the jurisdiction of 'this court to proceed in this action cannot be sustained. I have riot stopped in this opinion to consider whetlier the sale made of the assets of the car company transferred this right of action to the Thresher company. I have assumed that it did not, as claimed by counsel for complainant. It is not expressly mentioned in the order of sale, nor is it expressly excluded; the language of that order is general in its terms. IUt were such an asset as is assignable, then the general terms of description would probably convey it, and the conveyance, beingat a publkjudicial sale,would doubtless transfer a good title to the purchaser,-a title. which could not be assailed by these complainants simply as stockholders in the car company. For these reasons I think the demurrer to the amended bill must be sustained. I have held this case for sometime, and given the matter much thought, for I was impressed at theargllment with the idea that somehow this action ought to be sustained; and only what seemed to me the settled laws of adjudica.tion have forced me to a different conclusion. The demurrer will be 8UStained.
SHERWOOD tI. M:OEUE
((h"rouit (Jourt, D. Nebraska.
October 29, 1888.)
VENDOR AND VENDEE-BONA FTDEPURCHASERS-QUITCLAIM DEEDS.
A grantee in a warranty deed, whose grantor has a warranty deed,.and who acts in good faith. and without actual notice. is entitled to protection as a bona fide purchaser, notwithstanding the existence of a qUitclaim deed in the chain of title. l
In Equity. On rehearing.' Bill by James K. O. Sherwood against Theodore J. MocHe to remove cloud from title. Before Circuit Judge, and DUNDY, District Judge. Montgomery « Jeffrey, for plaintiff. Harwood, Ames« Kelly, for defEmdant.
BREWER, J. This case is now submitted on petition for rehearing. When first it was decided upon the proposition that one who takes title by a mere quitclaim deed cannot be considered a bonafide purchaser, and a decree was ordered accordingly in favor of the defendant and cross-complainant. In this petition for rehearing that proposition is challengeJ, as well as its application to the facts in this case. Of the soundness of the proposition as a gelleral one I have no doubt, although it ma'y be possibly subject to some limitations. It has been
. lAs to the rights of a grantee of land under a quitclaim deed, or in whose chain of title-there is a quitclaim deed, see Lumber Co. v. Hancock, (Tex.) 7 S. W. Rep. 724, and note; Gest v. PackWood, 34 Fed. Rep. and note; O'Neal v. Seixas, (Ala.) 4 South. . Rep. 745, and n o t e . . ·No opinion was .flIed on the original hearing.
SHERWOOD tI. MOELLE.
by many courts, and frequently affirmed by the supreme court of the United States. In the recent case of Johnson v. Williams, 37 Ran. 179, 14 Pac. Rep. 537 ,Mr. JusticeVALENTINE, who is one of the most painstaking and thoughtful judges I kn,ow, has collated the various authorities, and in the following guarded language states the conclusions of himself and the other members of that court, as well as the principal reasons in support of the proposition: . . "We would think -that in all cases, however, where a purchaser takes a quitclaim de!1d, he must be presumed to take it with notice of all outstanding eqUities and interests of which he could, by the exercise of any reasonable diligence, obtain nOlice from an examination of all the records affecting the title to the property, and from all inquiries which he might make of petsons in the possession of the property, or of persons paying taxes thereon, or of any pertlon who might, from any record or from. any knowledge which the purchaser might have, seemingly have some interest in the property. In nearly all cases between individuals, where land is sold or conveyed, and where there is no doubt about the title, a general warranty deed is given; and it is only in cases where there lS3 doubt concerning the title that only a qUitclaim deed is given or received. Hence, when a party takes a quit-claim deed, he knows he is taking a doubtful title, and is put upon inquiry as to the title. The very form of the dped indicates to him that the grantor has doubts concerning the title; and the deed itself is notice to him that he is getting only a doubtful title. Also as a quitclaim deed can never of itself subject the maker thereof to any liability, such deeds may be executed' recklpssly, and by persons who have no real claim, and scarcely a shadow of claim to the lands for which the deeds are given; and the deeds may be executed for a merely nominal consid" eration, and merely to enable speCUlators in doubtful titles to harass and annoy the real owners of the land; and speculators in doubtful titlt'sal'e always ready to pay sometritling or nominal consideration to obtain a qUitclaim deed. ,. I do not care, however, to enter into a discussion of that general prop(}o sitioD, or consider what, if any, limitations thereof exist. That prop(}o sition is, I have stated, that no one who takes under a quitclaim deed can ,be considered a bona fide purchaser. The idea underlying the prop(}o sition is that when his grantor is willing to give him only a quitclaim deed, he impliedly notifies him that there may be outstanding equities, and that he is willing to place him only in the samepositiori which he himself holds. Now, in the case at bar the complainant took under a warranty deed. His immediate grantor also took under a warranty deed. It is true, in the chain of title of record there appeared a quitclaim deed, but it was back of his immediate grantor's deed; and the question is whether, if remotely, in the chain of title there exists a quitclaim deed, subsequent purchasers in good faith lose the protection of the apparently valid and clear deraignment of title from the government by reason of the existence of such quitclaim deed. In view of the fact that in the early history of titles in the west many conveyances were by quitclaim this question becomes important. Fortunately for this case the question has been before the supreme court of this state, and determined. Such determination is doubtless controlling in this court. Even if t.he question were an open one, there are many substantial and weighty reasons for upholding the conclusions reached by that supreme court. I merely
