Am. St. Rep. 858, 39 Pac. 261; French v. C. D. & E. Invest. Co. (1921) 114 Wash. 416, 195 Pac. 521.

Wisconsin.

See Reuter v. Lawe (1893) 86 Wis. 106, 56 N. W. 472. England. Maynard v. Mosely (1676) Cas. t. Finch, 288, 23 Eng. Reprint, 158, 3 Swanst. 653, 36 Eng. Reprint, 1009; Bree v. Holbech (1781) 2 Dougl. K. B. 654, 99 Eng. Reprint, 415; Wakeman v. Rutland (1796) 3 Ves. Jr. 233, 30 Eng. Reprint, 985; Clare v. Lamb (1875) L. R. 10 C. P. 334; Re Tyrell (1900) 82 L. T. N. S. 675; Early v. Garrett (1829) 9 Barn. & C. 928, 109 Eng. Reprint, 345.

Canada. Thomas v. Crooks (1854) 11 U. C. Q. B. 579.

In a proceeding by a vendor to foreclose his lien for the purchase price, the vendee, holding possession under a deed with covenants of warranty, cannot, in the absence of fraud or the insolvency of the vendor, maintain a cross bill for rescission of the sale on the ground that the vendor was without title. Vice v. Littlejohn (1896) 116 Ala. 276, 22 So. 488.

In Kratenstein v. Weiss (1910) 138 App. Div. 919, 123 N. Y. Supp. 545, it was held that a mere outstanding contingent estate afforded no ground to the vendee to rescind the conveyance to him of the fee, in the absence of fraud or mutual mistake. The court said: "The whole fee is at present vested in the plaintiff, subject to be devested, as above stated, upon the happening of certain contingencies which may never happen. The plaintiff is in undisturbed possession at present. No estate whatever is vested in any person adverse to the plaintiff. Plaintiff has no remedy except upon the covenants in the deed; none of them have been broken. If the covenant of seisin were broken, the damages at present are nominal only." So, in Parker v. Parker (1890) 93 Ala. 80, 9 So. 426, the rule is stated that when land is sold and conveyed, with express covenants of warranty as to title, equity is without power to grant relief on account of a defect in title unless the vendor is insolvent. If there is fraud or failure of the title, and the vendor is insolvent, equity will interpose and

grant what relief it can, whether the purchaser has a deed, or is in possession, or not. And in Yeates v. Pryor (1850) 11 Ark. 58, it is held that where there has been no fraud, and the vendee has entered and holds peaceable possession under an executed contract for conveyance, he cannot ordinarily come into a court of equity for relief, but must resort to his common-law action upon his covenant or warranty of title. And see Lucas v. Crippen (1889) 76 Iowa, 507, 41 N. W. 205, where the defects in the title complained of by the vendee had existed for many years, but no adverse claim had ever been made to the property, and in some instances the vendee had obtained judgments quieting the title to portions of the property, and it did not appear that in any instance there had been a breach of the covenants of seisin and for quiet enjoyment contained in the deed from the defendant to the plaintiff, the court said that it was clear that these defects afforded no ground either for rescission of the contract or the recovery of damages.

If there is a mere failure of consideration arising from the sale of a defective legal title, unmingled with fraud or bad faith, the vendee will be left to his remedy for breach of covenant of warranty in his deed. Wilty v. Hightower (1846) 6 Smedes & M. (Miss.) 345. A substantially similar rule has been stated where the court was considering the specific question of the right of the grantee to rescind the sale on the ground of the vendor's defective title. Thus, it is said in Miller v. Miller (1891) 47 Minn. 546, 50 N. W. 612, that the bare fact that the deed to the plaintiff conveyed no title would not constitute a sufficient reason for equitable relief by a decree of rescission. So, it is stated in Goatley v. Harmon (1923) 197 Ky. 669, 248 S. W. 212, that it is a "settled rule in [Kentucky] that a vendee in the peaceable possession of land by virtue of a deed containing a covenant of general warranty is not entitled to a rescission when sued for the purchase money, unless it is made to appear that the grantor is insolvent, or a non

V.

