of it, and does not ask to have the contract of sale and conveyance rescinded, and has shown no damages except the want of title to one fifth of the land, he is bound to pay at least four fifths of the consideration for said land."

It is held in Frisbie v. Hoffnagle (1814) 11 Johns. (N. Y.) 50, that where there was a judgment against the vendor at the time he conveyed by warranty deed, and the land was sold under the judgment, the consideration for the purchase-money note had entirely failed, and this could be set up as a defense to an action thereon. The soundness of the decision in Frisbie v. Hoffnagle is questioned by Chancellor Kent in a note to the last edition of his Commentaries (2 Kent, Com. 472), wherein he states that it is not now regarded as law, and that it was virtually overruled in Vibbard v. Johnson (1821) 19 Johns. (N. Y.) 77. The case was disregarded by the court in the subsequent decisions of Whitney v. Lewis (1839) 21 Wend. (N. Y.) 131, and Tallmadge v. Wallis (1840) 25 Wend. (N. Y.) 107. In the latter case, referring to Frisbie v. Hoffnagle, it is said that in this case there was a misapplication of a correct principle. In Whitney v. Lewis (N. Y.) supra, the court said that Frisbie v. Hoffnagle (N. Y.) supra, was virtually overruled in Vibbard v. Johnson (N. Y.) supra. However, in Batterman v. Pierce (1842) 3 Hill (N. Y.) 171, it is said that the case of Frisbie v. Hoffnagle still remains an authority which goes the whole length of sustaining the defense urged there. And in Tallmadge v. Wallis (N. Y.) supra, the court said that the only valid objection to the decision in the case of Frisbie v. Hoffnagle (N. Y.) supra, "if the case is correctly reported, is that there was not a total failure of consideration, as the purchaser had not been actually evicted, and the mesne profits which he would be liable to pay to the party who had obtained the title under the sheriff's deed could not extend back beyond the time of the sale and conveyance by the sheriff. The court probably proceeded upon the ground

that there was a moral certainty that the defendant must be turned out of possession under the sheriff's deed; and, as the case was submitted without argument, they may have overlooked the fact that the mesne profits of the premises could only be recovered from the time of the sheriff's sale, which, as stated in the report, was subsequent to the defendant's purchase, though the judgment was docketed before. If the case is correctly reported, the court probably erred in the application of a correct principle to the facts then before them." In Johnson v. Gere (1817) 2 Johns. Ch. (N. Y.) 546, where the grantee in a deed containing full covenants executed a bond and mortgage to secure the unpaid portion of the purchase money, and subsequently an action of ejectment was brought against him by the holder of an alleged adverse title, and the grantor brought an action to foreclose the bond and mortgage, it was held that the grantee was entitled to have the prosecution of the foreclosure proceedings stayed until the action of ejectment was determined. The court said that the defendant (grantor) was entitled, and it would be his duty, to defend the ejectment suit, and, until that suit was disposed of, he ought not to recover the remaining money due on the bond. So, in Withers v. Morrell (1842 )3 Edw. Ch. (N. Y.) 560, in holding that a failure of title to part of the premises was no defense to a bill to foreclose the mortgage for part of the purchase money, the court said that, while a foreclosure and sale would be ordered, yet a decree for the balance would not be granted, and the grantee might file a bill in equity to be relieved from the payment of the purchase money.

