46 Iowa 269 | Iowa | 1877
In this case the deed containing the covenant sued on conveyed an interest which was paramount to the incumbrance. That interest, it appears, was of the value of $1481.57. The amount necessary to be paid by the junior incumbrancer to redeem was $1681.57, but that covered improvements made by the plaintiff. What the plaintiff bought of the defendants was worth, according to the evidence, about $200 less. The plaintiff then paid $1200 and acquired an interest paramount to all others, worth $1481.57. To extinguish an incumbrance junior to it he paid, as we will assume, $378, or gave property of that value, and he now claims to recover that amount from his covenantors.
In the states where this rule prevails, it is held in actions for breach of covenants against incumbrances that the damages must be limited to the amount of purchase money and inter
But, in Knadler v. Sharp, 36 Iowa, 232, this court ignored the doctrine that the consideration paid is to be taken as the value of the property as between the parties. In that case, the court aimed to give full compensation, thus following, to some extent, the rule adopted in Massachusetts and some other states, where the limit of recovery in an action for breach of covenant is the actual value of the property at the time of eviction, or at the time of the extinguishment of the incumbrance. Net, we cannot think that the court designed to depart altogether from the other rule above set forth, Avhich is in accordance with the decided weight of authority, and which was expressly held by this court, as we have seen, in Brandt v. Foster. We have no doubt that if, in Knadler v. Sharp, the incumbrance paid off had exceeded the purchase money and interest, the plaintiff would have been limited in his recovery to that amount..
Under the decisions, then, of this court, the limitation imposed .upon the covenantee’s recovery must be regarded as placed more upon the ground that the covenantor needs that protection than upon the ground that the consideration paid is fairly the limit of compensation.
In Staats v. Ten Eyck's Executors, 3 Caines, 111, Mr., Justice Livingston said: “To find a proper rule of damages in a case like this .is a work of some difficulty. No one will be entirely free from objection, or will not at times work injustice. To refund the consideration, even with interest, may be a very inadequate compensation when the property is greatly enhanced in value, and when the same money might have been laid out to equal advantage elsewhere. Net, to make this increased value the criterion, where there has been no fraud, may also be attended with injustice if not with ruin.”
Proceeding then upon the rule, as indicated in Knadler v. Sharp, that the covenantee is entitled to full compensation, subject only to the limitation needed by the covenantor -for
The question then arises: Were the premises of greater value than the amount which the plaintiff would have received upon redemption before eviction? The amount necessary to redeem had come to be nearly $2000. The amount paid by plaintiff to the defendant was $1200. As between the parties we think that the consideration paid should be taken to be at least prima facie evidence of the value. If the plaintiff claims to recover upon the ground that they were .worth, not only more than that, but more than, the amount which he would have received upon redemption, he should have shown it in evidence. We are not satisfied that the amount paid was fairly paid. If the premises were really not worth redeeming, in other words if the incumbrance paid off was really of no value, there is ground for suspecting that there was collusion between the plaintiff and incumbrancer. Possibly the plaintiff would have been justified in paying something for the extinguishment of the incumbrance, even if it had no value, but in such case it would be incumbent upon him to show that the amount paid was reasonable. We cannot regard the defendants’ covenant as extending further than that.
It may be said that this rule does not afford the plaintiff complete protection, — that possibly the incumbrancer was unreasonable; but it should be borne in mind that the plaintiff bought with constructive notice of the incumbrance. If
In Knadler v. Sharp, it seems to have been taken for granted that the amount paid was reasonable. There is, therefore, nothing in the decision in that case which necessarily conflicts with this.
Reversed.