Appeal from city court of Birmingham; H. A. SHARPE, Judge.

Bill by George C. Thomas and others against the St. Paul Methodist Episcopal Church and others to have a vendor's lien made a charge on another piece of land. Bill dismissed, and complainants appeal.

Webb & Tillman, for appellants. Sterrett & Campbell, for appellees.

CLOPTON, J. On November 1, 1886, appellants and their wives duly signed a deed conveying to certain named persons, as trustees of the St. Paul Methodist Episcopal Church, which is a corporation, a lot of land in the city of Birmingham, described as "number seventeen, in block thirty." On the 6th day of the same month the individuals to whom the deed above mentioned was made duly signed as trustees for and on behalf of the church, and by their authority, a deed conveying to appellants another lot in the same city, described as "number five, in block fifty-two." After being duly acknowledged, the deeds were delivered by the respective grantors to the grantees respectively. The aliunde evidence, and the conveyances on their face, show that the transaction was an exchange of lots, each lot constituting the consideration price of the other. The conveyances contain the usual covenants of warranty, including a covenant that the premises are free from incumbrances. The lot conveyed to appellants was purchased by the trustees from Vann and Laird, September 20, 1886, who executed to them, in their capacity of trustees for the church, a warranty deed. They paid one-half of the purchase money, which was $2,250, and for the other half gave their note, payable 12 months thereafter, with interest. From the recitals of the deed it appears that Vann and Laird retained a vendor's lien as security for the payment of the note. The bill which is filed by appellants specially prays that the amount of the purchase money unpaid and due Vann and Laird be ascertained; that a lien be declared on lot No. 17 for its payment, its sale decreed unless paid; and that lot No. 5 be exonerated from the incumbrance of the vendor's lien; also for general relief. The complainants, as appears from the record, introduced in evidence a mortgage on lot No. 5, executed to H. D. Cowden by the persons who were trustees of the church in their individual names and capacity, to secure the payment of a note for $1,000, which mortgage was subsequently transferred by Cowden to Vann and Laird. What connection this mortgage has with the sale by Vann and Laird to the trustees, is not made to appear. We are left to surmise that it was executed in lieu of purchase money owing by them to Cowden, from whom they bought the lot, and was intended as evidence of the amount of the unpaid purchase money due by the trustees to Vann and Laird. We shall give the mortgage no further consideration, it being immaterial, as it sufficiently appears from the recitals of the deed, which are prima facie evidence against the trustees and the church, that there is a large portion of the purchase money unpaid, which is a charge or incumbrance upon the lot. The trustees, eo nomine, the church in its corporate capacity, and Vann and Laird, are made defendants to the bill.

The equity of complainants is rested on the proposition that, under the circumstances, and on the facts, the lot which they received in exchange for the lot conveyed by them to the trustees occupies the position of surety or guarantor for the unpaid purchase money, which constitutes a lien or incumbrance on the lot conveyed to them by the trustees. No principle of equity is more familiar or more firmly established than that a surety, after the debt for which he is liable has become due, without paying, or being called on to pay it, may file a bill in equity to compel the principal debtor to exonerate him from liability by its payment, provided no rights of the creditor are prejudiced thereby. The principle has been extended to cases of pledged or mortgaged property. It is well settled that when the owner mortgages or pledges his property for the debt of another person, such property occupies the position of a surety or

guarantor, and the owner is entitled to all the rights of an individual surety under similar circumstances, though he has not made himself personally liable for the debt. Brandt, Sur. §§ 21, 192.

