#### J. W. JONES and F. N. TAYLOR v. T. E. BALSLEY et al.

(Filed 20 December, 1910.)

1. Deeds and Conveyances — Warranty—Locus in Quo — Location— Issues.

In an action for damages for breach of warranty in a deed for lands, when it is alleged in the complaint that judgment had been recovered by a third person for a part of the lands upon a title paramount, which is not denied, but the answer alleges that the lands were not embraced in the deed containing the warranty sued on, the issue raised is as to the true location of the land, and does not embrace the paramountcy of the title.

2. Same — Judgment—Estoppel of Record.

In an action for damages for breach of warranty in a deed for lands, there was evidence tending to show that in a suit regularly instituted and tried, one W. and others had recovered from plaintiffs a part of the land covered by defendants’ warranty. In the former suit nothing appeared to indicate that the location of the land was involved, and in the present suit the issue was whether the locus in quo was embraced by the deed and warranty: Held, the plaintiff was not estopped by the record in the original suit to show the true location of the land and that the title was protected by the warranty, and, further, to allege and prove damages in his action upon the covenant, it having been only necessary for the plaintiff in the former suit to show paramountcy of title.

3. Instructions, Form of — Specific Issues.

When an action is tried upon specific issues framed to ascertain the facts involved, a prayer for a special instruction that “if the jury believe the evidence,-the plaintiff is entitled to recover,” may be disregarded.

4. Deeds and Conveyances — Damages—Notice to Covenantor — Reasonable Attorneys’ Fees.

The grantee in a deed, with warranty, to lands, being sued for title and possession of a part thereof, informed the warrantor of the pendency of the action, stating that he intended to defend the suit: Held, notice sufficient in law to charge the covenantor with all costs incurred by the covenantee in defending the action in good faith, including reasonable attorneys’ fees, as such were impliedly within the contemplation of the parties, though no express request was made of the covenantor to defend the action, the notice given, under the circumstances, being a sufficient “tender of the defense.”

*625. Same — Instructions.

In an action against the covenantor, an instruction that the covenantee may recover attorneys’ fees paid by him in defending an action brought to recover the land embraced in his deed and warranty, leaves out of consideration the reasonableness of the fees, and is reversible error; and when the costs and attorneys’ fees are blended by the jury in one sum in the answer to the issue, a new trial will be awarded thereon.

Appeal from Lyon, J., at August Term, 1910, of Guileokd.

The plaintiff brought this action to recover damages for a breach of a covenant of warranty. T. E. Balsley, as executor of Jacob B. Balsley, on 26 February, 1898, in consideration of $3,600, executed a deed to the plaintiffs for a lot in the city of Greensboro, which is described in the complaint. At the same time the defendants, referring to the said deed, covenanted with the plaintiffs, their heirs and assigns, “that the title to the property was vested in the said Jacob B. Balsley, and that the same is free from all encumbrances, and that the said T. E. Balsley as executor is authorized and empowered to sell the same, and that they will warrant and defend the title to the same against the lawful claims of all persons whatsoever.” The evidence tended to show that, in a suit regularly instituted and tried, Eugenia 'Watlington and others as plaintiffs recovered of the plaintiffs in this case a part of the land conveyed by the deed of T. E. Balsley, executor, to them, the title to which is protected by the covenant of warranty. The defendants in that suit informed the covenantors of the pendency of the action on their covenant, though they did not request them to defend it, but stated, at the time of giving the notice, that they intended to defend the suit. They employed attorneys, defended the suit, and lost a part of the land by the judgment therein. The taxed costs amounted to $138.65; attorneys’ fees, paid by them, to $175, and the damages assessed by the jury to $135. The plaintiffs in this action alleged in their complaint that they had.been ousted or evicted by the plaintiffs in the former suit, who held the paramount title. The defendants, in their answer, admitted the sale of the land and the execution of the covenant, and also admitted that the plaintiffs in this *63action, under tbe judgment in tbe suit against them by tbe Wat-lingtons, bad been dispossessed of tbe part of tbe land described in tbe complaint, but averred tbat tbey bad not been damaged thereby, and further, tbat at tbe time tbey purchased tbe land and received tbe deed therefor tbe plaintiffs bad full notice tbat tbe Watlingtons claimed a part of tbe land, and were advised not to buy tbe same. In an amendment to tbe answer tbey aver tbat tbe judgment in tbe former suit, when construed in connection with tbe map annexed thereto, does not include any land conveyed by tbe deed of tbe executor, and by reason thereof tbey plead tbe judgment as an estoppel upon tbe plaintiffs.

