Silverman v. Loomis, 104 Ill. 137 (1882)

Sept. 27, 1882 · Illinois Supreme Court

104 Ill. 137

Lazarus Silverman v. Mason B. Loomis.

Filed at Ottawa September 27,1882.

1. Covenants—contracts—cancellation of. corresponding covenants each to the other. Where A conveys to B' land upon which there is an incumbrance of record, with covenants against incumbrances and of warranty, and B subsequently reconveys to A with like covenants, the several' conveyances between them will, by operation of law, cancel or extinguish the covenants in B’s deed as to all incumbrances covered by A’s deed to B, to avoid circuity of action. In such case the law construes such covenants as mutually canceling each other, so that no action can be maintained by either of the parties or their assigns.

2. Purchaser—rights and liabilities as to prior covenants. Where a grantee in a deed covenants therein to'take up and surrender certain notes to a third person as a part payment of the consideration, and subsequently conveys the premises by quitclaim deed, his 'grantee will take the land burdened with this covenant, and in equity will be required to perform the covenant. The assignee of a grantee can not recover on a covenant made by the grantor of the latter, where, by reason of matter apparent upon the record of deeds in the line of his title at the time of the assignee’s" purchase, .the grantee himself could not have recovered. The assignee in such case occupies no better position than the original covenantee through whom he claims.

Appeal from the Appellate Court for the First District;— heard in that court on appeal from the Circuit Court of Cook county; the Hon..George. Gardner, Judge, presiding.

The facts material-, to a proper: understanding of this case are, in substance, as follows: On the 10th of May, 1871, Eben F. Eunyan, being the owner in fee of a certain lot of ground in Chicago, Cook county, mortgaged the same to Iza H. Scribner, to secure a loan of $2000, the mortgage being filed in the proper office for record the day it was executed. On the 12th of July-following, for the consideration of $7000, Eunyan sold, and conveyed by warranty deed, the same property to Mason B. Loomis, the appellee, the latter having constructive, but no actual, knowledge of the Scribner mortgage. Loomis paid $500 cash on his purchase, and executed to Eunyan thirteen notes, of $500 each, payable at intervals of six months, the last maturing on July 12, 1878. These •notes were secured by a deed of trust on the purchased property. Loomis took possession of the premises at the time of his purchase, and occupied the same until May 1, 1875, having in the meantime paid the first six of said notes. On the day last mentioned, for the consideration of $7500, Loomis sold, and reconveyed by warranty deed, the property to Eunyan, the latter agreeing, in part payment of the consideration, to take up and surrender to Loomis the remaining seven notes, which were then outstanding in the hands of other parties, and this stipulation was set forth in the conveyance, which" was. duly recorded about the date of its execution; The" seventh and eighth notes were taken up and surrendered by Eunyan in pursuance of the stipulation in the deed. The remaining five notes had already been transferred by Eunyan to Lazarus Silverman, who subsequently transferred them, for value, to L. C. Paine Freer.

On the 23d of June, 1876, Eunyan contracted and sold the premises in question to Silverman, but at the instance of the latter the conveyance was made to Bernhard Moos, who subsequently, on the 2d of April, 1879, by quitclaim, deed, conveyed the property to Silverman, the real purchaser. By a stipulation .in the deed from Eunyan to Moos, the grantee covenanted and agreed, as a' part of the .consideration, to take up and surrender to Loomis the remaining notes given by the latter to Eunyan on his original purchase, which were then outstanding in the hands of Freer. Silverman took up the ninth, tenth, eleventh and twelfth of these notes, as provided in the deed, on his purchase from Eunyan, but declined to surrender them to Loomis, on the ground he had been compelled to redeem from a sale under the Scribner mortgage, at an expense of $2655.91, which he claims appellee is bound to make good to him by reason of his covenant against incumbrances in his deed of reconveyance to Eunyan, as heretofore stated. Appellee denying, all liability on. account of his covenants in that deed, suits at law were commenced against him by Silverman on the four notes last mentioned, and by Freer on the thirteenth of said notes, and the present bill was filed by appellee to enjoin these suits. On the hearing, the circuit court of Cook county rendered a decree perpetually enjoining Silverman from further prosecuting his suit upon the four notes taken up by him, and directing that the same be canceled and delivered to Loomis within ten days, and that Silverman, within thirty days,‘pay the amount of the thirteenth note to Freer, arid upon such payment surrender the said note, canceled, to Loomis. From this decree Silverman appealed to the Appellate Court for the First District, where the same was affirmed, and Silverman brings the case to this court by appeal.

Mr. Frank J. Crawford, for the appellant:

A covenant against incumbrances runs with the land, and is available for the benefit of the heirs or assigns of the covenantee, upon whom - the burden of the incumbrance ultimately falls. 3 Washburn on Real Prop. (4th ed.) 459; Richards v. Burt, 59 Ill. 38.

