Schafroth v. Ross, 6162.

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Citation: 289 F. 703
• Docket Number: 6162.
• Parties: SCHAFROTH v. ROSS.
• Decision Date: 07 May 1923

289 F. 703

SCHAFROTH
v.
ROSS.

No. 6162.

United States Court of Appeals, Eighth Circuit.

May 7, 1923

[289 F. 704]

A. G. Abbott, of Grand Island, Neb. (A. C. Mayer and E. G. Kroger, both of Grand Island, Neb., on the brief), for appellant.

Fred W. Ashton, of Grand Island, Neb. (Edward F. Hannon, of Shelton, Neb., on the brief), for appellee.

Before KENYON, Circuit Judge, and JOHNSON and BOOTH, District Judges.

KENYON, Circuit Judge.

This is an appeal from a decree of the United States District Court, Grand Island Division, District of Nebraska, rendered in favor of appellee, Ross, against appellant, Schafroth, and providing for the sale of certain land owned by Schafroth and wife to pay judgment entered on various notes secured by first and second mortgages on the land. No complaint is made of that part of the decree providing for sale under the mortgage foreclosure; the claimed error of the court being in permitting the enforcement by appellee of an equitable lien on the land to cover the amount paid by appellee's assignor on the purchase price thereof. The land was the southwest quarter of section 24, and all that part of the east one-half of section 24, lying south of the center of the right of way of the Union Pacific Railroad Company in township 11 north, of range 10 west of the 6th P.M., in Nebraska, containing 286 acres, more or less. Appellant, Schafroth, sold the same at public auction to one Blomquist, and entered into a contract with him which is the basis of this controversy. In the deed of the land to Schafroth from the West Grand Island Live Stock Company the same was made subject to the right of way of the Union Pacific Railroad Company. When Schafroth made the contract with Blomquist, no similar provision was inserted. The contract of sale did provide as follows:

'Witnesseth, that the party of the first part has this day sold to the party of the second part the following described property, to-wit: Southwest quarter (S.W. 1/4) section twenty-four (24), and all of that part of east half (E. 1/2) of section twenty-four (24), lying south of the center of the right of way of the Union Pacific Railroad Company, all in township eleven (11) north, of range ten (10), west of the 6th P.M., in Hall county, Nebraska, containing two hundred eighty-six (286) acres, a little more or less, according to the government survey thereof, together with all appurtenances thereto belonging and now thereon, for which the party of the second part agrees to pay the sum of thirty-seven thousand thirty-seven ($37,037.00) dollars, $ . . ., payable as follows.'

December 15, 1920, Blomquist made an assignment of this contract to appellee, Ross. One of the provisions of this assignment is, 'The intention being to assign all of our interest in said contract and the premises covered therein. ' This assignment was in blank, and Ross did not insert his name as assignee therein until March 2, 1921. March 1, 1921, Schafroth attempted to make a settlement, but was unable to do so, either with Ross or with Blomquist. The consideration given by Ross to Blomquist for said assignment was a lot in Central City which he valued at $1,200. Blomquist paid $5,555.55, and was to make further payment on the 1st day of March, 1921. Ross sought judgment for the notes and foreclosure of his mortgages, and as to this there is no contest. He also asked judgment for the $5,555.55 paid by [289 F. 705] Blomquist, and interest thereon, and that the same be established as an equitable lien, which was done. This is the contested proposition.

Had the contract contained a provision that the land was sold subject to the right of way of the railroad company, there would have been no controversy whatever. It is evident that Schafroth did not intend to make a contract to give a warranty deed to the 286-acre tract clear of the right of way of the Union Pacific Railroad Company. He had acquired the land from West Grand Island Live Stock Company and in the deed to him was the provision that it was subject to the right of way. He had given two mortgages on this same land to appellee, Ross, which contained the provision, 'containing 286 acres, more or less, subject, however, to the right of way of the Union Pacific Railroad. ' Blomquist claims in the testimony that he thought he was getting 286 acres clear of the right of way. We are not satisfied, however, that such was his expectation. While the contract does not contain the provision of the mortgages with reference to taking the land subject to the right of way, it does refer to that part of the east half of section 24 (which is a part of the tract sold) lying south of the center of the right of way of the Union Pacific Railroad Company. Blomquist had been over the land. He knew that the same right of way that passed over the east one-half of section 24 passed over the southwest quarter of the same section. He knew it was the permanent right of way of the main line of the Union Pacific Railroad Company, and in the contract he had notice that the boundary line of the east one-half of section 24 was the center of the right of way. Hence he had notice from the contract that at least as to the east one-half of section 24 there was a superior title to his.

As appellee made no effort to have the contract corrected to express what he contended was the real intention of the parties, the question of whether a court should have corrected it under the record is not before us. We pass the question of any right to rescind because of the $15,000 mortgage on the property held by Ross payable in 1923, for Ross admits in his testimony, and the same admission is in the answer, that he had agreed to accept payment therefor before the same was due, if Schafroth so desired. Further, by the terms of the contract the situation is provided for, if there is a mortgage on the property when the time arrives for performance. The real question in this case is as to the right of way. We shall confine our discussion to that.

