Court Opinion

ID: 3514286
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:25:26.983871+00
Date Added: 2024-06-11T14:18:03.433165
License: Public Domain

I am unable to agree with the majority in this case. I think there is a vital distinction between the purpose of a warranty against incumbrances and warrant of title, and that the fundamental distinction is that the breach of warranty against incumbrance is a personal covenant against the warrantor, while the breach of warranty as to title and quiet enjoyment is a covenant running with the land affecting the possessory interest.
In 11 R.C.L., p. 1134, under the title "Covenants," subheading, "Incumbrances," section 48 reads:
"An incumbrance, within the terms of a covenant against incumbrances, includes every right to or interest in the land to the diminution of the value of the land, but consistent with the passage of the fee for the land. It does not depend for existence upon the extent or *Page 869 
amount of the diminution in value, but extends to cases in which, by reason of the burden, claim, or right, the owner does not acquire complete dominion over the land which the grant apparently gives. Accordingly, an incumbrance is a burden upon land depreciative of its value, such as a lien, easement, or servitude, which, though adverse to the interest of the landowner, does not conflict with his conveyance of the land in fee. And though the burden be only inchoate, if, nevertheless, it is a right which may be enforced against the property and against the will and consent of the owner, in spite of any objection he might make, as such it is a burden on the land deprecative of its value, and hence an incumbrance. The contract to convey free from incumbrances ordinarily has reference to incumbrances of liens actually existing when the contract is executed, or thereafter created, or suffered by the act or default of the vendor."
In 7 R.C.L., p. 1135, section 49, it is said: "Nature ofCovenant. — The preponderance of authority establishes the proposition that covenants against incumbrances are merely personal, and do not run with the land; hence, such covenants under this rule are broken, if at all, when made, and whether the covenant in the deed is express or one implied by law. The covenant against incumbrances is sometimes, however, regarded as one of indemnity, running with the land; and especially if coupled to the covenant for quiet enjoyment, as is usually the case in England."
In 7 R.C.L., p. 1135, section 50, it is said: "It is a general rule that a covenant against incumbrances in a deed protects the grantee against every adverse right, interest, or dominion over the land, whether he had notice of such adverse interest or not; and that a covenantor covenants against known as well as unknown defects. Both parties may be in possession of all of the facts. Either or both may believe an incumbrance is not an incumbrance. If the apparent incumbrance turns out to *Page 870 
be real, the seller must answer, unless he excepts the incumbrance from his covenant," etc.
The bill in the present case not only prayed for the money paid upon the contract, but prayed for relief against both the immediate vendors and Whisenant, who sold to Burch Williams under a warranty also, and against the deed of trust which the appellant assumed and which was foreclosed. The bill also prayed for general relief, and under the prayer for general relief the appellant is entitled to any relief that the facts involved in the case establish and which are alleged in the bill.
So it appears that Whisenant had warranted to Burch Williams that there were no incumbrances against the land, and was obligated under this warranty to acquire the title outstanding in the deed of trust, or to discharge the incumbrance at once.
In 15 C.J., p. 1247, section 63, it is said: "The covenant against incumbrances is generally regarded as a covenant inpraesenti, broken if at all as soon as made, and hence, except in those jurisdictions where choses in action are assignable, or where other statutory provisions control, does not run with the land, although this rule has been held not to apply to a covenant to save a husband, his heirs, etc., harmless from any claim of dower on the part of his wife in consideration of a conveyance by the husband of certain property in trust for the use and benefit of the wife; and some courts contend that a covenant against incumbrances, being one of indemnity, runs with the land and passes to a remote grantee notwithstanding it is technically broken upon the execution of the original deed, especially where a manifest intention that it shall operate in future appears, as where it is intimately associated with the covenant for quiet enjoyment or for further assurance," etc.
In a case note to Geiszler v. De Graaf, 166 N.Y. 339,59 N.E. 993, 82 Am. St. Rep. 659; at page 676 of the Am. St. Rep., it is said under title "Covenants as to Incumbrances": *Page 871 
"The great preponderance of authority establishes the proposition that covenants against incumbrances are broken immediately, if at all, are merely personal, and do not run with the land (Sayre v. Sheffield, etc., Coal Co., 106 Ala. 440, 18 So. 101; Logan v. Moulder, 1 Ark. 313, 33 Am. Dec. 338;Brooks v. Moody, 25 Ark. 452; Lawrence v. Montgomery,37 Cal. 183; Salmon v. Vallejo, 41 Cal. 481, 484; Mitchell v.Warner, 5 Conn. 497; Davis v. Lyman, 6 Conn. 249, 258;Butler v. Barnes, 60 Conn. 170, 21 A. 419 [12 L.R.A. 273];Redwine v. Brown, 10 Ga. 311; Heath v. Whidden, 24 Me. 383;  Tufts v. Adams, 8 Pick. [Mass.] 547; Clark v. Swift,
3 Metc. [Mass.] 390; Whitney v. Dinsmore, 6 Cush. [Mass.] 124; Blondeau v. Sheridan, 81 Mo. 545; Moore v. Merrill,17 N.H. 75, 43 Am. Dec. 593; Morrison v. Underwood, 20 N.H. 369; Stewart v. Drake, 9 N.J. Law, 139; Chapman v.Holmes, 10 N.J. Law, 20; Garrison v. Sandford, 12 N.J. Law, 261; Carter v. Denman, 23 N.J. Law, 260; Wilson v.Cochran, 46 Pa. 229; Funk v. Voneida, 11 Serg.  R. [Miss.] 110, 14 Am. Dec. 617; Swasey v. Brooks, 30 Vt. 692;Pillsbury v. Mitchell, 5 Wis. 17; Fuller v. Jillett
[C.C.], 2 F. [30]), whether the covenant in the deed is expressed or one implied by law (Lawrence v. Montgomery, 37 Cal. 183). A covenant, whether express or implied, that land granted is free from incumbrances, does not run with the land, or pass to an assignee or succeeding grantee. McPike v. Heaton, 131 Cal. 109, 82 Am. St. Rep. 335, 63 P. 179."
