A bill to foreclose a mortgage on a lot of land in Mississippi was filed by the administrator of the assignee of the mortgage, in the superior court of chancery in that State. The complainant obtained a decree of foreclosure, and the respondent appealed to the high court of errors and appeals, where the decree of the superior court of chancery was affirmed. The appellant then prosecuted the writ of error, which brings the case before this court.
The case was, shortly, this: The appellant was one of two mortgagors. When the mortgage was executed, and land was encumbered by a lien from a judgment previously recovered against the mortgagors.
After executing the mortgage the appellant became a bankrupt, under the act of congress of August 19, 1841, 5 Stats. at Large, 440, and received his discharge. The land was exposed to sale to satisfy the judgment lien, and the appellant, after his discharge, purchased it. The court of appeals of Mississippi decided:--
1. That though the deed of mortgage contained no express covenant of warranty, the words 'grant, bargain and sell,' which were in the deed, under the law of that State, imported covenants of warranty of title, and against encumbrances, and for quiet enjoyment, as effectually as though such covenants had been expressly set out in the deed.
2. That, under the law of Mississippi, if there had been no discharge in bankruptcy, the appellant would be estopped by his covenants from setting up his after-acquired title to defeat the mortgage.
3. That the discharge in bankruptcy did not enable him to do so.
This last position is the only re examinable here; the decision by the state court, of all matters depending exclusively upon the law of the State, being conclusive, on a writ of error, under the 25th section of the judiciary act of 1789.
The question for our consideration is, what effect the discharge of a bankrupt has upon estoppels, arising by law from covenants of warranty contained in his deeds of conveyance of land.
To determine this, it is necessary to have in view the different modes of operation of such covenants. They are contracts, and an action lies for recovery of the damages sustained by their breach. At law, they run with the land; and if the covenantor subsequently acquire an outstanding paramount title, it enures by force of the covenant to him who claims under the deed of the covenantor. This rule is now established in the law of this country, and has been affirmed in numerous decisions in this and other courts. Many of them may be found collected in a note to 2 Smith's Leading Cases, 545, &c.
In equity, the covenantor is treated as estopped by his covenant to assert that any outstanding title existed inconsistent with what he undertook to sell and convey.
The argument on the part of the appellant is, that, under the 4th section of the bankrupt act, he was discharged from all debts, contracts, and other engagements provable under the act; that not only the debt secured by this mortgage, but the covenant of warranty itself, was provable under the act. And, consequently, the covenantor, being released from the covenant, it could no longer have the operation allowed to it by the courts of Mississippi.
It must be admitted, that if the covenantee or his assignee had released the covenant, it would be difficult to maintain that it could continue in existence for any purpose. But it must be considered, that whatever discharge has taken place in this case, is by force of a statute, which may have so qualified and limited its effect as still to leave the covenant in existence for one purpose, though not for others; and that the question, whether it has done so, can be determined only by examining the act, and ascertaining the will of the legislature in this particular.
The second section of the act contains that proviso: 'That nothing in this act contained shall be construed to annul, destroy, or impair any lawful rights of married women, or minors, or any liens, mortgages, or other securities on property, real or personal, which may be valid by the laws of the States respectively, and which are not inconsistent with the provisions of the second and fifth sections of this act.' There does not appear to have been anything in this mortgage inconsistent with those sections; and it is not denied that the mortgage itself, considered simply as a conveyance of the land, remained unaffected by the act.