Smith v. Gaub

• Decision Date: 19 November 1909
• Citation: 123 N.W. 827,19 N.D. 337
• Court: North Dakota Supreme Court

123 N.W. 827

19 N.D. 337

E. DELAFIELD SMITH v. JOHN GAUB, BARBARA GAUB, MATILDA SCHAFFER, NORTHWEST THRESHER CO. AND FOSTER COUNTY STATE BANK AND CHRIST SCHAFFER AND H. A. HOGUE

Supreme Court of North Dakota

November 19, 1909

Appeal from District Court, Stutsman county; Burke, J.

Mortgage foreclosure by E. Delafield Smith against H. A. Hogue and others. Decree for plaintiff, and defendant Hogue appeals.

Reversed and action dismissed.

Judgment of the district court reversed, and plaintiff's action dismissed.

John Knauf, for appellant.

Harold M. Smith, for respondent.

OPINION

ELLSWORTH, J.

This appeal arises in an action to foreclose a mortgage given by one Gaub and wife upon certain lands situated in Stutsman county. It appears that on the 15th day of July, 1899, Gaub was the owner of the land in question, and on that day executed to the Winona Savings Bank of Winona, Minn., the mortgage which the action is brought to foreclose. Afterward Gaub conveyed his interest in the land to the plaintiff Smith, who with his wife joining, on April 30, 1901, executed and delivered to the defendant Hogue a deed of the premises in question, in which the consideration named is $ 400. The words of conveyance and of covenant contained in this deed are as follows: "We do hereby grant, bargain, sell and convey unto the said party of the second part, his heirs and assigns forever, all that tract or parcel of land [here follows a description of the real property conveyed], to have and to hold the same, together with all the hereditaments and appurtenances thereunto belonging or in anywise appertaining to the said party of the second part, his heirs and assigns forever. And the said E. Delafield Smith and Annie M. Smith, parties of the first part, for their heirs, executors and administrators, do covenant with the said party of the second part, his heirs and assigns, that they are well seised in fee of the lands and premises aforesaid and have good right to sell and convey the same in manner and form aforesaid, that the same are free from all incumbrances except a certain mortgage amounting to $ 400 in favor of the Winona Savings Bank of Winona, Minn., and the above bargained and granted lands and premises in the quiet and peaceable possession of the said party of the second part, his heirs and assigns, against all persons lawfully claiming or to claim the whole or any part thereof, the said parties of the first part will warrant and defend." The defendant Hogue paid in full the consideration named in the deed, and upon delivery of the deed took possession of the land, and continued in possession until April 29, 1902, when he entered into a contract of sale with the defendant Schaffer. Under this contract Schaffer took possession of the land, and continued to hold the same until the time of trial. On November 14, 1904, the plaintiff, Smith, obtained from the Winona Savings Bank an assignment of the mortgage executed by Gaub and wife, and thereafter, the same being unpaid when due, instituted this action for its foreclosure. The defendant Hogue made answer, setting out the conveyance to him by the plaintiff Smith and wife and the covenants hereinbefore quoted, contained in the deed, and claims that, the plaintiff having sold him the premises in question for a valuable consideration and under full warranty of title, the purchase by plaintiff of the mortgage sought to be foreclosed inures wholly to the benefit of the defendant, and that plaintiff should not be permitted to assert a paramount title obtained through the foreclosure of this mortgage, against either the defendant Hogue, or his grantee, Schaffer.

There can be no question but that the deed of plaintiff to Hogue contains a full covenant of warranty. The only point presented by this appeal is whether or not the recital, "except a certain mortgage amounting to $ 400 in favor of the Winona Savings Bank of Winona, Minn.," contained in the covenant against incumbrances, excepts this mortgage from the warranty. In case it does, there is, of course, nothing to prevent the purchase by plaintiff of this mortgage and the assertion by him of any title obtained through its foreclosure. On the other hand, if this mortgage is not excepted from plaintiff's covenant of warranty, he will not, after warranting the title to this land, be permitted to purchase and assert adversely to his grantee, Hogue, a paramount title obtained in this or in any manner. The covenant against incumbrances and the covenant of warranty contained in the deed of plaintiff to Hogue are separate and independent covenants. They are not connected in form or substance, and are not of the same nature or import. Of the two, the covenant against incumbrances is the broader and assures to the grantee a more immediate right of action in case it shall appear thereafter that incumbrances upon the title exist. The covenant of warranty is not an absolute guaranty of perfect title, but is simply an assurance to the grantee of quiet enjoyment of the title conveyed, and that the covenantor and his heirs will not thereafter claim the estate, but will undertake to defend it whenever assailed by paramount title. Rawle on Covenants (5th Ed.) Section 116. A covenant against incumbrances is broken as soon as it appears that there is an outstanding paramount title or incumbrance; and the grantee, under such a covenant, if he sees fit to do so, may at once purchase the paramount claim and make it the basis of a claim for damage against the covenantor. Of the covenant of warranty, however, there is no breach until an outstanding paramount title has been purchased by the covenantor or has been hostilely asserted by some other party. Either of these acts, however, constitute a breach of the covenant of warranty, and the measure of damage is then the same as under the covenant against incumbrances. Rawle on Covenants, Sections 149, 150.

It is clear therefore that the purchase by plaintiff, Smith, of the Gaub mortgage, and its assertion by him in an action of foreclosure, is a breach of the covenant of warranty, unless this particular mortgage is excepted from its provisions. Plaintiff urges that under the peculiar language of the deed whereby, it will be observed, he covenants, not for himself, but only for his heirs, executors, and administrators, neither of the covenants contained in the deed can be asserted personally against him. With reference to the covenant against incumbrances, plaintiff's position is sustained by direct holdings of this court. Dun v. Dietrich, 3 N.D. 3, 53 N.W. 81. An examination of the covenant of warranty discloses, however, that it is...