ATTORNEY FOR APPELLANTS
ATTORNEY FOR APPELLEES
BRUCE AND DEBORAH OUTCALT
: JOHN C. AND JANET B. WARDLAW:
PHILIP A. SALLEE JOHN B. WILSON, JR.
Bloomington, Indiana Nashville, Indiana
ATTORNEY FOR APPELLEE
WILLIAM J. BEGGS
Bunger & Robertson
COURT OF APPEALS OF INDIANA
BRUCE OUTCALT and )
DEBORAH OUTCALT, )
Original Defendants and )
Third Party Plaintiffs below, )
vs. ) No. 60A01-0007-CV-224
JOHN C. WARDLAW and )
JANET B. WARDLAW, )
Third Party Defendants Below and )
Third Party Plaintiffs, )
FRANCES HARRIS, )
Third Party Defendant Below, )
BEULAH HARRIS and GARY HARRIS, )
Nominal Appellees, )
Original Plaintiffs Below. )
APPEAL FROM THE OWEN CIRCUIT COURT
The Honorable Richard J. McIntyre, Special Judge
Cause No. 60C01-9210-CP-136
June 22, 2001
OPINION - FOR PUBLICATION
Appellants, Bruce and Deborah Outcalt, challenge the trial courts entry of summary judgment
in favor of Appellees, John and Janet Wardlaw and Frances Harris. The
Outcalts present one issue for our review, which we restate as whether the
trial court erred in determining that the grantor of a warranty deed cannot
be liable for expenses the grantee incurred in successfully defending the warranted title.
The relevant facts are not in dispute. Beulah Harris owned a farm
in Owen County (the Harris property), which is now owned by her son
Gary. Bruce and Deborah Outcalt are the current owners of a tract
of land (the Outcalt property) adjacent to and immediately west of the Harris
property. The Outcalts purchased their property from John and Janet Wardlaw by
warranty deed on June 4, 1990. The Wardlaws had purchased the property
from Fred and Frances Harris
See footnote by warranty deed on January 25, 1989.
The eastern portion of the Outcalt property adjacent to the Harris property contained
an old fence. At the direction of Gary Harris, Mike Mundy surveyed
property. Mundys survey revealed that, according to the deed, the boundary line
between the Harris property and the Outcalt property varied from thirty to forty
feet east of the fence. In 1992, Beulah and Gary Harris filed
suit to quiet title to this disputed strip of land, claiming paramount title
by adverse possession. The Outcalts subsequently joined the Wardlaws as third party
defendants, claiming that the Wardlaws were required to appear and defend the Outcalts
title. The Wardlaws, on the same grounds, joined Frances Harris as a
third party defendant.
The trial court, reserving the issue of allocating the Outcalts defense costs, quieted
title to the disputed strip of land to the Outcalts. This judgment
was upheld by this court in the memorandum decision
Harris v. Outcalt, No.
60A01-9902-CV-62 (October 20, 1999). Thereafter, on March 9, 2000, the trial court
granted the Wardlaws motion for summary judgment on the issue of the Outcalts
expenses in favor of the Wardlaws and Frances Harris.
Summary judgment is appropriate only where the designated evidentiary material demonstrates that there
is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law. Ind.Trial Rule
56(C); Jones v. Western Reserve Group/Lightning Rod Mut. Ins. Co., 699 N.E.2d
711, 713 (Ind. Ct. App. 1998), rehg denied, trans. denied. Upon appeal,
we apply the same standard as the trial court, resolving disputed facts or
inferences in favor of the non-moving party. Id. at 713. It
is the moving partys burden to establish, prima facie, that no genuine issues
of material fact exist and that he or she is entitled to judgment
as a matter of law. Chance v. State Auto Ins. Cos., 684
N.E.2d 569, 570 (Ind. Ct. App. 1997), trans. denied. Only then does
the burden fall upon the non-moving party to set forth specific facts demonstrating
a genuine issue for trial. Id.
Here, the Outcalts do not claim that there was a genuine issue as
to any material fact. Instead, the Outcalts claim that the trial court
erred in determining as a matter of law that they were not entitled
to recover any expenses incurred in defending their title.
In support of their claim that the Wardlaws were required to reimburse them
for the costs of defending their title, the Outcalts rely upon Ind.Code §
32-1-2-12 (Burns Code Ed. Repl. 1995). Section 12 provides, among other things,
that the grantor of a warranty deed will warrant and defend the title
to the same against all lawful claims. Id. This is known
as the covenant of warranty. See Jesse Dukeminier & James E. Krier,
Property 735-36 (1981).
