Adams v. Reed

• Citation: 40 P. 720,11 Utah 480
• Decision Date: 03 June 1895
• Docket Number: 557
• Court: Supreme Court of Utah
• Parties: LOUIS B. ADAMS AND OTHERS, APPELLANTS, v. EDWARD A. REED AND OTHERS, RESPONDENTS. [1]

40 P. 720

11 Utah 480

LOUIS B. ADAMS AND OTHERS, APPELLANTS, v. EDWARD A. REED AND OTHERS, RESPONDENTS. ^[1]

No. 557

Supreme Court of Utah

June 3, 1895

APPEAL from the District Court of the Fourth Judicial District. Hon James A. Miner, Judge.

Action by Louis B. Adams and Watson N. Shilling against Edward A Reed, H. H. Henderson and others for the reformation and foreclosure of a mortgage. Defendants filed a cross complaint asking for a return of the money paid and for the cancellation of the mortgage and notes given as the purchase price, on the ground of failure of title. From a judgment for defendants confirming the report of Honorable Jacob S Boreman, special master in chancery, plaintiffs appeal.

Affirmed.

Mr. P L. Williams, Messrs. Kimball & Kimball, and Messrs. Bennett, Marshall & Bradley, for appellants.

The act in question by its language was a grant in proesenti and granted the legal title to all the lands within the grant limit, whether surveyed and selected or not by the railroad company, and that such grant was a legal title. The same construction has been placed upon the grant by the supreme court of the United States in a great many cases, to wit: Schulenberg v. Harriman, 21 Wall. 44; Ry. Co. v. United States, 92 U.S. 733; Ry. Co. v. Ry. Co., 97 U.S. 491; Ry. Co. v. Baldwin, 103 U.S. 426; Grinnell v. Ry. Co., 103 U.S. 739; Wright v. Roseberry, 121 U.S. 488; Rutherford v. Greene Heirs, 2 Wheat. 196. And by Judge Field, sitting in the District Court of the District of California, in the case of Denny v. Dodson, 32 F. 889. The supreme court of the United States again in the case of the Deseret Salt Co. v. Tarpey, 142 U.S. 241, S. C. L.Ed. Bk. 35, p. 999, decided that the act of July, 1862, granting land to the Union Pacific Railway Company, transfers a present legal title when the lands are identified by the location of the road.

It appears from finding 26, that respondents went into possession of the real estate in controversy and leased the same to the appellants, and that they have ever since the 28th of March, 1890, continued in such possession thereof up to and including the time of trial. This being so, they cannot avail themselves of either an outstanding title or incumbrance, for until an eviction they have no cause of action against appellants. Indeed, they could not maintain an action upon a covenant of warranty of title until such eviction. Warvelle on Vendors, p. 1004; 2 Jones on Mort. §§ 1501, 1502. The above is the rule laid down where the contract of sale and purchase is executory. The rule is much stronger in favor of appellants where the contract is an executed one. Warvelle on Vendors, p. 844.

Mr. H. H. Henderson and Messrs. Richards & MacMillan, for respondents.

The court finds that the lands in controversy are and have been used and cultivated as agricultural lands, and also that no exploration nor examination has been made for coal or minerals of any kind or description. No court could find as to the character of the land until that question had been passed upon and determined by the proper officers of the land office of the United States, and the only evidence of such determination is the patent. Barden v. Northern Pac. Ry. Co., 154 U.S. 320. The court will not take judicial knowledge of the fact that the lands were surveyed as early as 1868 or 1869 and returned as agricultural in character by the surveyor general, but the contrary is the rule; all these facts must be proven. Ankeny v. Clark, 148 U.S. 357; S. C. 37 L.Ed. 475.

The case of Ankeny v. Clark, we claim to be decisive of the case at issue. Ankeny v. Clark was a case where Ankeny acquired certain agricultural lands through certain conveyances from the Northern Pac. Ry. Co. and had contracted with Clark to deed him the same when the purchase price had been paid. Clark paid the purchase price and Ankeny refused to give him a warranty deed but did tender him a quit-claim deed of the railroad land, which Clark refused to accept. Then Clark sued Ankeny for the purchase price paid, and the court in that case said that inasmuch, under the stipulation of facts, that it was a railroad grant and it not appearing that the survey charges had been paid or that a patent had been obtained from the United States to the railroad, a clear title did not appear to be in Ankeny; and it was further decided that in case that even if Ankeny had tendered Clark a full warranty deed, Clark could not have been compelled to accept the same. In this case the court clearly distinguished what kind of a title a railroad company obtains under a land grant of congress, and explains what was meant to be decided in the case of Tarpy v. Deseret Salt Co.

