Opinion ID: 2602159
Heading Depth: 4
Heading Rank: 1

Heading: Covenant of Seisin and Covenant of Right to Convey

Text: ¶ 34 Initially, we address whether the trial court properly granted summary judgment to Cook Development [5] regarding Holmes's claim that Cook Development breached the covenants of seisin and right to convey. In making the covenant of seisin, a grantor warrants that the grantor is seized of the estate the deed purports to convey, both in quantity and quality. Utah Code Ann. § 57-1-12 (2000) (providing that grantor covenants he is lawfully seised of the premises); see also Bosnick v. Hill, 292 Ark. 505, 731 S.W.2d 204, 206 (1987); Brown v. Lober, 75 Ill.2d 547, 27 Ill.Dec. 780, 389 N.E.2d 1188, 1190-91 (1979); Maxwell v. Redd, 209 Kan. 264, 496 P.2d 1320, 1324 (1972); Seymour v. Evans, 608 So.2d 1141, 1144 (Miss. 1992); Ives v. Real Venture, Inc., 97 N.C.App. 391, 388 S.E.2d 573, 578 (1990); Double L. Props., Inc. v. Crandall, 51 Wash. App. 149, 751 P.2d 1208, 1210-11 (1988). Similarly, in making the covenant of the right to convey, a grantor guarantees that the grantor has the legal right to convey the estate the deed purports to convey. Utah Code Ann. § 57-1-12 (providing that grantor covenants he has good right to convey premises); see also Brown, 27 Ill.Dec. 780, 389 N.E.2d at 1190-91; Seymour, 608 So.2d at 1144. Essentially, the covenants of seisin and the right to convey are synonymous, and the analysis of whether a grantor breached one of these covenants is the same for either covenant. Creason v. Peterson, 24 Utah 2d 305, 307, 470 P.2d 403, 404 (1970). ¶ 35 Hence, the covenants of seisin and right to convey, if found in a warranty deed, attest that the grantor covenants that it has good title to the estate purportedly conveyed. See id. Consequently, the grantor breaches these covenants when it is shown that the grantor did not own the land that he purported to convey by the warranty deed description. Id.; see also Butler, Crockett & Walsh Dev. Corp. v. Pinecrest Pipeline Operating Co., 909 P.2d 225, 233 (Utah 1995). Once evidence is adduced showing the grantor does not own what the grantor purports to convey, in violation of these covenants of title, there is no need to show an actual eviction or threat thereof. Creason, 24 Utah 2d at 307, 470 P.2d at 404. ¶ 36 These covenants speak only to the circumstances at the moment a grantor delivers a deed and are thus defined as present covenants. 20 Am.Jur.2d Covenants, Conditions and Restrictions § 71 (1995) [hereinafter 20 Am.Jur.2d Covenants ]; see also Creason, 24 Utah 2d at 307, 470 P.2d at 404 (stating that no need to await actual eviction or threat thereof to sue for breach of covenants of seisin and right to convey). Thus, a grantor breaches these covenants, if at all, when the deed is delivered. See Soderberg v. Holt, 86 Utah 485, 493, 46 P.2d 428, 431 (1935); see also Bernklau v. Stevens, 150 Colo. 187, 371 P.2d 765, 769 (1962); Brown, 27 Ill.Dec. 780, 389 N.E.2d at 1191; Double L. Props., 751 P.2d at 1210-11; 20 Am.Jur.2d Covenants § 71. ¶ 37 In this case, Cook Development breached the covenants of seisin and right to convey because it did not own the 323-acre parcel when Cook Development delivered the warranty deed to Holmes. The quitclaim deed conveying the property to Cook Development from LC Farms failed because it erroneously identified LC Associates as the grantor. Cook Development breached these two covenants regardless of whether that breach was subsequently cured by First American's defense of Holmes in the Keystone litigation because the breach occurred when the deed was delivered.
