Houston v. Hurley

2 Del. Ch. 247 | New York Court of Chancery | 1860

Harrington, Chancellor.

The proof in this case establishes a written contract by the defendant’s intestate, Hurley, to sell to Houston,the complainant, the “ Moreign” tract of about 511 acres of land, and to make him “ a good and sufficient title” to it, for the consideration of $2000—a small part to be paid in cash, and the balance to be secured by three notes, of $500 each, with complainant, Hazzard, as surety. The notes were made, and Houston went into possession. The contract is without date, and the time of making it uncertain; the complainants alleging that it was in the fall of 1853, and the defendants that it was in the fall of 1854; which latter date seems the more probable. It was certainly several weeks before the 13th of Hovember, 1854, on which day Hurley executed and Houston accepted a deed conveying the /‘Moreign” farm, of about 511 acres, but without any warranty of title against incumbrances.

It is proved that Houston had knowledge that the Hurley title was derived through a sale of the “ Moreign” tract by a trustee, under an order of the Court of Chancery in Maryland, since the trustee’s deed is dated on the same day with his; and the Ennals grant to Moreign, referred to therein, is the same described by the trustee’s deed. This is also admitted in the bill, by the statement that a lawyer,alleged to have been Hurley’s, represented that covenants of title were not necessary, as the title was derived under a trustee’s sale in chancery. The trustee’s deed is in evidence, but his authority (recited in it) is not otherwise proved, the chancery record having been ruled out of the case for want of authentication. The Moreign title prior to this is in evidence, i. e. the Ennals deed. Indeed, it is not attacked beyond the chancery sale; but the complainant alleges that the title given him was not “ good and sufficient,” because the land was incumbered by old, unpaid taxes, and in fact had been sold, according to law, for the non-payment of these taxes, to one Webb, who claimed a right to the farm, and who it seems entered after the complainant, Houston, left it. To this it is replied, that such a sale by the collector, for non-payment of taxes,would not transfer title, without deed ; and that, though it would have been good ground for the complainant to refuse the deed of Hurley as a compliance with his contract to make “ a good and sufficient title,” yet that Houston, by accepting the deed on the 13th of November, 1854, precluded himself from denying the sufficiency of the title as a full compliance with the previous agreement, and that he cannot, after accepting that deed, abandon the contract, nor even resort to Hurley for a defect of title, otherwise than under the covenants of the deed. This position is tenable upon the assumption that there was no fraud practised upon Houston. It is with this qualification, viz ; the absence of fraud that Sugden lays down the rule, when he says that generally a purchaser, after a conveyance, has no remedy except upon the covenants he has obtained, although evicted for want of title, and however defective the title may be,-if there is no fraudulent concealment on the part of the seller; that the purchaser’s only remedy is under the covenants. 1 Sugd. on Vend. 324. It is true, that there are no covenants in this deed, and that Houston is therefore remediless, if he accepted it without being deceived; and the fact that he accepted so meagre a deed as this, without a single covenant or assurance, as the performance of an agreement to convey “ a good and sufficient title,” when the land was covered with incumbrances for tax, and had in fact been publicly sold for taxes, does not itself prove the fraud, though it is important in considering whether Houston was in fact defrauded by the willful concealment of these things by Hurley and the designed entrapping of him with so imperfect and unusual a deed.

This then, is the main question in the cause—whether there was fraud; for though Houston may be deprived of legal remedy for want of proper covenants in this deed, and though, by his receiving it and holding the land under it for some years, he may even be debarred by his loches from putting an end to the contract—yet,if the fraud is established, a court of equity will relieve; and it will not allow proceedings at law to go on against him for the purchase money until the title is perfected.

Incumbrances must be paid off by the vendor before he can compel payment of the purchase money, if discovered before the conveyance. 2 Sugd. on Vend. 124. After conveyance executed, if the vendor was aware of the defect of title, and concealed it from the purchaser, it is a fraud, and the purchaser will be relieved in equtity. 2 Sugd. on Vend, 132.

The decisive question in the case is, did Hurley know and conceal from Houston the tax incumbrances and the sale for taxes, by which the title was brought into dispute ? He could not perform his agreement to give Houston “ a good and sufficient title” when the title was thus in dispute; and, without a disclosure of the facts to Houston, his bare deed of bargain and sale, without any covenants, was a fraud on him, and does not deprive him of the right to be relieved in equity from paying the purchase money.

