holders in accordance with their priority; so that if the second mortgagee should recover damages for injury to or loss of the property the court would require him first to consider the interest of the first mortgagee before applying the fund in payment of his own mortgage. He would hold the funds thus secured, as trustee for all persons having prior liens, and could secure no advantage over them by his action. 54 54 Fowler v. Gilman, 13 Met. 267; Jackson v. Turrell, 39 N. J. L. 329. CHAPTER XIV. BREACH OF WARRANTY. 97. Breach of warranty of chattel.-Warranty contracts are common, relating to sales of both real and personal property. In sales of chattels the warranty is made to apply to the quality as well as to the title. The rules governing the measure of damages for a breach of warranty of title and of quality are the same in principle. If the quality of the chattel is not as warranted plaintiff may recover as damages the difference between the value of the chattel with its defects, and its value if it had been as warranted. In Cary v. Gruman,55 action was begun for breach of warranty of soundness on the sale of a horse. Defendant contended that the measure of damages was the difference between the price paid for the horse and its value with the defects. But the court held that a warranty on the sale of a chattel is, in legal effect, a promise that the thing sold corresponds with the warranty in title, soundness, or other quality to which it relates, and refused to adopt the rule contended for by defendant. The difference between the horse with his defects and what he would have been worth if sound as warranted was said to be a better rule because it gives to the plaintiff the value of his bargain. This is the rule generally adopted by the courts. 55 4 Hill 625 (N. Y.). This rule was applied in Hoffman v. Chamberlain 56 to a breach of warranty of title. Plaintiff in that case, it was shown, had bought of defendant certain Baltimore heaters, together with other property. Title failed to three of the heaters and the question of the measure of damages was important, as there was no separate price fixed for the heaters. The rule adopted was that where there is a failure of title to a part of the property the measure of damages is the loss sustained by the plaintiff, which is the difference between the value of the property as conveyed and its value, had the title been as warranted. These cases present the rule on this subject which is most just to the parties to the warranty contract. 98. Difference between price and value of article. -But there are a few cases where courts have adopted a different measure of damages based upon the idea that if plaintiff is placed in as good condition after the breach of warranty as before, this should be satisfactory. This rule permits plaintiff to recover only the difference between the price paid for the article and its actual value. The value of the warranty that the chattel was in better condition than it in fact turned out to be, is overlooked, although this may have been the prime motive of plaintiff in securing such warranty. Thus it was held in Mining Co. v. Jones,57 that the legal measure of damages against defendant for having furnished plaintiff a grade of ore inferior to that 56 40 N. J. Eq. 663. 57 108 Pa. St. 55. mentioned in his contract of warranty was the difference between the contract price of the ore and what the ore as furnished was worth in the market. It is probable, however, that no court would now, in view of the overwhelming authority favoring the difference between the actual value and the value as warranted, adopt a different rule. There seems to be no valid reason why one who has entered into a contract of warranty that an article is of a certain quality should not have damages in case of breach of this contract for whatever loss he has sustained by the breach, which must necessarily equal the value of his contract, or what he would have gained if the property had been as warranted. This is the rule adopted generally by the courts, where one has been induced to purchase property of another upon his false representations of its value or quality or title. In Morse v. Hutchins,58 in an action for deceit where it was alleged that plaintiff had bought certain property of defendant based upon his false representations of its value, the court said: "It is now well settled that, in actions for deceit or breach of warranty, the measure of damages is the difference between the actual value of the property at the time of the purchase, and its value if the property had been what it was represented or warranted to be." The court held that to adopt the rule giving plaintiff only the difference between the price and the value of the property would be unfair to plaintiff and offer an inducement to defendant to break his warranty contract. 58 102 Mass. 439, LEADING ILLUSTRATIVE CASES. 99. Breach of warranty of title to land. There was formerly a decided division of opinion relating to the proper measure of damages on breach of warranty of title to land. It was strongly contended that plaintiff who had been compelled to yield possession under a superior title, held by a stranger, was entitled to recover the value of the land at the time of his eviction, however remote that might be from the date of his purchase. It was insisted, with much reason, that only in this way could he have the full benefit of his bargain, since he would not have lost the land had the title been as warranted. This theory was early adopted in the New England states, taken doubtless from the English rule on the subject which permits plaintiff to recover the full value of the land at the time of his eviction therefrom. Thus in Gore v. Brazier,59 where defendant was sued upon a breach of his covenant of warranty, the court held that plaintiff was entitled to damages equal to the estate at the time of eviction. Parson, C. J., in delivering the opinion said: "The court are of opinion, conformably to the principles of law applied to personal actions of covenant broken, to the ancient usages of the state, and to the decisions of our predecessors, supported by the practice of the legislature, that the plaintiff in this action ought to recover in damages the value of the estate at the time of the eviction." 100. A dangerous rule.-The danger in this rule was frequently emphasized and discussed by the courts. It was shown that one who had sold a city 59 3 Mass. 523, 3 Am. Dec. 182. |