This section is from the book "The Law Of Contracts", by Theophilus Parsons. Also available from Amazon: The law of contracts.
But, if he does not discharge the incumbrances, and brings his action before ouster or any actual injury springing from them, although the action is sustainable, because the existence of the incumbrances works a breach of the covenant, yet he can recover only nominal damages, (v) Still, if the incumbrances are of a permanent nature, such as interfere with the actual enjoyment of the estate, and such that the grantee cannot remove them by his own act, as, for instance, a lease of the whole or a part of the premises, then it would seem that actual compensation may be recovered, and that there is no rule which should prevent this from being full and adequate, (w) If the * action is brought on a contract to sell, and against the party who had promised to sell and had failed to do so, many authorities have held that the result may depend upon the cause of the failure. For if the intended vendor was honest, and was prevented from cannot recover beyond the amount of the consideration-money and interest. Dim-mink v. Lock wood, 10 Wend. 142; Foote v Burnet, 10 Ohio, 317; 4 Kent, Com. 476. But in those States in which, in action for a breach of the covenant of warranty, the measure of damages is held to be the value of the estate at the time of eviction, it seems that the grantee may recover what he has paid to extinguish incumbrances, to the extent of the value of the estate at the time of payment. Norton v. Babcock, 2 Met 510; white v. Whitney, 3 id. 81 Rawle on Cov. for Title (2d edition), 161 ; Sedgwick on Dam. 180. In Elder v True, 32 Me. 104, it was held, that where land is incumbered by a mortgage, the grantee may redeem or not at his election; but, if evicted, he may recover the value of the land, including his improvements, even if the value exceed the amount due on the mortgage. But see White v. Whitney, 3 Met. 81; Donahoe v. Emery, 9 id 63.
(uu) Smith v. Sprague, 40 Vt. 43.
(v) Prescott v. True man. 4 Mass. 627; Wyman v; Ballard, 12 id. 304; Tufts v. Adams, 8 Pick 547; Herrick v Moore, 19 Me. 313; Delavergne v Nora's. 7 Johns. 358; Hall v. Dean, 13 id 105; Stanard v. Eldridge, 16 id. 254; Whisler v. Hicks, 5 Blackf 100; Davis v. Lyman, 6 Conn. 254. Payments for the discharge of incumbrances cannot be recovered unless specially alleged. De Forest v. Leete, 16 Johns 122.
(w) Prescott v. Trueman, 4 Mats. 267, making the sale by causes which he did not foresee, and could not control, then the plaintiff recovers only nominal damages; or, if he has paid the price, the sum with interest, adding perhaps, in both cases, his expenses in investigating the title, or for similar purposes, (x) But if the proposed vendor * was in fault, and either did know, or should have known, that he could not do what he undertook to do, here substantial damages may be given, including compensation for any actual loss, as by the increased value of the land (y)l and this has been extended to cases where the vendor acted in good faith, but knew that he had, at the time, no title; as where the vendor offered for sale at public auction, land which he had contracted with a third person to buy from him, and failed to buy, only on account of the inability of that third person to make a conveyance to him. (z)2 In this respect the rule would be * distinguished from that applicable to actions for non-sale of chattels, where the plaintiff recovers compensation for all actual damages, without any reference to the good or bad faith of the vendor. But the Supreme Court of the United States have refused to adopt this distinction, on the ground that the reason of the rule as to chattels applies with equal force to bargains respecting land; this reason being, that if a vendor under such circumstances could escape with nominal damages, there would be danger that
630; Harlow v. Thomas, 15 Pick. 66, 69; Hubbard v. Norton, 10 Conn. 422, 435. In Batchelder v. Sturgis, 3 Cush. 205, Fletcher, J., in giving the opinion of the court, said: "In New York, in the case of Rickert v. Snyder, 9 Wwnd. 423, it was held, that when the covenant against incumbrances is broken, by reason of an unexpired term, which is the present case, the rule of damages is the annual value of the estate, or the annual interest on the purchase-money. This rule may do justice in some, perhaps in many cases; but this court is not prepared to adopt it as a general rule,... The rule is, that for such incumbrances as a covenantee cannot remove, he shall recover a just compensation for the real injury resulting from the incumbrance. Though it seems desirable to have as definite and precise rules, upon the subject of damages, as are practicable, it seems impossible to establish any more precise general rule in this class of cases." if the grantee is permanently kept out of the estate, by reason of the incumbrances, the purchase-money and interest are the measure of damages. Chapel v Bull, 17 Mass. 213; Jenkins v. Hopkins, 8 Pick. 346. So, also, in case of eviction Waldo v Long, 7 Johns. 173; Martin v Atkinson, 7 Ga 228; Patterson v. Steward. 6 Watts & S 527. But see Chapel v Bull; Jenkins v. Hopkins, and supra, p * 224, note (g). In an action on a covenant to pay off incumbrances, the amount of the incumbrances, is held the measure of damages. Lethbridge v. Mytton, 2 B. & Ad. 772.
