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Peugh (P) borrowed money from Davis (D) in the sum of $2,000 payable in sixty days with interest at the rate of 3.75% per month and with security consisting of two squares of land in the city of Washington. The deed was absolute in form purporting to be made upon the sale of the property for the consideration of $2,000, and it also contained a special covenant against acts of the grantor and parties claiming under him. The loan was paid at maturity, and the deed was returned to the grantor. P then borrowed more money from D ($1,500 payable in 60 days) with the same terms. The interest was paid, but not the principal and D placed the deed on record on the 7th of that month. In January 1858, a party claiming the squares under a tax title brought suits of ejectment for their recovery. D demanded payment of his loan but without success. On February 9th P got another $500 and executed a deed to P, which recited that he had previously sold and conveyed to D the squares in question. D also gave a receipt for $2,000 purporting to be in full for the purchase of the land. The instrument also recited that the sale was made with assurance and promise of a good and indefeasible title in fee simple and that the title was not disputed. There was also a general covenant warranting the title against all parties, and a special covenant to pay and refund to D the costs and expenses, including the consideration of the deed, to which he might be subjected by reason of any claim or litigation on account of the premises.

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