111 Tenn. 737 | Tenn. | 1902
delivered the opinion of the Court.
This is a hill to rescind an executed sale of land. On the 18th of April, 1899, Daniel Crowder and his wife sold 16 2-3 acres of land to W. F. Matthews for the sum of $300. All parties believed, and Crowder and wife represented, that they owned the land absolutely in fee. Their deed of conveyance to Matthews was absolute in terms, and contained full covenant of seisin and warranty of title. For the consideration Matthews executed two promissory notes, which Crowder and wife assigned to J. F. Bailey in the purchase of another tract of land, which contained 35 acres, and Matthews paid the notes.
In October, 1899, Matthews discovered that Crowder and wife had misrepresented their title; that they in fact had only a life estate in the land sold to him as aforesaid; and because of that fact, and the further fact that Crowder and wife were insolvent, Matthews, on the 16th day of that month, brought this bill, seeking a rescission. He offered to restore the tract he had purchased-, and sought a recovery for the $300 paid; and to satisfy that recovery, if not'otherwise paid, he sought to have both tracts sold, first the life estate in the 16 2-3 acres, and then the 35 acres, if necessary. Crowder and wife? by answer and agreement, conceded the facts just
1. The decree is correct. It is true the vendee in an executed sale of land cannot, before eviction, maintain a suit to rescind for a mere breach of the warranty of title, for in that case he is presumably protected by that-covenant in his deed; but when insolvency of the vendor, as in this instance, is superadded to such breach, that protection is dissipated, and the vendee, in consequence thereof, may have a decree for rescission, though not yet evicted. Young v. Butler, 1 Head, 640; Crawford v. Keebler, 5 Lea, 550; Merriman v. Norman, 9 Heisk., 270; Land Co. v. Hill, 87 Tenn., 598, 11 S. W., 797, 5 L. R. A., 45; McElya v. Hill, 105 Tenn., 329, 59 S. W., 1025; 18 Enc. Pl. & Prac., 770.
2. This deed contains also a covenant of seisin, which is an assurance to the vendee that the vendors have the very estate, in quantity and quality, that they purport to convey, namely, 16 2-3 acres of land in fee. Being a personal covenant in praesenti, and being untrue, in that the covenantors in fact had only a life estate in the land, it was breached the instant it was made, and the covenantee therefore at once, and without reference to the
3. The object and result of every decree of rescission is to put the parties as nearly in statu quo as possible without injury to innocent third persons. Curtis v. Brannon, 98 Tenn., 161, 38 S. W., 1073, and authorities cited. That object and result are to be accomplished, under the facts of this case, by the court’s direction, in the first instance, that the vendee restore the land received, and the vendors the money paid; and, in the second instance, if the money be not restored by payment into court within a given time, that the life estate in the 16 2-3 acres, and, if necessary, the fee in the 35 acres, be sold to raise the amount of the money recovered. If 'the notes executed by Matthews to Crowder and wife were still in their hands and unpaid, the status quo could be restored by a mere restoration of the land con
But the notes were assigned to Bailey in the purchase of the 35-acre tract, and have been paid in full to Matthews. This being true, and the 35 acres being still in the possession and ownership of Crowder and wife, a court of equity will treat this land as the representative of the notes, and in that view will subject it to sale for his reimbursement so fa,r as not otherwise made. Having obtained the notes upon the faith of such a misrepresentation as justifies this proceeding for rescission, Crowder and wife will be justly regarded as trustees, or quasi trustees, for the benefit of Matthews, the maker; and the notes, like any trust fund, can, under familiar equitable principles, be followed by him into the land purchased therewith. The subjection, in the first place, of the life estate in the 16 2-3 acres, is but the ordinary equitable relief granted in rescission for the reimbursement of the vendee who has paid the price of the land sold; and the supplementary subjection, ■ in the second place, of the 35 acres purchased with his notes, results from the rule that the parties whose contract is rescinded may be placed as nearly in statu quo as possible without injury to innocent third persons, and also from the doctrine that a cestui que. trust may follow the trust fund wherever he may be able to trace it, except in the hands of innocent third persons.
In his classification of constructive trusts Perry uses this language, viz.: “Third. Trusts that arise from
Pomeroy thinks the case put by Perry is more like an express trust. He observes: “It is commonly said that a trust is created by a contract for the sale of land; that the vendor holds the legal title as a trustee for the
Which of these two eminent authors is the more accurate in his classification need not be here considered. It is sufficient for present purposes that the relation they mention and its equitable result furnish an analogy for the case under consideration, as has been seen already. In section 1044 Pomeroy says: “Constructive trusts include all those instances in which a trust is raised by the doctrines of equity for the purpose of working out justice in the most efficient manner where there is no intention of the parties to create such a relation, and in most cases contrary to the intention of the one holding the legal title, and where there is no express or implied, written or verbal, declaration of the trust.”
The generality of that statement, which is amply justified by the other text-writers on equity jurisprudence and the adjudged cases, embraces the present case. Here are insolvent vendors of land, who have breached, the vital covenants of their deed, in possession, first, of their vendee’s notes for the purchase money, and then of other land purchased with those notes, since paid by their maker, the misled and damaged vendee. He who has really paid for this other land has it not; and they, who have in fact not paid for it, have it. In ultimate
Let the decree be affirmed.