(x) Flureau v Thornhill, 2 W. Bl. 1078; Walker v. Moore, 10 B. & C. 416; Worthington v. Warrington, 8 C. B. 134; Baldwin v. Munn, 2 Wend. 399; Peters v. McKeon, 4 Denio, 546; Thompson v. Guthrie, 9 Leigh, 101; Combs v. Tarlton, 2 Dana, 464; Allen v. Anderson, 2 Bibb, 415; Stewart v. Noble, 1 Greene (la ), 26. See Fletcher v. Button, 6 Barb. 646. This rule appears to be established in England, and generally prevails in this country; but there appears to be some diversity'in the reasoning upon which it is based. In England, the role appears to be sustained on the ground that the parties must have contemplated the difficulties attendant upon the conveyance, and hence the plaintiff is allowed to recover the expense of investigating the title, but no other expenses, on the ground that he is not justified in taking any other step until he is sure of a good title. In Flureau v. Thornhill, Black stone, J., said: "These contracts are merely upon condition, frequently expressed, but always implied, that the vendor has a good title. In Walker v. Moore, the land was not conveyed on account of a defect in the title. The plaintiff had contracted to resell, and demanded damages for the loss of profits on his contracts of resale, for the expense attending those resales, and for the amount for which he was liable to the sub-contractors for examining the title, and the expense incurred by himself for the same purpose. He was allowed to recover only his own expense in examining the title. Parke, J , said: "It is usual and reasonable, before any expense is incurred, to compare the abstract with the deeds; and without giving any opinion as to the right of the plaintiff to resell before he had obtained a conveyance and actual possession, I think he cannot recover those expenses which he has sustained by reason of his having contracted to retell the premises before he had taken the trouble to ascertain whether the abstract was correct or not." Bay ley, J., supposed he might have recovered the expense attending the resale, had that contract been entered into after proper investigation. He said: "If it [the abstract] had been examined with the deeds and found correct, the plaintiff might perhaps have been justifies in acting upon the faith of having the estate; and if, after that time, he had made a sub-contract, I think he would have been entitled to recover the expenses attending it, if it failed in consequence of any defect in the title of his vendor." The plaintiff, having failed in a bill in equity, Drought to enforce specific performance of a contract to sell land, because the defendant could not give title, was not allowed to recover his costs in the equity suit, in an action at law. Maiden v. Fyson, 11 Q. B 292. In this country, although nearly the same rule is in some of the States adopted (differing perhaps from the English in the fact that the expense of investigating the title is not allowed), it is based upon the analogy between this class of cases and actions upon covenants for title. As we have seen, in those cases, the measure of damages, where there has been an eviction, is, in most of the States, the amount of the consideration-money, with interest; so in actions upon this class of contracts, the same rule has been adopted. In Baldwin v. Munn, supra, Sutherland, J., said: "In an action on the covenant against incumbrances in a deed, the plaintiff can recover only the amount paid by him to extinguish the incumbrance; but if he has paid nothing, no matter what the amount of the lien may be. he can recover nominal damages only. Delavergne v. Norris, 7 Johns. 358; 4 Mass. 627; 13 Johns. 105. If these principles are just, in relation to the covenant of general warranty, and of quiet enjoyment, and against incumbrances, I do not perceive why they are not equally applicable to the covenant to convey, where the covenantor has acted in good faith, and refused to convey because his title has in fact failed. The reasons which are urged with so much force, by C J. Kent, in Staats v. Ten Eyck (3 Caines, 11I, 115), in favor of the rule of damages adopted in that case, certainly apply with equal force to the case in question" See the other American cases cited above.
 
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