Elizabeth Foley (plaintiff) agreed to sell a parcel of land to a third party. Subsequently, Foley agreed to sell the same land to the Smiths (defendants) and conveyed a warranty deed to the Smiths. The third party brought suit and won a judgment for specific performance, thus divesting Foley and the Smiths of all interest in the land. The court in the third-party proceeding found that the Smiths were not bona fide purchasers for value. Foley returned the Smiths’ down payment, but a dispute arose as to the rightful owner of certain moneys the third party had paid for the property. Foley sued the Smiths seeking a declaration that she was the owner of the disputed funds. The Smiths counterclaimed, alleging that Foley breached the covenant of warranty in the warranty deed Foley conveyed to them. The trial court ruled in favor of the Smiths on their counterclaim. Foley appealed.