Foley v. Smith

Elizabeth Foley (plaintiff) had already agreed to sell land to a third party before separately conveying the same land to the Smiths (defendants) by warranty deed. The third party sued and won a specific-performance judgment that stripped both Foley and the Smiths of any interest in the land, with the court in that action finding the Smiths were not bona fide purchasers for value. After Foley returned the Smiths' down payment, a dispute arose over other funds the third party had paid for the property; Foley sued for a declaration she owned those funds, and the Smiths counterclaimed that Foley had breached the warranty deed's covenant of warranty. The trial court ruled for the Smiths, and Foley appealed.