Ward v. Wiman — 17 Wend. 192

Majority

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Ward vs. Wiman.

Headnote

Case lies against a grantor for & fraudulent representation vhat the lands sold by him are free and clear of incumbrances, although in the deed conveying the lands there is a covenant against incumbrances,^[1]

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Demurrer to plea. The plaintiff declared in case that he bought of the defendant certain real estate, situate in Upper Canada, which the defendant fraudulently represented to be free and clear of all incumbrances; that he paid $1500 for the land, and received of the defendant a deed for the same, bearing date 1st May, 1882; that previous to the execution of the deed, to wit, on, &c., the defendant had executed a mortgage of the same premises to one J. McA. to secure the payment of ¿6300, of the currency of Upper Canada; that that sum, with the interest thereof, amounted on the 11th July, 1832, to $1500; that the mortgage was a lien and incumbrance upon the land conveyed to him, and so remained until it became forfeited by non-payment; whereby he lost the land, &c., alleging a scienter, and claiming damages. The defendant pleaded, 1, non cul., and 2, actio nun, because he conveyed the premises to the plaintiff by deed, and thereby covenanted that at the time of the ensealing and delivery thereof, he was lawfully seized of the premises in his own right as of an absolute and indefeasible estate of inheritance in the law in fee-simple, without any manner of condition to alter, change, determine or defeat the same ; that the deed also contained covenants for quiet enjoyment, further assurances and warranty, and that the plaintiff had not required any further assurances; concluding with a verification and prayer of judgment. The plaintiff put in a similiter to the first plea and a demurrer to the second. T.he cause was brought to argument on the demurrer.

A. Taber, for the plaintiff,

in his opening relied principally upon the case of Wardell v. Fosdick & Davis (13 Johns. R. 325), in which an action on the caso was maintained for deceit in selling land which had no [194] existence, notwithstanding that'the plaintiff might have availed himself of covenants of seizin, quiet enjoyment and warranty.

J. A. Spencer, for the defendant.

The covenant that the grantor was seized in fee-simple, without any manner of condition to alter, change, determine or defeat the same, is equivalent to a covenant against incumbrances (16 Johns. R. 254). There is therefore an express covenant in reference to incumbrances, and the purchaser can not go back of the deed to show verbal representations made at the time of or previous to its execution. The representation is merged in the covenant, and the purchaser is only entitled to such remedy as the law will give him under the covenant; the mere existence of the mortgage, without payment thereof by him or an eviction by the mortgagee, only entitles to nominal damages, and that may be recovered under his covenant as well as in the action on the case. If this action be maintained and the plaintiff is suffered to recover the whole consideration money, and he should afterwards be evicted by the mortgagee, there is nothing to prevent a second recovery for the same amount, as a recovery in an action of tort would be no bar to a recovery on the covenant. In the case of Wardell v. Fosdick & Davis, the purchaser was remediless, unless the action on the case was sustained; there being no land in existence, there could be no eviction, and without an 'eviction, there could be no recovery under the covenant, beyond nominal damages. Not so here; the rights of the plaintiff were perfect under his covenants. In Comyn’s Dig. vol. 1, p. 356, it is said if one sells land, affirming that he has a good title, when he knows he has no title, an action on the case lies. Here there is pretence of want of title. The grantor covenants that the purchaser shall have quiet enjoyment, and that he will warrant him in the possession of the land—he also covenants that the land is free and clear of incumbrances, and if the purchaser is not disturbed in his possession, by the settled rules of law he can claim only nominal damages for the breach of a covenant, where he has [195] not sustained actual damages. Payment of the incumbrance by the ¡.■Taiitor, at any time before eviction, saves the purchaser harmless. In 2 Day, 128 , it was held that case will not lie for a misrepresentation as to the

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locality or quantity of land sold; and in Leonard v. Pitney (5 Wendell, 30,) Justice Marcy said, doubts may be well entertained whether an action at law lies for a deceitful and false representation of title in the vendor of real estate. Contrary opinions have been expressed in 4 Johns. R. 4, and 10 Wendell, 142; but the opinions were obiter, and were not necessary to the decision of the cases under consideration.

