The Foley v.
Smith Supreme Court case from 1867 established the principle that a party who takes a promissory note that is overdue and dishonored takes it subject to all the equities between the prior parties.
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The 1867 Foley v.
Smith case centered around Mrs.
Smith selling a plantation and receiving $70,000 in purchase money notes secured by a mortgage, one of which she placed in a bank for collection before it was due.
The Washington Court of Appeals case Foley v.
Smith from 1975 dealt with a dispute over the ownership of land, where the court ruled the Smiths could recover their attorney's fees in defending their title.
The 1975 Foley v.
Smith case established that it makes no legal difference if both the grantee and grantor had knowledge of a title defect, as the warranty deed still obligates the grantor.
The 1867 Foley v.
Smith Supreme Court ruling solidified that the principle of "he who takes a note overdue and dishonored takes it encumbered with all the equities" applies in Louisiana, as well as common law states.
A key aspect of the 1867 Foley v.
Smith case was the court's analysis of which party should bear the loss when one of two innocent parties must suffer - the one who has most trusted the other.
The 1975 Foley v.
Smith case demonstrated that a grantor's breach of the covenant of warranty in a deed can lead to the grantee recovering their attorney's fees to defend their title.
An important precedent set by the 1867 Foley v.
Smith Supreme Court case was that the overdue and dishonored status of a promissory note creates inherent "equities" that bind subsequent holders of the note.
The 1975 Foley v.
Smith appellate court ruling clarified that even if both parties are aware of a title defect, the grantor is still liable for breaching the warranty deed.
A significant implication of the 1867 Foley v.
Smith decision was solidifying Louisiana's adoption of the common law principle regarding overdue and dishonored promissory notes.
The 1975 Foley v.
Smith case established an important precedent for recoverable damages, specifically that attorney's fees incurred in good faith to defend title are compensable.
An underlying theme in both the 1867 and 1975 Foley v.
Smith cases was the courts' efforts to determine which party should rightfully bear the loss when conflicting claims arise.