he says that but for such representations and assurances on the part of the defendant which were untrue, plaintiff would not have accepted said deed or have paid said consideration or have placed improvements on said land as above set out.

"Plaintiff says that, as stated above, the title of the said defendant to said land at the date of said deed and now was and is defective and not a fee-simple title, said defect being as follows: Defendant Jesse Campbell obtained title thereto from John Payne and William Payne by deed of date 21st day of February, 1914, and recorded in Book 43, p. 580, in the office of the Scott county clerk, copy of which deed is filed herewith. He says that previous to the date of said conveyance from the said Payne to the defendant Campbell, John Payne by deed of date the 3d of January, 1913, and recorded in Deed Book 43, p. 294, in the Scott county clerk's office, conveyed said tract of land to Mrs. Carrie Payne Cantrill, deeding her his undivided one-half interest upon the following trust: "That she should reconvey same to John Payne for life with remainder to his children if any, but if he should die without leaving children then to William Payne his brother for life with remainder to his children, if any, and if he should die without leaving children then to the children of Mrs. Carrie Payne.' He further says that carrying out said trust Mrs. Cantrill and her husband J. C. Cantrill did reconvey said property to the said John Payne for life with remainders over as above set out, said deed being also of date 3d of January, 1913, and recorded in Deed Book 43, p. 295. Copies of both this deed and the one from Payne to Cantrill are filed herewith.

"Plaintiff says that John Payne, the grantor of the defendant, by reason of the aforesaid deeds, at the time he made the deed to defendant had only a life estate in an undivided one-half of the entire tract, and that by the conveyance from the said two Paynes to the 50 A.L.R.-12.

said Campbell he only obtained a fee simple in one-half of said land and an estate for the life of John Payne in the other undivided onehalf, with remainders in this onehalf in the various remaindermen as set out in said deed; and he says that by the deed from the defendant herein to this plaintiff this plaintiff only receives the same interest in said land and not a fee-simple title therein as warranted and as represented."

The trial court sustained the general demurrer to the petition of appellant with leave to amend; thereupon appellant filed an amended petition wherein he averred in substance that he had tried to sell the tract of land, but, owing to the defect in the title set up in his original petition, no one would purchase the same, and further alleged he had attempted to obtain a loan from the Federal Loan Bank on the land, but this was refused because of defective title. The demurrer was then interposed to the petition as amended and again sustained The appellant declined to further plead and his petition was dismissed, and he appeals.

It is a well-settled principle that a vendee of land by conveyance containing a covenant

an eviction by paramount title, or the vendor is insolvent or a nonresident. Walker v. Robinson, 163 Ky. 618, 174 S. W. 503; Hunter v. Keightley, 184 Ky. 835, 213 S. W. 201. This rule has been recognized by this court in a long line of cases.

"In order to constitute a breach of covenant of warranty the title or right to which a covenantee yields must be not only paramount to his own, but also paramount to that of anyone else; and the paramount title must have been in existence at the date the warranty was made.

"To constitute a breach of the covenant of warranty there must be an eviction or equivalent disturb

ance by title paramount unless there was an entire want of title in the grantor or unless he had only an equitable title with right to legal title." 15 C. J. 1287; Walker v. Robinson, 163 Ky. 618, 174 S. W. 503; Grant v. McArthur, 153 Ky. 356, 155 S. W. 732; Simpson v. Hawkins, 1 Dana, 303; Fowler v. Chiles, 4 J. J. Marsh. 504; Booker v. Meriwether, 4 Litt. (Ky.) 212; Arnold v. Maiden, 10 Ky. Ops. 288; Burbanks v. Burbanks, 8 Ky. Ops. 113; Fennessey v. Abbott, 4 Ky. Ops. 469.

We have also held, and it is the general rule, that although a vendor may represent his title as perfect when in fact it is not, in the absence

Vendor and purchaser-de

fective titlerescission.

of actual fraud, a vendee, in peaceable possession of the granted premises, under a deed with covenant of general warranty, is not entitled to rescission of the contract. Simpson v. Hawkins, 1 Dana, 303.

In the recent case of Hughes v. Collins, 197 Ky. 589, 247 S. W. 737, we said: "If it were true that the title conveyed by plaintiff was imperfect then this court has held in numerous cases that defendant, holding by warranty deed, and in peaceable possession, may not defend this character of action therefor, unless plaintiff was either insolvent, a nonresident of the state, or was guilty of fraud in the transaction, which latter should relate to the title about which complaint is made, and it must be active and not mere passive fraud."

