Harwood v. Lee

52 N.W. 521, 85 Iowa 622

• Court: Supreme Court of Iowa
• Decided: May 26, 1892
• Status: Published

Opinion

Kinne, J.

This action was tried to the court, a jury having been waived. The district court found the facts and conclusions of law based thereon as follows: “First. On the-day of-, 1885, the defendant, J. S. Lee, executed to the plaintiff a deed of conveyance for the south half (i) of the southwest quarter (z) of section twenty-one (21), township one hundred (100), range twenty-five (25) west fifth principal meridian, Iowa, with covenants of warranty against incum-brances, except a mortgage of two hundred and sixty-two •dollars and seventy-five hundredths dollars ($262.75). Second. That at the time of the execution and delivery of .said deed the said premises, together with the northeast quarter of section thirty-three, township one hundred, range twenty-five west fifth principal meridian, Iowa, was in fact incumbered by a mortgage of seven hundred and •eighty dollars and sixty-three one-hundredths dollars ($780.63), bearing interest at eight per cent, from December 16, 1882. The said sum of two hundred and sixty-two dollars and sixty-five hundredths ($262.65) mentioned in the deed to the plaintiff being the one-third (i) part of such whole incumbrance, and it being understood by both parties, at the time of making the deed, that the plaintiff should assume and pay off one-third of such whole incumbrance. Third. That before the commencement of this suit the plaintiff, in order to discharge the premises sb conveyed to’ him from the lien of said mortgage, the holder thereof having refused to release the said premises except upon payment and receipt by him of the entire sum secured by the mortgage, paid W. W. Lyons, the holder of said mortgage, the sum of nine hundred and seven dollars and twenty-hundredths dollars ($907.20), and the said mortgage and the notes secured thereby were assigned and transferred to the plaintiff by said Lyons, and the plaintiff thereupon became the owner and holder thereof. Fourth. That by the terms of said mortgage the taxes upon said land covered thereby, if paid by the holder of said mortgage, should be secured by such mortgage, and that said Lyons, as the holder of said mortgage, had paid the sum of one hundred and twenty-six dollars and twenty-hundredths dollars ($126.20) delinquent tax levied upon and assessed against the lands covered by said mortgage other than those conveyed to the plaintiff; that the claim for such taxes paid was also assigned by said Lyons to the plaintiff, and the plaintiff is now the owner and holder thereof. The court finds as conclusions of law that the plaintiff being the holder of said mortgage by assignment, and having taken no step to exhaust his remedy on the same by foreclosure or otherwise, this action is prematurely brought, and should now be abated.’7

I. It is contended that the law in this state is, that a covenant against incumbrances is broken as soon as 1. Deed: warranty: breach: right of action. made, when there is an outstanding lien or incumbrance at the time, and that the . , „ .. . , right ot action accrues m such a case to the covenantee immediately; that the grantee need not wait until he is evicted. And if the grantee extinguishes the incumbrance, he may recover the 'amount so paid. If he has not extinguised it he can recover only nominal damages. As to this there can he no controversy. Funk v. Cresswell, 5 Iowa, 62; Knadler v. Sharp, 36 Iowa, 232; Eversole v. Early, 80 Iowa, 604; Bradshaw v. Crossly (Mass), 24 N. E. Rep. 47. See, also, Brandt v. Foster, 5 Iowa, 296; Kane v. Mink, 64 Iowa, 86. It appears, however, in the case at bar, that the covenantee, Harwood, did not 'extinguish the incumbrance. He purchased the notes and mortgage, took an assignment of them, and held them at the time of the trial. His situation then, was this: He had bought in the incumbrance which existed fipon the land at the time he purchased it. He also claims a right to recover as against his grantor the amount of the purchase price of said incumbrance. The rule as to recovery of the amount paid in these cases, as we understand it, only applies when the incumbrance is thereby discharged. If this is not so, then it follows that an evil-disposed grantee might buy in an incum-brance before maturity, hold it unsatisfied, and recover for a breach of the covenant of his deed, and then dispose of his notes and mortgage to one in good faith without notice before maturity, and for valuable consideration, and thus, instead of being made whole, greatly profit by the transaction.

II. The finding of facts shows that the deed covenanted against all incumbrances except a mortgage of two hundred and sixty-two dollars and 2. -: -: -: -. seventy-five cents. That the premises purchased were, in connection with two other eighty-acre tracts, incumbered with a mortgage for seven hundred and eighty dollars and sixty-three cents, bearing eight per cent, interest from December 16, 1882; and the said two hundred and sixty-two dollars and seventy-five cents was one-third of the whole incumbrance. The court further finds that at the time the plaintiff purchased the land he knew that this mortgage covered the three eighties, and that it was understood the plaintiff was to assume and pay one-third of the entire incumbrance. The presumption must be, in the absence of anything in the finding of facts to the contrary, that each of these three eighty-acre tracts should bear one-third of the incumbrance. Hence the court below correctly found that there could be no recovery until, by foreclosure, the property covered by the mortgage was exhausted. In other words, by his purchase of the mortgage, the plaintiff holds a lien upon lands not included in his deed, so that what will be required to make the plaintiff whole cannot be ascertained until the mortgage is foreclosed. Thus, if, on foreclosure of the mortgage and a sale had thereunder, the entire mortgage debt should be satisfied, together with interest and costs, no action would then lie upon the covenants of the deed. It is apparent that the plaintiff’s damage or loss by reason of the breach of the covenants against incumbrances in the deed can only be determined when the remedy by foreclosure of the mortgage has been exhausted.

III. The court finds that the taxes paid were taxes upon other lands than the eighty purchased by the 3. -: -: -: -. plaintiff, and that they are secured by the mortgage above mentioned. In view of these facts, and the presumption that the sale of the other land will produce sufficient to pay them, we cannot say that the decision of the court below with reference thereto was wrong.

IV. It is insisted that in any event the plaintiff was entitled to nominal damages, inasmuch as when he 4. -: -: -: nominal damages: appeal. took his deed the incumbrance was then outstanding, which constituted a breach COyenant, and an action then accrued to Mm. This is true, hut we have often held that we will not reverse a judgment because nominal damages were not allowed, even though it appears that the appellant was entitled thereto. Watson v. Van Meter, 43 Iowa, 76; Rowley v. Jewett, 56 Iowa, 492; Threshing Machine Co. v. Haven, 65 Iowa, 359; Wire v. Foster, 62 Iowa, 114.

The judgment of the court below is affibmed.