The supreme court of the United States in the case of Barden v. Northern Pac. Ry. Co., 154 U.S. p. 342, explains many of the decisions heretofore rendered by that court and lays down the latest rule, and explains what title railroad companies receive to lands under the various grants of Congress. On page 315 of the opinion the court say: "Such is the purport and sole purport of the cases of St. Paul & Pac. R. R. Co. v. Northern Pac. Co., 139 U.S. 1, 5, and Deseret Salt Co. v. Tarpey, 142 U.S. 241, 247. In both of those cases the writer of this opinion had the honor to write the opinions of this court, and it was never asserted or pretended that they decided anything whatever respecting the minerals, but only that the title to the lands granted took effect within certain designated exceptions as of the date of the grant. They never decided anything else. And what was the title? It was of the lands which at the time of the grant were not reserved as mineral, and of lands which at the time of the location had not been sold, reserved, or to which a pre-emption or homestead right had not attached. * * * It seems to us as plain as language can make it that the intention of Congress was to exclude from the grant actual mineral lands, whether known or unknown, and not merely such as were at the time known to be mineral."

"The contention that no recovery can be had because the incumbrance was a matter of record, is not sound. A fraudulent representation, by one who assumes to have personal knowledge, to the purchaser of real estate, that there is no incumbrance thereon, and upon which representations the purchaser relies and acts to his injury, will sustain an action for the tort, although the purchaser might have discovered the fraud by searching the records." McKee v. Eaton, 26 Kas. 226; Curtis v. Stitson, 38 Kas. 302; 16 P. 678; David v. Park, 103 Mass. 501; Babcock v. Case, 61 Pa. St. Rep. 427; Allen v. Green, 5 McCrary, 380; 17 F. 407. And in Allen v. Hammond, 11 Pet. p. 72, the court says: "The law on this subject is clearly stated in the case of Hitchcock v. Biddings (Daniel's Rep. 1), where it is said that a vendor is bound to know that he actually has that which he professes to sell." And Warvelle on Vendors, vol. 2, p 858, says: "False representations by the vendor as to nature, quantity or quality of the property, or of the title by which it is held, will entitle the vendee to a rescission of the contract." And the same author says at page 945, "In some instances it has been held that a defect or incumbrance not known to the vendee, when he accepts the deed, is a defense to a bond for purchase money, although there be a general warranty." Peck v. Jones, 70 Pa. St. 83.

"A distinct statement of such fact by a seller, knowing it to be false, and with intent to deceive the buyer, and on which the buyer acts to his own injury, will sustain an action for deceit, even if the buyer might have discovered the fraud by searching the records of the patent office." David v. Parker, 103 Mass. 501; Claggett v. Crall, 12 Kas. 393. "A distinct statement of a fact by a seller, knowing it to be false, and with an intent to deceive the buyer, and on which the buyer acts to his own injury, will sustain an action of deceit, even if the buyer might have discovered the fraud by searching the records." David v. Parker, 103 Mass. 501. "The falsity and fraud consists in representing that he knows the facts to be true, and this renders him liable to a party who relies and acts upon the statements as true." Litchfield v. Hutchinson, 117 Mass. 195; Linn v. Green, 17 F. 207. Equity will grant relief on the ground of fraud, although the party representing the material fact made the assertion, not knowing whether it was true or not. Wilcox v. Iowa Wesleyan University, 32 Ia. 367; Williard's Eq. Jur. 150; Ainslie v. Medlysott, 9 Ves. 91; Smith v. Richards, 13 Pet. 38; Harding v. Randall, 3 Me. 332; Trumbull v. Gadsden, 2 S. C. Eq. 14; McFadden v. Taylor, 3 Cranch, 281. "An incumbrance is defined to be any right to or interest in land which may subsist in third persons to the diminution of the value of the land and not inconsistent with the passing of the fee in it by the deed of conveyance." Burr v. Lamaster, 46 N.W. 1016 and citations. A purchaser of vacant real estate receiving a deed therefor with a covenant of seisin from one who has no title, the covenant being wholly broken, is not compelled, at least after he has commenced an action for a breach of the covenant for the recovery of the purchase money paid, to accept a title which his grantor may then acquire. Reeser v. Carney, 54 N.W. 89. 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. 20 N.E. 581; 10 Am. St. Rep. 433.

APPELLANTS' BRIEF IN REPLY.

The referee found that the representation as to title was made as alleged, and it was in fact untrue, but failed to find any scienter or any fact inconsistent with the most...