[IN THE EXCHEQUER CHAMBER.]

(Appeal from the Court of Common Pleas.)

Feb. 6, 1866.

LOCK v. FURZE.

35 L. J. C.P. 141; 1 H. & R. 379; L. R. 1 C.P. 441; 15 L. T. 161; 14 W. R. 403 affirming, 34 L. J. C.P. 201; 19 C.B. N.S. 96; 12 L. T. 731; 13 W. R. 971; 11 Jur. N.S. 726 (C.P.).

Referred to, Wigsell v. School for Indigent Blind, [1882] E. R. A.; 51 L. J. Q.B. 330; 8 Q.B. D. 357; 46 L. T. 422; 30 W. R. 474 (Q.B. D.). Distinguished, Wallis v. Hands, [1893] E. R. A.; 62 L. J. Ch. 586; [1893] 2 Ch. 75; 68 L. T. 428; 41 W. R. 471 (Ch. D.). See In re Gray, [1901] E. R. A. ; 70 L. J. Ch. 133; 84 L. T. 24; 49 W. R. 298 (Ch. D.).

Lease-Action for Breach of Covenant for Quiet Enjoyment-Interesse Termini-Measure of Damages.

LANDLORD AND TENANT. VENDOR AND PURCHASER.-The plaintiff being in occupation of premises under a lease from J. F, which would expire on the 4th of December, 1864, obtained from J. F. a reversionary lease for twenty-one years and twenty-one days, to commence from the said 4th of December, 1864, on payment of a premium. In November, 1863, J. F. died. It then turned out that he had no power to grant this reversionary lease, and thereupon F. V, who was entitled to the premises on the death of J. F, refused to ratify it, and the plaintiff was obliged to accept a lease from F. V, to commence on the 25th of December, 1864, for seven years only, at a greater rent. The plaintiff brought an action against the executor of J. F. on a covenant for quiet enjoyment contained in the void lease-Held, that the plaintiff was entitled to be indemnified for what he had lost by the breach of covenant, and that under the circumstances the difference between the value of the two leases might be used as a test of the amount of the damages he was entitled to.

This was an appeal by the defendant against the judgment of the Court of Common Pleas discharging the greater part of a rule of that Court, obtained by the defendant.

The facts will be found fully stated in the report of the case below (34 Law J. Rep. (N.s.) C.P. 201), and the following statement will be found sufficient for the present report.

The action was brought against the defendant, as the executor of John Furze, for breach of a covenant for quiet enjoyment, in a lease dated the 14th of February, 1860, whereby John Furze, in consideration of 400l., demised to the plaintiff certain premises from the 4th of December, 1864 (when a then existing lease to the plaintiff would expire) for twenty-one years, at a rent of

1751.

The first count of the declaration was founded on this covenant, and alleged that Frances Vickers, who claimed through John Furze, had threatened to evict the plaintiff, who had been obliged to accept from her a lease for only seven years, at a rent of 3001., had been put to expense, and lost the 4001. There was a second count for money had and received.

The defendant pleaded to the first count, secondly, that the plaintiff had never entered into possession of the premises under the lease; fourthly, that Frances Vickers did not demand them from the plaintiff or oust him; and to the second count payment into court of 4171., and never indebted to the residue. On these pleas issue was joined, and there was a demurrer to the second

plea.

At the trial, the first count of the declaration was substantially proved,

and also the second plea. The money paid into court was the 4001. premium and 171. for the expenses of the void lease; the plaintiff, however, claimed between 1,500l. and 1,600l. for damages for the difference in value between the two leases, and 651., the expense of the new lease.

The learned Judge, in summing up, told the jury, in substance, that the covenant having been broken, the plaintiff under the circumstances was entitled to be indemnified for what he had lost under that breach of covenant, and to recover the difference in value between the old and new leases.

The jury found a verdict on the first count for the plaintiff for 1,5221. (which included the 651.) and for the defendant on the second; and leave was reserved to the defendant to move to set aside the verdict on the second and fourth pleas, and to reduce the verdict by 651.

