Loewenthal v. McElroy

• Decision Date: 13 June 1914
• Docket Number: No. 10994.,10994.
• Parties: LOEWENTHAL v. McELROY et al.
• Court: Missouri Court of Appeals

168 S.W. 813

181 Mo. A. 399

LOEWENTHAL v. McELROY et al.

No. 10994.

Kansas City Court of Appeals. Missouri.

June 13, 1914.

Rehearing Denied July 6, 1914.

1. INDEMNITY (§ 11) — BONDS — BREACH — RIGHT OF ACTION.

Where a bond is merely for indemnity, damage must be sustained before action can be maintained on it; but if it is one to do the thing which is to prevent the damage to the obligor, neglect or refusal to do such act gives an immediate right of action.

2. INDEMNITY (§ 11) — BONDS — BREACH — RIGHT OF ACTION.

The bond given by vendors of property to the purchaser, containing the positive agreement that they, within 60 days, would "pay all bills and settle all unsatisfied claims against the property," is more than a mere promise to indemnify against loss on account of such claims; so that breach of it gives the obligee immediate right of action, before he has paid any of the

claims or incurred expense in getting rid of the cloud cast on the property by action to foreclose the liens therefor.

3. INDEMNITY (§ 9)—CONTRACTS—BREACH— RIGHT OF OBLIGEE.

Breach of the covenant in a bond given by the vendors of property to the purchaser to "pay all bills and settle all unsatisfied claims against the property," within 60 days, gives him right to do what they had agreed to do, and recover of them the expense, including the reasonable expense of removing the cloud cast on title by asserted liens, and action thereon.

4. INDEMNITY (§ 9)—CONTRACTS—BREACH— ACTION—DEFENSES.

The obligors in a bond given by the vendors of property to the purchaser, sued for breach of their agreement therein to "pay all bills and settle all unsatisfied claims against the property" within 60 days, cannot, as against plaintiff's claim for releasing the property from an asserted lien, at an expense of less than half the amount of the lien, question the method of procuring the release as being in fraud of the lien claimant.

5. INDEMNITY (§ 9)—CONTRACTS—BREACH— DAMAGES.

As damages for breach of the covenant in a bond of vendors to the vendee to "pay all bills and settle all unsatisfied claims against the property" within 60 days, the expense of necessary services of an attorney to assist the obligee in removing the clouds on title left by such breach is recoverable of the obligors, though not within the part of the other covenant of indemnity "to pay counsel to defend any suit * * * brought to assert such liens."

Appeal from Circuit Court, Jackson County; E. A. Krauthoff, Special Judge.

Action by S. G. Loewenthal against Edmund D. McElroy and others. Judgment for plaintiff, and defendant F. W. Casner appeals. Affirmed.

Roy B. Thomson and Sebree, Conrad & Wendorff, all of Kansas City, for appellant. W. C. Reynolds and Robinson & Goodrich, all of Kansas City, for respondent.

JOHNSON, J.

The defendants, McElroy, Herrick, and Casner, owned certain recently improved real estate in Kansas City which was incumbered by a deed of trust for $3,500. Mechanics' liens had been filed against the property on account of materials and labor furnished for the improvements, and there were other claims for which liens might be filed. The record title stood in McElroy, but all of the defendants participated in the sale of the property to plaintiff. McElroy executed and delivered a warranty deed conveying title to plaintiff, subject only to the lien of the trust deed. The warranty deed covenanted against all other incumbrances and liens, and to secure the performance of such covenant McElroy as principal, and the other two defendants as sureties, under date of March 28, 1911, executed and delivered to plaintiff their bond in the penal sum of $2,000, conditioned:

"If the said principal above named shall well and truly within sixty days from this date pay all bills and settle all unsatisfied claims against the property above described, and shall save the said S. G. Loewenthal or assigns, or the holder of the legal title to said property, harmless from any and all mechanics' liens or claims for improving said property now against the property or that may be placed against the property, and if he shall pay counsel to defend any suit or suits that may be brought to assert such liens, if any, and if he shall pay any and all judgments or claims including damages and costs that may be rendered in any such suit or suits, then this obligation shall be void, otherwise valid and binding."

The petition, which was filed in the circuit court of Jackson county August 10, 1911, alleged the existence of a number of mechanics' liens filed against the property, and that plaintiff had been compelled to employ counsel at an expense of $100 to assist him in the investigation and defense of claims that had been filed as liens or were about to be so filed. The petition did not allege that plaintiff had paid any lien claims. After enumerating them it closed with the allegation:

"That all of the aforesaid mechanics' liens and all of the said suits constitute valid and subsisting liens against the aforesaid real estate and the improvements thereon, and that the above-mentioned attorney fee of $100 constitutes a valid and subsisting charge against the said defendants, which by the provisions of the aforesaid bond, they bound and obligated themselves to pay; and that the said defendants have failed and refused to pay and discharge each and all of said liens and charges above mentioned, although often requested by plaintiff so to do. Wherefore, plaintiff prays judgment against defendants for said sum of $2,000, the penalty of said bond, that his damages by reason of the breach of said bond may be assessed, and that he may have execution therefor and for costs of this suit, and for such other order and judgment as the court shall deem just and proper in the premises."

The cause was tried without the aid of a jury, and judgment was rendered January 15, 1913, for plaintiff for the penalty of the bond, to be satisfied on the payment of $449.90, assessed as the sum of the actual damages sustained by plaintiff on account of the breach. Defendant Casner alone appealed.

The damages assessed by the court consisted of three items, viz.: First, $70 paid by plaintiff after the beginning of this suit in discharge of a judgment sustaining a mechanic's lien filed against the property by the Kansas City Mantel Company before the execution of the bond; second, $279.90, expenses incurred by plaintiff in and about the defense of a lien for $689.74, claimed by the Independence Planing Mill & Supply Company, for the enforcement of which an action was pending in the circuit court of Jackson county at Independence, where the bond was given; and, third, $100 attorney's fees paid by plaintiff for services in and about the defense of these demands and other claims the attorneys succeeded in...