St. Paul Title Ins. Corp. v. Owen - 452 So. 2d 482 (Ala. 1984)

Rule:

The words "grant, bargain, sell' do not import an absolute general covenant of seizin against incumbrances and for quiet enjoyment, but they amount to a covenant only against acts that are done or suffered by the grantor and his heirs. The covenants that are implied by statute are limited to the acts of the grantor and those claiming under him, and do not extend to defects of title anterior to the conveyance to him. 

Facts:

On February 18, 1976, Albert M. Owen, an unmarried man, executed a warranty deed purporting to convey certain real property in Baldwin County to his brother and sister-in-law, James R. Owen, Jr., and Cheryl C. Owen. The deed contained the following covenants of title: a covenant of seizin; a covenant of right to convey; a covenant for quiet enjoyment; a covenant against encumbrances; and a covenant of warranty. Subsequently, James and Cheryl Owen conveyed the Baldwin County property, purportedly conveyed to them, by statutory warranty deed to Dennis C. Carlisle Jr., the brother of Cheryl Owen. The property was conveyed June 6, 1976, and the deed recorded in Baldwin County on July 14, 1976. On June 10, 1976, Dennis Carlisle mortgaged the property to United Companies Mortgage and Investment of Mobile #2, Inc., for $17,159.52. This mortgage was recorded on July 14, 1976, in both Mobile and Baldwin counties. Dennis Carlisle mortgaged the property to GECC Financial Services (GECC) for $17,671.29, on November 8, 1977, apparently substituting mortgages and paying off the original mortgage. The mortgage to GECC was recorded in Baldwin County and a policy of title insurance naming GECC as the insured was issued shortly thereafter by Eastern Shore Title Insurance Corp., of Daphne, the agent for St. Paul Title Insurance Corp. (St. Paul Title). The title insurance was issued at the request of Dennis Carlisle. When Dennis Carlisle subsequently defaulted on his mortgage payments, GECC attempted to foreclose on the property. The Circuit Court of Baldwin County found, however, that because Dennis Carlisle held no right, title, or interest in or to any of the property on the day the mortgage was executed, GECC was not entitled to foreclose on the property. GECC then brought suit against St. Paul Title, to collect its debt, and in addition the costs of litigation involved, all as provided for under the terms of the title insurance policy. St. Paul Title, as subrogee of GECC, then filed a complaint against Albert Owen, James R. Owen, Jr., and Cheryl Owen, wherein St. Paul alleged that they had breached the covenants of title contained in the deeds executed and delivered by them. The trial court, after a non-jury trial, entered a judgment on behalf of the defendants. 

Issue:

Are James and Cheryl Owen liable for a breach of the implied covenant of quiet enjoyment contained in the statutory warranty deed?

Answer:

No.

Conclusion:

The deed executed by James and Cheryl Owen contained no express covenants of title, but it did use the words, "grant, bargain, sell and convey." James and Cheryl Owen conveyed their complete, albeit nonexistent interest, in the subject property to Dennis Carlisle by statutory warranty deed. By so doing, they merely warranted that they had not conveyed title to anyone else; that they had not allowed the property to become encumbered while they held purported title; and that they had not caused or suffered anyone to do anything that would interfere with the property's quiet enjoyment by the grantee, the grantee's heirs or assigns. Because the record indicates that James and Cheryl did nothing to affect the purported title they conveyed, they did not breach any of the covenants of title contained in the statutory warranty deed delivered to Dennis Carlisle and are therefore not liable to St. Paul, as subrogee of GECC.