In Pennsylvania, if the consideration money for land has not been paid, the purchaser, unless it plainly appears that he has agreed to run the risk of the title, may defend 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 of the premises, or not. Youngman v. Lynn (1866) 52 Pa. 413, 2 Mor. Min. Rep. 443; Steinhaur v. Witman (1815) 1 Serg. & R. (Pa.) 438; Roland v. Miller (1842) 3 Watts & S. 393. So, it is asserted in Ludwick v. Huntzinger (1842) 5 Watts & S. (Pa.) 58, that where a superior title outstanding in a third person is shown clearly to exist, and that he claims the land by virtue of it, this will be a good defense to an action to enforce payment of the purchase money, or any portion thereof, though the defendant is in possession under a deed of conveyance containing warranties of title, unless it was explicitly agreed and understood between the grantor and grantee that the latter was to take the title of the former, such as it was, at his own risk. However, this right to relief apparently depends upon the question as to whether or not the grantee accepted the conveyance with knowledge of the defect in the title. The doctrine is thus stated in Wilson v. Cochran (1863) 46 Pa. 229: "The detention of purchase money on account of breaches of the vendor's covenant is a mode of defense that is peculiar to our Pennsylvania jurisprudence, but the principle is well settled with us that, where a vendor has conveyed with covenants on which he would be liable to the vendee in damages for a defect of title, the vendee may detain purchase money to the extent to which he would be entitled to recover damages upon the covenant, and he is not obliged to restore possession to his vendor before or at the time of availing himself of such a defense. Where there is a known defect, but no covenant or fraud, the vendee can avail himself of nothing, being presumed to have been compensated for the risk in the collateral advantages of the bargain. But where there is a covenant against a known defect, he shall not detain purchase money unless the covenant has been broken. If the covenant be for seisin or against encumbrances, it is broken as soon as made, if a defect of title or an encumbrance exist; but, if it

be a covenant of warranty, it binds the grantor to defend the possession against every claimant of it by right, and is consequently a covenant against rightful eviction. To maintain an action for breach of it, an eviction must be laid and proved, not necessarily by judicial process, or the application of physical force, but by the legal force of an irresistible title. There must be proof, at the least, of an involuntary loss of the possession. And as the right to detain purchase money is in the nature of an action on the covenant, and is allowed to prevent circuity, the vendee who seeks to detain by virtue of a covenant of warranty is as much bound to prove an eviction as if he were plaintiff in an action of covenant. Until eviction, the covenant is part of the consideration of the purchase money he agreed to pay, and, holding the covenant, he may not withhold the purchase money."

The right of a grantee in possession to defend an action for the purchase price on the ground of failure of the title of the grantor, due to the invalidity of his deed, is sustained in Lafferty v. Evans (1906) 17 Okla. 247, 21 L.R.A. (N.S.) 363, 87 Pac. 304, where the grantor was a corporation, and was attempting to exercise its corporate powers in executing the conveyance without any authorization in that regard.

A grantee of land by deed of warranty has a right to relief in equity against the vendor, who seeks to enforce the payment of a bond and mortgage, given for the purchase money, until a suit actually brought to recover the premises, by a person claiming them by paramount title, shall have been determined. Jaques v. Esler (1844) 4 N. J. Eq. 461. The court said: "The grantee in such circumstances is not obliged to look merely to the covenants in the deed; he is not to be driven to such circuity of action, nor to rely upon that as his only security. The fund in his hands is a security of which it would be inequitable to deprive him. And this rule applies whether the purchaser had notice of the outstanding claim or not.

Indeed, in practice, it not infrequently happens that notice of such claim induces the purchaser to require a covenant against it."

It has been held to constitute a good defense to an action on certain notes to show that they were given for the purchase price of land which the grantor represented that he owned, whereas, as a matter of fact, the grantee then owned the land, of which fact he was ignorant when he accepted the conveyance and executed the notes. O'Neal v. Phillips (1889) 83 Ga. 556, 10 S. E. 352.

Equity will assume jurisdiction to restrain the collection of the unpaid purchase price on the ground of defects in the vendor's title, where there was an agreement to defer payment of a part of the purchase money until the validity of the alleged defect could be determined, and also a provision for a deduction of the purchase money if the defect was established. Blackstone Hall Co. v. Rhode Island Hospital Trust Co. (1916) 39 R. I. 69, 97 Atl. 484. So, where the grantee in a deed, at the time of the conveyance, knew of a defect in the title of the vendor, but took the deeds with covenants of warranty and a special provision that a certain portion of the purchase price was not to be paid until the grantor removed this defect, the latter cannot recover this amount of the purchase money without first curing the defect. Youngman v. Lynn (1856) 52 Pa. 413, 2 Mor. Min. Rep. 443.

