Simon v. Williams

• Decision Date: 05 October 1925
• Docket Number: 24632
• Citation: 105 So. 487,140 Miss. 854
• Court: Mississippi Supreme Court
• Parties: SIMON v. WILLIAMS et al. [*]

105 So. 487

140 Miss. 854

SIMON v. WILLIAMS et al. ^[*]

No. 24632

Supreme Court of Mississippi

October 5, 1925

(In Banc.)

1. VENDOR AND PUBCHASER. Vendee not moving promptly may not rescind.

Vendee in order to rescind must move promptly after accrual of right; and not acting for two years during which there were radical changes in the situation, including a fifty per cent decline in the land's market value, he loses his right.

2 COVENANTS. Breach of covenant against incumbrances held technical, giving no right to damages.

Breach of covenant against incumbrances, by reason of presence of deed of trust, is technical, and gives covenantee no right to recover purchase money paid or to damages, he not having extinguished the incumbrance, nor been disturbed thereby, but having lost the land through foreclosure of another mortgage which he had assumed and on which he defaulted. ETHRIDGE, J dissenting.

HON. C L. LOMAX, Chancellor.

APPEAL from chancery court of Tunica county, HON. C. L. LOMAX Chancellor.

Suit by Joe Simon against Burch Williams and others. Bill dismissed and complainant appeals. Affirmed.

Affirmed.

Cutter & Smith and Roberson, Yerger & Cook, for appellant.

A vendor who sells property to a vendee, conveying the land with a covenant against encumbrance and with full knowledge on the part of the vendor that the vendee is buying the property for a resale, is liable for the resulting damage, for the failure to make the resale when there is in fact an encumbrance on the property conveyed, and the vendee by reason and because of this encumbrance is prevented from making a resale of the property. Sisters of Perpetual Adoration v. Jane, 110 Miss. 612; Caswell v. Habberzettle, 99 Tex. 1, 86 S.W. 738; 122 Am. St. Rep. 597; Wm. Farrell Lbr. Co. v. Deshon, 65 Ark. 103, 44 S.W. 1036.

So we say in this instant case that a covenant against encumbrance is broken immediately if there is in fact a deed of trust on the property at the time the covenant against encumbrance is entered into. And in the case at bar, there was a deed of trust on the property conveyed, though a covenant against encumbrance was entered into by the grantors; and this covenant was breached by the existence of the deed of trust as soon as it was entered into. If injury, direct, or indirect, resulted from this breach of the covenant, then, the appellees must indemnify the appellant for this injury or damage.

For law in regard to the breach of a covenant against encumbrance see: 11 Cyc. 1164; 15 C. J. 1326, section 230; Fraser v. Bentel, Ann. Cas. 1913 B. 1062; Lynch v. Wright, 94 F. 704; Weatherbee v. Bennett, 84 Mass. 428; Harlow v. Thomas, 15 Pick. 66; Batchelder v. Sturgis, 3 Cush. 201, 57 Mass. 201.

The measure of damages is the same old measure that has been applied in this state from the earliest case to the present date, and in truth the same measure which has been applied in cases of damages from breach of contract from the time of the decision in the case of Hadley v. Braxendale, on down to the present date. 15 C. J. 1317; 2 Devlin on Real Estate (3rd Ed.), 1720, sec. 917; Funk v. Voneida, 14 Amer. Dec. (Penn.) 614; Sutton v. Cannon, 100 So. 24.

II. The right of Simon to a rescission of the contract because of this encumbrance on same. Unless there was an unreasonable delay on the part of Simon in asking for a rescission, then most certainly he is entitled to a rescission of the contract, a cancellation of the deed, and a return of the twenty-two thousand four hundred fifty dollars cash paid by him, together with interest thereon.

It will be borne in mind, always, by this court that this contract between Joe Simon and Burch, and J. D. Williams was not the simple, ordinary contract of bargain and sale, but that it was the case of a purchase of land by a real estate agent for the purpose of resale, with full knowledge on the part of the vendee of the purpose for which the land was being bought. Here, the vendor conveyed an absolutely unmarketable title. The vendor conveyed with full knowledge that it was being bought for a resale. He executed a covenant against encumbrance, knowing that the place was bought for a resale. It was his duty to remove the encumbrance so that the place might be marketable. Failing to do this, the vendee undoubtedly had a right to the rescission of the contract.

We say that there was no unreasonable delay.

Dulaney & Jaquess, for appellees.

