Ayer v. Philadelphia & Boston Face Brick Co.

• Decision Date: 17 May 1893
• Citation: Ayer v. Philadelphia & Boston Face Brick Co., 159 Mass. 84, 34 N.E. 177 (Mass. 1893)
• Parties: AYER v. PHILADELPHIA & BOSTON FACE BRICK CO.
• Court: Supreme Judicial Court of Massachusetts

159 Mass. 84

34 N.E. 177

AYER v. PHILADELPHIA & BOSTON FACE BRICK CO.

Supreme Judicial Court of Massachusetts, Suffolk.

May 17, 1893

COUNSEL

W.G. Russell and F.W. Kittredge, for demandant.

H.G Parker, J.C. Gray, and E.L. Rand, for tenant.

OPINION

HOLMES, J.

When the case was before us the first time (31 N.E. 717) it was assumed by the tenant that the only question was whether the covenant of warranty in the second mortgage should be construed as warranting against the first mortgage. No attempt was made to deny that, if it was so construed, the title afterwards acquired by the mortgagor would inure to the benefit of the second mortgagee under the established American doctrine. The tenant now desires to reopen the agreed facts for the purpose of showing that after a breach of the covenant in the second mortgage, and before he repurchased the land, the mortgagor went into bankruptcy, and got his discharge. The judge below ruled that the discharge was immaterial, and for that reason alone declined to reopen the agreed statement, and the case comes before us upon an exception to that ruling.

The tenant's counsel frankly avow their own opinion that the discharge in bankruptcy makes no difference; but they say that the inuring of an after-acquired title by virtue of a covenant of warranty must be due either to a representation or to a promise contained in the covenant, and that, if it is due to the former,--which they deem the correct doctrine,--then they are entitled to judgment on the agreed statement of facts as it stands, on the ground that there can be no estoppel by an instrument when the truth appears on the face of it, and that in this case the deed showed that the grantor was conveying land subject to a mortgage. If however, contrary to their opinion, the title inures by reason of the promise in the covenant, or to prevent circuity of action, then they say the provision is discharged by the discharge in bankruptcy.

However anomalous what we have called the "American doctrine" may be, as argued by Mr. Rawle and others, (Rawle, Cov., 5th Ed., § 247 et seq.,) it is settled in this state as well as elsewhere. It is settled also that a discharge in bankruptcy has no effect on this operation of the covenant of warranty in an ordinary deed when the warranty is coextensive with the grant. Bush v. Cooper, 18 How. 82; Russ v. Alpaugh, 118 Mass. 369, 376; Gibbs v. Thayer, 6 Cush. 30; Cole v. Raymond, 9 Gray, 217; Rawle, Cov. § 251.

It would be to introduce further technicality into an artificial doctrine if a different rule should be applied where the conveyance is of land subject to a mortgage against which the grantor covenants to warrant and defend. No reason has been offered for such a distinction, nor do we perceive any.

But it is said that the operation of the covenant must be rested on some general principle, and cannot be left to stand simply as an unjustified peculiarity of a particular transaction without analogies elsewhere in the law, and that this general principle can be found only in the doctrine of estoppel by representation, if it is held, as the cases cited, and many others, show, that the estoppel does not depend on personal liability for damages. Rawle, Cov. § 251.

If the American rule is an anomaly, it gains no strength by being referred to a principle which does not justify it in fact and by sound reasoning. The title may be said to inure by way of estoppel when explaining the reason why a discharge in bankruptcy does not affect this operation of the warranty but, if so, the existence of the estoppel does not rest on the prevention of fraud, or on the fact of a representation actually believed to be true. It is a technical effect of a technical representation, the extent of which is determined by the scope of the words devoted to making it. A subsequent title would inure to the grantor when the grant was of an unincumbered fee, although the parties agreed by parol that there was a mortgage outstanding, ( Chamberlain v. Meeder, 16 N.H. 381, 384. See Jenkins v. Collard, 145 U.S. 546, 560, 12 S.Ct. 868;) and this shows that the estoppel is determined by the scope of the conventional assertion, not by any question of fraud or of actual belief. But the scope of the conventional assertion is determined by the scope of the warranty which contains it. Usually the warranty is of what is granted, and therefore the scope of it is determined by the scope of the description; but this is not necessarily so, and when the warranty says that the grantor is to be taken as assuring you that he owns and will defend you in the unincumbered fee, it does not matter that by the same deed he avows the assertion not to be the fact. The warranty is intended to fix the extent of responsibility assumed, and by that the grantor makes himself answerable for the fact being true. In short, if a man by a deed says, "I hereby estop myself to...