Tbe judge submitted issues to the jury which, with the answers thereto, are as follows:

1. Did tbe defendants covenant to warrant and defend tbe title to tbe land described in tbe complaint ? Answer: Yes.

2. Were tbe plaintiffs ousted from tbe land or any part thereof, as alleged in tbe complaint? Answer: Yes.

3. What damages, if any, are tbe plaintiffs entitled to recover for costs and attorneys’ fees? Answer: $313.65.

4. What damages, if any, are plaintiffs entitled to recover as tbe value of tbe land taken from tbe plaintiffs? Answer: $135.

Tbe defendants duly excepted to tbe third issue. Judgment was entered for tbe total amount of damages assessed by tbe jury, including attorneys’ fees and costs, and tbe defendants appealed. -

John A. Barringer and T. H. Calwert for plaintiffs.

A. L. Brooks for defendants.

Walxee, J.,

after stating the case: When this case was first presented to us, we thought it would be necessary to decide whether the record in the original suit was evidence against the defendants in this case, either presumptive, prima facie, or conclusive, that the plaintiffs bad been ousted by a paramount title. It is alleged in the complaint that the plaintiffs in the suit of Watlington v. Jones recovered a judgment for a part of tbe land conveyed by the deed of T. E. Balsley, executor, to *64Jones -and Taylor, upon a title paramount to that which was conveyed by the deed of T. E. Balsley, executor, and this allegation was not denied. It is true that defendants allege in their answer that the land recovered from Jones and Taylor in the action against them is not a part of the land conveyed to them by Balsley, executor; but that allegation only raises an issue as to the true location of the land, and not as to the superiority of the title of the Watlingtons, if it is embraced by the description in the deed. If the Balsley deed.did not convey the land recovered in the other suit, the title is not protected by the covenant of warranty, and the question as to the paramountcy of the Watlington title is not involved. The jury have found, in their response to the first issue, that it is so embraced, for they have decided that the land described in the complaint is covered by the covenant of warranty, and the plaintiffs herein have been ousted therefrom. There was, therefore, no controversy as to the title being paramount to that conveyed by the Balsley deed, but the only question was whether the deed conveyed the land and the warranty protected the title. This fact was found against the defendants’ contention, both in that suit and in this. We have not discovered in the case any prayer for instructions or any specific exception or assignment of error which relates to the location of the land or to the effect of the judgment in the original suit, as an estoppel upon the plaintiff in this action to now assert that the deed of T. E. Balsley, executor, covers the land described in the complaint, though it is argued in the brief that they are so estopped, and, in aid of that argument, a map is referred to which is not a part of the record.

