Opinion
September Term, 1859
John K. Porter, for the appellants.
William Inglis, for the respondent.
There can be no doubt that if the charge of fraud preferred against Greene in the answer had been proved, Tallman, if he had not sold the property, would have been entitled to recoup in this suit to the extent of his actual damage; and if that had exceeded or equaled the amount of the mortgage, it would have constituted an entire defence. But there was no attempt to show any fraud, nor was there anything in the evidence from which it could be inferred, on the trial.
In the absence of fraud, a party who has purchased real estate, and received a deed for it containing a covenant that it is free from any incumbrance, and has subsequently paid off and discharged an incumbrance, may set off what has been paid by him against the amount due on any mortgage for the purchase money. In order to avail himself of such defence, however, he would be bound to prove either that what had been paid by him was actually due, or that he had given notice to his vendor requiring that such vendor should pay off the incumbrance within a limited time, or that otherwise the purchaser would pay a specified amount. Some of the authorities lay down the rule that the purchaser may set off or recover the amount paid without any qualification; but it seems to me reasonable that a vendor who has been innocent of any fraud should have an opportunity to set himself right before he should be obliged to pay or allow more than the amount actually due. It is, I think, well settled that where the incumbrance has not been paid off by the purchaser of the land, and he has remained in quiet and peaceable possession of the premises, he cannot have relief against his contract to pay the purchase money, or any part of it, on the ground of defect of title. The reason is, that the incumbrance may not, if let alone, ever be asserted against the purchaser, as it may be paid off or satisfied in some other way; and then it would be inequitable that any part of the purchase money should be retained. The circumstances of this case furnish a strong illustration of the reasonableness of the principle. It is quite apparent that there is no probability that the owner of the mortgaged premises will ever be called upon to pay any part of the quit-rents. There is a mere possibility that a claim may be made by the city corporation; but in such case the existing owner may, by a complaint in equity, coerce the entire payment out of the other portions of the lands conveyed to Hammond; and if he could not do that, a recovery against him would enable him to sue for, or recoup, the fair value of the entire incumbrance.
The defendants Tallman and wife seek to recoup the damages sustained by them by reason of the liability of the land for contribution towards payment of the quit-rents, and estimate such damages at the difference between what he obtained and what, but for the incumbrance, he might have obtained for the lot. But such is not the rule, except in cases of fraud. Parties in other cases can only be entitled to the amount actually payable on such incumbrance, or, where the amount cannot be ascertained by calculation, to its value. In the case of Dimmick v. Lockwood (10 Wend., 155), Chief Justice SAVAGE remarked that "in all the cases which have been cited, there is none in our own courts where the purchaser has been permitted to recover beyond the consideration and interest and costs. There is none in Massachusetts where, under the covenant against incumbrances, the purchaser has recovered any more, though there the rule allows a recovery for the value at the time of the eviction. All the reasoning of our own judges goes to limit the responsibility of the grantor to the consideration with interest and costs; and I am unwilling to go further where the principle to be established may lead to greater injustice." That was an action for the breach of a covenant in a deed of land that it was free from incumbrances, and the decision was that the recovery should be limited to a portion of the consideration equivalent to the extent of the incumbrance, and not include the enhanced value of the land in consequence of subsequent improvements. The same is true in cases where there has been a general advance in the price of real estate. I am satisfied that the established rule in such cases is, that the recovery, when any can be had, must be restricted to the actual amount or value of the incumbrance, and, where the purchaser has not occupied or enjoyed the premises, the interest. No consequential damages are allowed. The reason given is, that when the incumbrance is actually unknown to the vendor, as is generally the case where he covenants against them, the means of discovering them are, or with proper exertions may be, equally accessible to both parties. If the intended purchaser should make proper examination, he would ordinarily discover an incumbrance, which must be in writing, and the evidence on record; and should he neglect to do that, he cannot reasonably claim any more than an exemption from positive loss. Now, what is the value of a lien specifically upon the lot in question? Under the circumstances, it is nothing. What is the actual loss to the defendant Tallman? That, too, is nothing. He was to pay or allow, in all, $6,000 for the lot. He occupied it without the payment of any part of the quit-rent until his sale to Bradford, when he obtained for it $8,000. He entered into no covenants in his deed, and, as the purchaser was not deceived as to the incumbrance, Tallman is under no obligation to return any part of the purchase money, should the lien for any part of the rent be enforced against the premises. The demand was not enforced against him while he owned the lot, nor has it been since, nor can it be now. He might, it is true, be subjected to a judgment if there should not be enough in the proceeds of the land to satisfy the debt and costs. But considering what the alleges to be the value of the premises, there is not enough of probability of there being a deficiency to form the basis of any action. Possibly the judgment might have been so qualified as to relieve him from any such liability, if he had asked for it; but he did not. I think that, under the circumstances, the defendant's claim to recoup or set off damages was properly rejected.
The assignment from Greene vested in the plaintiff the legal title to the securities. He was the legal owner when this suit was instituted, and the suit was rightly commenced in his name. It could be legally continued in his name, notwithstanding his having received the debt for which the securities had been assigned to him. ( Code, § 121.)
The judgment should be affirmed.
All the judges (except SELDEN, J., who was not present) concurring,
Judgment affirmed.