In Worley v. Hineman, 6 Ind.App. 240, 33 N.E. 260, 264 (1893), this
court held that the necessary expenses for defending ones title are properly allowed
when it is shown that the covenantor had notice of the suit, or,
which is the same thing, himself defended the action in the name of
the grantee defendant. In Worley, the grantee/plaintiffs had paid approximately $2400 to
subsequent grantees to cover the costs of redeeming a mortgage on the property
which the grantor/defendant had failed to pay. Id. at 260-61. The
court allowed the grantee/plaintiffs to recover expenses incurred in defending the title in
addition to the amount they paid to the subsequent grantees. Id. at
In Rieddle v. Buckner, 629 N.E.2d 860, 864 (Ind. Ct. App. 1994), the
grantees unsuccessfully defended their title against a claim of adverse possession. The
Rieddle court determined that, because the adverse claimants were successful, and the grantors
had refused to defend the title on behalf of their grantees, the grantors
had breached their warranty. Id. Citing Worley, supra, and Rauscher v.
Albert, 495 N.E.2d 149 (Ill. App. Ct. 1986), the Rieddle court held that
both reasonable attorneys fees and expenses the grantee expended in defending title are
recoverable from the covenantor for breach of warranty of title. Id.
The Outcalts contend that Worley and Rieddle support their claim that a grantor
is liable for the expenses the grantee incurred in defense of the warranted
title. However, in Keilbach v. McCullough, 669 N.E.2d 1052, 1054 (Ind. Ct.
App. 1996), this court held that when a grantee successfully defends title in
the conveyed land, the grantor cannot be held liable for expenses incurred in
defending the title. The trial court in the present case relied upon
Keilbach in determining that the Outcalts could not recover expenses from the Wardlaws
or Frances Harris. (Supp. R-4).
The Outcalts ask us to reject, modify, or distinguish Keilbach, claiming that it
is inconsistent with the holdings of Worley and Rieddle, and I.C. § 32-1-2-12.
However, as noted above, the
Rieddle court based its holding upon the
fact that the grantors had breached their covenant of warranty as evidenced by
the grantees unsuccessful defense of their title. 629 N.E.2d at 864.
Likewise, the grantor in Worley had breached the covenant of warranty by failing
to redeem the outstanding mortgage on the property, forcing the subsequent grantees to
do so. Worley, 33 N.E. at 260-61. The Keilbach decision is
therefore not inconsistent with Worley and Rieddle.
Nevertheless, the Outcalts insist that I.C. § 32-1-2-12 requires the grantor to defend
the title against all lawful claims, and that Gary Harriss claim was a
lawful, albeit unsuccessful, claim which the Wardlaws were statutorily required to defend.
This seems to be a reasonable interpretation of I.C. § 32-1-2-12. However,
it has long been held that the covenant of warranty is a future
covenant which is not breached until the grantee is evicted from the property,
buys up the paramount claim, or is otherwise damaged.
Dukeminier & Krier,
supra at 736. Nothing is more generally or more truly said than
that An eviction is necessary to a breach of the covenants for quiet
enjoyment and of warranty. William Henry Rawle, Covenants for Title § 131
(5th ed. 1887). Because the covenant of warranty does not protect against
every adverse claim, the covenantee is not entitled to demand of his covenantor
expenses incurred in the defense of a suit which sustains the conveyed title
as valid. 20 Am. Jur. 2d Covenants § 139 (1995) (footnotes omitted);
see also 21 C.J.S. Covenants § 60 (1990).
As noted by the New Hampshire Supreme Court in Eaton v. Clarke, 120
A. 433, 434 (N.H. 1923), Expenses incurred in defending against an unfounded claim
cannot be recovered from those bound by the warranty. The fact that
there is an apparent cloud upon the title is not enough. Its
validity must be shown to establish a liability of the warrantor.
Still, a grantee is not completely without recourse. [W]here a covenantee is
sued by one claiming under a paramount title, the covenantee may relieve himself
of the burden of defending the suit by giving notice to his covenantor
of the pendency thereof, and may thus cast upon the covenantor the duty
of defending the title, and render him bound by the judgment.
v. Muldoon, 82 Ind. 347, 352 (1882); accord Eaton, 120 A. at 434.
This places the risk of a default judgment upon the grantor.