The plaintiff, J. W. Jones, testified that the land which he lost in the Watlington suit is a part of the land which was conveyed to him and Taylor by Balsley, and the court seems to have submitted the question as to whether the land which was recovered in the Watlington suit was embraced by the Balsley deed and the covenant of warranty, to the jury, upon the evidence, and they have found that it was included in the description of that deed, and, therefore, covered by the warranty. Nor do we see how the plaintiffs in this action are estopped by the *65record in tbe original suit to allege tbat tbe three acres recovered in tbat suit were conveyed by tbe Balsley deed, and are, therefore, within tbe protection of tbe warranty. Tbe Wat-lingtons recovered tbe land, we must assume, because they bad a valid and superior title. It was sufficient for them to show this in order to recover, and it made no difference whether they recovered because their title was paramount to tbat claimed by tbe defendants in tbat suit under tbe Balsley deed, or because tbe land in dispute was not embraced by tbat deed. They might have recovered on either ground. It was not, therefore, essential tbat tbe jury should have found, and tbe court adjudged, that tbe land was not so embraced, in order to decide with the Watlingtons; and tbe location of tbe land, consequently, was not necessarily involved in tbat case, even if tbe plaintiffs in this action (defendants in tbat one) would be estopped, as contended by tbe defendants, if it bad been so involved. Tbe defendants in this action have not denied tbe allegation tbat the Watlingtons recovered under a paramount title, but have merely averred, tbat tbe three acres are not covered by tbe warranty. We may add tbat there is really no question in tbe case as to tbe superiority of tbe Watlington title, if tbe three acres are covered by tbe Balsley deed.

The first prayer of the defendants, namely, “If the jury be: lieve the evidence, the plaintiffs are not entitled to recover,” has frequently been condemned by this Court as not being a proper one, and may be disregarded when the case is tried upon specific issues framed to ascertain the facts. Farrell v. R. R., 102 N. C., 390; Baker v. Brem, 103 N. C., 72; Clark’s Code (3 Ed.), sec. 413, p. 535, and notes.

Tbe other assignments of error which it is necessary to consider relate to tbe allowance of attorneys’ fees paid and costs taxed and recovered in tbe other suit as part of tbe damages.

There seems to be great conflict in the authorities as to the legal effect of a judgment recovered against a covenantee, as evidence against his covenantor, in an action upon the warranty, both as to the title and the damages. Rawle, in his ex*66cellent treatise on “Covenants for Title” (5 Ed.), sec. 125 and p. 164, states tbe rules, which., he says, have been adopted by a majority of the courts, as follows:

> “In reviewing, then, what has been said on the subject of notice to the covenantor of the adverse proceedings, the following points appear to be settled by the weight of authority:

> “First. The notice must be distinct and unequivocal, and expressly require the party bound by the covenant to appear and defend the adverse suit.

> “Secondly. If such notice appear upon the record of that suit or if the covenantor be made a party to it, the court will, in the action on the covenant, be authorized to instruct the jury that the recovery is conclusive upon and binds the defendant in that action.

> “Thirdly. If the notice do not thus appear on the record, the question of conclusiveness of the judgment will depend upon the belief of the jury as to the reception of the notice.

> “Fourthly. If the record of the adverse suit does not exhibit on its face the title under which the recovery was had, the plaintiff in the action on the covenant must, notwithstanding proper notice has been given, prove that such title did not accrue subsequently to the deed to himself.

> “Fifthly. If no notice has been given, the record of such adverse suit is not even prima, facie evidence that the title was a paramount one, though it may under some circumstances be evidence of eviction; and

> “Sixthly. It is not indispensable to the recovery on the covenant that notice of the adverse suit shall have been in any way given.”

This Court, in Martin v. Cowles, 19 N. C., 101, approved in Wilder v. Ireland, 53 N. C., 85, held that a judgment in ejectment against the vendee is no evidence of a defect in the title of the vendorj when the latter is sued upon his covenant by the former, and Chief Justice Pearson says, in Wilder v. Ireland, that such is the settled law of this State. See Miller v. Pitts, 152 N. C., 629.

We need not attempt to reconcile the conflicting authorities, for it is enough for us to decide in this case, as we do, that the *67notice given to the defendants as to the pendency of the Watlington suit was sufficient in law. to charge them with all the costs and reasonable attorney’s fee in assessing the damages. We have referred to the foregoing rules for the purpose of showing what should be substantially the form of the notice, as it is said that the right to recover costs and counsel fees depends upon tbe character of tbe notice given by tbe covenantee to tbe covenantor of tbe suit in ejectment against him. After reviewing tbe authorities, tbe following conclusion was reached by Mr. Eawle and stated in his work on Covenants for Title (5 Ed.), sec. 201, p. 290: “A consideration of these rather conflicting cases would seem to suggest, as a rule to be deduced from them, that tbe plaintiff’s right to recover counsel fees as part of bis costs should, in general, be limited to eases where be has properly notified tbe party bound by tbe covenant to come in and defend tbe title, but that tbe neglect or silence of tbe latter should inure to tbe benefit of tbe plaintiff rather than to bis own.” Chesnut v. Tyson, 105 Ala., 163; Wiggins v. Pender, 132 N. C., 628; Chrisfield v. Storr, 36 Md., 129; Somers v. Schmidt, 24 Wis., 417 (1 Am. Rep., 191).

