In Thomas v. Bartow, 48 N.Y. 193, 197, the court says: "It was claimed on the argument that the assignment of the McPhierson contract, containing his covenant to give a sufficient deed, implied a warranty on the part of the assignors that McPhierson had a good title and a right to convey the land. It implied a warranty that the assignors owned the contract assigned by them, and that the signatures to the contract were genuine, but not that the land embraced in it was the property of McPhierson."Summary of this case from Kleinman v. Strassburg
Argued September 20, 1871
Decided, January term, 1872
Francis Kernan for appellant.
Samuel Hand for respondent.
The Supreme Court as well as the referee seem to have overlooked the fact that when, on the 4th day of March, 1854, the contract was made by which Wadhams agreed to cause the several lots embraced in it to be conveyed to Bartow, that Bartow knew that only one of the five lots was owned by Wadhams, and that the only title he had to lot No. 7 rested in a contract with McPhierson, upon which there was unpaid $2,675, which, when paid, entitled Wadhams, or such person as he might appoint, to a sufficient deed of conveyance of that lot. From the fourth to the tenth of January, some six days, the contract between Wadhams and the defendant Bartow remained executory; then, to end it, or, as the defendant states it, "in consummation" of it, he received a deed from Edwin Wadhams for one of the lots, from Collins for another, from Jonathan Wadhams for two others; and upon securing to be paid some $2,500 of the purchase price of lot 7, and assuming to pay $2,675, the amount which remained unpaid upon it from the Messrs. Wadhams to McPhierson, they assigned to him McPhierson's covenant, to convey to him that lot upon being paid the balance unpaid upon it, and thus, according to his own version of the transaction, an end was put to the contract of the fourth. It is sometimes a question necessary to be referred to and passed upon by a jury or referee, whether the receipt by an obligee of the covenant of a third party to do what has been agreed to be done by the obligor is intended by the parties as a substitute for and in discharge of the covenant of the original obligor; but where it is clearly understood; as in this case, that the object of the one in assigning and of the other in receiving is to put an end to the original obligation, its effect becomes the only question for consideration. The parties having terminated the contract of the fourth of January, by the defendant's receiving, in consummation of it, a deed from each of the owners of the respective lots owned by them, which, by that contract, Wadhams was to cause to be conveyed to him, and the assignment of a covenant of a third party to convey the remaining part, must look to the substituted covenant for the redress of any grievance he has sustained by reason of the failure of the title conveyed or covenanted to be conveyed to him.
It was claimed on the argument that the assignment of the McPhierson contract, containing his covenant to give a sufficient deed, implied a warranty on the part of the assignors that McPhierson had a good title and a right to convey the land. It implied a warranty that the assignors owned the contract assigned by them, and that the signatures to the contract were genuine, but not that the land embraced in it was the property of McPhierson. The assignment "of the land thereby conveyed" was at most but a quitclaim of the title of Wadhams to the land described therein; in which, by statute, no warranty of title could be implied. (3 R.S., 5th ed., 29, 30, § 160.) It was also insisted that, irrespective of any covenant, that where a purchaser supposes he has purchased a good title and pays for it, and it turns out that the grantor had no title, the purchaser may recover back the purchase-money, on the ground of a mistake of fact. This he may do if both parties are mistaken, and not otherwise. ( Martin v. McCormick, 8 N.Y., 331, 335.) Unless the mistake is mutual, if there be no ingredient of fraud, the party is remitted to his covenants. (2 Kent's Com., 11th ed., 622, marg. 473.) There is neither allegation nor proof of mutual mistake, nor of any fraud on the part of the assignors of McPhierson's covenants; and hence, without considering any other question submitted on the part of the appellant, I am of opinion that the judgment of the Supreme Court should be reversed, and that entered upon the report of the referee should be affirmed.
