidently consisted in results favorable and advantageous to’ the purchasers, arising not only from the occupation of this precise-house, long used as a bank, with an established line of customers, but also in other stipulations of the con*423tract, such as that, on the day complainant was ready to open their bank for business, the vendor should at once cease to do such business,- by discounting notes, receiving deposits, in a word, going into liquidation in favor of the purchaser, 'the purchasing bank to close up the unsettled business of the retiring bank.
It is obvious that these elements of value were fairly the subjects of contract, and advantages which were desirable, and to be sought as benefits by the purchaser. They do not admit of precise estimation, but elements of uncertainty necessarily enter into such a calculation; still the parties had the right, the one to demand pay for them, the other to agree to give what was demanded or refuse, as he might deem to his interest, and whatever estimate the parties themselves put upon such incidental advantages would not be likely to be disturbed or dissented from by a court dealing with such a contract made between intelligent business' men, where no fraud or bad faith had entered into the transaction. We need not undertake to analyze the elements of value that entered into the considerations mentioned, to see how much of them consisted in the advantage of continuing a banking business in the stead of a retiring bank, though under a different name, and the prospect of being able to retain its customers under the circumstances, or how much came from the fact of the occupation of the banking house, commonly called “the good will of the premises,” and which only could be dealt with as a part of the premises: See Stewart v. Gladstone, 27 W. R., 512; L. R., 10 Ch. Div., 625; Albany Law Register, vol. 19, 503. *424It suffices to say, that all the elements we have mentioned entered into the consideration of this contract of sale and purchase, and were estimated evidently by the parties at $10,000, and so the chancellor has found.
On this basis he has made his decree, giving complainant a rescission of the contract for sale of the house and lot; required respondents to pay back the money received for the house and lot, but charged complainant with rents during the period of occupation, less taxes paid. From this decree complainant has appealed, the defendant making no objection to it, submitting to the result, insisting the chancellor has made the proper decree as to the incidental relief, conceding the right to a rescission.
We need not discuss the propriety of the chancellor’s decree ordering a rescission of the contract on the facts. The case was clearly made out, so far as it can stand on the ground of concealment or failure to give information of an incumbrance on the lot materially affecting the title.
The only question is, whether the complainant, on the facts of the record, was entitled to any different decree from that which he has obtained. He insists he is entitled, under the alternative prayer of his bill, to compel the vendor to specifically execute his contract, and then assumes that contract to be one, if executed, that will authorize this court to compel the removal of the incumbrances now shown to be fastened on the land. In this last assumption lies the error of the contention. The vendor has only given, the vendee only received, a covenant of warranty of title. *425All that this covenant gives him he would fairly be entitled to, but that is settled by all our authorities to be, when breached, the purchase money paid, with interest. The breach ordinarily is by eviction, but when valid incumbrances are found on the land, we have held, the vendee may .pay these off, and treat this as an eviction pro tanto, and recover for such breach. We cannot, however, in a case like this, make an additional covenant, to-wit, one against in-cumbrances, and finding that broken, enforce that by compelling the party to perform it, when in fact he has only a covenant of warranty, which has not been broken either by eviction, or constructively breached by the payment and discharge of all or any part of the incumbrances by the vendee. This would be to make a contract to meet the exigencies of the case, which the parties have not made, and enforce it after thus making it.
If we should say, on the principle of quia timet, growing out of anticipated difficulty in securing indemnity on the covenant against the bank, it being in litigation, and assets about to be distributed, that we would anticipate the actual breach in either of the recognized methods stated, the result would only be the same, a decree for payment of the purchase money back with interect, credited by rents enjoyed by purchaser, less taxes paid by him, and betterments that have permanently enhanced the value of the land. No third party claims the rents in this case, or is now entitled to do so. This is precisely the result reached by the chancellor's decree, and we see no way *426to avoid the conclusion he has reached. The case of Baird v. Goodrich, 5 Heis., 23, is in accord with this view, as there was both a covenant of seizin, as well as of warranty, the covenant of seizin being broken as soon as made, being false. Even on the idea that the covenant of warranty and insolvency gave the right in that case, the measure of relief was not discussed or decided, and could only have been the purchase money with interest, less value of betterments, after deducting rents and taxes.
The decree of the chancellor is affirmed with costs.