resident, or was guilty of actual fraud, and that a mere mistake, or error of opinion, as to the title, is not actual fraud within the meaning of the rule." And see Creekmore Bryant (1914) 158 Ky. 166, 164 S. W. 337, stating the rule that where the contract has been executed, and a deed with warranty of title has been made and accepted and possession delivered, which has been enjoyed without eviction or molestation, unless the petition shows fraud, insolvency, or nonresidence of the defendant, and the probable or threatened danger of the immediate or ultimate loss of the property, without legal remedy, by reason of defects in the title conveyed and the vendee's inability to protect himself against eviction, he is not entitled to a rescission of the contract. And in Davis v. Jelks (1858) 13 La. Ann. 432, the court said that, where the vendee has gone into possession by means of his deed containing covenants of warranty, he must allege and show some disturbance or danger of eviction even to require security from the vendor, and much more to stay an order of seizure and rescind the sale. And it is pointed out in Decker v. Schulze (1895) 11 Wash. 47, 27 L.R.A. 335, 48 Am. St. Rep. 858, 39 Pac. 261, that where a contract has been fully executed, the consideration paid, the conveyance executed, and full covenants have been given and accepted, and there is no suggestion of insolvency or nonresidence, or that the plaintiff's remedy at law would not be adequate, rescission of the deed on the ground of defective title will be denied.

In Thompson v. Jackson (1825) 3 Rand. (Va.) 504, 15 Am. Dec. 721, rescission of a deed containing covenants of warranty was denied where the ground of rescission was a defect in the title to about one fourth of the land conveyed. The court said: "When the application is to rescind an executed contract for land, the English books lay it down as a general rule (admitting of but few exceptions) that, to justify such decree, fraud must appear; and this fraud

must be distinctly put in issue by the pleadings. If the charge be a mere failure of consideration, arising from the sale of a defective legal title, unmingled with fraud or mala fides of any kind, it is generally laid down. that the vendee will be left to the covenants of warranty in his deed." And in Reuter v. Lawe (1893) 86 Wis. 106, 56 N. W. 472, it having been held that the vendee's claim of fraud was not established, the court said that there could be no rescission, even though the title failed, where the contract had been executed by delivery of the deed and the payment of the purchase money, and there was nothing to prevent the plaintiff from taking possession of the land. Under such circumstances, the plaintiff's remedy was by action on the covenants of the deed. So, in Alger v. Anderson (1899; C. C.) 92 Fed. 696, where the right of a vendee in possession under a warranty deed to complain of fraudulent representations on the part of the vendor was lost by laches, the court held that the case then was similar to one where a purchaser of land had taken a deed with covenants of warranty and had been let into possession and applied the Tennessee rule that in the absence of fraud or insolvency, and before eviction, such a vendee cannot in equity claim rescission, or resist payment of the purchase price, on the ground merely of the defective title of the vendor; that he must, in such cases, be left to his remedy at law upon the covenant of warranty. Likewise, in Reed v. Rogers (1914) 19 N. M. 177, 141 Pac. 611, where the vendor had been guilty of fraud, but the right to rescind a conveyance of real estate for the fraud was lost by the vendee because of laches, it was held proper to deny him the right to rescind on the ground of a defect in title. The court said: Where a contract has been fully and completely performed, a court of equity will not grant relief by way of rescission unless the strongest of reasons exists for its interposition, and that this is true even though the circumstances of the case are such that, were the contract

still executory, a court would not decree specific performance at the suit of the other party; that nothing short of actual fraud or mistake would justify a decree rescinding an executed contract.

In a few jurisdictions it is held that, although a grantee has gone into possession of land under a deed containing general covenants of title, he may, nevertheless, rescind the sale where there are outstanding adverse rights, although there has been no actual eviction. Of course, this does not mean that the grantee may retain possession of the property as owner, and at the same time rescind the sale. And it is held in Jackson v. Welsh Land Asso. (1902) 51 W. Va. 482, 41 S. E. 920, that where a deed has been accepted the grantee cannot refuse to pay the purchase money, unless his grantor is insolvent, or the title is proven to be bad, or a suit endangering it is actually pending or threatened. To rely upon a pending action, the grounds of suit must be given, and they must be such as ought to cause a reasonable man to fear loss of his land.

It is stated in Crowley v. Vaughan (1921) 88 W. Va. 223, 106 S. E. 539, that it is well established in that state that equity will grant relief to a vendee in possession of land under a conveyance containing covenants of general warranty, where the title is questioned by suit, prosecuted or threatened, or where it is clearly shown to be defective.

In Thompson v. Sheppard (1888) 85 Ala. 618, 5 So. 334, it is held that where the grantee has continued in possession and enjoyment of the land, with full knowledge of a defect in title from the time of his purchase, and no fraud or misrepresentation is alleged or proved, equity will not rescind the contract on account of a want or defect of title, but will leave the party to his remedy at law, unless it appears that the grantee's retention of the property is necessary for his reimbursement or indemnity.