A. Taber, in reply,

admitted that where there is no fraud in the transaction, the agreement of the parties is merged in the written contract; but insisted that a fraudulent representation can not be deemed as incorporated in the written contract. Fraud vitiates all contracts, and consequently an action on the case lies where there has "been a fraudulent representation by means of which a party has been induced to part with his property. The action on the case, should be sustained, as it gives an immediate remedy, whilst the remedy on the covenant may be distant: and besides, in this action the plaintiff may recover for improvements while in covenant he can receive only the consideration money and interest.

By the Court.

The only question presented upon the pleadings in this case is, whether an action on the case will lie against the defendant for a false and fraudulent representation, made in respect to an incumbrance upon a lot of land, sold and conveyed by him by a warrantee deed to the plaintiff. The deed contained no formal covenant against incumbrance according to the plea, though the expressions following the covenant of seizin, “without any manner of condition to alter, change, determine or defeat the same,” which in Stanard v. Eldridge (15 Johns. R. 254), were construed to be, in effect, such a covenant, are found here. Conceding this to be a correct exposition of the terms, it can not, however, in my [196] judgment, vary the result; because, whether the deed contained this covenant or not, the question is not an open one in this court. The fraud is not merged nor extinguished by the covenant, but affords an additional and more complete remedy to the party. It is true, a doubt was expressed by Mr. Justice Marcy, in Leonard v. Pitney (5 Wendell, 30), whether an action at law would lie, under any circumstances, for a deceitful and false representation of title in the vendor ; but the remark was incidental, and was not material to the decision of the case, nor was it intended as the deliberate expression of an opinion. The principle of the case of Wardell v. Fosdick & Davis (13 Johns. R. 355), appears to me to be decisive in favor of maintaining the action; and that too, whether the deed contains a covenant or not. There the title wholly failed, as there was no such land in existence as described in the deed ; and which fact was known to the defendants at the time of the conveyance. The deed contained no covenant except against the acts of the grantors, but they assigned to the plaintiff a deed of the premises made to themselves, by one Corlies, which contained full covenants, and which together were, in legal effect, and so considered by the counsel and court, a conveyance of the land with covenants of title. The action was for deceit in the sale, and a recovery was resisted upon the ground, among others, that the purchaser must rely upon liis covenants. The court say, there is no legal objection to the form of action, and that where the party has been induced,'by a fraudulent representation, to pay his money and accept a deed, it is immaterial whether any or what covenants are contained in the deed. The purchaser defrauded has a right to treat the deed as a nullity, and may maintain an action on the case for the deceit.

It was attempted upon the argument to distinguish that case from the present upon the ground before mentioned, that there was no such land in existence as the deed porported to convey ; but it can in nowise be important to the decision, how or in what way the title fails or is embarrassed; the defect of title is the material point. Besides, the only reason that can be urged

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.against sustaining this action is that the grantee should be compelled to look to his covenants. That reason applies with as much force in the case of a failure of title on account of the non-existence of the land described, as where the title fails by reason of some other defect.

The authorities sustaining the general principle, that this action' lies for deceitful and false representations respecting the title to lands in the sale of them, without adverting particularly to the fact of the covenants of title in the deed of conveyance, are numerous (2 Caines, 193; 4 Johns. R. 1, Van Ness J.; 13 id. 395; 7 Wend. 380 ; 1 Inst. 384, a. § 1; 4 Cruise, 88; 2 Ld. Raym. 1118; 2 Co. Litt. 384, Tho’s ed. n; 1 Fonbl. 374, 5, n; 3 Johns. Ch. R. 528; 10 Wend. 155 , Savage, C. J. ; Sugden on Vend. 491, 2; Doug. 654; Platt on Covenants, 354).

Judgment for plaintiff on demurrer; leave to amend on payment of costs.

Cases cited

Culver v. Avery 7 Wend. 380 N.Y. Sup. Ct. p. 113