Gilbert v. Rushmer

Deed — Covenant against Incumbrances, Action On — Measure of Damages —Purchase of Outstanding Title. In an action on the covenant against incumbrances, where the plaintiff has purchased an outstanding title or incumbranoe from a second mortgagee, who was not made a party in the foreclosure suit through which the former obtained his title, the measure of damage is not what was actually paid to extinguish the incumbrance, but what was fairly and necessarily paid. Where the person holding such incumbrance states that the price given is the least sum that he would take for his interest, and there is no other evidence establishing the reasonableness of such interest, held, that the findings and judgment of the court that the price paid was fair and reasonable are not supported by the evidence.

Error from Douglas District Court. Action by Gorton E. Rushmer, as administrator of tbe estate of H. J. Rushmer, deceased, against William L. Gilbert and Henry Gay, to recover on the covenants against incumbrances contained in a deed from defendants to deceased. Judgment for plaintiff, at the May term, 1888. Defendants bring error. The court erred in admitting the testimony of J. D. Bowersock, a witness called by defendant in error, to the question, “Was $700 the least sum that you would take and make a deed to this property?” It was wholly immaterial to the issue what sum Bowersock was willing to take, or whether he got the sum he asked or not. Admitting, for the sake of the argument, that Bowersock had a valid claim, the issue would be, was the price defendant in error paid to remove the alleged incumbrance a reasonable sum, not whether it was the lowest sum asked or not. The evidence adduced was immaterial, to the issue, and did not, in the least, tend to prove it. The court erred in admitting the conversations of Wm. T. Sinclair with G. W. E. Griffith, as they were wholly incompetent and immaterial, and not binding upon the plaintiffs in error. The court erred in its first conclusion of law, which is based upon its fourth finding of facts from the evidence. The fourth finding of fact is as follows: “Before said deed was delivered, and after the terms had been agreed upon, the outstanding interest or claim in Bower-sock, trustee, was discovered by Rushmer; and thereupon it appears by parol proof, offered by defendants and received over the objection and exception of the plaintiff, that Rushmer asked Griffith to pay off and discharge the same, it being understood that Bowersock would release for $50; Griffith said he would do it if Rushmer would pay that much more for the property, as Gilbert & Gay were only getting out what they had in the property and reducing the interest. Rushmer then said he would take it as it was, and so accepted the deed, paying the $1,400, and having full knowledge of the outstanding claim.” This finding is defective in this, that it conveys the idea that Rushmer took the deed “having full knowledge of the outstanding claim” only. The fact is, and the court should have so found, that Rushmer took the deed agreeing to pay as a further consideration for the premises the claim Bower-sock made against them. This is shown by the evidence of Griffith, and the evidence of Sinclair as to what Rushmer said to him. On the theory that the Bowersock claim was valid, and that Rushmer had not agreed to pay the same as a part of the purchase-price of the premises, and that it was a breach of the covenant against incumbrances contained in the deed, we have but little criticism to offer to the third and fourth conclusions of law found by the court. In its fourth finding the court says: “The measure of damages on breach of the covenant against incumbrances is the amount paid to discharge the incumbrance, with interest, if fairly and reasonably paid, provided such amount does not exceed the consideration paid to the covenantor, which is the limit of his liability.” A further rule may be here invoked, to wit: That when the covenantee has elected to discharge the incumbrances, and brings action for the price paid, the burden is upon the covenantee to show not only that the price paid was a reasonable one, but also that it was the amount he was legally bound to pay, to wit, that the basis upon which he paid was the legal basis. It does not follow that the price paid was the fair and reasonable value of the incumbrance. The covenantee is not entitled to the price that he has been compelled to pay, or. has seen proper to pay, but only to this amount when he has fairly and reasonably paid it. It accordingly results that he has the burden of showing this fact.” 2 Devi. Deeds, § 919, and cases cited; Pate v. Mitehell, 79 Am. Dec. 114, in point, and note; Hall v. Bragg, 51 Mo. 292. In one of the cases cited by Devlin, Chilton, J., says: “In order to recover more than nominal damages, the plaintiff must prove not only the amount paid, but that such payment was the reasonable value of the interest acquired. To hold that it was reasonable from the bare fact of payment, is to assume as true the fact to be proved.” He cannot recover more than the price paid, with interest from the time of payment, but may recover less, as the proof may show that the title bought in was not worth the amount paid. Pate v. Mitchell, 79 Am. Dec. 114; Harlow v. Thomas, 15 Pick. 69; Mitchell v. Hagen, 10 Am. Dec. 169; Dickson v. Desire, 23 Mo. 167; Lawless v. Collier, 19 id. 480. In order to recover more than nominal damages, the onus is on the plaintiff tó.show what the outstanding title is worth; and the fact that he paid a given sum for it cannot be regarded as evidence of its value. Anderson v. Knox, 20 Ala. 156; Pate v. Mitchell, 79 Am. Dec. 114. What, then, was the value of the incumbrance? It was the sum which it would take to redeem these premises from the Bowersock mortgage, providing it did not exceed the consideration price. How much was this