Appeal from the Appellate Court for the Fourth District; heard
in that court on appeal from the Circuit Court of Montgomery
County, the Hon. William H. Spitler, Jr., Judge, presiding.
MR. JUSTICE UNDERWOOD DELIVERED THE OPINION OF THE COURT:
Plaintiffs instituted this action in the Montgomery County circuit court based on an alleged breach of the covenant of seisin in their warranty deed. The trial court held that although there had been a breach of the covenant of seisin, the suit was barred by the 10-year statute of limitations in section 16 of the Limitations Act (Ill. Rev. Stat. 1975, ch. 83, par. 17). Plaintiffs' post-trial motion, which was based on an alleged breach of the covenant of quiet enjoyment, was also denied. A divided Fifth District Appellate Court reversed and remanded. (63 Ill. App.3d 727.) We allowed the defendant's petition for leave to appeal.
The parties submitted an agreed statement of facts which sets forth the relevant history of this controversy. Plaintiffs purchased 80 acres of Montgomery County real estate from William and Faith Bost and received a statutory warranty deed (Ill. Rev. Stat. 1957, ch. 30, par. 8), containing no exceptions, dated December 21, 1957. Subsequently, plaintiffs took possession of the land and recorded their deed.
On May 8, 1974, plaintiffs granted a coal option to Consolidated Coal Company (Consolidated) for the coal rights on the 80-acre tract for the sum of $6,000. Approximately two years later, however, plaintiffs "discovered" that they, in fact, owned only a one-third interest in the subsurface coal rights. It is a matter of public record that, in 1947, a prior grantor had reserved a two-thirds interest in the mineral rights on the property. Although plaintiffs had their abstract of title examined in 1958 and 1968 for loan purposes, they contend that until May 4, 1976, they believed that they were the sole owners of the surface and subsurface rights on the 80-acre tract. Upon discovering that a prior grantor had reserved a two-thirds interest in the coal rights, plaintiffs and Consolidated renegotiated their agreement to provide for payment of $2,000 in exchange for a one-third interest in the subsurface coal rights. On May 25, 1976, plaintiffs filed this action against the executor of the estate of Faith Bost, seeking damages in the amount of $4,000.
The deed which plaintiffs received from the Bosts was a general statutory form warranty deed meeting the requirements of section 9 of "An Act concerning conveyances" (Ill. Rev. Stat. 1957, ch. 30, par. 8). That section provides:
"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 were 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." Ill. Rev. Stat. 1957, ch. 30, par. 8.
The effect of this provision is that certain covenants of title are implied in every statutory form warranty deed. Subsection 1 contains the covenant of seisin and the covenant of good right to convey. These covenants, which are considered synonymous (McNitt v. Turner (1873), 83 U.S. (16 Wall.) 352, 21 L.Ed. 341), assure the grantee that the grantor is, at the time of the conveyance, lawfully seized and has the power to convey an estate of the quality and quantity which he professes to convey. Maxwell v. Redd (1972), 209 Kan. 264, 496 P.2d 1320.
Subsection 2 represents the covenant against encumbrances. An incumbrance is any right to, or interest in, land which may subsist in a third party to the diminution of the value of the estate, but consistent with the passing of the fee by conveyance. Marathon Builders, Inc. v. Polinger (1971), 263 Md. 410, 283 A.2d 617; Aczas v. Stuart Heights, Inc. (1966), 154 Conn. 54, 221 A.2d 589.
Subsection 3 sets forth the covenant of quiet enjoyment, which is synonymous with the covenant of warranty in Illinois. (Biwer v. Martin (1920), 294 Ill. 488; Barry v. Guild (1888), 126 Ill. 439; Bostwick v. Williams (1864), 36 Ill. 65.) By this covenant, "the grantor warrants to the grantee, his heirs and assigns, the possession of the premises and that he will defend the title granted by the terms of the deed against persons who may lawfully claim the same, and that such covenant shall be obligatory upon the grantor, his heirs, personal representatives and assigns." Biwer v. Martin (1920), 294 Ill. 488, 497.
Plaintiffs' complaint is premised upon the fact that "William Roy Bost and Faith Bost covenanted that they were the owners in fee simple of the above described property at the time of the conveyance to the plaintiffs." While the complaint could be more explicit, it appears that plaintiffs were alleging a cause of action for breach of the covenant of seisin. This court has stated repeatedly that the covenant of seisin is a covenant in praesenti and, therefore, if broken at all, is broken at the time of delivery of the deed. Tone v. Wilson (1876), 81 Ill. 529; Jones v. Warner (1876), 81 Ill. 343.
Since the deed was delivered to the plaintiffs on December 21, 1957, any cause of action for breach of the covenant of seisin would have accrued on that date. The trial court held that this cause of action was barred by the statute of limitations. No question is raised as to the applicability of the 10-year statute of limitations (Ill. Rev. Stat. 1975, ch. 83, par. 17). We conclude, therefore, that the cause of action for breach of the covenant of seisin was properly determined by the trial court to be barred by the statute of limitations since plaintiffs did not file their complaint until May 25, 1976, nearly 20 years after their alleged cause of action accrued.
In their post-trial motion, plaintiffs set forth as an additional theory of recovery an alleged breach of the covenant of quiet enjoyment. The trial court, without explanation, denied the motion. The appellate court reversed, holding that the cause of action on the covenant of quiet enjoyment was not barred by the statute of limitations. The appellate court theorized that plaintiffs' cause of action did not accrue until 1976, when plaintiffs discovered that they only had a one-third interest in the subsurface coal rights and renegotiated their contract with the coal company for one-third of the previous contract price. The primary issue before us, therefore, is when, if at all, the plaintiffs' cause of action for breach of the covenant of quiet enjoyment is deemed to have accrued.
This court has stated on numerous occasions that, in contrast to the covenant of seisin, the covenant of warranty or quiet enjoyment is prospective in nature and is breached only when there is an actual or constructive eviction of the covenantee by the paramount titleholder. Biwer v. Martin (1920), 294 Ill. 488; Barry v. Guild (1888), 126 Ill. 439; Scott v. Kirkendall ...