It would be difficult to specify or limit the variety of circumstances to which the doctrine has been or may be applied. When a mortgagor conveys the mortgaged premises subject to the mortgage, he only conveys the equity of redemption; and the discharge of the mortgage, which, in such case, is the equitable duty of the grantee, is preliminary and requisite to the acquisition of an interest by him. Founded on this reasoning, it has been repeatedly held that the effect of the transaction in equity was to make the mortgaged premises the primary fund for the payment of the debt, and to place the mortgagor in the situation or relation of a surety,-to change his position from that of principal and only debtor, as created by the original contract, to that of guarantor. Johnson v. Zink, 51 N. Y. 333; Cleveland v. Southard, 25 Wis. 479. Also the mortgagor may convey the premises, not only subject to the mortgage, but in such manner that the grantee assumes the payment of the mortgage debt, and thus renders himself personally responsible. In such case, not only is the mortgage property the primary fund for the payment of the debt, but the grantee becomes the principal debtor, and the mortgagor the surety as between themselves. If the mortgagor pays the debt, he is entitled to an equitable assignment, or to subrogation, for his reimbursement. In either case, whether he conveys the premises subject to the mortgage, or in such manner that the grantee assumes the debt, the grantor is entitled, as against the grantee, to all the rights of a surety, including the right of exoneration from personal liability, to the extent of the value of the property conveyed. The right of the surety to be exonerated from liability is founded on equitable principles,-the primary duty of the principal to pay the debt, and its being unreasonable that the surety should be burdened with the liability, a cloud hanging over him, at the will of the creditor, and the risk of ultimate loss. The doctrine has been expressed by Lord REDESDALE as follows: "A court of equity will also prevent injury in some cases by interposing before any actual injury has been suffered; by a bill which has been sometimes called a bill quia timet, in analogy to proceedings at the common law, where, in some cases, a writ may be maintained before any molestation, distress, or impleading. Thus a surety may file a bill to compel the debtor on a bond in which he has joined to pay the debt when due, whether the surety has been actually sued for it or not; and upon a covenant to save harmless a bill may be filed to relieve the covenantee under similar circumstances." Mitf. & T. Eq. Pl. 240. On the principle thus declared it was held that a surety who was secured by a bond of indemnity, entered into by the principal debtor's father, who died, having devised certain property upon trust to pay the debt, and the executors having no funds in hand, and being unable, under the bill, to raise the money by sale of any portion of the testator's estate except under a decree of the court, was entitled to maintain a bill against the executors for administration, payment of the debt, and indemnity. Wooldridge v. Norris, L. R. 6 Eq. Cas. 410.

In the sale and conveyance of lands the parties to the transaction may, by the conditions in their contract, or by the covenants in the deed, regulate or control the equities and relation between themselves. A mortgagor cannot, by agreement with a third person, impair or prejudice the rights of the mortgagee, without his concurrence; but he may contract in such manner so as, between him and his grantee, to render himself primarily, and the premises conveyed secondarily, liable for the mortgage debt,-in such manner as to make it his duty and obligation to exonerate the land, and to vest the grantee with the rights growing out of the relation, which is in the nature of that of principal and surety. On the same principle, a grantor, who conveys land, incumbered with a vendor's lien, may, under similar circumstances, contract