content myself with quoting its language as found in the case ofSrwwden' v. Tyler, 31 .N. W. Rep. 661, as follows: . "3. It is claimed that the quitclaim deed from Shirk to Poe conveyed no title, and that bona fide purchasers from Poe were not protected. The rule no doubt is that a person who procures'of another real estate, and, receives a. qUitclaim deed only therefor, is bound to inquire and ascertain at his peril what outstanding e.:juities·exist, if any, against the title. The reason is his grantor will not warrant the title, even as against himself. Therefore it is a cause of suspicion. We are not prepared to hold, however, that a quitclaim · deed, where the grantor has already conveyed, will not in any case convey titJe. It is not unreasonable to suppose that a quitclaim deed occurs in many titles where there is no outstanding equity. In this caSll the quitclaim deed in question was made by Shirk to Poe to supply a deed which was supposed to have been lost. It was made to the grantee of such of the heirs of Snowden as wtlre of lawful age. Shirk, upon the record of Oto.e county, apparently posilessed the legal Litle to the land in controversy, and a conveyance from him to Poe, although in the form of a quitclaim deed, in forro, at least, transferred the legal title to Poe. No one seems to have been in possession of:the land, nor had any chll,rge of the same; and the fact that more than eight years had elapsed from the time of the execntion of the deed from Shirk to Snowden without the same having b,:,en :recorded, certainly was astl'ong circumstance tending to show that the title still remained in Shirk. It is the policy of the law that titles to real estate should become matters of certainty, as far as. pos. sible, and that one who acts in good faith in purchasing, and pays the value of the property, shall be protected in his purchase. Any other rule would op. erate to prevent settlerneqt and improvements upon lands. A party, there. fore, who finds a complete chain of conveyances from the original grantee to his grantor upon the proper records of the county may rely thereon, provided he has no notice, either actual or constructive, of the equities affecting tha title, and is a purchaser for a sufficient consideration. All those persons. therefore, who purchased from D'Gette and Warren, without notice, for valuable consideration, and their grantees, will be protected." It may be added that the testimony clearly shows that the complainant acted in good faith, in ignorance of the outstanding title not apparent of record, and paid full value for the land, while, Oli thtl other hand, the defendant .paid much less than the value, and probably bought with notice of complainant's rights. For these reasons the petition. for r&' hearing is sustained, and a decree entered in favor of the complainant t quieting his title as prayed. ....
J. t concurring.
RUNT t1. OREGON PAC. RY. CO.
HUNT II. OREGON PAC.
(Oircuit Court, D. Oregon.
DAMAGES-FoR BREACH OF CONTRACT.
The party injured by the breach of a contract is entitled to recover all his damages, including gains prevented, as well as losses sustained, provided such damages may fairly be supposed to have been within the contemplation of the parties when they made the contract. and are certain, both in their nature and in respect to the cause from which they proceed.
The plaintiff sues the defendant for damages on an alleged breach of a contract whereby the former agreed, in consideration of certain payments, to be made as the work progressed, to construct 52 miles of railway for the latter. The defendant sets up a counter-claim for the failure to construct the road, and claims damages therefor: (1) For the loss of the use of the road; (2) for the loss of certain freight which it had made" arrangements" to carryover the road; and (3)for the sum it will cost to complete the roadin excess ofthe contract price. On motion of plaintiff, the last two clauses were stricken out of the counter-claim; the one, as arising on a collateral contract not within the contemplation of the parties, and tile other as being uncertain, and also con· tingent on the future construction of the road by the defendant. (8yllab'/J,8 by the Court;)
At Law. Action to recover damages. George H. Williamtl, for plaintiff. John W. Whalley and William T. Muir, for defendant.
DEADY, J. The plaintiff, a citizen of Ohio, brings this action against the defendant, a corporation formed under the laws of Oregon, to recover $160,000 damages for an alleged breach of a contract entered into by the on August 8, 1887, whereby the plaintiff, for a consideration therein specified, undertook to construct two sections of the defendant's railway, on the eastern extension thereof, one of 42 miles in length, and the other of 10; the first 20 miles to be completed by November 15, 1887, the next 22 miles by April!, 1888, and the last 10 by May 1,1888. The breach alleged is that the defendant wholly failed to make payments on the work as it progressed, according to the agreement, or to furnish transportation, iron, steel, or ties, as provided therein; wherefore the plaintiff was compelled to give up the performance of the contract after doing $80,000 worth of work thereunder, and did quit the work on December 12, 1887. The answer of the defendant was filed April 5, 1888, and contains a counter-claim, miscalled a "further defense," founded on alleged breach of the contract in question by the plaintiff, wherein it is alleged that the plaintiff, after performing work and labor, and furnishing material to the estimated value of $50,643.56, failed and refused to comply with said contract, and about December 10, 1887, abandoned the same, and notified defendant thereof; that the work is still unfinished, nothing having been done thereon since the abandonment by the plaintiff. The counter-claim concludes with three demands for special damages: v.36F.no.8-31 '