Administrators of Barton v. Rector

*525 Opinion of Ike Court, delivered by

This was a bill in chancery, brought by the administrators of David Barton, deceased, against Nimrod Rector, Charles Rector, Jamison Samuel & Co., John II. Gay & Co., and others.

The bill charges that Barton in his life time contracted in writing with the Rectors for a lot in the town of Boonville, by the terms of which agreement they were to convey to said Barton the said lot by “deed of general warranty in fee,” so soon as Barton completed the payments of purchase money. The price of the lot was three thousand dollars, payable in three installments for each of which Barton gave separate notes bearing interest, & c.

The bill alleges that these notes were assigned to Samuel & Co., Gay & Co., and others, made parties defendants. •

The bill further charges a payment of $672.10, by Barton, on one of the notes, and that judgment at law had been obtained on the others.

It is further charged, that the lot was incumbered by two deeds of trust, at the time of the sale ; that these in-cumbrances were never removed, and that the Rectors were insolvent or in very embarrassed circumstances at the time of the sale. It is also alleged, that these incum-brances were concealed from Barton.

The prayer of the bill is for a rescisión of the contract, ■ a perpetual injunction of the judgments at law, a cancellation of the notes unpaid, and a return of _ the $672.10, which Barton had paid in his life time.

The answers of the Rectors admit all the material allegations of the hill in relation to the terms of the contract, and the existence of the incumbrances but deny all fraud and concealment. Both the Rectors admit their inability to remove the incumbrances.

*526The answers of the assignees of the notes, who are the remaining parties to the suit, deny all knowledge of the transaction and rely on being protected as bona fide purchasers without notice.

On the hearing’of the cause, the complainants proved that under the deed of trust mentioned in the bill, a sale, of the house and lot had been made to satisfy said liens ; that at the time of the sale to Barton, the said Rectors were in embarrassed circumstances, and that neither of them discharged the liens, and further proved the payment by Barton of the f672.10, charged in the bill.

The defendants proved, that at the time of the sale to Barton, he had actual notice of the incumbrances, and of their being on record, and also knowledge of the embarrassed condition of the Rectors, and was persuaded not to purchase, but that he avowed his confidence in their honesty and industry, and his belief that they would remove the incumbrances.

The injunction was dissolved, and the bill dismissed. From this decree an appeal is now taken to this court.

In examining this decree we will first examine whether the assignment of these notes by the Rectors has in anywise affected the legal or equitable rights of Barton. This inquiry is an important one, and in this case, necessarily a preliminary one, as a decision favorable to the assignees, <on this point, would render unnecessary any further investigation of the rights of complainants against the assignee.

The statutes of other States in pari materia, and the adjudication of the courts upon such statutes, have been much relied upon at the bar, with a view to elucidate the meaning of our act of assembly concerning the assign - ment of bonds and notes. But our statute is so plain and explicit that human ingenuity would hardly torture its language into an ambiguity.

The third section declares that “ the nature of the de-fence of the obligor or maker, shall not he changed by the assignment, hut he may make the same defence against the bond or note, in the hands of the assignee, that he might .have made against the assignor.” The fifth section fur*527ther declares “that the assignee shall never obtain any greater title to, or interest in, any bond or note than the person had from whom he acquired it.”

*527The defence spoken of in this third section, was clearly intended to embrace equitable as well as legal defences: for the court of appeals of Virginia, in Norton v. Rone, (2 Wash. R. 233,) so construed the act of the Virginia Assembly, which merely provided that the plaintiff should allow alljnsi discounis and either against himself or his assignor before notice of assignment. A similar tute in Kentucky was similarly construed, and the act held to save all equitable defences, which the obligor had against the obligee, from ho ing impaired or affected by the assignments. Rawlins v. Timberlake, 6 Monroe R. 234.

As to the distinction between equities existing at q ° time of the assignment on:! those arising afterwards, such : Wounded. The equity must of note is made, and it is difficult, , . . : we oí any equity springing up .» contract. The equity,if any , existence simultaneously with , . . . circumstances which call it into t nfore the assignment. distinction appears to course exist at the tin»' if not impossible, io or after the completion v." there be, is brongW. the contract, though h action may ariso 0;'.' , ■ ; mjlc a.¡3¡5igmiidjLt. x iic istenee of these. circumstances has no bearing upon the assigir.Ac.iil, rod the equitable rights of the obli-gor are not affect Ai ¡vy (ho assignment, though they may have been called ihio :v.iivo operation by the happening of events subsequent ¡hereto. The main question in the case will then he cn'iddored, as though the Rectors, who were the obIip: ;,i: «a Ibo notes, were the only parties defendants. Tie Asiíi'gíicos stand in no better position than what the assignors the m3 elves would occupy. Though they are bona iule purchasers without actual notice, the law of assignments ope-’ates to place them on their guard against any equitable defence which existed against their vendors.