A rule was (in the terms set forth in the report below) afterwards obtained pursuant to such leave, and also for a new trial on the ground of misdirection; and it was agreed that the demurrer should be argued with the rule. The Court of Common Pleas decided the demurrer in favour of the plaintiff, and made the rule absolute to enter a verdict for the defendant on the second plea and to reduce the damages by 251., but discharged the residue of the rule, with leave to the defendant to appeal on the main point as to the principle of damages; and the question submitted to the Court of Appeal was, whether the damages should be reduced, and if so, whether to nominal damages or 251.

Garth, for the appellant (the defendant below).-The question is, how the damages are to be assessed; and it is contended that as this was the sale of an interesse termini, and the plaintiff was never in possession under the deed of conveyance, the same rule applies as that which holds good where a sale of lands goes off; and that, therefore, only the money paid (viz. 4001.) and the expenses are recoverable. There is no direct authority to be found in the English books, but there is a large number of American authorities on this point. The state of the law on this question is elaborately discussed in 4 Kent's Commentaries, 10th edit., part 6, lec. 67, and the author says, "The ultimate extent of the vendor's responsibility, under all or any of the usual covenants in his deed, is the purchase-money, with interest; and this I presume to be the prevalent rule throughout the United States."

[BLACKBURN, J.-But in the note, after stating that it had been held in Massachusetts that the true measure of damages was the consideration-money and interest, he says that this was formely the rule also in South Carolina, but that now the rule is there settled according to the English common law doctrine. So that he evidently considers that the English law is contrary to the prevalent doctrine in America. ]

In Staats v. Ten Eyck's Executors (3 Caines, 111) Kent, C.J., said, "Upon the sale of lands the purchaser usually examines the title for himself, and in case of good faith between the parties (and of such cases only I now speak) the seller discloses his proof and knowledge of the title. The want of title is therefore usually a case of mutual error, and it would be ruinous and oppressive to make the seller refund for any accidental or extraordinary rise in the value of the land. Still more burdensome would the rule seem to be, if that rise was owing to the taste, fortune or luxury of the purchaser. No man could venture to sell an acre of ground to a wealthy purchaser without the hazard of absolute ruin." And in Mayne on Damages, pp. 98, 99, we find that the author, after citing these words of Chief Justice Kent, goes on to say, "I conceive that the doctrine laid down by Chief Justice Kent is clearly the equitable rule, where the improvements arise from causes of an entirely collateral nature, such as the growth of a town, the formation of a railway, or the like." The reason is, that such events are not in the contemplation of the parties.

[MARTIN, B.-The case of Robinson v. Harman (1 Exch. Rep. 855; s. c.

18 Law J. Rep. (N.S.) Exch. 202) is against you.]

There fraud existed, which makes all the difference.

[BLACKBURN, J.-You must shew that you are within the exception laid

down in Flureau v. Thornhill (2 W. Black. 1078). CHANNELL, B.—The distinction pointed out in Sugden's Vendors and Purchasers, 14th edit., p. 236, seems not to have been sufficiently attended to; there it is said, “Where the purchaser has paid any part of the purchase-money, and the seller does not complete his engagement, so that the contract is totally unexecuted, the purchaser may affirm the agreement by bringing an action for the nonperformance of it, or he may disaffirm it and bring an action for money had and received to his use. In this latter action the plaintiff cannot recover more than the money paid, although the estate has risen in value, while it would seem that if the estate has experienced a diminution in value, he can only recover the damages he sustained by the estate not having been conveyed, that being the only money retained by the defendant against conscience. But where, for example, the purchasers have had possession of the property, so that the parties cannot be placed in statu quo, the count for money had and received cannot be maintained."]

In Sedgwick on Damages (2nd edit), chap. 6, the matter is fully discussed. As to the English law, the author points out that there is hardly any learning on the subject, and that in Pomeroy v. Partington (3 Term Rep. 678, note), though the Court did not actually decide the point, they intimated that only the money paid, interest and expenses could be recovered; and as to the American law, he agrees with the account given in Kent's Commentaries, and shews that the prevalent American rule arose from the analogy to the ancient real warranty, and the assumed impropriety of applying different rules to covenants for quiet enjoyment and seisin.

[MARTIN, B.-As late as the year 1826, in Hopkins v. Glazebrook (6 B. & C. 31), Lord Tenterden said, "I will only say, that if it is advanced as a general proposition that where a vendor cannot make a good title, the purchaser shall recover nothing more than nominal damages, I am by no means prepared to assent to it."]

