Van Bibber v. Hardy, 4-8826.
| Decision Date | 11 April 1949 |
| Docket Number | No. 4-8826.,4-8826. |
| Citation | 219 S.W.2d 435 |
| Parties | VAN BIBBER et al. v. HARDY et al. |
| Court | Arkansas Supreme Court |
Claude F. Cooper and Frank C. Douglas, both of Blytheville, for appellants.
Holland & Taylor and Marcus Evrard, all of Blytheville, for appellees.
Appellants prosecute this appeal from a decree (1) awarding appellee Hardy $3000.00 for breach of warranty; (2) refusing appellants a judgment against appellee Little; and (3) refusing to allow appellants a foreclosure.
In July, 1945 appellants, T. H. Van Bibber and Velma Louise Van Bibber, his wife, through the efforts of Tom Little, a real estate broker, agreed in writing to sell Alvin Hardy certain real property in the City of Blytheville. There was a two-story building on the property. The ground floor was leased to George Stilwell at a rental of $100.00 per month; and the second floor was used as a hotel by Mrs. Van Bibber. The sales contract stated, inter alia:
The total contract price was $20,000.00, of which amount $7,000.00 was evidenced by a lien note executed by Hardy to the Van Bibbers, due in installments of $100.00 each month, and with the option given Hardy to pay the entire balance at any time. On July 19, 1945, in keeping with the sales contract, the Van Bibbers executed to Hardy a general warranty deed, but in which the covenant of warranty made no mention of Stilwell's possession or contractual rights concerning the ground floor of the building.
After delivery of the deed, Stilwell regularly paid his rent to Hardy for several months, and then demanded an extension of his lease of the store building for three additional years, exhibiting to Hardy the original 1943 lease contract between Stilwell and the Van Bibbers, which read in part:
"This lease is for a period of three years from September 1, 1943, and the rental price is $1,200.00 per year, payable in monthly installments of $100.00, payable in advance, and second party is given the privilege of renewal of said lease for from one to three years,1 at the same rental and upon the same general terms."
Hardy paid Stilwell $3,000.00 in order to obtain possession of the ground floor store building on September 1, 1946; and then Hardy filed this action against the Van Bibbers for breach of warranty, claiming that it had been represented to him that he would get possession of the ground floor on September 1, 1946, and that the Van Bibbers had contracted with Stilwell that he might have an extension, and that the $3,000.00 was the amount of the damages for the possession of the store building from September 1, 1946 through the period of the contractual extension held by Stilwell.
In defending the action, the Van Bibbers claimed that Hardy had known, all the time, that Stilwell had the right to a three-year extension, and that Hardy made monthly payments to the Van Bibbers after knowing of the Stilwell contract, and after having paid Stilwell the $3,000.00, thereby creating an estoppel against Hardy. The Van Bibbers also alleged that Hardy was in default in his monthly payments on the note, and prayed a foreclosure of their lien. The Van Bibbers made Tom Little a cross-defendant, alleging that they had informed him, as their real estate agent, all about the Stilwell contract, and that Little had failed to put the correct provisions in the Hardy sales contract and the general warranty deed. Little's defense was a general denial. The respective parties testified in accordance with their pleadings; and the Chancery Court found and decreed:
1. that Hardy was entitled to judgment against the Van Bibbers for $3,000.00 for breach of warranty;
2. that the Van Bibbers were entitled to no relief against Little; and
3. that the Van Bibbers were not entitled to foreclose their lien on the property for the balance of the $7,000.00 purchase note.
To reverse that decree, the Van Bibbers bring this appeal. We discuss the issues under the following topic headings.