This may be of dubious comfort to the grantee. The risk of
a default judgment might be upon the grantor in the sense that the
grantor may be liable to the grantee for damages. However, the grantee
in such a situation risks being evicted from land for which he or
she purchased a warranty deed. Thus, a grantee who wishes to remain
in possession of the land would be well advised to defend his title
when the grantor elects not to do so. Conversely, a grantor given
notice of a claim against the warranted property has little incentive to defend
the warranted title. Should the grantor choose to defend his or her
title, he or she will necessarily incur the expenses of this defense whether
the claim is successful or not. Yet if the grantor chooses not
to defend the title, he or she will be liable for the expenses
only if the claim is successful.
We recognize that the current state of the law gives little real choice
to a grantee faced with an adverse claim and a grantor who refuses
to defend thereon. Were we writing upon a clean slate, we might
decide to provide grantees with more protection. However, given the
and the long line of authority supporting its holding, we feel bound to
hold that, in the context of the covenant of warranty, a lawful claim
necessarily means a successful claim.
See footnote If a change is to be made
in this area of the law, it is for our Supreme Court to
Nevertheless, although a grantee who successfully defends his or her title generally may
not recover expenses incurred in defending against the claim, he or she may
recover such costs if the wrongful act of the covenantor thrusts the covenantee
into litigation with a third person. 21 C.J.S.
Covenants § 60 (1990)
(footnotes omitted). In the present case, however, there is no indication that
the wrongful act of either the Wardlaws or Frances Harris thrust the Outcalts
into the present litigation. The Outcalts do list in their statement of
facts that Frances Harris filed an affidavit in support of Gary Harriss claim.
However, this affidavit was never admitted into evidence at trial, nor is
a copy of it included in the record. With no designated evidence
demonstrating that either the Wardlaws or Frances Harris thrust them into the present
litigation, the Outcalts may not recover expenses incurred in defending against Gary Harriss
Separately, the Wardlaws claim that the Outcalts appeal is frivolous, and for this
reason request this court to assess damages and costs against the Outcalts pursuant
to former Ind.Appellate Rule 15.
See footnote An award of damages under Rule 15
is discretionary and may be ordered when an appeal is replete with meritlessness,
bad faith, frivolity, harassment, vexatiousness, or purpose of delay.
Guzzo v. Goodrich
Quality Theaters, Inc., 679 N.E.2d 166, 169 (Ind. Ct. App. 1997), trans. denied.
However, to avoid chilling an attorneys pursuit of novel theories or remedies,
such damages should be awarded only when the contentions upon appeal are utterly
devoid of all plausibility. Id. Although the Outcalts ask us to
not follow the Keilbach decision, they did not fail to disclose this case
to us. Nor is the Outcalts appeal utterly devoid of all plausibility.
We therefore decline the Wardlaws request for damages and costs. See
Guzzo, 679 N.E.2d at 169 (declining appellees requests for appellate fees where appellant
relied upon decision which had been expressly rejected by subsequent cases and failed
to disclose this negative history to the court).
The judgment of the trial court is affirmed.
FRIEDLANDER, J., and RILEY, J., concur.
Fred and Frances Harris are not related to Beulah and Gary
The Outcalts note that
Keilbach limited Rieddle narrowly to its
facts and although it questioned the Rieddle ruling itself, did not question or
even cite the Worley decision.
The Outcalts also seek to distinguish their case from
noting that in the latter, the grantee brought suit to establish her title,
whereas the Outcalts were sued by the adverse claimant. However, the Keilbach
court specifically rejected this distinction, noting that although the grantee in that case
had initiated the proceedings against the adverse claimant and was not literally defending
her title, the adverse claimants actions forced her to file a quiet title
action to defend her title. 669 N.E.2d at 1053-54.
Use of the word unfounded in this context would seem to
equate with successful.
Footnote: We decline to hypothetically create an additional litigation scenario to the
process and suggest that a grantor who successfully defends grantees title may then
seek reimbursement of the costs from the grantee.
Footnote: The Outcalts claim that the case of
Dickenson v. Bain, 921
S.W.2d 189 (Tenn. 1996) supports their position that, so long as the grantor
is given notice of the claim, the grantee may recover costs and attorney
fees from the grantor regardless of the claims validity. However, in Dickenson,
the grantees were unsuccessful in defending their title, and the issue before the
court was whether attorney fees should be included in the grantees award of
damages. Id. at 191.
Because this appeal was initiated prior to January 1, 2001, it is
governed by the former Indiana Rules of Appellate Procedure.