Dothan Nat. Bank v. Hollis , 212 Ala. 628 ( 1925 )

The suit is for breach of a covenant of warranty in a deed to lands, brought by a subpurchaser from the covenantee. The breach alleged is the existence of a lien arising from a local assessment, made by a municipality for improvements, which plaintiff was required to pay.

The covenant specially counted upon reads:

"And that we will warrant and defend the premises to the same to the said E. C. Williams, his heirs and assigns forever, against the lawful claims and demands of all persons, holding through or under us."

Apart from the concluding clause, there is a covenant of general warranty. By its terms it operates in futuro, is appurtenant to, and runs with, the land.

Among other things, it has the effect of a covenant of quiet enjoyment, and is breached by the assertion of a lawful existent incumbrance upon the property. The grantee, or his successors in right, may remove the incumbrance, without awaiting an actual eviction.

By the added clause "holding through or under us," it is made a special or restrictive warranty. The restriction does not relate to the nature of the incumbrances covered by the covenant, but to the time and manner in which they accrued. The effect of this restriction is the controlling question before us. "Holding through" the grantor implies a claim or incumbrance created by the act of the grantor. "Holding under" the grantor has some wider meaning.

In West v. Spaulding, 11 Metc. (Mass.) 556, Chief Justice Shaw dealt with a covenant against claims or demands of all persons claiming "by, through, or under" the grantor. He treated the covenant as covering incumbrances "made or suffered" by the grantor, and held it did not cover a tax lien by virtue of an assessment made by his predecessor in title. The effect was to hold that the lien accrued under him who then owned the property, and whose duty it was to remove it.

In Carleton v. Tyler, 16 Me. 392, 33 Am. Dec. 673, the court considered a joint covenant of like kind, and held the covenant breached by all the covenantors, by reason of a prior conveyance of a part interest by one of them.

The covenant implied by the words "grant, bargain, sell" having, under our statute, the effect of a warranty against incumbrances "done or suffered" by the grantor, covers a local assessment against the property while owned and in possession of the grantor. Mackintosh v. Stewart, 181 Ala. 328,61 So. 956.

But such implied covenant in a mortgagee's foreclosure deed does not cover the lien for taxes assessed against a mortgagor in possession. Hood Wheeler v. Clark, 141 Ala. 397,37 So. 550.

The case was tried below without a jury, and on an agreed statement of facts. In 1912 the property was purchased by E. C. Williams from J. U. Cureton, who gave a title bond. This carried a right of possession. In October, 1913, it appears Williams transferred his title bond to Dothan National Bank, and in the following February Cureton executed a deed to the bank. The legal title appears to have been in the bank until May 1, 1920, when it executed to Williams the deed here involved. Meantime on October 9, 1919, proceedings were concluded by which the city of Dothan fixed the local assessment upon the property. The record shows this assessment was made against the lot as the property of E. C. Williams, and that he was then in possession of the property.

The plaintiff, E. H. Hollis, holds by deed from E. C. Williams. Plaintiff's right of action is derivative. The case must be viewed as if Williams brought this action. The record is entirely silent as to the nature of Williams' possession at the time the assessment was made.

Under our statutes an error in the name of the owner does not defeat the lien, and no personal liability is created against the party named as owner. Code 1923, § 2191; City of Huntsville v. Madison County, 166 Ala. 389, 52 So. 326, 139 Am. St. Rep. 45.

But the statute does require the name of the owner to appear on the assessment roll, and various notices are given to allow him a hearing on the proposed assessment. In the absence of proof to the contrary, the proceedings are to be taken as regular. As the record stands, his possession will be taken to have been in his own right, and the ownership rightfully laid in him.

The controlling inquiry in construing the covenant before us as applied to a local assessment is, who had the benefit of the improvement? If the bank was absolute owner of the property, and Williams in possession merely as its agent or tenant, then the lien accrued "through or under" the bank, but if Williams was in possession as owner under an executory contract of purchase, the price being fixed without regard to the benefits of the improvement, then he was due to pay the assessment, and the lien will be held to have accrued "under" him and not the bank.

The fact of his possession, not shown to be other than in his own right, and the fact of the assessment to him as owner, not shown to have been protested or questioned as regular, overcome any presumption of absolute ownership in the bank by virtue of its legal title.

The burden of proof was, therefore, on plaintiff to go further to make out a case of breach of warranty.

In awarding judgment for plaintiff, the court below was in error.

Reversed and remanded.

ANDERSON, C. J., and SOMERVILLE and THOMAS, JJ., concur.