Opinion ID: 1144948
Heading Depth: 1
Heading Rank: 2

Heading: Covenant Survived Delivery of Deed

Text: The present action is neither one to secure specific performance of nor to rescind an executory contract. The question is, then, what happens to the covenant to deliver abstract or title policy after the deed has been executed and delivered? The majority have concluded that once the deed was executed the provisions of the purchase agreement merged into the deed, and the contract covenant to provide title insurance is no longer operable. I disagree. The significance of a failure to provide a title insurance policy after the deed has been executed has been before the supreme courts of New Mexico and Idaho. Both states have held that the covenant has not merged with the deed and that the remedy is a suit at law for damages for breach of covenants. In Chavez v. Gomez, 77 N.M. 341, 423 P.2d 31, 33 (1967), it is said: Generally speaking, provisions in an executory contract to convey are performed when the conveyance is made. Contract provisions as to title, possession, quantities or emblements of the land are, again generally speaking, conclusively presumed to be merged in a subsequently delivered and accepted deed.     Where the contract provisions are not performed by delivery and acceptance of the deed, there is no merger. Such provisions are collateral to and independent of the deed. Norman v. Turley, supra [24 N.M. 526, 174 P. 999].       The provision for furnishing either abstract of title or title insurance was collateral to and independent of the deed. The doctrine of merger by deed does not apply. (Emphasis added.) In Jolley v. Idaho Securities Inc., 90 Idaho 373, 414 P.2d 879, reh. denied (1966), the parties had contracted to exchange real properties. One of the provisions in the agreement was that each party would furnish to the other abstract of title as to the property to be conveyed, showing good and marketable title free and clear of all encumbrances except those recited in the agreement. Such an abstract had not been furnished by the corporation to the Jolleys, but the deeds had been executed and delivered. The Jolleys later made substantial objections to the transaction and attempted to secure a rescission of the whole deal. The Idaho Supreme Court considers the authorities at some length, including its previous decision in Christiansen v. Intermountain Ass'n of Credit Men, 46 Idaho 394, 267 P. 1074 (1928). Based upon its analysis of the previous cases, particularly Christiansen, the court concluded that ... the agreement to furnish the abstract was not merged by the Jolleys accepting the corporation deed and that as a prerequisite to furnishing such abstract, the corporation was required to furnish one showing the `Title of the transferror to be good and marketable and free and clear of all encumbrances except those set forth herein.' 414 P.2d at 886.