sum? That can. only be arrived at by ascertaining the value of these premises and the other lands included in the Gower mortgage, and then proportioning the amount secured pro rata between them. This was for defendant in error to show. The burden was upon him to prove that the amount paid by him was the fair and reasonable value. He did not do it, and we submit he was, from the evidence, only entitled to nominal damages. Rushmer should have ascertained the amount necessary to redeem these premises from the Gower mortgage and paid that amount to Bowersock, In order to recover in this action, the burden was upon him to show that the $700 paid and asked for was the amount necessary to redeem; that it was a just and reasonable amount to pay. The burden of this issue was upon him. There was no evidence produced tending to show the amount it would have taken to redeem from the Bowersock claim. He is therefore in the condition as though he had brought suit before paying anything. He is entitled to nominal damages only. Again, if the theory of the court shall be found to be the correct theory, the plaintiffs in error are entitled to a reversal within the rule laid down in Guthrie v. Russell, 46 Iowa, 269 We claim, first, that if the incumbrance be an outstanding mortgage or attachment, or execution, or, in fact, any valid lien, the purchaser need not wait for the enforcement of these liens; he may proceed at once to satisfy them, and may recover of the guarantor, on his covenant, against incumbrances, all expenses incurred in extinguishing the mortgage or removing the attachment or other incumbrance, provided the amount paid to extinguish the incumbrance does not exceed the consideration money and interest. See Tied. Real Prop., p. 708, ¶ 861; Foote v. Burnett, 10 Ohio, 317; Stambaugh v. Smith, 23 Ohio St. 584; Richards v. Bent, 59 111. 38; Easton v. Lyman, 30 Wis. 41. Of course, the amount which Rushmer would be authorized to pay to remove the incumbrance must be reasonable, and must be the least sum for which he could procure the removal or discharge of the incumbrance. That being the law, there was no error when the court allowed Bowersock, who was called as a witness for Rushmer on the trial, to testify that $700 was the least sum that he would take and make a deed to the property. The next objection urged by the plaintiffs in error in their brief and argument is, that the court erred in admitting the conversations of William T. Sinclair with G. W. E. Griffith, on the grounds that they were “wholly incompetent and immaterial and not binding upon the plaintiffs in error.” The reason assigned by the plaintiffs in error why those conversations should not be admitted is because Griffith was simply acting for Rushmer, and not as the agent of Gilbert & Gay. We think this is a far-fetched conclusion, and not sustained by the evidence given on the trial. The testimony of Griffith shows that he made the sale of the property in controversy to Rushmer as the agent of Gilbert & Gay. If the court was correct in its conclusion that Griffith was the agent of Gilbert & Gay, then all the objection made by the plaintiffs in error which relates to the receipt of improper evidence by the court is not well taken, and the action of the court below should be sustained, and the findings of fact as made by the court are correct, and should not be disturbed by this court. The court in its first conclusion of law was correct, in our opinion, in holding that parol evidence could not be allowed to contradict the plain language of the covenant in the deed? and to hold “to overthrow a solemn covenant in a deed, by proof of a cotemporaneous parol agreement .that it should not take effect, would be highly dangerous, and o pposed alike to reason and authority.” 2 Devlin on Deeds, §§914, 915; McGowan v. Myers, 60 Iowa, 256; Long v. Moler, 5 Ohio St. 271; Harlow v. Thomas, 15 Pick. 70; Keith v. Day, 16 Vt. 670; Jacques v. Ester, 3 Green’s Chan. 463; McLeod v. Sidles, 81 Mo. 595; Spurr v. Andrews, 6 Allen, 422; Toionsend v. Wells, 8 Mass. 146; McKennon v. Donghman, 1 Pa. 417; Collinwood v. Erwin, 3 Watt, 306; Bacheldor v. Sturgin, 3 Cush. 203; Van Wagoner v. Van Nostrand, 19 Iowa, 428; Grice v. Schorhovan, 42 Am. Dec. 391; Sydam v. Jones, 10 Wend. 185. See, also, Sinaovich v. Wood, 145 Mass. 180; Howe v. Walker, 4 Gray, 318; Flynn v. Bourneuf, 143 Mass. 277; 9 N. E. Eep. 650; Rodgers v. Perrault, 41 Kas. 385; Raymond v. Raymond, 10 Cush. 134; Eastbrook v. Smith, 6 Gray, 562; Burke v. Hill, 48 Ind. 52; Memmert v. MoKeen, 4 Atl. Eep. 542; 112 Pa. St. 315; 2 Devi. Deeds, §913; Bennett v. Buchan, 76 N. Y. 386; Shanahan v. Perry, 130 Mass. 460; Burr v. La-master, 46 N. W. Eep. 115. In its third conclusion of law, the court finds that the amount paid by Eushmer ($700) in discharge of that incumbrance was fairly and reasonably paid, and did not exceed the consideration paid by Eushmer to Gilbert & Gay for the land. It will therefore be seen that Eushmer negotiated for some time with Bowersock to get the least possible price that he was bound to pay to remove that incumbrance; that he called on Gilbert & Gay’s agent and notified them of the amount he was compelled to pay to remove the same; that Gilbert & Gay refused to pay anything for the removal thereof; that Rushmer was compelled, in order to sell the property, to pay Bowersock the sum of $700 therefor, to remove said incumbrance, which Gilbert & Gay in their deed had covenanted against; that the court found that the same was a reasonable sum, from the evidence. We therefore think.that this court must come to the conclusion that the sum was reasonable, and that the court did not err in its conclusions of law and judgment, in giving to Rushmer a judgment for said sum of $700. See 2 Dev. Deeds, § 918; 2 Suth. Dam., 313, 315; 2 Greenl., §244; Tied. Real Prop., §8(31, p. 708; Richards v. Bent, 59 111. 38; Foote v. Barnett, 10 Ohio, 317.