There is only one English case, viz. Williams v. Burrell (1 Com. B. Rep. 402; s. c. 14 Law J. Rep. (N.S.) C.P. 98), which comes at all near the present, and that is distinguishable, because there the lessee had entered and enjoyed the premises under the lease, whereas here there was only an interesse termini.

Mellish (Archibald with him), for the respondent (the plaintiff below).-A covenant for title is broken the moment the deed is sealed if the vendor really has no title; but a covenant for quiet enjoyment is not broken till the vendee is disturbed; and it would be odd if the damages recoverable were not the loss at the time of disturbance. With respect to the amount in the present case, the difference between the value of the two leases was the proper thing to give. The vendee did the best he could do for himself and all parties in getting the second lease, and it is fair to take the difference as a test of the damages. The true principle was laid down to the jury; and this difference was only used as a fair method of arriving at the amount under the circumstances.

MARTIN, B.-I have a strong opinion that the Court of Common Pleas were right, and so has the Lord Chief Baron, who has left the court. The matter is, in my judgment, clear. The correct rule is laid down, by Parke, B., in Robinson v. Harman (1 Exch. Rep. 855; s. c. 18 Law J. Rep. (N.s.) Exch. 202): "The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.” The deceased, by this contract, bound himself for the existence of a certain state of things; and if this be altered, why should he not pay the difference? It is said that the case of Flureau v. Thornhill (2 W. Black. 1078) qualified the rule of the common law; but Parke, B., in Robinson v. Harman (1 Exch. Rep. 855; s. c. 18 Law J. Rep. (N.s.) Exch. 202) treats it as an exception. The case of Sikes v. Wild (4 Best & S. 421; s. c. 32 Law J. Rep. (N.s.) Q.B. 375) upholds Flureau v. Thornhill (2 W. Black. 1078), although Lord Tenterden, then Chief E. R. A. [1866]-VOL. 2

4

Justice Abbott, said in Hopkins v. Grazebrook (6 B. & C. 31), "If it is advanced as a general proposition that when a vendor cannot make a good title the purchaser shall recover nothing more than nominal damages, I am by no means prepared to assent to it; if it were necessary to decide that point, I should desire to have time for consideration." Still it is an exception, and why should we extend it? Lord Tenterden is against it; the rule of the common law is against it; why should it be further extended? Prima facie, the plaintiff would be entitled to be placed in the same situation as if the contract had been performed; and I am of opinion that the Court of Common Pleas were right.

CHANNELL, B.-I am of opinion that the judgment of the Court below should be upheld. The action is brought for breach of a covenant for quiet enjoyment (as to which it may be parenthetically remarked that there may be a distinction between the consequences of a breach of a covenant for title and one for quiet enjoyment, as the one breach may be said to occur at the time of the contract, the other at the time of eviction); and the question reserved for our opinion is as to the principle on which the damages were assessed. The principle laid down by the learned Judge at the trial, as disclosed by the case, was, that the plaintiff under the circumstances was entitled to be indemnified for what he had lost under the breach of covenant, and to recover the difference in value between the old and new leases. There is a general rule of law, that if a man enters into a contract and fails to perform it, he is to make compensation to the extent of the injury. Where the contract is one in fieri, or rescinded, or there is an attempt to enforce it, different considerations may arise which it is unnecessary to discuss. Here the contract was executed as far as possible. The deceased executed the conveyance, which contained a covenant for quiet enjoyment. The plaintiff being in possession under an old unexpired lease, what was actually conveyed was an interesse termini no doubt, and no actual eviction was necessary; but still the contract was actually executed, containing a covenant for a given benefit which the testator could not give, and therefore the damages ought not to be limited to what the plaintiff paid. It is true that the difference in value between the old and new leases is not necessarily the amount; but what was done at the trial, as to this, was only a method of working out the principle, and really was in ease of the defendant; as taking the shorter lease was no doubt the best thing to be done under the circumstances.

