De Carli v. O'Brien

• Decision Date: 19 February 1935
• Citation: 150 Or. 35,41 P.2d 411
• Parties: DE CARLI v. O'BRIEN et al. [*]
• Court: Oregon Supreme Court

41 P.2d 411

150 Or. 35

DE CARLI v. O'BRIEN et al. ^[*]

Supreme Court of Oregon

February 19, 1935

In Bank.

Appeal from Circuit Court, Multnomah County; Robert Tucker, Judge.

Action for breach of covenant against encumbrances upon real property by Frank De Carli against J. P. O'Brien and his wife. From judgment for defendants, plaintiff appeals.

Reversed and remanded, with instructions.

RAND and BEAN, JJ., dissenting.

Purchaser seeking to recover from vendor for breach of warranty against encumbrances amount which purchaser had paid to satisfy judgment which was encumbrance against premises, by admitting receipt of certain sum from title insurer and by failing to join insurer as coplaintiff waived right to recover from vendor amount obtained from insurer.

David L. Davies, of Portland (John C. Veatch and Carey, Hart, Spencer & McCulloch, all of Portland, on the brief), for appellant.

Roy F Shields, of Portland (A. C. Spencer, of Portland, on the brief), for respondents.

KELLY Justice.

This case is presented upon the pleadings and a stipulation of facts. On the 18th day of May, 1932, during the pendency of this action in the circuit court, the defendant Annie L O'Brien died intestate. On the 25th day of April, 1933, the parties hereto entered into a stipulation, which was also made a part of the stipulation of facts, wherein it was agreed that this action should continue against defendant J. P. O'Brien only, and that he waived any and all objections to the continuance and prosecution of said action against him alone without the substitution of the administrator of the estate of said Annie L. O'Brien, deceased, as a defendant in this case. In our discussion of the case we will, therefore, refer to but one defendant.

By stipulation, it is admitted that on July 27, 1925, Coe A. McKenna was the owner of lots 1, 2, 3, 4, and 5 in block 1, Good Morning addition to East Portland, now within the corporate limits of the city of Portland, and on said date Coe A. McKenna and his wife conveyed said real property to the defendant J. P. O'Brien, who owned the same at all times thereafter until he executed a conveyance thereof to plaintiff on August 2, 1926. That on August 2, 1926, said J. P. O'Brien and Annie L. O'Brien, his wife, for a consideration exceeding in amount the sum for which plaintiff prays judgment herein, made, executed, and delivered to the plaintiff a warranty deed conveying to plaintiff the real property above described, and ever since that time plaintiff has been and is now the owner of said property.

That said deed contained, among other provisions, the following, to wit: "And the grantors above named do covenant to and with the above named grantee, his heirs and assigns, that they are lawfully seized in fee simple of the above granted premises, that the above granted premises are free from all encumbrances, no exceptions, and they will and their heirs, executors and administrators, shall warrant and forever defend the above granted premises and every part and parcel thereof against the lawful claims and demands of all persons whomsoever."

That on November 5, 1924, in a cause then pending in the circuit court of the state of Oregon for the county of Multnomah, wherein E. R. Stark and Martha Stark were plaintiffs and Coe A. McKenna and others were defendants, there was made and entered a judgment in favor of the plaintiffs in said cause and against said Coe A. McKenna, in the sum of $4,500 and the costs and disbursements in said action; that on the said 5th day of November, 1924, said judgment was duly docketed and entered in judgment docket No. 20, at page 209, in said Multnomah county, at which time said Coe A. McKenna was the owner of said real property first hereinabove described.

That on the 3d day of January, 1925, said Coe A. McKenna served and filed in said cause a notice of appeal to the Supreme Court of Oregon, from said judgment; and on the 9th day of January, 1925, served and filed his undertaking on appeal wherein said Coe A. McKenna and his surety jointly and severally agreed that they would pay all damages, costs, and disbursements which should be awarded against said McKenna on said appeal, and that if said judgment or any part thereof should be affirmed said McKenna would satisfy it so far as affirmed; that upon March 6, 1928, said judgment against said Coe A. McKenna was in all things affirmed by the Supreme Court.

