Crosby v. Evans

• Decision Date: 21 May 1917
• Docket Number: No. 1996.,1996.
• Parties: CROSBY v. EVANS et al.
• Court: Missouri Court of Appeals

195 S.W. 514

CROSBY v. EVANS et al.

No. 1996.

Springfield Court of Appeals. Missouri.

May 21, 1917.

Appeal from Circuit Court, Greene County; Arch A. Johnson, Judge.

Action by William L. Crosby against H. F. Evans and another. From an order granting a new trial, plaintiff appeals. Reversed and remanded with directions, and certified to the Supreme Court.

U. G. Johnson and Warren L. White, both of Springfield, for appellant. G. W. Goad and O. T. Hamlin, both of Springfield, for respondents.

STURGIS, J.

This is a suit on the covenants of warranty contained in an ordinary warranty deed executed by defendants to plaintiff. The plaintiff had judgment, and the court granted a new trial, without specifying the grounds therefor, as required by statute. This requires an examination of all the grounds alleged in the motion for such new trial.

We find, however, that the facts essential to a decision of this case are not controverted, and need only to be stated briefly. The plaintiff went into possession of the land warranted, and paid $300 of the purchase money, before discovering any defect in the title. The defendants had taken a deed of trust in the nature of a mortgage on the property conveyed to secure the balance of the purchase price. It is conceded that the title proved defective, in that there was a prior unsatisfied mortgage thereon, defectively drawn and executed, but recorded. Some negotiations were had between the parties with a view to perfecting the title for plaintiff's benefit. Most of the evidence at the trial was produced to show that the parties agreed to have the property sold, or to let it be sold, and that defendants would purchase the same for plaintiff's benefit, thereby extinguishing the outstanding incumbrance. Some sort of written contract was made and then lost or destroyed. The case was tried on the theory that there was sufficient evidence to establish a valid contract to the effect that defendants' purchase of the property at the foreclosure sales, both of the outstanding mortgage by decree of court and at the foreclosure of the purchase money mortgages under power of sale therein, was by agreement and for plaintiff's benefit.

Under the view we take of the case, the establishment of such a contract is immaterial. So far as the outstanding mortgage on the property is concerned, the defendants having warranted the title to plaintiff, it was clearly their duty to discharge any outstanding lien thereon and to acquire for plaintiff's benefit any outstanding title. Since the warrantors did not have full title to the land when same was conveyed by warranty, the law makes such party a trustee for plaintiff's benefit of any after-acquired title, regardless of any express contract to that effect. Section 2871, R. S. 1909; St. Joseph, etc., Railway v. Smith, 170 Mo. 327, 331, 70 S. W. 484.

The unquestioned facts are that the outstanding title or lien on this land was asserted by an action in court, and its validity established by a judgment ordering the property in question to be sold to satisfy same. This judgment was rendered January 19, 1910, but no sale was had thereunder until June 11, 1910, at which time defendants purchased same, and received a sheriff's deed vesting title in them. In the meantime, and doubtless because of this defective title, the plaintiff had defaulted in the payment of the purchase-money mortgage, and defendants foreclosed same March 31, 1910, under the power of sale therein, became the purchasers at such sale, and received a trustee's deed of that date extinguishing plaintiff's defective title.

It will thus be seen that defendants did not purchase and extinguish the outstanding title and lien till after they had foreclosed their purchase-money mortgage and acquired plaintiff's defective title thereby. Not only covenants of warranty run with the land and pass to successive owners, but also and because of this the inurement of after-acquired title also runs with the land and the benefits thereof pass to the successors in title of the land warranted. Johnson v. Johnson, 170 Mo. 34, 48, 70 S. W. 241, 59 L. R. A. 748; Fordyce v. Rapp, 131 Mo. 354, 366, 33 S. W. 57. At the time defendants acquired the outstanding title, therefore, the same did not pass or inure to plaintiff under the statute above mentioned, and by virtue of defendants' warranty, but passed to (or remained in) defendants themselves as plaintiff's grantees, since plaintiff's purchase-money mortgage and the sale and conveyance to defendants thereunder is sufficient to vest in defendants, as successors to plaintiff's title, the benefits of such inurement of title, the form of such conveyance being immaterial, provided the land is conveyed thereby. Trust Co. v. Fullen, 114 Mo. App. 633, 638, 91 S. W. 58; Johnson v. Johnson, 170 Mo. 34, 50, 70 S. W. 241, 59 L. R. A. 748; Diggs v. Henson, 181 Mo. App. 34, 41, 163 S. W. 565.

