Winn v. Taylor

JOHNS, J.

It is admitted that on April 21, 1914, the defendant executed the lease to Hansell for a period of four and one-half years, for a stipulated yearly cash rental; that on August 21, 1917, for a consideration of $10,000 the defendant contracted in writing to convey the lands to the plaintiff on or before November 1, 1917; that pursuant to such agreement, on October 17, 1917, he executed to the plaintiff his warranty deed, and that in consideration thereof the plaintiff gave him his note for $50,000, dated August 21,1917, and a mortgage on the conveyed realty to secure the payment thereof. Although the lease recited that the first year’s rent was paid at the time of execution, there was no stipulation as to when rent for remaining years should be paid. But it is admitted that after the execution of the contract and prior to the giving of the deed Hansell paid the defendant rent in advance from October 1, 1917, to October 1, 1918.

There are no reservations or exceptions in the conveyance from the defendant to the plaintiff. The execution of the lease and the warranty deed and the payment of the rent in question are all set forth and alleged in the complaint; and in legal effect the plaintiff claims that he is entitled to the rent from October 1, 1917, to October 1, 1918, which Hansell paid in advance to the defendant.

It is admitted that at the time of executing the lease Hansell took possession of the premises; that he has held them ever since, and that his possession is lawful; and it inferentially appears that the lease was of record.

1. Although the contract between the plaintiff and the defendant does not specify the nature of the conveyance to be made by the defendant, yet, pursuant thereto the defendant executed a warranty deed, covenanting that the premises were “free from all encumbrances” except the railroad right of way, and that he would “warrant an(L forever defend the above-granted premises, and every part and parcel thereof, against the lawful claims and demands of all persons whomsoever, save and except as to encumbrance above mentioned,” meaning the right of way. Concurrent with the execution of the deed the plaintiff became the owner of the lands in fee simple, and through its legal force and effect would be entitled to the use, possession and enjoyment thereof. But at that time .the premises were subject to the Hansell lease and the defendant had collected rent in advance for the year beginning October 1, 1917. In Fritz v. Pusey, 31 Minn. 368 (18 N. W. 94), it is said:

“An ‘encumbrance,’ within the meaning of a covenant against encumbrances, includes any right or interest in the land which may subsist in third persons to the diminution of the value of the land, but consistent with the passing of the fee by the conveyance. # * Hence an outstanding lease is an encumbrance.”

Crawford v. McDonald, 84 Ark. 415 (106 S. W. 206), holds that:

“The statutory covenant against encumbrances, implied by the use of the words ‘grant, bargain and sell’ in a deed, was broken at the time the deed was executed where the grantor had previously executed a written lease of the land which had not expired. ’ ’

Brass v. Vandecar, 70 Neb. 35 (96 N. W. 1035), upholds the doctrine that:

“An unexpired term or lease, which prevents the grantee in the deed from recovering possession of the land described therein, is an encumbrance.”

Defining “encumbrance,” we find the following in 22 Cyc., page 73:

“It is an interest in or chargeable on land, which may subsist in, or in favor of, a third person consistently with a transfer of the fee, but diminishes the value of the estate to the occupant. It is an estate, interest or right in lands, diminishing their value to the general owner; a paramount right in or weight upon the land, which may lessen its value.”

See, also, 2 Words & Phrases, Second Series, p. 1021, and authorities there cited. In Friendly v. Ruff, 61 Or. 42, 46 (120 Pac. 745, 746), this court, speaking through Mr. Justice Burnett, said:

“An encumbrance, within the terms of such a covenant, includes any right to or interest in the land to the diminution of its value, but consistent with the passage of the fee by the conveyance. * * Within the rule thus laid down, any adverse right or privilege which would interfere with or curtail the full and exclusive enjoyment of the fee simple title by the grantee in the contract would justify the allegation of a breach of such a covenant.”

We hold that the outstanding lease to Hans ell was an encumbrance within the meaning of the covenants in the deed, for which an action would lie for breach.

2-5. As the defendant admitted the execution of the deed and the receipt of the rental, it devolved upon him to prove his right to retain the snm in question. That matter was fairly submitted to the jury under instructions favorable to the defendant, and the jury found for the plaintiff. The latter assumed the burden of proof, and undertook to show that when the deed was executed on October 17, 1917, his title related to his contract of August 21, 1917, and that for such reason he was entitled to the rent which the defendant thereafter collected from Hansell. It will be noted that when the deed was executed, the plaintiff gave his note for $50,000 to the defendant as of August 21, 1917, the date of the contract, and that it drew interest from that date. That was strong evidence tending to show that it was intended that the plaintiff’s title should relate back, and that he should become the owner of the property as of August 21, 1917. Although the case was tried, and the jury was instructed, upon that theory, it was not prejudicial to the defendant, and was a matter about which he had no right to complain. The real question in dispute is whether the defendant or the plaintiff was entitled to the rent which accrued after the execution of the warranty deed. Although he was not bound by that rule, yet in his complaint the plaintiff adopted the amount of rental collected in advance by the defendant, as the measure of his recovery. Such a measure was sustained in Fritz v. Pusey, 31 Minn. 368 (18 N. W. 94), where it was held that:

“When the breach of either of the above covenants consists of the existence of an unexpired term or lease, the measure of damages, at least in the absence of-any special circumstances, will be the value of the use of the premises for the time during which the grantee has been’ deprived of such use. ’ ’

The same rule is laid down in Brass v. Vandecar, 70 Neb. 35 (96 N. W. 1035). Although the complaint might have been more specific, the defendant met the issue, and affirmatively pleaded that under an oral agreement with the plaintiff he had a legal right to the advance rental which he received, and according to the admitted facts that pleading is broad enough after verdict to sustain the judgment.

6. 'It is also contended that the plaintiff was not entitled to interest upon the amount of his claim prior to the rendition of judgment. The jury found substantially that the advance rental collected from Hansell by the defendant in October, 1917, belonged to the plaintiff. The action was commenced on October 1, 1918, about one year afterwards. Section 6028, L. O. L., provides:

“The rate of interest in this state shall be 6 per centum per annum * * on money received for the use of another and retained beyond a reasonable time without the owner’s consent, express or implied.”

There is no dispute concerning the amount of the rent involved or the time of collection. Under such a state of facts the plaintiff was entitled to interest.

The judgment is affirmed. Affirmed.

Former opinion sustained January 18, 1921.