That on March 12, 1928, said surety upon the appeal bond of said McKenna paid to the owner of said judgment the full amount due thereon, and in consideration thereof said judgment and the lien thereof were thereupon transferred and assigned to Harry L. Raffety as agent and trustee of said surety, and said Harry L. Raffety in such capacity has remained the owner thereof at all times thereafter. That said judgment has not been satisfied, paid, or discharged except to the extent hereinafter stated.

That on November 5, 1924, and at all times thereafter until August 3, 1926, said Coe A. McKenna owned, and was shown by the records of Multnomah county, Or., to own, a number of parcels of land and lots in said county other than the five lots first hereinabove described, one of which said parcels of land said Coe A. McKenna still so owns, and the remaining parcels were sold and conveyed by said Coe A. McKenna to different parties at various dates after July 27, 1925; that during all of said times said other parcels of land and lots had a fair market value over and above encumbrances against the same in excess of the amount of the judgment against said Coe A. McKenna as affirmed as heretofore stated; but no one of the other parcels of land so owned by Coe A. McKenna, which were free of encumbrances, during the period mentioned in said stipulation had a value equal to the amount of said judgment and the costs which would have accrued upon the sale of same under execution on said judgment, and that no one of the unencumbered parcels of land so owned by Coe A. McKenna, during the period mentioned, had a value as great as the value of said five lots first hereinabove described.

That at the time of the execution of the conveyance from the defendant, J. P. O'Brien, to the plaintiff, Frank De Carli, of said five lots first hereinabove described, said J. P. O'Brien, at his expense, and as a part of the consideration for such conveyance, furnished to plaintiff a title insurance policy issued by the Title & Trust Company, which policy insured plaintiff against loss or damage on account of any defect in the title to said premises, and also against any loss on account of any and all liens and encumbrances existing on or against said premises at the time of said conveyance.

That on or about the 4th day of February, 1927, plaintiff asserted a claim against said Title & Trust Company by reason of the existence of said judgment as a lien upon said premises, and thereupon said claim was compromised and settled by the payment of $300 to plaintiff by said Title & Trust Company at which time plaintiff executed a release in substantially the following form, to wit:

"In consideration of the payment to me of $300.00 by Title and Trust Company, of Portland, Oregon, the receipt of which is hereby acknowledged, I, the undersigned Frank Decarli, do hereby release said Title and Trust Company from all liabilities, claims, and demands now existing or hereafter to accrue under their policy of Title Insurance, No. 90907, insuring the title to Lots 1, 2, 3, 4, and 5, Block 1, Goodmorning Addition to East Portland, in the City of Portland, County of Multnomah and State of Oregon, and upon any policies hereafter to be issued on said premises or any portion thereof; but this release is expressly limited to such liabilities, claims or demands as may arise under claim of unmarketability of the title to said premises or any portion thereof, by reason of the existence of the judgment in the Circuit Court of the State of Oregon for Multnomah County against Coe A. McKenna doing business as Coe A. McKenna & Co. in favor of E. R. Stark and Martha Stark in the sum of $4500.00 with interest and costs, which judgment was entered 5 November 1924 in Docket 20 of the judgment Lien Dockets of said Court on page 209.

"Dated 4 February 1927.

"Frank Decarli."

At the time this action was commenced plaintiff had not paid any sum on account of the judgment hereinbefore mentioned; that after the commencement of this action, and on or about January 30, 1929, and before the plaintiff had paid anything on account of said judgment, the defendants J. P. O'Brien and Annie L. O'Brien served upon plaintiff and his attorney of record in this cause a notice of which the following is substantially a true copy:

"Registered

"Portland, Ore., January 30, 1929.

"Mr Frank De Carli, Portland, Oregon

"Dear Sir: About January 11, 1929, you commenced an action against the undersigned in the Circuit Court of the State of Oregon for Multnomah County, Case No. 1810, in which you seek to recover damages for an alleged breach of a warranty against incumbrances contained in a deed dated on or about August 2, 1926, executed by the undersigned, conveying to you Lots 1 to 5, inclusive, in Block 1, Good Morning Addition to East Portland, Multnomah County, Oregon.

"The alleged incumbrance which you claim to have been a lien on said property at the date of said deed is a certain judgment recovered in the Circuit Court of the State of Oregon for Multnomah County, by E. A. Stark and Martha Stark, against Coe A. McKenna.

"The purpose of this letter is inform you that the holder of said judgment cannot enforce payment of said judgment by levying upon the lots, or any thereof, above mentioned. This is so for several reasons, some of which...