On the 4th day of January, 1854, the defendant Bartow entered into contract for the purchase, from Edwin Wadhams, of lots 4, 5, 6, 7 and 14, and, upon the payment of the purchase money, Wadhams agreed to grant and convey to Bartow, a fee simple to the lots "by a good and sufficient deed of conveyance." In this executory contract there was an implied warranty on the part of Wadhams that he had good title to the lots, and Bartow could not be compelled to take a deed in performance of it which would not give him a good and perfect title. ( Burwell v. Jackson, 9 N Y, 535.) But this implied warranty had force and vitality only while the contract remained executory. In such a case, after the deed has been executed and delivered by the vendor in performance of the contract, the implied covenant contained in the contract is gone, and the vendee must rely upon express covenants contained in his deed. If the vendee has taken a deed without covenants, and his title proves defective, he is without remedy, unless he can make a case for relief, upon the ground of fraud, and possibly of mistake. ( Houghtailing v. Lewis, 10 Johns., 297; Bull v. Willard, 9 Barb., 641; Ware v. Westfall, 21 Barb., 177.)
Here Bartow received, in performance of the contract, a deed of lot 6, from Edwin Wadhams, of lots 4 and 14 from Jonathan Wadhams, and of lot 5 from John H. Collins; and he received from Edwin and Jonathan Wadhams the McPhierson contract for lot 7. The -contract thus became executed. If the deeds given contained no express covenants, and there proved to be a defect in the title to any of the lots conveyed to him by deed, he was entirely without remedy. What different position does he hold as to lot 7? The contract for that lot was assigned to him by an instrument under seal, of which the following is a copy: "For a valuable consideration to us in hand paid by Charles Bartow, we hereby sell, assign, transfer and set over the within contract and the lands thereby conveyed to the said Charles Bartow, his heirs and assigns." If Bartow has any implied covenant upon which he can rely, it must be in this assignment. This was not an executory contract to sell the McPhierson contract. If it had been, it may well be, in the light of the authorities, that a covenant would be implied, not only that they held the contract and had the right to sell it, but that McPhierson had a good title to the land which by his contract he had agreed to convey. This was an executed sale and transfer of the contract and of the assignor's interest in the land, and a covenant is no more to be implied than if a quitclaim deed had been given. If we were to treat the assignment of this contract as the sale of a chattel, and apply to it the rules applicable to sales of personal property, the same result would follow. In such case there would be an implied warranty that the assignor had title to the contract and the right to assign it; but there could be no implied warranty that McPhierson would perform the contract on his part. McPhierson's relation to the title was such that it was possible and feasible for him to perform the contract, and Bartow, by the assignment to him, was placed in such relation to the title that he could have compelled performance. Hence, this was not a case where the assignor had nothing to assign and the assignee got nothing by the assignment.
The defendants cannot, therefore, rest their defence upon any covenant; and we will look further to see if there is any other ground to rest it upon. It cannot rest upon the ground of a total failure of consideration, because it must be conceded that Bartow got by the assignment possession of the lot and a valuable interest therein, which, as we have above intimated, could have ripened into a perfect title. It cannot rest upon the ground of mistake, even if the answer, proof and findings were otherwise adequate to such a defence, because it was in such case the duty of Bartow, as soon as he discovered the mistake, to offer to rescind, or at least to notify Wadhams of it. He was informed of the alleged mistake at least as soon as the foreclosure suit was commenced against him and others by Lathrop. And yet he took no measures in that suit, as he might have done, to secure his title, as there was more due from him to McPhierson which he had assumed to pay than there was due to Lathrop; and he gave no notice to his assignors that they might protect his title. He waited until the entire interest under the McPhierson contract had been wiped out, and then for the first time made his claim on the ground of the alleged mistake. He was too dilatory, and his claim came too late. In ordinary cases of tort and breach of contract, it is a fair and just rule which requires the injured party to use ordinary diligence to make his damages as small as he can, and confines his recovery to so much damages only as he could not by good faith and ordinary diligence have averted. Much more where a party comes into equity seeking relief on the ground of mistake should he show that he has used due diligence and good faith to avert the consequences of the mistake; and it would be a poor administration of equity that would give him relief after, by his delay and omission of duty, he had caused irreparable mischief to the other party.
I am, therefore, upon the whole case, in favor of reversing the order of the General Term, and affirming the judgment entered upon the report of the referee, with costs.
All concur, except HUNT, C., not sitting.