Shortly after the defendants acquired the title by purchase at both such foreclosure sales, they conveyed the same to one Gray, who thereupon went into possession, ousting plaintiff. Plaintiff then brought this suit.

Plaintiff never recorded his deed, the covenants of which he sues on here, and it is urged that but for this fact the after-acquired title would have at once passed to him by virtue of our statute, and no damage would have been suffered. What we have said disposes of this question, since defendants acquired plaintiff's title, defective as it was, by foreclosure of the purchase-money mortgage prior to acquiring or extinguishing the outstanding title or lien. Had plaintiff's title been of record, the same result would have been achieved. Gray's title, by which he took possession, is not based on the fact that he was an innocent purchaser without notice of plaintiff's unrecorded deed. Plaintiff did not lose his title by making it possible, by not recording his own deed, for defendants to make a wrongful second sale of the land to an innocent party and thus start a new chain of title.

Nor does it seem just to allow a warrantor to take advantage of his own wrong in making a second sale of land and defeat an action on the covenants merely because the covenantee made such a sale effectual by not recording his own deed. The case of Curtis v. Deering, 12 Me. 499, holds that, as between covenantor and covenantee, the latter owes no duty to record his deed, and that an action will lie on the covenants of warranty where the covenantor, as here, made a second deed, which that purchaser recorded, and then ousted the first grantee. This decision commends itself to us rather than that of Wade v. Comstock, 11 Ohio St. 71, holding a somewhat contrary view.

The next contention is that, since plaintiff's mortgage or deed of trust to defendants contains the same covenants of warranty as contained in the deed from defendants to him, these mutual covenants cancel each other. This is the general rule. 11 Cyc. 1094. But purchase-money mortgages furnish an exception. This rule is stated in a note to 11 Cyc. 1094, thus:

"Purchase-Money Mortgages. — Where land is conveyed by deed of warranty, and the same premises at the same time are reconveyed in mortgage with like covenants, the covenants of the mortgage deed will not operate to preclude the maintenance of an action on the covenants of the absolute deed."

Such is the holding in Connor v. Eddy, 25 Mo. 72, and Resser v. Carney, 52 Minn. 397, 54 N. W. 89. In the last cited case the court said:

"As between the parties to such a transaction, the mortgage back to the vendor is to be deemed as reconveying, subject to the condition of defeasance, only such estate as is conveyed by the mortgagee to the mortgagors." Smith v. Cannell, 32 Me. 123; Hardy v. Nelson, 27 Me. 525; Randall v. Lower, 98 Ind. 255.

The most serious contention against plaintiff's right to recover is based on the fact that plaintiff made default in his purchase-money mortgage, and that defendants had a right to foreclose the same, since the plaintiff, being yet in possession, could not defeat payment of the purchase price, however defective the title might be. Such is the law, and a purchaser of a defective title, while still holding the land, cannot refuse to pay therefor, nor can he maintain a suit on the covenants of warranty until actually evicted, or having actually acquired or extinguished the outstanding superior title or incumbrance. The reason is that he cannot base a suit or counterclaim on a demand not fully matured, and such demand is not matured till he has been evicted or has extinguished a valid superior title or lien. Pence v. Gabbert, 63 Mo. App. 302; Buren v. Hubbell, 54 Mo. App. 617, 625; Cartwright v. Culver, 74 Mo. 179; Hunt v. Marsh, 80 Mo. 396; Carter v. Butler, 264 Mo. 306, 174 S. W. 399, Ann. Cas. 1917A, 483. The above rule, however, is not applicable to the facts here. Plaintiff did not bring this suit till after he had been ousted of his possession by reason of the outstanding title. When plaintiff sued there was no possibility of his recovering damages and retaining the land also.

Closely akin to the foregoing is the argument adduced by defendants that, since the covenants of warranty run with the land and pass to the successive owners of the defective title, only that owner can sue on the covenants who has the defective title when an eviction or its equivalent is had by the owner of the paramount title. In this case plaintiff had lost his defective title by the foreclosure of the purchase-money mortgage prior to the sale founded on the outstanding prior mortgage. The argument is that the right to sue on the covenants of warranty was also foreclosed, and passed with the land to defendants as purchasers at the foreclosure sale under the purchase-money mortgage, and that plaintiff could not maintain a suit after so losing his title. This is based on the fact that the giving of the purchase-money mortgage and its foreclosure is equivalent to, and...