Russell & Co. v. Polk Cnty. Abstract Co.

• Decision Date: 24 January 1893
• Citation: 87 Iowa 233,54 N.W. 212
• Court: Iowa Supreme Court
• Parties: RUSSELL & CO. v. POLK COUNTY ABSTRACT CO.

87 Iowa 233

54 N.W. 212

RUSSELL & CO.

v.POLK COUNTY ABSTRACT CO.

Supreme Court of Iowa.

Jan. 24, 1893.

Appeal from district court, Polk county; W. F. Conrad, Judge.

The parties are corporations, the plaintiff being organized under the laws of Ohio, and the defendant under the laws of Iowa. The defendant is engaged in furnishing abstracts of title, and the averments of the petition are to the effect that in December, 1884, the plaintiff contemplated purchasing a mortgage from one Kellog on a certain tract of land; that, with a view to learn if said mortgage was a first lien on said land, it procured of the defendant an abstract of the title thereof, which abstract was furnished about December 16, 1884, and showed that the mortgage in question was a first lien on the land; that, relying on said abstract, the plaintiff purchased said mortgage, and paid therefor $1,310.43, and afterwards foreclosed the same, and at the foreclosure sale purchased the land, and paid therefor $2,060.85; that, because of the negligent and unskillful manner in which defendant examined the title to said land, the abstract of title failed to disclose a judgment lien of about $1,400, which was prior and superior to the mortgage purchased by plaintiff, and of which plaintiff had no knowledge; that, because of the neglect and unskillful acts of the defendant, the plaintiff lost said land, and the amounts paid therefor, and plaintiff asks judgment in the sum of $5,000. The petition was filed on the 19th of June, 1890. There is a demurrer to the petition on the ground that the action is barred by the statute of limitations. The district court sustained the demurrer, and from a judgment dismissing the petition the plaintiff appealed.Cole, McVey & Cheshire, for appellant.

W. G. Harrison, for appellee.

GRANGER, J.

1. The statute of limitations commences to run from the time a cause of action accrues. Code, § 2529. By section 2530 it is provided that in actions for relief on the ground of fraud or mistake the cause shall not be deemed to have accrued until the fraud or mistake has been discovered. The petition is without allegations to bring the case within the provisions of the latter section, and hence we are to inquire when the cause of action accrued without reference to its being grounded on fraud or mistake. The pith of contention by counsel is whether the action is one ex contractu, so that the cause of action accrues with the actual breach of the contract, or ex delicto, so that the action accrues whenever consequential damages result because of the tort. We are directed especially to the averments of the petition wherein recovery is sought because of negligence in preparing the abstract, and for the money expended in the purchase of the mortgage because of such negligence; and it is said that “no legal damage was sustained on the part of the plaintiff until the purchase of the Kellog mortgage.” We may not correctly apprehend what is meant by the term “legal damage.” If it means special damage, such as that alleged, the proposition is correct. If it means general damage, such as the law infers because of the breach, without its being specified, it is not correct. Of course, a cause of action does not accrue in such a case until damages are recoverable, and hence the statute does not commence to run until there is damage to constitute a basis for an action. The further discussion of the case will indicate our view as to when such damage first arose. Appellant, in support of its theory that the action is ex delicto, cites the following from Angell on Limitations, (section 71:) “The action of assumpsit lies to recover damages for consequential wrongs or torts, which, though they are ex delicto, are quasi ex contractu; and they arise from malfeasance, or doing what the defendant ought not to do; nonfeasance, or not doing what he ought to do; and misfeasance, or doing what he ought to do, improperly.” It also cites the following from Addison on Torts, (page 13:) “A tort may be dependent upon or independent of contract. If a contract imposed a legal duty upon a person, the neglect of that duty is a tort founded on contract, so that an action ex contractu for the breach of contract, or an action ex delicto for the breach of duty, may be brought at the option of the plaintiff.” It is then urged that this is “an action for misfeasance,” and hence based upon tort. A few considerations will lead to a correct conclusion on this particular proposition, and aid much towards a solution of the entire case. We get the spirit of the rule to be deduced from the above citations, so far as it pertains to this case, but, understanding the last statement in the citation from Addison on Torts: “If a contract imposes a legal duty upon a person, the neglect of that duty is a tort founded on contract,” and in such a case the injured party may elect to sue for the tort or breach of the legal duty, or sue for the breach of contract,--now, what is the true significance of the rule stated? We think it is this: When the law imposes a duty from one person to another, independent of contract, the duty thus imposed is a legal one,--one enjoined by the law. Its neglect is a tort. Now, if the parties, by contract, further impose that duty, which may be, and is often, done, then the obligation is twofold,--enjoined both by law and the contract; and the author has said no more than that “the neglect of such a duty is a tort founded on contract.” It cannot be said that the legal duty referred to means duties arising solely upon contract, for, if it does, then all duties in pursuance of contract are, within the meaning of the rule, legal duties, and hence a neglect to discharge them is a tort. This, followed to its logical conclusion, would make every breach of contract a tort. The duties arising upon contracts are, of course, legal duties, within the most comprehensive meaning of the term, but the sanction of the law making them so is invoked by the contract, and hence, in an important and practical sense, we regard and express the obligations and duties thus arising between parties as contractual, and in that way distinguish them from other legal duties or obligations. The learned author was evidently preserving this distinction.

In the case at bar the defendant, independent of the contract, owed no duty to the plaintiff. The neglected duty was one alone enjoined by contract. The failure to perform by the defendant was a failure to discharge its agreement, which is solely a breach of contract. No refinement of reasoning can or should avoid the conclusion. The fact that the act is alleged as negligently done does not change the situation. It is an allegation only as to the manner of making the breach. The liability of the defendant company in no way depends on the fact of negligence. The allegations of the petition show an absolute undertaking “to furnish a full, complete, and correct abstract to the plaintiff, correctly showing the liens of mortgages, judgments, and otherwise.” The demurrer admits such an undertaking, and the allegation of negligence cannot have the effect to change the action from one on contract to one for tort. If A. should engage to deliver to B. a quantity of wheat at a certain time and place, and he failed to do so, he would be liable upon his undertaking, and in an action for damage because of the failure a mere allegation that he negligently failed to perform would not affect the character of the action. The liability in either case attaches without the negligence. We reach the conclusion that the action is upon contract, and that the statute of limitations is to be applied accordingly.

We may now notice the claims as to when the statute commences to run. With our conclusion as to the character of the action it is probable appellant might not claim that the authorities cited are applicable. We refer, however, to a few as indicating the character of all. Reference is made to sections 433 and 434 of 2 Greenleaf on Evidence. The sections have reference to cases of tort, and actions on the case sounding in tort, and it is there stated as the rule that in such cases, where the injury is consequential, and the right of action is founded in special damages, the statute commences to run from the time the special damages accrued. Also, where a statute commences to run from the time of the “act done,” and the act was lawful as to the plaintiff, the act is regarded as “done” when the damages result. But this case is not within...