It is held in Kimball v. West (1872) 15 Wall. (U. S.) 377, 21 L. ed. 95, that where the vendee has paid the pur

chase price and accepted a deed with a clause warranting the title to the premises, if there is any defect in the title, he has a remedy by an action on the covenant. If he declines to pursue this remedy and applies to a court of equity to rescind the entire contract and recover the purchase price, the necessity of such a decree to obtain the ends of justice must be very clear before it will be given. When, therefore, it appears that at the time of the hearing the vendor is able to remedy the defect in the title, and in point of fact secures and makes good to the vendee at his own cost all that he conveyed to him originally, the vendee must show some loss, injury, or damage by the delay in perfecting the title, before he can claim a rescission of the contract, and, even if this could be done, the general rule would not decree a rescission of compensation to be made for the injury arising from the delay in making good the original defect in the title.

Under the Louisiana Code it is held in Bonvillain v. Bodenheimer (1906) 117 La. 794, 42 So. 273, that, where the vendor had no title to the land he sold with covenants of warranty, the vendee incurs no obligation to pay the purchase price, and may rescind the sale and recover the amount that he has paid, although he may have gone into possession and never been evicted, or had his possession disturbed.

In Roland v. Miller (1842) 3 Watts & S. (Pa.) 390, a grantee in a deed containing covenants of title was held entitled to sustain an action for the purchase money by showing that there was a dower encumbrance against part of the land, requiring the paying of annual interest to the widow. The doctrine is stated in this case that, "if the consideration money has not been paid, the purchaser, unless it plainly appear that he has agreed to run the risk of the title, may defend himself in an action for the purchase money by showing that the title was defective, either in whole or in part, whether there was a covenant of general warranty, or of right to convey, or quiet enjoyment, by the vendor, or

not; and whether the vendor has executed a deed of conveyance for the premises or not." This rule is followed by the following Pennsylvania cases: Lloyd v. Farrell (1864) 48 Pa. 73, 86 Am. Dec. 563; Weakland v. Hoffman (1865) 50 Pa. 513, 88 Am. Dec. 560; Herrod v. Blackburn (1867) 56 Pa. 103, 94 Am. Dec. 49; Dankel v. Hunter (1869) 61 Pa. 382, 100 Am. Dec. 651; Cross v. Noble (1870) 67 Pa. 74. Where, however, the grantee with knowledge of the existence of an encumbrance, or of a defect in the title, accepts the deed with warranty against it, and gives his bond for the purchase money, the continued existence of the encumbrance or defect is no defense to an action on the bond. Wilson's Appeal (1885) 109 Pa. 606, 7 Atl. 88; Fuhrman v. Loudon (1825) 13 Serg. & R. (Pa.) 386, 15 Am. Dec. 608; Wilson v. Cochran (1864) 48 Pa. 107, 86 Am. Dec. 574.

b. As affected by the retention of possession by the grantee.

In many of the cases denying relief to a vendee in possession under a deed containing general covenants of title, the rule is stated that a vendee in possession under a deed of this character is not entitled to a rescission of the sale for defects in his grantor's title, unless fraud or insolvency of the latter is shown, or he is a nonresident of the state. Statements of this character may mean either that a condition to rescission is the surrender of, or offer to surrender, possession, which would be merely applying the general rule as to rescission by one in possession of land; or, which seems the more likely, such a statement may mean that the remedy of the grantee is restricted to an action for breach of covenant. Indeed, in many of the cases the rule is also stated that a vendee of land by a conveyance containing a covenant of general warranty has no recourse against the vendor until there has been an eviction by paramount title, etc. In other courts, however, the argument seems to be based upon the effect of the grantee remaining in possession.

