This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Upon the question whether a failure of title to realty which has been conveyed to the promisor is such a failure of consideration as to discharge a promise in consideration thereof there is a divergence of judicial opinion. Some courts hold that such failure of title is not failure of consideration, and that the grantee must perform the contract on his part, his remedy being an action for damages upon the covenants of the deed.1 Accordingly, in the absence of special circumstances such as fraud, insolvency or non-residence of the grantor,2 equity will not grant rescission.3 So failure of title cannot be interposed as a defense in an action for the purchase price.4 A breach of covenants of seisin,5 or of covenants against encumbrances,6 is not ground for rescission in equity. Therefore, if the vendor removes the defect in title,7 or if the liens which formed a cloud upon the title are barred by limitations,8 rescission cannot be had. If the vendee has not exacted proper covenants to protect him, no relief can be given.9 The same result follows where he has required warranties but the cavenants of warranty are ultra vires because the grantor is a county.10 In some cases this view is based on the theory that the interest of one in possession is a sufficient consideration,11 and if the vendee wishes to do more than purchase the vendor's interest he should stipulate therefor. Other authorities hold that a failure of title is a failure of consideration which discharges the vendee from performance.12 Thus if the grantor breaks his contract to furnish an abstract showing a complete title, the grantee may tender a reconveyance and defeat an action for the purchase money even if he is in undisturbed possession under a warranty deed.13 If the vendee does not tender reconveyance he cannot recover the purchase money in the action of assumpsit.14 In other cases it is held that if the vendee has been placed in possession of the realty he can rescind for failure of title and defeat recovery on the purchase money notes,15 only if there are special facts, such as fraud on the part of the vendor, or insolvency or non-residence.
6 Zimmerman v. Branyan. 62 N. J. L. 478; 41 Atl. 689; Duncan v. Gisborn, 17 Utah 209; 52 Pac. 1044.
7.Redfe"ld v. Woodfolk, 22 How. (U. S.) 318.
1 Fields v. Clayton, 117 Ala. 538; 67 Am. St. Hep. 189; 23 So. 530; Barkhamstead v. Case, 5 Conn. 528; 13 Am. Dec. 92; Long v. Allen, 2 Fla. 403; 50 Am. Dec. 281; Laugh-ery v. McLean, 14 Ind. 106; Harrison v. Palo Alto County, 104 la. 383; 73 N. W. 872; Lloyd v. Jewell, 1 Me. 352; 10 Am. Dec. 73.
2 Fields v. Clayton, 117 Ala. 538; 67 Am. St. Rep. 189; 23 So. 530; Abner v. York (Ky.), 41 S. W. 309; Egan v. Yeaman (Tenn. Ch. App.), 46 S. W. 1012. Even in case of innocent misrepresentation in some states. Abner v. York (Ky.), 41 S. W. 309.
3 Fields v. Clayton. 117 Ala. 538;
67 Am. St. Rep. 189; 23 So. 530; Parker v. Parker, 93 Ala. 80; 9 So. 426; Meeks v. Garner, 93 Ala. 17; 8 So. 378; Murkett v. Munford, 70 Ala. 423; Abner v. York (Ky.), 41 S. W. 309; Earle v. De Witt, 6 All. (Mass.) 520; Fellows v. Evans, 33 Or. 30; 53 Pac. 491; Stokes v. Ack-len (Tenn. Ch. App.), 46 S. W. 316.
4 Patton v. Taylor, 7 How. (U. S.) 132; Lafarge v. Mathews. 68 111. 328; Wimberg v. Schwegeman, 97 Ind. 528; Slocum v. Bracy. 55 Minn. 249; 43 Am. St. Rep. 499; 56 N. W. 826; Leird v. Abernathy, 10 Hei>k. (Tenn.) 626; Tarlton v. Daily. 55 Tex. 95.
5 McLennan v. Prentice. 85 Wis. 427; 55 X. W. 764.
6 Anderson v. Land Co., 96 Va. 257: 31 S. E. 82.
7 Building, etc., Co. v. Fray. 96 Va. 559: 32 S. E. 58.