Appellant insists, however, that the averments of the petition show that appellee Campbell was guilty of actual fraud in bringing about the conveyance of land to appellant. Constructive fraud is not sufficient to warrant the cancellation of a deed, but actual fraud is necessary,

Fraud-rescission of land contract.

and it is defined to be an evil purpose, an intention to deceive, an ulterior motive or bad faith. In every case representation

to amount to actual fraud must be made with knowl

edge of its falsity -what constitutes.

and with the design

and intention to deceive. Livermore v. Middlesborough Town Lands Co. 106 Ky. 163, 50 S. W. 6; Chicago Bldg. & Mfg. Co. v. Beaven, 149 Ky. 267, 148 S. W. 37; Taylor v. Mullins, 151 Ky. 597, 152 S. W. 774; Bewley v. Moreman, 162 Ky. 32, 171 S. W. 996; AnheuserBusch Brewing Asso. v. Daviess County Distilling Co. 20 Ky. L. Rep. 1522, 49 S. W. 541; Shipp v. Com. 101 Ky. 530, 41 S. W. 856.

A petition which does not aver facts showing that the vendor had knowledge of the falsity of his resentation, which does not ciency. charge him with

Pleading-petireption for rescisand sion of sale of

land-suffi

such knowledge, and thus impute to him the essential and definite elements of actual fraud, is fatally defective.

Representation as to the title made by the vendor

scission.

to the vendee at the Fraud-innocent misrepretime of the sale, sentation will which representa- not justify retion the vendor believed to be true but which is in fact untrue, will not authorize a rescission of a contract.

In the case of English v. Thomasson, 82 Ky. 280, the court said:

"The question presented, therefore, is whether a representation as to the title, made by the vendor to the vendee at the time of the sale, which the former believes to be true, but which is, in fact, untrue, will authorize the rescission of the contract, if it has been executed by the acceptance by the vendee of a recorded conveyance containing a covenant of general warranty as to the title, and where there has been no eviction, and no ground for equitable interference, such as insolvency or nonresidence of the grantor, exists.

"We think not; and our conclusion renders it unnecessary to consider any other question in the case.

We do not mean to give any opinion by what is above stated, or to intimate whether the title of Thomasson was or was not in fact defective; but, admitting for argument's sake that it was, yet the defendant is not entitled to the relief asked by him upon the mere ground that this was so, and that the appellee represented differently.

"It is insisted by the counsel for the appellant that this is an unsettled question in this state; and that the general rule elsewhere is that the falsity of the representation is sufficient, although innocently made."

Continuing, the same opinion

says:

"A mere mistake, or error of opinion, as to the validity of his title would not constitute fraud. The warranty, which the appellant chose to accept, was designed to protect him against such a representation, and is effective for that purpose; and he must await an eviction, if it should ever occur, and then look to his remedy at law upon the covenant in his deed.

"The appellant has now been in quiet possession of the property for years under an executed deed, containing a covenant of warranty as to the title. The appellee is neither a nonresident nor insolvent; the appellant is not even threatened with a disturbance of his possession; no fraud was connected with the sale to him, and no covenant of the contract has been broken.

"Under such circumstances it would open too wide a door, and be dangerous in principle, if this court should undertake to pass upon any outstanding claims or titles, which the claimants are not even asserting, and grant to the vendee, who is new in repose and even ultimately secure, perhaps, in his purchase, a rescission of the contract."

The facts in the case of Buford v. Guthrie, 14 Bush. 697, are in some particulars like those in the case at bar, and we said:

"But it is claimed that in conse

quence of the defects in the title the vendee was unable to sell or mortgage the land to raise money to complete her payments, and that not having the money she has been unable to pay for it, and it has fallen in price, and has ultimately been entirely lost to her and her devisee, and that a rescission ought to be decreed on account of the peculiar hardship of the case.

"As said in the former opinion, there is no evidence that the vendor was guilty of any actual wrong in representing the title to be good. The parties are equally innocent, and if we decree a rescission it will require the whole land, and according to appellant's estimate of its present value, it will be insufficient to repay the purchase money, and in that case the land would be entirely lost to the vendors; so that if this court was at liberty to decide the case in the way that would produce the least hardship, we should find the task far from an easy one.

"That the vendee was without the means of paying for the land without selling or mortgaging and was unable to raise it in that way on account of defects in the title, certainly furnishes no ground for rescinding the contract. That question must be determined from the nature of the defects in the title and the conduct of the vendor in the transaction, and not upon the financial condition of the vendee. If this were not so, then the right to a rescission would depend upon the question whether the vendee was rich or poor."

Without overturning a long line of cases, we must hold that appellant cannot maintain the present action because he is in the peaceable possession of the land, the vendor is solvent and a resident of the state, and the petition does not allege facts which we regard as showing actual fraud. The demurrer to the petition as amended was therefore properly sustained, and the judgment is affirmed.

I. Scope:

a. In general, 185.

I. Scope.

a. As regards character of covenant; covenants of seisin distinguished.

