APPEAL from the Circuit Court of Montgomery County; the Hon.
WILLIAM H. SPITLER, JR., Judge, presiding.
MR. JUSTICE WINELAND DELIVERED THE OPINION OF THE COURT:
This is an appeal by plaintiffs, James and Dolly Brown, from a judgment of the circuit court of Montgomery County finding that their action for breach of covenant under a warranty deed was barred by the statute of limitations.
Although a hearing was conducted below, no transcript of it appears in the record on appeal. An agreed statement of facts was filed on July 20, 1977. The following facts are derived from that statement.
In 1957, the Browns purchased 80 acres of land in Montgomery County from joint tenants William and Faith Bost. They received a statutory warranty deed (see Ill. Rev. Stat. 1957, ch. 30, par. 8) that contained no exceptions, dated December 21, 1957. The Browns thereafter went into possession and duly recorded their warranty deed.
Although the deed appeared on its face to convey the described land in fee simple, in fact, a two-thirds interest in the mineral rights (including coal) was reserved in 1947 by a prior grantor in the chain of title. The plaintiffs had their abstract of title examined in 1958 and again in 1968 for the purposes of a loan.
William Bost died sometime after making the conveyance and Faith Bost died on December 21, 1974. Defendant, Maureen Lober, was subsequently appointed executor of Faith's estate, which was still pending at the time of the making of the agreed statement of facts.
On May 8, 1974, plaintiffs granted a coal option to Consolidated Coal Company covering the rights to the coal beneath the surface of the 80-acre tract. The stated consideration was $6000. On May 4, 1976, the plaintiffs learned that they only owned one-third of the coal rights. The coal company then tendered $2000 for the Browns' interest which was accepted by them.
The plaintiffs commenced the present action on May 25, 1976, seeking $4000 damages.
The deed by which title to the instant tract of land was passed to the plaintiffs was in the form of a warranty deed as described in section 9 of "An Act concerning conveyances" (Ill. Rev. Stat. 1975, ch. 30, par. 8). At all times pertinent to this appeal, that section provided in part:
"* * * Every deed in substance in the above form, when otherwise duly executed, shall be deemed and held a conveyance in fee simple, to the grantee, his heirs or assigns, with covenants on the part of the grantor, (1) that at the time of the making and delivery of such deed he was lawfully seized of an indefeasible estate in fee simple, in and to the premises therein described, and had good right and full power to convey the same; (2) that the same was then free from all encumbrances; and (3) that he warrants to the grantee, his heirs and assigns, the quiet and peaceable possession of such premises, and will defend the title thereto against all persons who may lawfully claim the same. And such covenants shall be obligatory upon any grantor, his heirs and personal representatives, as fully and with like effect as if written at length in such deed."
The covenants contained in subsection 1 above are generally referred to as the covenants of seizin and of good right to convey. Subsection 2 is referred to as the covenant against encumbrances and subsection 3 as the covenant of quiet enjoyment.
The Browns' complaint did not explicitly state which covenants they believed had been breached, giving rise to their cause of action. The court, however, found that only the warranty (covenant) of seizin (and necessarily the right to convey) had been broken and that the action was therefore barred by the statute of limitations. Since the defendant raised as an affirmative defense the 10-year limitation period of section 16 of the Limitations Act (Ill. Rev. Stat. 1975, ch. 83, par. 17), we conclude that the court found that it was the section of the Act which was applicable to a suit for breach of covenant under a warranty deed.
On appeal, the plaintiffs assert that their cause of action was based on alleged breaches of the covenant against encumbrances and the covenant of quiet enjoyment, rather than the covenant of seizin. Consequently, they argue that the action was not barred by the limitations period since a cause of action for breach of these covenants "accrued" when an eviction or the equivalent thereto has occurred. They argue that they were not evicted until 1976, when they learned that they owned only one-third of the underlying coal and other minerals. Although all actions for breach of covenant under a warranty deed must be commenced within 10 years "after the cause of action" accrued (Ill. Rev. Stat. 1975, ch. 83, par. 17), it is of some importance to ascertain which covenant has been breached because the decisions view causes of action under the various covenants as "accruing" at different times.
It is for this reason important to determine the validity of plaintiffs' assertion that their action is based on a breach of covenant of quiet enjoyment or the covenant against encumbrances.
1 It may be said to be well settled that the covenant of seizin of land and the right to convey such, that if broken at all, are broken when the deed is delivered. 14 Ill. L. & Prac. Covenants § 8 (1968).
2, 3 As opposed to this, it may be likewise said to be well settled that since a covenant of quiet enjoyment operates prospectively, it can only be broken when an eviction occurs or disturbance of the possession is caused by one having a paramount title. (14 Ill. L. & Prac. Covenants § 8 (1968); Scott v. Kirkendall (1878), 88 Ill. 465; Newman v. Sevier (1907) 134 Ill. App. 544.) It was at one time held necessary under such a covenant to show actual eviction to prove a breach, but now it is not deemed necessary to do so and only something equivalent is held to be required. Claycomb v. Munger (1869), 51 Ill. 373.