V. Where grantee has acquired adverse right.

The weight of authority sustains the right of a vendee in possession of land under a deed containing general covenants of warranty, to acquire an outstanding adverse title to, or pay a valid encumbrance upon, the land, and recover the amount paid of the vendor, or offset such amount against any balance due on the purchase price of the land.

Alabama.-Vice v. Littlejohn (1896) 116 Ala. 276, 22 So. 488.

Idaho.-Warren v. Stoddart (1899) 6 Idaho, 692, 59 Pac. 540.

In Vice v. Littlejohn (Ala.) supra, while denying the right of the vendee to rescind on the ground of lack of title in the vendor, it is held that the fact that the vendee has acquired an adverse title furnishes a basis for the allowance to him, as a credit on the purchase money, of the amount paid in securing the same and the reasonable expenses incurred in that behalf.

Under the statute of Illinois relative to set-offs and recoupments, which in effect prevents a defense by the defendant, in an action upon a note, bond, bill, or instrument in writing, or either total or partial failure of consideration, it has been held that the vendee may defend an action to recover on a note given for the purchase price of land warranted free from encumbrances, by showing the existence of an encumbrance on the land, which the grantee has had to pay and discharge. To the extent of the amount paid, there is a failure of consideration, and this amount may be recouped. Schuchmann v. Koebel (Ill.) supra.

In Cheney v. City Nat. Bank (Ill.) supra, in holding that the grantee in

a warranty deed with covenants against encumbrances, who had given his notes in payment, could not defeat payment thereof on the ground that the land was encumbered, where he had not been disturbed in the possession, and had not paid or discharged the encumbrance, the court said that, if he had discharged the encumbrance, the amount paid to clear the land might have been interposed under the plea of a partial failure of consideration.

So, it is held in Buell v. Tate (Ind.) supra, that, before a grantee in possession under a general warranty deed can set up an encumbrance against the property as a defense to an action on a note given for a portion of the purchase price, he must show that he has extinguished the encumbrance, or has been otherwise injured by it.

Where the vendee in possession acquires an outstanding title and thereby perfects the title which the vendor conveyed to him, he is entitled to a credit upon the purchase price for what the outstanding title cost him. Davis v. Jelks (La.) supra. So, in Lyman v. Estes (1821) 1 Me. 182, where the grantee in possession of land under a deed containing warranties of title paid and secured the discharge of an existir lien against the property, which came within the warranties, it was held that he was entitled to an abatement of the purchase price to the extent of the amount he had paid to secure the discharge of this mortgage. It is also held in Davis v. Bean (Mass.) supra, that, where the grantee in a deed containing a covenant against encumbrances is required to pay an encumbrance existing upon the land at the time of the conveyance, he is entitled to offset the amount thus paid in an action against him by the grantor to recover a portion of the purchase price. And see Nesbitt v. Campbell (1877) 5 Neb. 429, holding that when the maker of a promissory note, given as a payment on real estate conveyed with warranties against encumbrance, is sued on such note, he may set off against the same the amount which he has

been compelled to pay to discharge the encumbrance, whether paid before or after commencement of the suit.

The grantee of real estate under a deed containing a covenant that it is free from any encumbrance, who subsequently paid off and discharged an encumbrance, may set off what has been paid by him against the amount due on any mortgage for the purchase money. Greene v. Tallman (1859) 20 N. Y. 191, 75 Am. Dec. 384. The court said that in order to avail himself of such defense, however, the grantee is bound to prove either that what was paid by him was actually due, or that he gave notice to his vendor requiring such vendor to pay off the encumbrance within a limited time, or that otherwise the purchaser would pay a specified amount; that the vendor who has been innocent of any fraud should have an opportunity to set himself right before he is obliged to pay or allow more than the amount actually due.