BLACKBURN, J.-I am of opinion that the decision of the Court of Common Pleas should be affirmed. The general rule is, as laid down by Baron Parke in Robinson v. Harman (1 Exch. Rep. 855; s. c. 18 Law J. Rep. (N.s.) Exch. 202), that where a contract is broken the injured person is, so far as money can do it, to be placed in the same situation with respect to damages as if the contract had been performed. This is the amount of damages where the contract would give the actual enjoyment of a thing, and it is immaterial whether the contract is as to real or personal property. To this rule, however, there is an exception: the origin of which, I take it, was, that in the present complicated state of things no man can be sure that he has a good title to his real property, and therefore it is prudent for him when he is about to sell it, to make it part of the bargain that he shall not be liable to full damages, but that the bargain may be off on repayment of money paid and expenses. That is reasonable; and Flureau v. Thornhill (2 W. Black. 1078), and other cases, establish that by custom such a stipulation tacite inest. As Mr. Justice Parke said in Walker v. Moore (10 B. & C. 422), "A jury ought not, in the case of a vendor in possession, to give any other damages in consequence of a defect being found in the title than those which were allowed in Flureau v. Thornhill (2 W. Black. 1078), which was recognized in Johnson v. Johnson (3 B. & P. 167), Bratt v. Ellis (Sugd. Vend. & Pur. App. 7), and Jones v. Dyke (Ibid. 8). In the absence of any express stipulation about it, the parties must be considered as content that the damages, in the event of the title proving defective, shall be measured in the ordinary way, and that excludes the claim of damages on account of the supposed

goodness of the bargain." This is the true and only principle on which to support Flureau v. Thornhill (2 W. Black. 1078), and the other cases depending on it. There is a tacit agreement in such a case, and it merely saves writing at length. But in the present case there is an executed conveyance, a conveyance of the subject-matter out and out, containing a covenant for quiet enjoyment. Why should this case be out of the ordinary rule? and why should the plaintiff not be compensated for what he has lost, viz. a valuable lease? No English case decides otherwise, or even suggests (unless it be in the note in 3 Term. Rep. 678) any such difference as has been here contended for. In America there appears to be considerable difference in the law on this point in the different States; as to which I will only say that it may be in New York and the States where the law is the same that there is a tacit understanding even in such a case as the present, somewhat similar to that which here exists in cases like Flureau v. Thornhill (2 W. Black. 1078). The only English decision on the point is in the case of Williams v. Burrell (1 Com. B. Rep. 402; s. c. 14 Law J. Rep. (N.s.) C.P. 98), and there Lord Truro gave up the point. I am of opinion that the same rule applies here as in ordinary cases, and that in such a case there is no difference between a contract as to real and a contract as to personal property.

MELLOR, J.-I am of the same opinion. Here there was an actual executed demise with a covenant for quiet enjoyment. The plaintiff was entitled to enjoy the premises for the whole term, but it turned out that the deceased had no title to make such a lease, and on his death his successor avoided it, and the plaintiff was obliged to make a new bargain for a shorter lease at a larger rent. I hesitated, because I doubted whether the true rule had been laid down to the jury. But I think that it may be taken for granted that the obtaining the shorter lease was really in ease of the defendant, and the best thing to be done; and it was not laid down by the learned Judge as a rule that the difference between the value of the leases was the measure of damages, but that this was used merely as a way of working out the true rule laid down to them, that the plaintiff was to be indemnified for what he had really lost. I think, therefore, there was nothing objectionable in the way in which the matter was left to the jury: the true principle was laid down to them, and the taking the difference of value between the leases was only a mode of guiding them as to the proper amount; and I am of opinion therefore that the direction was not erroneous.

PIGOTT, B.-I am of the same opinion. I hesitated, however, for some time, because I doubted whether the proper rule had been laid down to the jury. The learned Judge told the jury "that the plaintiff was entitled to be indemnified for what he had lost." That was correct; but he went on to say, "and to recover the difference in value between the old and new leases," and it struck me there was a fallacy in arriving at the damages in that way. I thought that the case differed from the case of an ordinary commercial contract, -as for instance, a contract for cotton, where, if it be broken by non-delivery, a man may go into the market and get more because I thought the plaintiff ought to shew what he had lost in money, and that this could not be done in such a case as this, as he could not have obtained a similar lease to the void one of this property, and that to take an imaginary lease as a basis would be erroneous. In the result, however, I think this cannot be distinguished from the ordinary case, though it seems to me hard measure.

Decision affirmed.