I. Breach of Warranty. The possession by Stilwell of a portion of the premises described in the deed from the appellants to Hardy was a breach of the covenant of warranty. Crawford v. McDonald, 84 Ark. 415, 106 S.W. 206; Kahn v. Cherry, 131 Ark. 49, 198 S.W. 266; see also O'Bar v. Hight, 169 Ark. 1008, 277 S. W. 533 and Arkansas Trust Co. v. Bates, 187 Ark. 331, 59 S.W.2d 1025. But under the general rules of estoppel, Hardy could not be heard to claim any damages arising from such breach until after September 1, 1946, because of the provisions in the sales contract, to which Hardy had agreed, and which stated:
"The ground floor of this building is leased till September 1st, 1946."
However, the same paragraph in the sales contract continued in this language:
"* * * (at) which time the purchaser can get possession."
The written provision in the sales contract, when considered with the general warranty deed, makes clear that, if the appellants granted Stilwell any lease rights effective after September 1, 1946, then such grant was not only a breach of the covenant of warranty in the deed, but was also actionable by Hardy, unless he be prevented from asserting his cause of action because of estoppel or waiver.
By way of defense, appellants claim that Stilwell's possession at the time of the delivery of the deed was notice to Hardy of the full extent of Stilwell's rights to the premises, even including the right of renewal of the lease; and appellants cite Thalheimer v. Lockert, 76 Ark. 25, 88 S.W. 591 and Prince v. Alford, 173 Ark. 633, 293 S.W. 36 to support their contention. To these cases may well be added First National Bank v. Gray, 168 Ark. 12, 268 S.W. 616, 617, wherein we said:
"* * * the possession of a tenant or lessee is not only notice of all his rights and interests connected with or growing out of the tenancy itself or the lease, but is also notice of all interests acquired by collateral or subsequent agreements."
From these cited cases appellants argue that, since Hardy had constructive notice of all of Stilwell's rights, therefore Hardy is now barred from claiming a breach of warranty. But in this argument appellants are confusing Stilwell's rights under his possession with Hardy's rights under the covenant of warranty. Stilwell could claim that his possession was notice to Hardy of the lease extension rights; but that claim by Stilwell does not protect the appellants, because it is definitely stated in their contract (as previously quoted) with Hardy, that on September 1, 1946 full possession of all of the premises would be delivered to him. In effect, the appellants— by their representation—lulled Hardy into a feeling of security that could well have caused him to forego any inquiry of Stilwell as to the duration of possession or right of extension. Such is the effect of Hardy's testimony.
Our holding in the recent case of Thackston v. Farm Bureau Lumber Corporation, 212 Ark. 47, 204 S.W.2d 897, is apposite to the point now under discussion. In the reported case Rinehart had executed a timber deed to the Lumber Corporation which, with an extension, allowed until March, 1946 for the timber to be cut and removed. In September, 1945 Rinehart sold the land to Thackston, representing that all rights of the Lumber Corporation expired in December, 1945. We held that the Lumber Corporation's right to remove the timber continued until March, 1946, even against the rights of Thackston. But we also held that Rinehart was liable to Thackston on the warranty in the deed for all damages accruing after December, 1945, because Thackston was not informed that the Lumber Corporation had any rights to cut and remove the timber after December, 1945. Likewise, in the case at bar: Stilwell's right to an extension of his lease is superior to Hardy's claim; but Hardy can recover from appellants on the warranty for all damages accruing after September 1, 1946.
Appellants further contended—in their efforts to defeat Hardy's action on his warranty —that Hardy actually knew, before he received the deed, of Stilwell's right to extend the lease. We need not discuss the questions (a) whether one who contracts to purchase property with knowledge of a title defect thereby waives the right to a perfect title,2 and (b) whether knowledge by a grantee of an outstanding easement or claim is an estoppel against an action for warranty,3 because the evidence in the case at bar preponderates to the effect that Hardy did not actually know —until long subsequent to the receipt of the deed by him—that Stilwell had any rights to possession after September 1, 1946.
Furthermore, Hardy's acceptance of the monthly rental money from Stilwell up to September 1, 1946 could not work an estoppel against Hardy, because the appellants in the contract of sale had assigned all such rent money to Hardy. Neither did Hardy's acts, in making his monthly payments to appellants after ...
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