Upon the same subject it is stated in Delavergne v. Norris (1811) 7 Johns. (N. Y.) 358, 5 Am. Dec. 281: "If the plaintiff, when he sues on a covenant against encumbrances, has extinguished the encumbrance, he is entitled to recover the price he has paid for it. But if he has not extinguished it, but it is still an outstanding encumbrance, his damages are but nominal, for he ought not to recover the value of an encumbrance on a contingency, where he may never be disturbed by it."

In York v. Allen (1864) 30 N. Y. 104, an existing encumbrance was treated as a subsisting lien, and the amount due thereon was ordered to be deducted from the amount due on the plaintiff's mortgage, and applied to its redemption and payment.

In Dahl v. Stakke (1903) 12 N. D. 325, 96 N. W. 353, in holding that where there was a breach of a covenant against encumbrances, and existing encumbrances upon the land conveyed were foreclosed, and the grantee in the deed purchased from the mortgagee, he was entitled to make the defense of failure of consideration for

notes given by him for the purchase price, in an action thereon by the original grantor. The court said: "We conclude that total or partial failure of consideration, or want of consideration, may be shown as a complete or partial defense in an action on a note given for the purchase price of land sold with covenants, where the title has failed, or partially failed; and that, in case of a breach of a covenant against encumbrances, the purchaser is entitled to a credit on a note given for the purchase price of real estate, of the amount paid by him to protect his title against such mortgage by paying said mortgage. The evidence in this case, however, does not show a total failure of consideration for the note sued on. When the deed was delivered, the mortgages on the land were less than the price agreed on for the land, evidenced by the note. It is also true that, when the deeds were delivered to the defendant by the mortgagees, who had foreclosed the mortgages and received sheriff's deeds, the whole amount of the encumbrances and interest was less than the purchase price with accumulated interest. . The defendant has bought the outstanding title held by third parties by virtue of the foreclosure of the mortgages on the premises when the plaintiff conveyed them to the defendant. In this case it is not material whether the defense be considered as one arising by virtue of the purchase of an outstanding title hostilely asserted, or by virtue of the payment of a valid mortgage against the premises. The outstanding title grew out of the mortgages, and the principles of law applicable are not materially different, except that, before the outstanding title can be purchased with safety, it must be hostilely asserted against the possession of the purchaser of an inferior title.

The covenant of the deed was

that the premises were free from encumbrances. We will, therefore, treat the case as arising by virtue of a breach of a covenant against encumbrances. The answer does not well plead this defense, but as the answer contains a general denial, and no objection was made to the answer as not sufficient to warrant the defense, we will treat it as sufficient; and, as no objection was made to any of the evidence substantiating this defense on the ground that such defense was not well pleaded, we deem all objections thereto waived. The objection to a defense arising out of the breach of a covenant against encumbrances, that there has been no eviction, cannot be sustained. A covenant against encumbrances is a covenant that is broken when made, if the encumbrance then exists." To the same effect is Bank of Charleston v. Johnston (1900) 105 Tenn. 521, 59 S. W. 131, where the grantee was also in possession under a deed containing covenants of title.

In Tyrell v. Woodhouse (1900) 82 L. T. N. S. (Eng.) 675, the court refused to rescind an executed contract for the purchase of real estate, where there was an outstanding reversionary interest unknown to both the vendor and the vendee. It is said that, while the court would not authorize a rescission or payment of damages, yet it would sanction the application of part of the purchase money to acquire such reversionary interest.

But where an outstanding title has not been asserted against the grantee, who has not been evicted or disturbed in his possession and enjoyment of the property, a payment by him to the holder of such title, where made without the consent of the grantor, imposes no obligation upon the latter to reimburse the former for the amount thus paid. Blair v. Perry (1832) 7 J. J. Marsh. (Ky.) 152.

A. G. S.