See, also, Williams v. O'Donnell, 225 Pa. 321, 74 A. 205, 26 L.R.A. (N.S.) 1094, and case note; Webb v. Wheeler,80 Neb. 438, 114 N.W. 636, 17 L.R.A. (N.S.) 1178; Duval v.Craig, 2 Wheat. 45, 4 L.Ed. 180.
In Sutton v. Cannon, 135 Miss. 368, 100 So. 24, we decided that a covenant of general warranty made one who executed the warranty liable for a breach of warranty by reason of an incumbrance, although the grantee had notice thereof at the time of purchase. It was also decided in this case that the grantee in the deed did not have to *Page 872 
pay out more than the purchase price to discharge an incumbrance or to perfect the title. It was stated in this opinion (135 Miss. 375, 100 So. at page 26), that:
"The fact that a purchaser has notice of an incumbrance may be the reason for his requiring a covenant within whose scope it is included, and having taken this covenant he has the right to rest in the security afforded thereby, and to demand that the warrantor discharge it at its maturity, and upon his failure to do so the covenantee may either discharge the paramount incumbrance or surrender to the holder thereof and recover of the covenantor for a breach of the warranty."
This case did not involve a demand and suit before the maturity of the incumbrances warranted against, and the expression in the opinion that the grantee had the right to demand that the warrantor discharge it "at its maturity" is not a decision that he would have to wait until it matured before bringing an action for a breach. In that case the incumbrance had been matured and foreclosure had thereunder before the suit was brought. It seems clear to me that it is the duty of the person warranting against incumbrance to forthwith remove the incumbrance and certainly to do so on demand of the grantee.
This seems to be clearly indicated in our statute, section 895, Hemingway's Code (section 1168, Code of 1906), wherein it is provided:
"If any person shall sell, barter, or exchange or mortgage, or give deed of trust on, any property, real or personal, which he had before sold, bartered, or exchanged, or obligated himself to sell, barter, or exchange, or which he had mortgaged, or in any manner incumbered, or on which he knows there is a lien of any kind, by contract or by law, without informing the person to whom he so sells, barters, exchanges, or bargains, or mortgages or gives deeds of trust on it, of the exact state of the property as affected by said acts or of the lien or incumbrance thereon, he shall be guilty of obtaining under false pretenses *Page 873 
whatever he received from the person dealing with him, and shall, on conviction, be punished therefor, as for obtaining goods under false pretenses."
And also section 992, Hemingway's Code (section 1262, Code of 1906), making it a misdemeanor, among other things, to sell or dispose of any property upon which there is a lien without the consent of the mortgagee or beneficiary.
In 7 R.C.L., p. 1163, section 78, it is said: "According to the great weight of authority, the covenant against incumbrances is a covenant as to things existing at the time it is made. If broken at all, it is broken at the moment it is made, and a cause of action then exists which does not pass by force of any conveyance purporting to grant the premises."
In 7 R.C.L., p. 1180, section 103, it is said: "The damages under a covenant against incumbrances as distinguished from the other covenants in a warranty deed are a just compensation for the injury actually suffered," etc.
It seems to me that these authorities conclusively establish a right of action, and that it was the duty of the court to determine the damage to the complainant resulting from the incumbrance warranted against, and which the defendants refused to remove on notice to do so, and on notice of the fact that the vendee had a resale which could be made only by having the incumbrance removed. In the case before us there was an incumbrance of seventy-five thousand dollars which the complainant had not assumed, plus an incumbrance of sixty-five thousand dollars which he had assumed, amounting altogether to one hundred forty thousand dollars, whereas he had only contracted to pay eighty-seven thousand dollars, of which he had paid a part.
The bill alleges that the property was sold to him on representation that he could make money reselling it, and that he bought it with the distinct knowledge and understanding that he was buying it for resale. I think *Page 874 
that the facts in the record conclusively show that all the parties to all of these transactions knew that the property was being bought for resale or for speculative purposes rather than for purposes of occupation and use. Whisenant, having warranted the title against the incumbrance which existed against it, and which caused the complainant's injury and loss, was in no position to foreclose for default in the payment of the notes which the complainant had assumed. Had the property in fact not been incumbered, complainant would clearly have complied with his contract, would have discharged his obligations, and would have made a profit. The warranty against incumbrances ought to protect the buyer in his right to use the property for procuring loans and other uses consistent with possession, which are most valuable rights. It would sound exceedingly foolish to a man unacquainted with the ancient legal rules that the incumbrance caused no damage. If the rule ever existed, which I do not think it did, it has ceased to meet the conditions of modern life, and certainly ought to be abolished. I think the present decision is the first decision in this state which construes the warranty against incumbrances as it is now construed. The deeds involved in this suit contain five separate and distinct warranties. To have property unincumbered is certainly a desirable and valuable right. If it is incumbered, he is denied one of the greatest uses of his property under modern conditions of society. The loan value of property is one of its chief and most attractive features, and certainly this loan value is completely destroyed where the outstanding incumbrances are not yet due and which the grantee cannot discharge without the consent of the holder. If the rule adopted is a sound rule of legal construction, the legislature certainly ought to change the rule so as to give an immediate right of action for the difference in the value of the property unincumbered and the value with the incumbrance on it. *Page 875