It is the theory of appellee that appellant agreed in the contract to furnish a warranty deed to 286 acres of land and an abstract showing good title; that the right of way was an incumbrance, and hence appellant could not perform his contract, because he could not furnish title clear and free of such incumbrance. Therefore, as assignee of Blomquist's interest in the contract, he had a right to rescind the same and recover the money paid by Blomquist to Schafroth on the purchase price, and to enforce such payment by the establishment of an equitable lien therefor. While a somewhat different theory is argued, the real basis of this action is rescission of the contract.

That such an easement as a railroad right of way is an incumbrance [289 F. 706] is the very general voice of authority. Dosch v. Andrus, 111 Minn. 287, 126 N.W. 1071; Wadhams v. Swan, 109 Ill. 46; Riley v. Wheat (S.D.) 187 N.W. 425; Tandy v. Waesch, 154 Cal. 108, 97 P. 69; Burk v. Hill, 48 Ind. 52, 17 Am.Rep. 731; Farrington v. Tourtelott (C.C.) 39 F. 738; Goodman v. Heilig et. al., 157 N.C. 6, 72 S.E. 866, 36 L.R.A. (N.S.) 1004; Beach v. Miller, 51 Ill. 206, 2 Am.Rep. 290; Adams v. Henderson, 168 U.S. 573, 18 Sup.Ct. 179, 42 L.Ed. 584; Butler v. Gale, 27 Vt. 742; Weiss v. Binnian, 178 Ill. 241, 52 N.E. 969; Jerald v. Elly, 51 Iowa, 321, 1 N.W. 639; Pierce v. Houghton, 122 Iowa, 477, 98 N.W. 306; Quick v. Taylor, 113 Ind. 540, 16 N.E. 588; Kellogg v. Malin, 50 Mo. 496, 11 Am.Rep. 426; Whiteside v. Magruder, 75 Mo.App. 364. It has been held by many authorities that, where the vendee has knowledge of the incumbrance, it does not prevent him from recovering damages on account thereof in an action at law for breach of covenant. 11 Cyc. 1066, 1067, 1068; Barlow v. McKinley, 24 Iowa, 69; Doyle v. Emerson, 145 Iowa, 358, 124 N.W. 176; Harwood v. Lee, 85 Iowa, 622, 52 N.W. 521; Huyck v. Andrews, 113 N.Y. 81, 20 N.E. 581, 3 L.R.A. 789, 10 Am.St.Rep. 432; Yancey v. Tatlock, 93 Iowa, 386, 61 N.W. 997; Weiss v. Binnian, 178 Ill. 241, 52 N.E. 969; Patterson v. Freihofer, 215 Pa. 47, 64 A. 326; Harlow v. Thomas, 15 Pick. (Mass.) 66; Townsend v. Weld, 8 Mass. 146; Rawle on Covenants for Title (5th Ed.) Secs. 82 and 88. The decisions holding to this rule are based on the danger of permitting parol evidence to show knowledge of defect in title and thereby grafting exceptions upon written instruments.

Another line of decisions follows the doctrine that, where there is a sale of a tract of land upon which exists an obvious easement or burden of any kind, such as right of way, highway, river, artesian system, or pond, and the person has knowledge thereof, the fair presumption is, in the absence of express provisions in the contract, that both parties act with reference thereto, and that the purchaser is in fact paying only for the land subject to the easement thereon, and therefore the easement does not constitute such an incumbrance as to support an action for breach of covenant against incumbrances. Kutz v. McCune, 22 Wis. 628, 99 Am.Dec. 85; Pomeroy, Executor, v. C. & M. Ry. Co., 25 Wis. 641; Rich v. Scales, 116 Tenn. 57, 91 S.W. 50; Burbach v. Schweinler, 56 Wis. 386, 14 N.W. 449; Sachs v. Owings, 92 S.E. 997; Goodman v. Heilig, 157 N.C. 6, 72 S.E. 866, 36 L.R.A. (N.S.) 1004; Frost v. Angier, 127 Mass. 212; Knox v. Spratt, 23 Fla. 64, 6 So. 924; Ex parte Alexander, 122 N.C. 727, 30 S.E. 336; Patterson v. Arthurs, 9 Watts (Pa.) 152; Memmert v. McKeen, 112 Pa. 315, 4 A. 542; Bird v. Bank of Williamstown, 13 S.W. 430, 11 Ky.Law Rep. 868; Desvergers v. Willis, 56 Ga. 515, 21 Am.Rep. 289; Whitbeck v. Cook, 15 Johns. (N.Y.) 483, 8 Am.Dec. 272; Barnum v. Lockhart, 75 Or. 528, 146 P. 975; Hymes v. Estey, 116 N.Y. 505, 22 N.E. 1087, 15 Am.St.Rep. 421; Schurger v. Mooreman, 20 Idaho, 97, 117 P. 122, 36 L.R.A. (N.S.) 313, Ann. Cas. 1912D, 1114. This line of decisions is well...