¶ 38 Although Cook Development breached the covenants of seisin and right to convey, summary judgment was nevertheless appropriate in the instant case because the damages were nominal. The usual measure of damages for breach of covenant ... is compensation for actual loss suffered by reason of the breach. 20 Am.Jur.2d Covenants § 45 (1995). Generally, the measure of damages for breach of the covenants of seisin and right to convey, predicated upon a complete failure of title, is the consideration paid to purchase the property, plus applicable interest and any attorney fees incurred to establish title in the grantee pursuant to the deed. See, e.g., Koelker v. Turnbull, 127 Idaho 262, 899 P.2d 972, 976 (1995); Ralston v. Thacker, 932 S.W.2d 384, 388 (Ky.Ct.App.1996); Reese v. Smith, 12 Mo. 344, 347-48 (1849); Meyer v. Thompson, 183 N.C. 543, 112 S.E. 328, 329 (1922); Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex.1987); Schorsch v. Blader, 209 Wis.2d 401, 563 N.W.2d 538, 540 (Ct.App.1997); see also 20 Am.Jur.2d Covenants § 123. The consideration paid is the proper measure of damages at the moment of delivery because the grantee has paid his money, yet did not receive the property. Reese, 12 Mo. at 347-48. ¶ 39 However, a covenantee can recover only damages that are occasioned by the breach of these covenants. See Creason, 24 Utah 2d at 307, 470 P.2d at 404; Pac. Bond & Mortgage Co. v. Rohn, 101 Utah 335, 341, 121 P.2d 635, 637 (1942). For example, in Creason, we held that the damages recoverable for breach of the covenants of seisin and the right to convey were limited in that case. 24 Utah 2d at 307, 470 P.2d at 404. Specifically, we held that the plaintiff could recover only damages actually resulting from the breach, which included reasonable and necessary costs incurred to clear up any difficulty [that] would represent a substantial flaw in his title, such as reasonable attorney fees. Id. at 307-09, 470 P.2d at 404-05. ¶ 40 In the event that the grantor cures the breach by ensuring that title vests in the grantee in fee simple absolute before an action is initiated, then the grantee has not suffered actual damages as a result of the breach. In such a case, any recovery for breach of these covenants is limited to nominal damages for a mere technical breach. Bair v. Axiom Design, L.L.C., 2001 UT 20, ¶ 18, 20 P.3d 388; Thompson v. Anderson, 107 Utah 331, 336, 153 P.2d 665, 667 (1944); Pac. Bond & Mortgage Co., 101 Utah at 341, 121 P.2d at 637; see also, e.g., Perkins v. August, 109 Conn. 452, 146 A. 831, 833-34 (1929); 20 Am.Jur.2d Covenants § 148. ¶ 41 In Perkins, the defendant breached the covenants of seisin and good right to convey because another owned an interest in the land purportedly conveyed when the defendant deeded the property to the plaintiffs. 146 A. at 833. Nevertheless, the court determined that the most [the plaintiffs] could claim would be nominal damages because the breach was cured when the unowned interest was conveyed to the plaintiffs at their request and without cost to them before the action was brought. Id. The court reasoned that in effect all technical difficulties [were] healed and the plaintiffs have received in fact just what they purchased. Id. ¶ 42 Similarly, in this case, Holmes's recovery is limited to nominal damages. Although Cook Development technically breached the covenants of seisin and right to convey, Cook Development cured the breach by having LC Farms convey the property directly to Holmes by the special warranty deed on September 3, 1998. Additionally, First American defended Holmes in the Keystone litigation pursuant to the title insurance policy Cook Development purchased for Holmes. In the Keystone litigation, First American established that the title to the 323-acre parcel vested in Holmes under the special warranty deed. ¶ 43 Thus, at most, Cook Development technically breached the two covenants. Holmes never incurred actual damages, however, because the breach of the covenants was cured. Indeed, Holmes conceded at oral argument that there were no damages before September 3, 1998, when LC Farms delivered the special warranty deed to Holmes. Further, Holmes can still sell the lots, which may have appreciated in value, and profit therefrom although Holmes claims that it was damaged in lost profits. Therefore, Holmes's recovery is limited to nominal damages. However, we will not remand because we generally do not remand if the damages are only nominal. Globe Leasing Corp. v. Bank of Salt Lake, 586 P.2d 420, 422 (Utah 1978); see also Perkins, 146 A. at 833-34; Castor v. Dufur, 133 Iowa 535, 11 N.W. 43, 46 (Iowa 1907). Thus, we affirm the trial court's order granting Cook and Cook Development summary judgment.