I. The appellant was not entitled to a rescission on either the allegations of the bill or the proof. Halls v. Thompson, 1 S. &. M. 443. Appellant has never had a ground for rescission, but here we submit that there is no equitable principle better established than the rule that a party having a ground for rescission must seek rescission promptly upon the discovery of that ground, and may not with such knowledge continue to enjoy the benefits of his trade until the situation is changed. Alig v. Lackey, 114 Miss. 392, 75 So. 139; Gannaway v. Toler, 122 Miss. 111; Shappirio v. Goldberg, 192 U.S. 232, 48 L.Ed. 419; 19 Rose's Notes on U. S. Reports, 25; 5 Pomeroy's Eq. Jur. Prud. (2nd Ed.), 4758, sec. 2109; Note to Faulkner v. Wassmer, 30 L. R. A. (N. S.) 872; Fletcher v. Wilson, S. & M. Ch. 376.

Has it ever been held to be the law that one with full knowledge of the facts may enter into a contract, accept the benefits of the contract, wait to see whether there will be a profit or a loss, and finding that there will be a loss obtain a rescission because of a fact known to him from the first?

II. Appellee has shown no right to recover damages for breach of covenant against encumbrances. The final contract between the parties was a warranty deed in which nothing was said about a reconveyance, and having contracted in that formal manner they must be presumed to have had in mind the rules of damages adopted by the courts as applicable to that contract in hundreds of cases and since the earliest times of our jurisprudence.

The appellant relies upon the familiar rule of Hadley v. Baxendale, 9 Exch. 341, that the damages recoverable for a breach of contract are such as may fairly and reasonably be considered as arising naturally from the breach of the contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it.

Can it reasonably be presumed that both parties at the time the deed was delivered contemplated damages arising from a loss of profit on resale, when at the time Simon was accepting the title knowing of the existence of the deed of trust?

Parties adopting a solemn form of contract, often passed upon by the courts, may reasonably be presumed to have had in mind the rules of damages, which the courts have uniformly applied to that contract and no other. 8 R. C. L. 459; Brown v. Chicago, etc., R. Co., 54 Wis. 342, 11 N.W. 356, 41 Am. Rep. 41; Allison v. Chandler, 11 Mich. 542, 17 C. J. 746; Hale on Damages (Hornbook Series) 369.

Note the distinction between damages for breach of covenant against encumbrances when the encumbrance is removable and when it is not removable, for this distinction constitutes a complete answer to all of the authorities cited in regard to purchases for resale. This distinction seems to be recognized by all of the courts and leading textwriters.

There are two kinds of encumbrances recognized by the courts and textwriters. The first class consists of money charges such as judgments, mortgages, attachments, and other liens, which may be discharged by the payment of a sum of money. The second class of encumbrances consists of such as may not be discharged by the payment of a sum of money, and interfere with the enjoyment of the land, such as leases, building restrictions, rights-of-way, and other easements. 2 Sutherland on Damages (2nd Ed.), 2146; Rawle on Covenants for Title, 271-276; Delavergne v. Norris, 7 Johns 358 (N. Y.) 5 Am. Dec. 281; Prescott v. Trueman, 4 Mass. 627, 3 Am. Dec. 246; Post v. Campau, 42 Mich. 90; Bailey v. Agawam National Bank, 190 Mass. 20, 76 N.E. 449, 112 Am. St. Rep. 296, at 301.

Having merely a technical cause of action at law for nominal damages, a court of equity will not retain jurisdiction for the sole purpose of awarding nominal damages, and the bill must be dismissed. Hastings v. Hastings, 58 N.Y.S. 416.

The law in Mississippi is not different from that in other states. Winstead v. Davis, 40 Miss. 785; Vick v. Percy, 7 S. & M. 256; Guice v. Sellers, 43 Miss. 52; Wofford v. Ashcraft, 47 Miss. 641; Walker v. Gilbert, 7 S. & M. 456, at 464.

No case seems to have been presented to the Mississippi supreme court in which there was a breach of the covenant against encumbrances by virtue of there being an encumbrance of the second class; that is, one which interfered with the use of the land, but the statutory deed has often been before the court in cases where the encumbrance was of the first class; that is, a mere money charge. Allen v. Caffee, 85 Miss. 766.

It would be a strange result if the court should hold that where one accepts the statutory warranty deed, he may recover damages where there is an outstanding mortgage, and he has not been evicted and has paid out nothing on this account, but cannot recover damages where there is outstanding an absolute fee-simple title unless he is evicted or pays out something on this account. But we must confess that there is an analogy for this in the English law, which formerly required a man to pay damages when he injured one of his fellows physically, but did not require him to pay anything if his victim was killed. Bush v. Cooper, 26 Miss. 599.

As illustrative of the holdings of our court see Kirkpatrick v. Miller, 50 Miss....