Chicago Title Insurance Co. v. Cochran Investments, Inc. (Opinion)Annotate this Case
In this real estate dispute, the Supreme Court held that where the plain language of a special warranty deed limited the grantor's liability for failures of title to claims asserted by individuals "by, through and under" the grantor, the grantor could not be liable for breach of the covenant of seisin because the plaintiff asserted no such claim.
The grantor of property, who purchased the property at a foreclosure sale, and the grantee entered into a residential sales contract, and the grantor conveyed the property by special warranty deed to the grantee. The grantee obtained title insurance from an insurer. When the validity of the foreclosure sale was challenged, the insurer assumed the grantee's defense and settled the suit. As the grantee's subrogee, the insurer sued the grantor for breach of the sales contract and breach of the implied covenant of seisin. The trial court found in favor of the insurer. The court of appeals reversed. The Supreme Court held (1) the special warranty deed barred the insurer's recovery because, regardless of whether it implied the covenant of seisin, the deed limited the grantor's liability for failures of title to claims asserted by individuals "by, through and under" the grantor; (2) because the failure of title did not arise from such a claim, the grantor was not liable for it; and (3) the merger doctrine barred the insurer's breach of contract claim.