Brief Fact Summary. In this opinion, the Georgia Supreme Court discusses the measure of damages for breach of a covenant of warranty in a deed. The estate of Harris, deceased, was partially insolvent and the administrator brought a bill in equity, seeking directions for the payment of debts. Among the debts was a claim by the heirs of Laney, deceased, for breach of a covenant of warranty in a deed by Harris to Laney.
Synopsis of Rule of Law. The majority rule in this country is that the vendee is allowed to recover the purchase money with interest from the time of the purchase.
Issue. What is the proper measure of damages for a breach of a covenant of warranty in a deed?
Held. At common law, the measure of recovery was the value of land at the time the warranty was made.
The Court noted that there was a split of authority on the question of measure of damages and that there were three basic rules.
Some courts have held that the vendee is entitled to recover the value of the land, at the time of eviction, including its natural appreciation of course and no more than its value then, if it has depreciated.
Other courts have held that the vendee is entitled to recover the value of the land at the time of eviction, including the improvements, which may have been put upon it.
The majority rule in this country, however, is that the vendee is allowed to recover the purchase money with interest from the time of the purchase. The Court approved of this rule as being the majority rule and the rule in England. The rule is simple and easy to prove and has the advantage of being a measure which the parties always set for themselves.
The Court noted that the vendee has a personal interest in the security of his title. The Court found that the vendee estimates the value of the title in the sum he agrees to pay for the property. The vendee makes, by his contract, the purchase money the measure of the value of the title, and takes security in that amount. Thus, the purchase price is the proper measure of loss from the security interest.
Discussion. The Court noted in its decision that there could be extreme cases where this rule would have a harsh result. Such an example is where the vendee has undertaken to make improvements on the land and is evicted by a paramount title holder. The recovery is limited to the purchase price of the land under the contract, along with interest.