The bill, answers,, and exhibits, shew the facts of this case to be tors a lot rs, and exhibits, show the facts of this simply these: Barton purchased of the Rec-in Boormlle for three thousand dollars, for *528^16 Save ^iree several promissory notes. At the same time, the Rectors covenanted to make him a deed of general warranty in fee simple, so soon as the payments were completed. . Barton paid a portion of the purchase money, and after his death his executors were sued upon , 7 n f tne other notes, and judgment recovered. At the time 0f the sale, the lot was incumbered, but Barton knew of . the .incumbrance, and was aware of the embarrassed pe-c°mary condition of the Rectors; but anterior to the decree, the lot was sold and passed entirely out of the Rec-x tors. Will a court of equity now throw the complain-upon their covenant, when it is apparent that no title can he made, and that no real satisfaction could be , , , . . obtained by a suit at law.

^ will, however, leave out of view, in this aspect of the case, the insolvency of the Rectors. Their entire ina- , ’ • , •, . . bihty to make a conveyance is conceded m their un-sv/01's’ an^ proved, if proof were necessary, by the testi-monje. ' They have covenanted to make a deed in fee simple, with general warranty, and such a covenant implies not merely their willingness to make a deed of this J , ° . , character, but their alrtkl.y to make a deed which will carry an indefeasible title. Judson v. Wap, 11 John R. 524 ; Clute v. Robinson, 2 J. R. 614. Such a deed is, by their own admissions, clearly beyond their power.

manifest distinction is to be traced through all the cases between executory contracts, and those which have been executed. In the latter class, where a deed ^ocn ma<le3 and possession given, there must be an eviction at law under paramount title, before the court chancery will interfere, and the vendor selling in good faith; is not responsible for. his title beyond his covenants, Bumpass v. Pattner, 1 John C. R. 218; Governeur v. Elmendorf, 5 ib. 84; Abbot v. Allen, 5 ib. 523. Whe-tiler an outstanding incumbrance: shown by the record, . ° . . . , , . . ,,. be equivalent to an eviction, is not well settled; but tne knowledge of such an incumbrance by the vendee at the time he accepted his deed, would seem to preelude him „ , . , , . . „ ., asking the interposition of a court of equity.

*529But the case now before the court is the case of an ex-«ecutory contract; no deed has been made or and no possession given. There having been no possession, there could of course be no eviction. But the complainants equity rests upon the total failure of consideration, not a mere defective title, but an entire inability on the part of the vendor to make any title whatever. ’

In the case of Rawlins v. Timberlake, (6 Mo. R. 234,) where the contract was executed, a deed of general war- • /•iii ranty made and accepted, and possession of the land taken by the vendee, the court refused to rescind the contract, merely because adversary claims were .set up, which the purchaser had notice at the time of the sale.— There had been no eviction, and that the court regarded as essential to warrant its interference. Yet even in that case, it appearing that a part of the land conveyed with warranty was lost, the court enjoined so much of the purchase money as was equivalent to the value of the land lost, upon the ground of the insolvency of the warrantor-The language of Judge Bibb, when treating of this branch of the case, is applicable here. “If,” says he, “equity could interfere in such a case, by reason of the insolvency of the warrantor, to arrest the payment of the purchase money, or any part of it, it would only be by clear evidence of eviction or undoubted defect of title, so as to show the covenant of warranty broken, and by stopping payment of so much of the purchase money as was equal to the damages incurred by the breach.” This was accordingly done, and the complainant, as to the loss established, -was not thrown upon his covenants, but obtained the equitable interference of the court.

In this case, there is atotalfailure of consideration, and a court of equity would not turn the parties round to a suit at law, even were it obvious that such suit would be of any avail.

The admissions of the Rectors, their failure to remove the incumbrances, and the proofs taken in the cause, render it exceedingly probable that a suit upon their covenant would be fruitless. But admitting that it would not *530be so, their entire inability to make any title is a sufficient ground for arresting the payment of the purchase money* And their assignees, as we have seen, stand in no better predicament than themselves.

It is therefore ordered, that the decree of the circuit court be reversed, and this court proceeding to make such decree as the circuit court should have made, do hereby order, adjudge, and decree, that the contract aforesaid be recinded, the judgments at law be perpetually enjoined, and that Nimrod and Charles Rector refund to the administrators of David Barton, deceased, the sum of $672..10 with interest.