Tbe notice given by tbe plaintiffs to tbe defendants of tbe other suit, while there was no express “tender of tbe defense,” as it is called, was quite sufficient to wárn tbe defendant that be was expected to assist in tbe defense of tbe suit, nor does it show that tbe plaintiff intended to exclude tbe defendants from participation therein. Why notify tbe defendants at all, if they did not expect them to comply with their covenant and defend tbe title, which they bad expressly promised to do? Tbe notice clearly implied that tbe plaintiffs in this suit looked to tbe defendants to protect them in tbe other suit by,defending tbe same and making good their assertion of title to tbe land. It is not required that tbe notice shall be in any particular form or in writing, if it sufficiently, though only substantially, informs tbe warrantor that bis covenantee has been sued and bis title has been assailed, and tbe former has tbe opportunity to defend bis title against attack and to save himself from liability' upon bis warranty. Tbe true doctrine is stated in Carroll v. Nodine, 41 Oregon, 412, as follows: “But before an indemnitor *68can be expected to defend, be must have reasonable notice of tbe pendency of tbe suit or action by wbicb be is to be bound, and afforded an opportunity to participate in or interpose sucb defense as be may desire; and it is only by complying witb sucb conditions tbat tbe party to be indemnified can estop tbe indemnitor to controvert tbe matter anew upon an action against bim upon tbe indemnity contract or obligation. Of course, tbe suit or action tbat works tbe estoppel must bave been prosecuted without collusion or fraud, as it affects tbe indemnitor. While notice of tbe pendency of tbe suit or action is always necessary to render tbe decree or judgment binding upon tbe indemnitor, tbe better reason and tbe weight of authority dispense witb any request to take charge of or assume tbe responsibilities of tbe defense. Having notice, tbe indemnitor may, as is bis right, interpose and make sucb defense as to him might seem most expedient and effective; and, if be did nothing in tbat direction, it must be considered a matter of bis own volition, and a request for bim, coupled witb a warning of consequences, to do tbat wbicb duty and interest require bim to do, would seem superfluous, and tbe law, wbicb is founded upon reason, does not require a vain thing.” If tbe covenantor fails to appear and defend, the covenantee must, of course, be required to conduct tbe defense in good faith and witb reasonable diligence. The judgment must not have been recovered against bim by reason of any neglect or default on bis part.

We think tbe notice given by tbe plaintiff wras equivalent, in law, to a notice to defend, as a request to do so is fairly to be implied. When tbe plaintiffs stated tbat they would defend tbe suit, it was not meant tbat tbe defendants should not bave full opportunity to do so, if they desired; but the contrary is the reasonable implication. It is more just to say tbat they intended to inform tbe defendants tbat if they did not defend, tbe plaintiffs would defend for them, and not merely for themselves. This accords witb what was said in Wiggins v. Pender, supra, as we bold that the notice is substantially one which “tenders the defense.”

Tbe object of notice is to give tbe covenantor an opportunity *69to defend bis title in bis own way and witb bis own counsel, and to settle tbe case and pay tbe damages by yielding to tbe superior title, if bis is found to be wanting, and thereby save unnecessary costs and expenses.