Thus, in Ryerson v. Willis (1880) 81 N. Y. 277, in denying the right of the vendee in possession under a warranty deed to have a mortgage executed by him to the vendor canceled and discharged of record because of the defective title of the vendor, of which the vendee had knowledge, it is pointed out: "The effect of a decree in favor of the plaintiffs would be to relieve them from payment of the mortgage, while they still retain possession of and title to the land under the warranty deed. They do not ask for a rescission of the contract as an entirety, but only to cancel the mortgage. As one who seeks equitable relief should do equity, this cannot be done, and the plaintiffs have no claim to enforce the contract where it is advantageous, and to cancel it where it imposes an obligation to pay money. Such a course would be unjust and cannot be upheld upon any principle of equity. Nor can the plaintiffs' action be sustained upon the ground that the mortgage is a cloud upon plaintiffs' title. The cases in which a person may institute an action to remove a claim which is a cloud upon the title to his real estate are those in which the alleged cloud exists without right." And in Mercer County State Bank v. Hayes (1916) 34 N. D. 601, 159 N. W. 74, where a vendee in possession was denied relief against the enforcement of a purchase-price note, on the ground of the vendor's defective title, the court pointed out: "Not only is there no offer in the answer to return the premises, nor any allegation or proof of the assertion by anyone of any adverse title, and not only is there no proof of any attempt to rescind the contract, but there is proof that the defendants remained in the possession of the premises, either by themselves or by their tenants, up to the time of the trial, and at the time of the trial were collecting the rents therefrom, and stated that they intended so to do." So, in Hanna v. Shields (1870) 34 Ind. 84, a grantee in possession of the land under a deed containing covenants of title was denied a rescission of the trans

action on the ground that he had not offered to place the grantor in statu quo.

The rules applicable to the situation confronting the grantee in possession are thus stated in Norton v. Jackson (1855) 5 Cal. 262: “(1) Where there is a covenant of warranty the payment of the purchase money cannot be resisted as long as the grantee remains in possession. (2) Nor under the same circumstances can the purchase money be reduced. (3) Eviction by process of law is requisite to enable an action to be maintained on the covenant. (4) Equity can relieve by granting a rescission of the contract upon the allegation of the insolvency of the grantor and his inability to respond in damages to an action upon the covenant, a paramount outstanding title in another, and an offer to redeliver possession, and account for the rents and profits." In Hoy v. Peacock (1913) Tex. Civ. App. 154 S. W. 677, it is held that the rule that a grantor in a deed containing general covenants of warranty is not entitled to a foreclosure of a vendor's lien until existing encumbrances against the premises conveyed are discharged by him is subject to many exceptions; that for this rule to apply there must be an allegation or finding to the effect that the vendor was insolvent, or there must be an offer on the part of the vendee to rescind the contract and restore the possession of the property. The court said that the allegations of the answer did not show, nor did the findings indicate, that there had been any eviction of appellants, or that there was any danger of an eviction, and the findings did show that, at the time of the purchase, appellants had full notice of the existing encumbrances.

And see Mathis v. Crowley (1917) 146 Ga. 749, 92 S. E. 213, where the rule is thus stated: "A purchaser of land, who is in undisturbed possession under an absolute warranty deed, cannot have rescission and recover from the grantor partial payments made on the purchase price, or have damages covering cost of improvements made on the land, solely upon

the ground of a defect in the grantor's title. Such relief is dependent upon the grantee's equitable right of rescission or cancelation, which does not exist unless he alleges that the grantor is insolvent or a nonresident, or for fraud, mutual mistake, or the existence of conditions which would make it inequitable for the grantor to hold the purchase money already paid and to collect the balance."

The fact of the vendee's retention of the possession of the land is also emphasized in Willets v. Burgess (1864) 34 Ill. 494, where it is pointed. out: "There is no pretense that there has been a rescission of the contract; no reconveyance of the land has been made or even offered by appellant. He has ample remedy on the covenants, if there has been a breach, for the recovery of all damages he may have sustained. Or, if he had paid the mortgage, or any portion of it, he might have set off the damages thus sustained against the notes in this action. The giving of the covenant and the notes form but one transaction, and damages arising from a breach of the covenant grow out of the contract, and may be set off against the notes." And it is held in Childs v. Lockett (1901) 107 La. 270, 31 So. 751, that a grantee of land who remains in undisturbed possession cannot enjoin proceedings to enforce payment of the purchase price on the ground of failure of his title. The court said that the grantee cannot hold possession under the title he received, and prevent the grantor from securing his pay through a sale of the property. It is also held in Knight v. Coleman (1899) Tex. Civ. App. 51 S. W. 258, that where there is no evidence tending to prove fraudulent representations or the insolvency of the grantor, or of any offer to return the possession of the premises to the grantor, and the deed for cancelation, the grantee is not entitled to defend an action on purchase-price notes by asserting a defect in the title to the land conveyed to him. This holding is in line with the holding in Cooper v. Singleton (1857) 19 Tex. 267, 70 Am. Dec. 333,