St. Paul Title Ins. Corp. v. Owen
452 So.2d 482 (1984)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Covenants of quiet enjoyment and warranty in a general warranty deed run with the land, allowing a remote grantee to sue the original grantor for a breach. However, covenants implied in a statutory warranty deed only warrant against acts of the immediate grantor, not against pre-existing defects in title.
Facts:
- Albert M. Owen executed a general warranty deed for a parcel of property to his brother and sister-in-law, James R. Owen, Jr., and Cheryl C. Owen.
- Subsequently, James and Cheryl Owen conveyed the same property to Dennis C. Carlisle Jr. using a statutory warranty deed.
- Neither Albert Owen nor James and Cheryl Owen received any monetary consideration for their respective conveyances.
- Dennis Carlisle obtained a mortgage on the property from GECC Financial Services (GECC).
- St. Paul Title Insurance Corp. (St. Paul Title) issued a title insurance policy to GECC, insuring the title to the property.
- Carlisle later defaulted on the mortgage payments.
- During subsequent foreclosure proceedings, it was determined that Carlisle, and therefore the Owens before him, never held any legal right, title, or interest in the property.
Procedural Posture:
- GECC Financial Services attempted to foreclose on the property mortgaged by Dennis Carlisle in the Circuit Court of Baldwin County.
- The circuit court denied the foreclosure, finding that Carlisle held no right, title, or interest in the property.
- GECC made a claim on its title insurance policy and was paid by St. Paul Title Insurance Corp.
- St. Paul Title, as subrogee of GECC, filed a complaint in an Alabama trial court against Albert Owen, James Owen, and Cheryl Owen for breach of covenants of title.
- The trial court entered a judgment in favor of the defendants.
- St. Paul Title appealed the trial court's judgment to the Supreme Court of Alabama.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Are grantors who conveyed property they did not own liable to a remote grantee's subrogee for breach of title covenants contained in a general warranty deed and a statutory warranty deed?
Opinions:
Majority - Maddox, Justice
Yes, as to the original grantor under the general warranty deed, but no, as to the intermediate grantors under the statutory warranty deed. The covenants of quiet enjoyment and warranty in Albert Owen's general warranty deed run with the land to future owners. A breach occurred when a court found the ultimate grantee, Carlisle, had no title, which constitutes a constructive eviction. Therefore, St. Paul Title, as the subrogee of the ultimate grantee's mortgagee (GECC), can sue the original grantor, Albert Owen. However, the covenants in the statutory warranty deed from James and Cheryl Owen are limited by statute to warranting only against title defects created or 'suffered' by them. Because the total failure of title existed before their involvement, they did not breach their limited statutory covenants and are not liable. Furthermore, because Albert Owen received no consideration for his conveyance, damages for his breach are limited to a nominal amount.
Analysis:
This case clarifies the significant distinction between the scope of liability under a general warranty deed versus a statutory warranty deed in Alabama. It reinforces that certain express covenants, like quiet enjoyment and warranty, are future covenants that run with the land, exposing original grantors to liability from remote grantees. However, the decision crucially limits the financial exposure of grantors in non-sale transactions, establishing that damages for breach of warranty are tied to the consideration received by the grantor. This prevents a remote grantee from recovering a large sum, such as a mortgage amount, from a grantor who conveyed the property as a gift and received no financial benefit.