with like effect. The relation between the parties depends on the conditions of the contract and the character of the covenant. Refeld v. Woodfolk, 22 How. 318, on which counsel for appellees rely, though apparently when cursorily read, is not really opposed to this view, but rather recognizes the doctrine. The complainant in that case had made an executory contract for the purchase of unimproved lands, a portion of the purchase money being payable in cash, and the remainder in installments secured by his notes and bond. The vendor and his wife obligated themselves, when the payments should be completed, to convey to him the land in fee-simple, "by a good and sufficient deed, with general warranty of title, duly executed according to law." He refused to accept a deed containing a covenant of warranty, which was offered him on the completion of the payments, because the lands had been previously mortgaged by his vendor, and thereupon filed a bill in equity praying that the title be examined, and the defendants required to remove the incumbrance, or give him effectual indemnity against it. It was held that "where a contract for the sale of land, with an agreement to convey by deed of general warranty, has been executed by the delivery of possession and payment of the purchase money, the purchaser cannot, in the absence of fraud and concealment, refuse to receive a deed with proper covenants, or go into chancery to obtain indemnity against incumbrances." The contract of sale was executory, and the suit was regarded as in the nature of a suit for specific performance. It is said in the opinion, quoting the language of Lord ELDON: "If it turns out that the defendant cannot make a title to that which he has agreed to convey, the court will not compel him to convey less, with indemnity against the risk of eviction. The purchaser is left to seek his remedy at law, in damages for the breach of the agreement." To compel a conveyance of the lands, with indemnity against incumbrance, would have been to compel the defendants to perform a contract which they had not made. It is further said: "If the contract has been executed by the delivery of possession, and the payment of the price, the grounds of interference are limited by the covenants of the deed, or to cases of fraud and misrepresentation." And, referring to a case in which Lord ELDON made an order that the purchaser should be compensated for the difference in the value between the title contracted for and the one exhibited, and, if that difference could not be ascertained, the master should settle the security to be given by the defendant as indemnity against disturbance or eviction, it is said there were conditions in the contract which authorized the order. The opinion rendered by the eminent and distinguished jurist, Mr. Justice CAMPBELL, manifestly recognizes the principle that the rights and equities of the parties may be regulated and controlled by the stipulations of the contract, or by the particular covenants. It should also be observed that the agreement sought to be enforced in Refeld v. Woodfolk provided only for a general warranty of title; not for a specific covenant against incumbrances. The difference between these covenants is well understood and defined. The former operates in the future, and is in effect a covenant for quiet enjoyment against the consequences of a defective title, or disturbance in the enjoyment of the premises. An eviction, or disturbance in the possession tantamount to an eviction, is essential to a breach of the covenant. It is not broken by any outstanding incumbrance. An unqualified covenant against incumbrances operates in præsenti, and is broken as soon as made, if there is an outstanding incumbrance. When the incumbrance exists at the time of making the deed, and the loss or damage is inchoate, an action at law is an inadequate remedy. Unless the grantee purchases in the incumbrance, he is entitled to recover only nominal damages. Anderson v. Knox, 20 Ala. 156; Caldwell v. Kirkpatrick, 6 Ala. 60. A covenant against incumbrances obligates the covenantor to discharge or remove the incumbrance, whether or not known to the grantee. Such covenant is of the character which furnishes ground of interference, and fails within the classes of cases in which a court of equity will

lend its aid to protect a party against apprehended loss, or to relieve him and his property from an unreasonable and oppressive responsibility. It binds the grantor primarily to remove an incumbrance, which the grantee, on his failure, may be compelled to discharge, to protect his interests,-a covenant to save him harmless against loss or damage which may be occasioned thereby. It is, in its effect and operation, a contract of indemnity. The reason of the doctrine which clothes a mortgagor who conveys the mortgaged premises subject to the mortgage with the right of a surety to be relieved from liability for the debt for which he is bound, or indemnified against it, applies with equal force to the converse case where the mortgagor conveys the premises by deed containing a specific covenant against incumbrances. The right of the grantee in such case to have his property exonerated from liability, or to indemnity, rests on the same equitable principles on which is founded the right of a surety on a money demand, under similar circumstances; the equity of each is the same. 3 Pom. Eq. Jur. § 1205, note 3. Insolvency of the grantors, or danger of irreparable injury, is not an essential element in complainants' title to relief. The court will interfere in a proper case, though the principal may be able to respond in damages. Irick v. Black, 17 N. J. Eq. 189.

It may be said, generally, that on well-established principles equity will interpose in some proper mode, determined by the circumstances of the case, for the aid or protection of a surety or covenantee, whenever there is an outstanding, enforceable demand which it is the primary and present duty of the principal debtor or the covenantor to pay, and which the surety or covenantee may be compelled to pay, either in consequence of his personal responsibility or to protect his interests. The note given to Vann and Laird for the purchase money by the grantors of complainants, had become due before the bill was filed. It was an incumbrance existing at the date of their deed to complainants. The deed contained a covenant that the premises are free from incumbrances, which obligated the grantors, primarily and presently, to discharge the vendor's lien, of which the complainants had constructive notice by the registration of the deed made by Vann and Laird. When the deed contains a covenant that the granted premises are free from incumbrances, and there is an incumbrance existing at the time of making the deed, in a suit by the grantor to foreclose a mortgage for the purchase money the amount of such incumbrance will be deducted from the amount due on the mortgage, or, if it cannot be deducted, the suit will be stayed until the incumbrance is removed, or the premises released from its charge. White v. Stretch, 22 N. J. Eq. 76; Dayton v. Dusenbury, 25 N. J. Eq. 110. By parity of reasoning, and on like equitable principles, when possession has been delivered, the purchase money paid, and a deed executed containing a specific covenant against incumbrances, the grantor may be compelled to pay off or remove all existing incumbrances, or to give the grantee suitable indemnity. It would be unreasonable and unjust that premises so situated should remain under such burden and cloud during the time the law allows the lienor before he is required to become active.