There is no evidence in the case that Houston knew of the delinquent taxes, or had any information of the sale by the collector to Webb and the consequent defect or dispute of title in Hurley, until after the execution of this deed. He states this in his bill positively. Before he contracted for the land he lived at a distance, and the collector’s sale, if not made prior to his contract, was made many months before his deed. It is entirely probable, then, that this sale was unknown to him ; while Hurley, being in the neighborhood of the county town and being interested in the sale, which was public, was likely to know and, according to direct proof, did know of the sale. Yet, neither the fact of this sale nor the existence of the tax incumbrances was disclosed to Houston; while the giving an unusual deed, without warrants, under the advice, as the bill alleges, of Hurley’s lawyer that a chancery title did not require warrants, are abundant evidence to my mind of tacit, if not of active, fraud.

Does this fraud annul the contract of sale, or justify Houston in abandoning the property, as he did ?

The rule on this subject is that the right to rescind a contract for fraud must be exercised promptly after discovery of the fraud.

Houston states in his bill that he heard of the collector’s sale subsequently to the execution of the deed, which was in 1854; and, being then in possession of the land, he was required to act promptly on this information. The time he first heard of it is not stated; but, from his removal to the neighborhood and the publicity of the fact, he must be taken to have known it soon after the time he mentions as not having heard any thing of it. Yet, he continued in possession of the farm for several years, paid the taxes as late as 1858, and afterward abandoned the premises, without eviction or any legal attempt by Webb to turn .him out of possession.

This is not the promptness required, and I think he had no right at that time so to abandon the purchase; but, I think, he is entitled in equity to refuse further payment of the purchase money until he gets the title he bargained for, namely, “ a good and sufficient title” against any lawful claims of Webb, or his alienee, and also discharged of the back taxes which Hurley was bound to .pay. 2 Sugd. on Vend. 124.

Another question arises in the case, with reference to the complainant Hazzard. He is the surety of Houston in the four notes, amounting to over $1700, on which proeeedings were .had in Maryland, judgment obtained against Houston, with a stay of execution for four months by consent, as the record expresses it, execution afterward taken out and levied, the levy released and execution stayed by agreement,and the goods levied on taken away by Houston, with Hurley’s consent. This is relied on as releasing the surety.

But it is objected, in the first place, that the release being under Hurley’s hand, is not sufficiently proved by the sheriffs deposition. This objection mistakes the point on which the question rests, which is, not whether the release to the sheriff from the responsibility of executing his writ can be proved, as a release, without its production, but it is whether the fact of lifting the levy, releasing the goods and staying the execution discharges the surety.

It has long been settled that giving time to a principal, by agreement, discharges a surety; 1 Harring. Rep. 369; and that even the accepting of a judgment, with a limited stay of execution, without the surety’s consent, releases him; and the reason is that such an arrangement puts it out of the creditor’s power to proceed at any time, or to authorize the surety to proceed, and thus puts him in a worse condition.

But it appears here that the judgment in Maryland against Houston was taken with a stay under an act of assembly, and that the plaintiffs consent to the stay was by the act necessary to his obtaining the judgment. It also appears that the stay of execution, after the levy, was merely a suspension of active proceedings, and did not prevent the plaintiff from proceeding again at any time. A surety is not discharged by mere indulgence or delay in suing or executing the principal. 1 Russ. R. 381.

Lifting the levy and releasing the goods levied on is another thing, and is an injury to the surety to the amount of the property released. If the benefit of some securities for a debt is lost by the neglect of the creditor, the surety is fro tanto discharged. 2 Sim. & Stu. R. 457.

The goods levied on in this case were a certain security for the payment of this judgment, in which Hazzard was interested, and the release of them, without his consent, was an injury to him, to the amount of their value.

A creditor is even bound to keep other property, pledged for a debt for which he has security, for the benefit of the surety; and, if he parts with it, he releases the surety to the amount of the property given up. 8 Pick. Ref. 121.

I am, therefore, of opinion that the release of this levy on Houston’s goods was an injury to his surety ; and, being without his consent, it is a release of his obligation of suretyship-to the extent of the value of the goods given up. This can be ascertained with reasonable accuracy in any proceeding hereafter taken to charge the.surety, since the levy and inventory will be shown by the sheriff’s return. But I.do not know of any decided case, and cannot perceive any principle of equity, that will make such a stay of proceedings and release of goods levied on an absolute release of the surety. It does him no wrong beyond the value of the goods released. The creditor has the right to forbear execution; and the surety has a remedy, if he desires it, to obtain further execution.

The decree will, therefore, be to continue the injunetiou of proceedings at law against Houston and Hazzard, on the notes given for the consideration of the “ Moreign” farm until a good and sufficient title 'shall have been made to Houston, according to the agreement; and that beyond this the defendants shall be prohibited and enjoined from ever proceeding against Hazzard, the surety in these notes, to the amount of the value of the goods of Houston levied on under the judgment and execution in Maryland and surrendered by the plaintiff in that,execution ; and that the defendants pay the cost of this suit.