It is the general rule that a covenant of general warranty is broken only by an eviction, actual or constructive, under paramount title, and until this time no action can be maintained upon the covenant. 7 R. C. L. §§ 60-62. This annotation is not concerned with cases of this character but is limited to cases considering the point as to whether or not the vendee in possession, who finds the vendor's title to be defective, has an immediate remedy against his grantor, or is remediless until there has been a breach of the covenant by his actual or constructive eviction. Cases are also excluded which involve the question of the effect of fraud, mistake, or the insolvency of the vendor, where one of these elements is found to exist. A line of cases also excluded are those wherein relief was given the grantee upon the ground of the fraud of the grantor. In this connection it may be observed that the question has sometimes been presented as to whether or not representations by the grantor as to the character of his title may be relied upon to establish the fraud of the grantor. While cases involving this

question are also excluded from the annotation, attention may be called to Andrus v. St. Louis Smelting & Ref. Co. (1889) 130 U. S. 643, 32 L. ed. 1054, 9 Sup. Ct. Rep. 645, wherein the court said that where the grantor, holding in good faith under a proper conveyance, executes to the grantee a deed containing a warranty of title and peaceable possession, his previous representations as to the validity of his title or right of possession become merged in the deed subsequently executed. Such covenants constitute an affirmance of the previous statements in a form admitting of no misunderstanding. They are the ultimate assurance given upon which the plaintiff may rely, a guaranty against disturbance by superior title. And see Vice v. Littlejohn (1896) 116 Ala. 276, 22 So. 488, where it is pointed out that the vendor believed at the time of the sale that he had a good title to the land, it having been in the possession of himself and those to whose possession he succeeded for forty or fifty years under mesne conveyances, and hence, in making the sale, he was not guilty of any fraud. And it is held in English v. Thomasson (1884) 82 Ky. 280, that a mere defect in the title, or even misrepresentations as to title,

innocently made, afford no ground.

for the rescission of the contract. In order to entitle the vendee in possession to this relief, actual fraud must be shown. On the other hand, Lanier v. Hill (1854) 25 Ala. 554, and Lindsey v. Veasy (1878) 62 Ala. 421, are representative of a class of cases holding that a misrepresentation by the vendor as to his seisin and right to convey is fraudulent notwithstanding the fact that there was evidence tending to show his good faith in making the misrepresentation. The court in this regard held that the evidence of his good faith was insufficient to overcome the presumption of fraud.

If a defect in the title existed, to the knowledge of the vendor, and was concealed by him from the vendee, who had no means of knowing it, the vendee may either maintain an action at law for the deceit, or have a rescission of the contract itself by an appeal to a court of equity. Beale v. Seiveley (1837) 8 Leigh (Va.) 658; Edwards v. McLeay (1818) 2 Swanst. 287, 36 Eng. Reprint, 625. And see Cullum v. Branch Bank (1842) 4 Ala. 21, 37 Am. Dec. 725, holding that where an encumbrance upon real estate was concealed from the grantee thereof, he is entitled to require its prompt removal, and if this is not effected he is entitled to seek a rescission of the transaction and may abandon the possession, unless he chooses to retain it for the purpose of charging the lands with a trust to reimburse himself for money paid; nor is it necessary that he should abandon possession, as the only effect of retaining it until a decree of rescission, even in cases where the occupation is of any value, will be to charge him with the interest on the purchase money. This holding is based upon the theory that such a concealment constitutes actionable fraud.

The foregoing cases are referred to merely as illustrative of classes of cases which are excluded, and hence they are not exhaustive of the subjects they purport to consider.

It is also to be observed that the present annotation is limited to cases involving covenants of title prospec

v.

tive in character, as distinguished from covenants having an immediate operation, such as covenants of seisin or covenants against encumbrances. As pointed out in Matthews Crowder (1902) 111 Tenn. 737, 69 S. W. 779, a covenant of seisin is an assurance to the vendee that the vendor has, in quantity and quality, that which he purports to convey. Being a personal covenant in præsenti, if the title is defective, the covenant is breached the instant it is made, and the covenantee, therefore, at once, and without reference to the matter of eviction, is entitled to his action for the breach, either at law for damages, or in equity for rescission. The breach alone authorizes an immediate suit at law, and the breach, together with the insolvency of the vendor, authorizes an immediate suit in equity, if, indeed, the insolvency is necessary for the latter. And see 7 R. C. L. pp. 1155-1159.

The distinction between covenants having an immediate operation and those having a prospective operation is made in Barnett v. Clark (1858) 5 Sneed (Tenn.) 435, wherein the rule is stated that when a purchaser of land has taken a deed of conveyance with a covenant of general warranty, under which he has been let into possession, he cannot, in the absence of fraud, before eviction, on the ground merely of defective title in the vendor, claim, in equity, either to have the contract rescinded, or to resist the payment of, or have refunded, the purchase money. He must, in such case, be left to his remedy at law on the covenant of warranty in his deed. If there be a covenant of seisin, the vendee has an immediate, perfect remedy at law on such covenant, to which he must resort. In such case, a court of equity will not interpose unless upon the ground of fraud, or the insolvency of the vendor, or some other distinct ground of equitable jurisdiction.

Considered with reference to the right to set up want of consideration, in actions to recover on purchase price notes, on the ground of a defect in the title of real estate con