We do not think this decision necessarily conflicts with Martin v. Cowles, supra, and Wilder v. Ireland, supra. Each of them was decided upon the question whether the judgment in the ejectment suit was conclusive as to the title, under the system of pleading, practice, and procedure prevailing at common law, when the ejectment suit was regarded witb respect to tbe covenantor as res inter alios acta, and be could not, for that reason, become a party to it. Tbe great weight of authority in England and tbis country is to tbe effeet that it is sufficient to conclude him by tbe judgment that be is made constructively a party by substantial notice to come in and defend bis title, and that it is not necessary that be be actually a party to tbe suit. In Martin v. Cowles, 19 N. C., at p. 102, Judge Gaston says that tbe record in tbe ejectment suit is, as to tbe covenantor, “evidence of tbe fact of tbe judgment (rem ipsato), and of tbe damages and costs'recovered” — implying, we tbink, that tbe cove-nantee in tbe action upon tbe covenant is only required to show that tbe title of tbe plaintiff, who recovered against him, .was paramount, and if be does so, be is entitled to recover tbe damages be paid in tbe other suit and tbe costs taxed, and, we add, reasonable counsel fees, as part of bis legitimate expenses.

Tbe covenantor agreed by bis warranty to defend tbe suit, and if be failed to do so, there is no reason why, if properly notified of tbe suit, be should not pay tbe covenantee what be would have paid himself if be bad complied witb bis promise and defended bis title. Where there is a breach of duty, whether that duty be imposed by contract or by tbe law, tbe party who commits tbe breach should be required to repair the loss caused thereby and which naturally flows from tbe breach in the case of tort (Johnson v. R. R., 140 N. C., 574), and such loss in tbe case of contract as was within tbe reasonable contemplation of tbe parties. (Williams v. Tel. Co., 136 N. C., 82.) If tbe covenantee is required by tbe inaction of his cove-nantor to defend tbe ejectment suit, it will be admitted, we *70think, 'that it must bave been witbin tbe reasonable expectation of tbe parties that counsel would have to be paid by him, as tbey are ordinarily and generally retained in sueb cases. It seems to be implied in Gastonia v. Engineering Co., 131 N. C., 363, that counsel fees would bave been allowed in that case if tbe suit against tbe town bad been covered by tbe indemnity bond. Tbe fees must be reasonable, and because tbe court instructed tbe jury that tbe plaintiffs were entitled to recover 1be fees tbey actually paid to counsel, without regard to tbeir reasonableness, there was error, as this was not tbe proper rule, and for this error there must be a new trial as to tbe third issue. There was no objection to tbe amount of tbe damages assessed under tbe fourth issue, and there was no question properly raised as to tbe title, and tbe jury bave found as a fact that tbe three acres were conveyed by tbe Balsley deed, and, therefore, covered by tbe warranty. Nor was there any controversy as to tbe ouster under tbe judgment in tbe Watlington suit. Tbe plaintiff is entitled to recover tbe costs taxed in that case. Tbe only error was as to counsel fees; but as tbey are blended with tbe costs in tbe third issue, that issue must be tried anew. Rowe v. Lumber Co., 133 N. C., 433.

Before taking leave of the case, we should say that the text-writers state that the rule, as declared in Martin v. Cowles, supra, and approved in Wilder v. Ireland, supra, as to the effect of a judgment, in an ejectment suit against the covenantor, as proof of title in an action on the covenant, has been adopted in this State only. In Rawle on Covenants for Title (5 Ed.), p. 153, note 1, it is said that, “In North Carolina alone (unless tbe decisions are based upon some local usage, for tbe common law has in none of our States been more clearly understood or expounded) does a contrary opinion seem to prevail,” and that it is contrary to tbe rule accepted by all other courts and tbe text-writers.

As counsel fees paid in tbe ejectment suit were fairly witbin tbe contemplation of tbe parties as a part of the damages which tbe plaintiffs would sustain by tbe breach of tbe covenant, we think tbey are covered by tbe prayer of tbe complaint without any more special reference to them. It was as probable that *71tbe plaintiffs would bave to pay couns^ fees in tbat case as it was tbat tbey would be compelled to pay costs and damages.

There must be a new trial as to tbe third issue.

New trial.