The city court possesses better opportunities and advantages than we have to determine the special relief which should be granted. We shall therefore leave to that court to settle whether the grantors of complainants shall be compelled to release the premises from the incumbrance, or give indemnity, and the kind and amount thereof.

Reversed and remanded.

POWELL v. WATSON.

(Supreme Court of Mississippi. March 11, 1889.)

EJECTMENT INCONSISTENT PLEAS-POSSESSION AND TITLE.

Under Code Miss. § 2483, a plea of not guilty, in ejectment, admits defendant's possession. Defendant interposed such a plea, and also the special plea denying the fact of possession, allowed by section 2486, which provides that "in such case the title of the plaintiff shall be admitted, and the only question on the trial shall be in relation to the fact of possession." Held, that the court should have directed one or the other of the pleas to be stricken from the files, even though no action was taken by plaintiff, as no issue could be presented while both pleas remained. Appeal from circuit court, Tishimingo county; L. E. HOUSTON, Judge. Candler & Candler and C. B. Powell, for appellant. J. B. Reynolds, for appellee.

The

COOPER, J. Mrs. Powell brought this action of ejectment against Watson, to recover the possession of lot 2 in block 3 in the town of luka. The defendant pleaded not guilty, and thereby admitted his possession of the premises demanded. Code, § 2483. At the same time he filed the special plea permitted by section 2486 of the Code to one sued in ejectment, who desires to deny the fact that he is in possession of the premises sought to be recovered. Where such plea is filed, the Code declares: "But in such case the title of the plaintiff shall be admitted, and the only question on the trial shall be in relation to the fact of possession." The defendant, by his pleading, admitted every material fact necessary to be established by the plaintiff, who would have been entitled to judgment of recovery on motion. Id. § 1548. Notwithstanding the contradictory and incompatible pleas, the plaintiff went into a protracted trial, introducing much evidence to establish her right to recover, and permitting much to be introduced against her without objection. We are unable to decide upon the record by whom the chain of title was introduced. There is an agreed abstract of title from the common source, and an agreement of counsel that either party might refer to it as evidence. bulk of the testimony seems to have been directed to the question of possession by the defendant, but there is much in the record tending to show that he relied upon title acquired by adverse possession. Upon the conclusion of the testimony the plaintiff, without moving to exclude the evidence tending to show title, asked the court to instruct the jury that the only question involved was that of possession by the defendant, and, this being refused, she sought and obtained many instructions upon the subject of title. It is strongly suggested by the record that the parties moved upon entirely distinct lines,the plaintiff, assuming that her title was admitted, devoting her attention to establishing the possession of the defendant; while he, relying upon his title to protect his possession, if that was established against him, turned his attention to the fact of title in himself. The trouble with the case was that, no issue being presented by the pleadings to which the parties were confined, each fell to fighting in the position he deemed strongest to himself, regardless of the fact that there was no enemy in front. The court should have directed one or the other of the pleas to be stricken from the files, even though no action was taken by the plaintiff. It was essential to the orderly trial of the cause; indeed, giving to the pleas their statutory effect, there could be no trial, because no issue could be presented while both remained on file. The defendant in the action of ejectment under our statute must elect whether he will admit the title of his adversary, and deny his own possession, or will admit his possession, and deny the hostile title. He cannot rely upon both defenses at one and the same time.

The judgment is reversed, and cause remanded.

v.5so.no.21-33