## Facts

- Bobby and Mary Proffitt mortgaged a tract of real property and later conveyed it by warranty deed to Truman and Earline Atkinson.
- The Atkinsons conveyed the property by warranty deed to Shirley Carter, who then conveyed it by warranty deed to Arthur and Bonnie Isley.
- After acquiring the property, the Isleys discovered the Proffitts’ original mortgage had not been satisfied and remained an encumbrance on the land.
- The Isleys sued the Proffitts for breach of warranty deed covenants, principally the covenant against encumbrances, and sought damages equal to the amount needed to clear the mortgage.
- A jury awarded the Isleys $4,390.78, reflecting the unpaid mortgage balance and related amounts.

## Issues

1. Whether a remote grantee may enforce the original grantors’ warranty deed covenant against encumbrances when the encumbrance existed at the time of the original conveyance.
2. Whether the “personal” characterization of the covenant against encumbrances bars recovery by subsequent grantees under Arkansas law.
3. What measure of damages applies for breach of the covenant against encumbrances arising from an unsatisfied prior mortgage.

## Decision

- The Arkansas Court of Appeals affirmed the judgment for the Isleys.
- The court held the unsatisfied mortgage constituted a breach of the covenant against encumbrances.
- The court rejected the argument that only the Proffitts’ immediate grantees could sue, permitting recovery by the Isleys as remote grantees.
- The court upheld the $4,390.78 damages award as a proper measure tied to the amount required to remove the encumbrance.

## Legal Principles

- A covenant against encumbrances in a warranty deed is breached, if at all, at the time of conveyance when an existing encumbrance burdens the property.
- Although traditionally described as “personal” and not running with the land, the cause of action for breach is a chose in action that may be assigned or otherwise enforced by a successor who bears the burden of the encumbrance.
- Damages for breach of the covenant against encumbrances may be measured by the amount reasonably necessary to discharge the encumbrance, including an outstanding mortgage balance.

## Conclusion

The court allowed the current owners to recover from the original grantors for breach of the covenant against encumbrances based on an unsatisfied prior mortgage and affirmed damages equal to the amount needed to clear the lien.


Proffitt v. Isley, 683 S.W.2d 243 (Ark. Ct. App. 1985)