The central issue in this case is whether the complaint states a cause of action for breach of the covenant of quiet enjoyment here involved. The answer to this issue in turn requires a discussion of the nature of such a covenant, also when a breach thereof is held to occur and what event triggers the statute of limitations against an action for a breach thereof. Keogh v. Peck (1925), 316 Ill. 318, 327-28:
"The test as to whether a covenant runs with the land or is merely personal is whether the covenant concerns the thing granted and the occupation or enjoyment of it or is a collateral and personal covenant not immediately concerning the thing granted. If a covenant concerns the land and the enjoyment of it, its benefit or obligation passes with the ownership, but to have that effect the covenant must respect the thing granted or demised and the act to be done or permitted must concern the land or the estate conveyed. In order that a covenant may run with the land its performance or non-performance must affect the nature, quality or value of the property demised, independent of collateral circumstances, or must affect the mode of enjoyment. [Citations.]"
The question of both actual knowledge and constructive notice appears to have been pleaded in many of the cases touching encumbrances and covenants of quiet enjoyment.
4 The fact that the parties knew at the time of conveyance that the grantor's title was defective or that an incumbrance existed on the land does not affect the right of recovery for a breach of covenant. Weiss v. Binnian (1899), 178 Ill. 241, 52 N.E. 969; Beach v. Miller (1869), 51 Ill. 206 (railroad in operation across land conveyed); Sondag v. Keefe (1929), 251 Ill. App. 378.
"The existence of a private easement constitutes a constructive eviction sufficient to support a breach of covenant of warranty even though the grantee had knowledge of its existence at the time. Whitley v. West, 293 Ky. 751, 123 S.W.2d 1009; Rea v. Minkler (NY) 5 Lans. 196; Eller v. Moore, 48 App. Div. 403, 63 NYS 88."
It would appear from a reading of the cases cited by defendant that they are inapposite. The case of Firebaugh v. Wittenberg (1923), 309 Ill. 536, discusses by way of dicta several cases involving covenants but is only authority for the proposition of holding that a purchaser is not required to accept a deed to real property where inchoate dower is outstanding.
Catlin Coal Co. v. Lloyd, 176 Ill. 275 (1898), appeal on remand, 180 Ill. 398 (1899), was a case of ejectment for possession of certain minerals which had been severed previously. In neither of the two cases was a breach of covenant involved before the supreme court. There was no breach of warranty involved. It would appear that these two opinions are consistent with our holding in this case.
We find no cases cited by the defendant in support of her theory that the plaintiffs were not subject to eviction from the two-thirds mineral rights by anyone because they never were in possession of them.
Likewise, in Uphoff v. Trustees of Tufts College, 351 Ill. 146 (1932), cited by defendant, there was a warranty conveyance to Uphoffs following warranty conveyances to third persons of a fractional interest of the coal and minerals. The deed to Uphoffs however contained this exception, "grantors should not be liable on their covenants herein on account of having made deed to Milton Sutliff and others dated June 10, 1870." Then, too, in this case there was separate taxation of the mineral interest beginning with the year of 1923 and continuing up to the filing of the complaint in 1928. There was also mining of the coal from time to time. It was, of course, held that a severance had been created of the two estates and that plaintiff's possession of the surface was not sufficiently adverse to overcome the severance once created, so as to revest title in plaintiffs of all the underlying minerals. Again no breach of covenant was involved.
The executor seems to make certain false assumptions in her brief. For instance, it is admitted that the plaintiffs had no knowledge of the incumbrance here until 1976. Almost in the same breath she states that they should have filed suit in 1957, when the warranty deed was executed, the theory being that was the time when the covenants were broken. At another point the defendant admits to the fundamental rule of law that a covenant of quiet enjoyment runs with the land and therefore suggests that since the plaintiffs owned the land, they should therefore sue the owners of the reserved minerals in ejectment for possession. This would seem to suggest a failure to distinguish between contractual and property rights. These positions on the part of the defendant fail to aid in the solution of a difficult problem. The latter proposal shows the confusion that exists in some of the cases, viz., confusing a suit for damages for breach of covenant with a possessory action of the property in question.
Turning now to Ibbetson v. Knodle, 201 Ill. App. 373 (1916), cited by defendant: This case is not unlike the present case, and quite ironically, both cases arose in the same court. In Ibbetson plaintiff purchased by means of a warranty deed in statutory form certain land located in Montgomery County. Some two months prior to the deed in question the defendant had conveyed all coal below a certain depth, with the right to mine and remove the same, all without liability for damage to the surface, to one Hammond. The latter deed was duly recorded in the recorder's office shortly thereafter. Plaintiff alleged that this prior conveyance created a covenant running with the land and constitutes a valuable estate in said land of the value of $2000, to the plaintiff's damage, etc.
The defendant demurred to the plaintiff's pleading and alleged especially that the title to the coal had been severed from the title to the surface before plaintiff recorded his warranty deed, which contained no ...