Booker T. Washington Construction & Design Co. v. Huntington Urban Renewal Authority
383 S.E.2d 41, 1989 W. Va. LEXIS 111, 181 W. Va. 409 (1989)
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Rule of Law:
A covenant of general warranty in a deed is breached when the grantee is sued by a prospective purchaser for inability to convey marketable title due to a title defect, as this constitutes a constructive eviction that obligates the covenantor to defend the title.
Facts:
- The City of Huntington purchased property from the Mickens family but failed to acquire the interests of certain remaindermen under a will.
- The City sold this property to the Huntington Urban Renewal Authority (the 'Authority') for one dollar, conveying it with a general warranty deed that purported to transfer a fee simple title.
- The Authority entered into an agreement to sell the land to the Booker T. Washington Building Construction & Design Company ('Construction Company').
- The Construction Company built a residence on the property.
- A title search conducted for a prospective buyer of the new residence revealed that the Authority only possessed a life estate, not a fee simple title.
- Because of this title defect, the Construction Company was unable to sell the property to its prospective purchaser.
Procedural Posture:
- The Booker T. Washington Company sued the City of Huntington and the Huntington Urban Renewal Authority in the Circuit Court of Cabell County, the court of first instance.
- The City was dismissed as a defendant because it was not a party to the contract between the Authority and the plaintiff.
- The Authority filed a third-party complaint against the City, alleging breach of the general warranty covenant and seeking indemnification.
- While the suit was pending, the City filed a separate condemnation action and perfected fee simple title to the property.
- The City then moved for summary judgment on the Authority's third-party claim, which the circuit court granted, dismissing the City from the suit.
- The Authority (appellant) appealed the circuit court's grant of summary judgment in favor of the City (appellee) to the Supreme Court of Appeals of West Virginia.
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Issue:
Does a lawsuit filed against a grantee by a prospective purchaser for failure to convey marketable title, due to a defect in title traceable to the grantor, constitute a constructive eviction sufficient to breach the grantor's covenant of general warranty?
Opinions:
Majority - Neely, Justice
Yes. A covenant of general warranty is broken when a grantee under a fee simple, general warranty deed is sued by a purchaser for an inability to convey marketable title because the grantee only possesses a life estate. This situation constitutes a constructive eviction, obligating the covenantor to defend the title or be answerable in damages. The court's reasoning is that a general warranty is a future covenant, breached not at the time of conveyance but upon eviction or an 'equivalent disturbance.' In the modern era, the right to enjoy property necessarily includes the right to sell it. Therefore, a lawsuit that prevents the sale of the property due to a title defect creates a 'necessity that the title of the vendee be defended,' which is sufficient to trigger the grantor's obligations under the covenant. The court rejected the antiquated rule that would require a grantee to wait until the expiration of the life estate and an actual physical ouster to have a remedy.
Analysis:
This decision modernizes the common law concept of 'constructive eviction' in the context of general warranty deeds. By holding that a lawsuit preventing the conveyance of marketable title is an 'equivalent disturbance' to physical eviction, the court adapted a centuries-old doctrine to the realities of modern real estate transactions where alienability is a key component of property enjoyment. The case establishes that a grantee does not have to suffer an actual ouster to have a cause of action against the grantor for a title defect. It also carefully distinguishes the damages available for a breach of warranty (value of the lost interest and costs of defending title) from consequential damages arising from a separate contract (like lost profits), which are not recoverable from the original covenantor.