The measure of damages on such covenant is the amount of the loss, not exceeding the purchase-money. Bawle on Covenants for Title, (4th ed.) 288; •• Delavergne v. Norris, 7 Johns. 358; Braman v. Bingham, 26 N. Y. 483; Spring v. Chase, 22 Me. 505; The City v. Bissell, 46 Mo. 160; Batchelder v. Sturgis, 3 Cush. 205; Brady v. Spurck, 27 Ill. 478.

If the covenant passes to the assignee with the land, it can not be affected by the equities existing between the original parties, any more than the title to the land itself.' Suydam v. Jones, 10 Wend. 180; Greenvault v. Davis, 4 Hill, 643; Rawle on Covenants, 351.

There was no release here of Loomis’ covenants by Bunyan. A release must be by an instrument of equal solemnity with that containing the covenants, and recorded, in order to affect a subsequent purchaser. Bawle on Covenants, 349, 352; Rogers v. Payne, 2 Wils. 376; Susquehanna Coal Co. v. Quick, 11 P. F. Smith, (Pa.) 339.

Mr. E. A. Otis, and Mr. Chas. H. Wood, for the appellee:

The conveyance by Bunyan to Loomis, and the reconveyance by Loomis to Bunyan of the same premises by a like deed, operated to extinguish the covenants in the deed • of Loomis, both as against Bunyan and his grantee, Silverman. 2 Coke on Littleton, sec. 743; Shepard’s Touchstone, 201; 10 Bacon’s Abridg, (Bouvier’s ed.) 414, “Warranty Deed;” Brown v. Metz, 33 Ill. 339; 3 Washburn on Real Prop. *661; Goodell v. Burnett, 22 Wis. 565; Kellogg v. Wood, 4 Paige, 578.

Silverman, by the covenant in the deed from Bunyan, assumed to pay and surrender up the last five notes of Loomis. That agreement is binding on him. Taylor v. Dace, 59 Pa. St. 436; Sawyer v. Weaver, 2 McArthur, D. C. 1; Lamb v. Tucker, 42 Iowa, 118; Ricard v. Sanderson, 41 N. Y. 179.

The acceptance by the grantee of a deed conveying lands subject to a specified mortgage, and providing that he shall assume and pay the mortgage, binds him as effectually as though the deed were inter partes, and executed by both grantor and grantee. The mortgagee- may treat both the mortgagor and his grantee, under such a promise, as principal debtors, and may have a formal decree against either or both. Crawford v. Edwards, 33 Mich. 354; Snyders. Robinson, 35 Ind. 311.

As to the mortgagor, the party who assumes the mortgage debt is the principal, and he is a surety only. Pruden v. Williams, 26 N. J. Eq. 210; Marsh v. Pike, 10 Paige, 695; Calvo v. Davis, 8 Hun, (N. Y.) 222; Jones on Mortgages, sec. 742.

Mr. Justice Mulkey

delivered the opinion of the Court:

Silverman, on his purchase from Bunyan, having agreed to take up and surrender to Loomis the notes sued on, it is clear he was bound to do so unless he was relieved from the performance of that undertaking by reason of having been compelled to redeem the premises from sale under the Scribner mortgage, and whether he was so relieved or not, of course depends upon whether Loomis is liable to Silverman on the covenants in the former’s deed to Bunyan, and upon the decision of this question the case depends. The circuit court held, and we think properly, that the conveyance and reconveyance of the premises between Eunyan and Loomis by operation of law- canceled or extinguished the covenants in the latter’s deed as to all incumbrances covered by Runyan’s deed to Loomis. The object of the parties in having a covenant against incumbrances inserted in appellee’s deed upon his reconveyance to Eunyan, was doubtless to assure the property to the latter in the same condition it was in when conveyed by Eunyan ■ to Loomis, and nothing more; and to give it a wider range, by extending it to matters covered by Runyan’s covenants to Loomis, would be to make the parties severally, liable to each other on account of the same incumbrance. The enforcement of this liability by legal proceedings would give rise to circuity of action, and an unnecessary and useless expenditure of money in vexatious litigation, which the law ever abhors. To avoid these consequences, the law wisely construes such covenants as mutually canceling each other, so that no action can be maintained on them by either of the parties or their assignees. The assignee of a grantee can not recover on a covenant made by the latter’s grantor, where, by reason of matters apparent upon the record of deeds in the line of his title at the time of the assignee’s purchase, the grantee himself could not recover. The assignee, in such.,case, occupies no better position than the original covenantee through whom he claims.

Silverman, having purchased with constructive notice of these two deeds, is conclusively presumed to have known and understood at the time of his purchase their legal effect, and he has no cause, therefore, to complain. The view here presented we understand to be fully sustained by well recognized legal principles. 2 Coke on Littleton, sec. 743; Brown v. Metz, 33 Ill. 339; Kellogg v. Wood, 4 Paige, 578.

The judgment of the Appellate Court will be affirmed.

Judgment affirmed.