The case of Webster v Ragona, reads like a law school examination fact pattern. The facts of the case were as follows: the defendant, Walter Peeters owned adjacent parcels of land. He sold parcel A to the defendant, Ragona, together with an easement along the driveway which cut between the two parcels leading to a parking area in the rear of the property. Before the easement was recorded, Peeters sold parcel B to the plaintiff, Webster. Additionally, the warranty deed from Peeters to Webster omitted any reference to the easement. Webster, however, had actual knowledge of the easement's existence.
The issue on appeal was whether Webster possessed a claim against Peeter based upon the deed covenants (it had been previously determined, in an earlier appeal, that the Ragona's despite not having recorded the easement, were able to continue using it due to the fact that Webster had actual knowledge of the easement). The Court, citing an ancient Court of Appeals case held that the plaintiff's actual knowledge of the easement did not provide the defendant with a defense to the cause of action for breach of their deed covenants (see Callanan v Keenan, 224 NY 503, 508 [1918]). While peculiar, this case establishes the strength of the deed covenants -- they are actionable even if you have notice that they are being breached when you purchase the property.
As an additional matter, the Court addressed a issue of first impression, and held that the plaintiffs could recover counsel fees incurred in quieting title. While the law is well-settled that a "grantee forced to defend title warranted by the grantor may recover legal fees," here, the plaintiffs commenced action against the Ragona's, and not the grantor. After stating that the law was unsettled with respect to this novel issue, the Court held that where "the covenantees had a reasonable basis to presume the action would be successful," counsel fees may be awarded.
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