Dana v. Goodfellow

51 Minn. 375 | Minn. | 1892

Gilfillan, G. J.

These two eases depend on the same facts. Dana was the owner of certain real estate subject to a mortgage, executed by a prior owner, and November 12, 1889, with his wife, conveyed to Goodfellow, for the consideration of $400, a portion of the-mortgaged premises, the deed containing no covenant but this: “It is agreed by and between the parties hereto, in consideration of the terms and conditions of this conveyance, that said first parties, their heirs and assigns, shall protect and save harmless said second party, his heirs and assigns, in his possession and ownership of the land above described and conveyed, against a certain mortgage on lot three for $5,000, dated May 8, 1885.” January 12, 1891, under a decree to which these parties were parties, the mortgage was foreclosed by a sale of the real estate in one parcel for $5,536.32, the-mortgagee becoming the purchaser, to whom the usual certificate-was issued. The sale was confirmed January 27th following. January 7, 1892, the purchaser, upon being paid $5,920.61, the amount due of the price bid and interest, assigned the certificate to Bay, -who purchased the same at the -request of Goodfellow, the latter furnishing the money, with the agreement between them that, if redemption should be made, Bay should pay to Goodfellow the money paid on *379redemption, and, if it should not be made, he should, after the time for redemption expired, convey the land to him. No redemption-was made.

The first of the actions was brought to have Dana adjudged the owner of that part of the real estate not conveyed by him to Good-fellow, upon his paying the amount paid by Goodfellow for the assignment of the certificate to Ray.

The second action was brought to recover damages for breach of the covenant above quoted.

A demurrer to the complaint in the first action was sustained, and judgment for defendant rendered in the second.

For the plaintiff in the first action it is claimed that the transaction of Goodfellow through Ray in securing an assignment of the certificate was, in legal effect, a redemption; but there is nothing in the transaction to indicate that it was intended to be anything other than what it purported and appeared to be, to wit, a purchase of the certificate; and there was nothing in the position of Goodfellow towards Dana or the property to disable him to make the purchase, and hold it as such, just as any third person might have done. He owed Dana no duty with respect to the mortgage, either to pay it or redeem from the sale under it. He did not stand in a fiduciary relation towards him. He did nothing to prevent him performing his covenant. Under the covenant the only duty on Dana was to protect the real estate from the mortgage and the sale, which he could have done, and which continued his duty to do to the time when the right to redeem expired. There is no reason for claiming that the transaction should inure in any way to his benefit.

As Goodfellow might have purchased at the mortgage sale, or might purchase the certificate of sale, and hold the interest thus acquired as any other person might, the effect on the covenant pending the right to redeem and after the sale became absolute was no-other than though the interest had been bought and held by any other person. As soon as the foreclosure sale became absolute, the-title under the deed from Dana to Goodfellow was defeated, — the thing against which the former Covenanted to protect the latter. Whether we treat the covenant as one to pay the mortgage or as. *380strictly one to indemnify against injury to the title by reason of the mortgage, there was a breach of it as soon as the foreclosure title became absolute through Dana’s neglect to redeem.

The recovery upon a breach of a contract to indemnify is limited by the amount of damage or injury sustained by the breach. In this case the breach consisted in Dana allowing the foreclosure to extinguish the title passed by his deed. The damage was the value of that title, — that is, of the land; and such value was prima, facie the price paid, $400. But it is claimed that, because the value of the land other than that conveyed by Dana to Goodfellow exceeded by more than $400 the amount the latter paid for the certificate of sale, he in fact sustained no damage. Taking into account the value of that land as compared with the amount paid for the certificate for the purpose of reducing the damages would be giving Dana the benefit of the purchase of the certificate, which, as we have already said, he was not entitled to. In the case of a covenant against incumbrances the covenantee’s right to substantial damages accrues at the time of and because of his act of paying off or securing the discharge of the incumbrance. The breach is then complete. What he is obliged to pay for the purpose is what the existence of the incumbrance and -the covenantor’s neglect to remove it has cost him, and that limits his recovery. But the purchase by Goodfellow of the certificate had no relation to the breach, or to his right to substantial damages. His cause of action did not grow out of it, and the covenant was not affected by it. Dana still had the right, and it was still his duty,under his covenant, to protect the title he had passed to Good-fellow by redeeming. Until he had neglected that duty, and allowed the foreclosure to extinguish the title he had covenanted to protect, there was no cause of action, and no right to damages against him.

On the facts found the court in the second action ought to have Tendered judgment for plaintiff for $400 and interest from the time when the foreclosure sale became absolute, and the court below, on a remand of the case, will enter such judgment.

The order sustaining the demurrer in the first case is affirmed.

Judgment reversed; order affirmed.

(Opinion published 53 N. W. Rep. 656.)

midpage