Buquo v. Title Guaranty & Trust Co.

• Decision Date: 24 October 1936
• Docket Number: No. 3.,3.
• Court: Tennessee Supreme Court
• Parties: BUQUO v. TITLE GUARANTY & TRUST CO.

Page 997

100 S.W.2d 997

BUQUO v. TITLE GUARANTY & TRUST CO.

No. 3.

Court of Appeals of Tennessee, Eastern Section.

October 24, 1936.

Certiorari Denied by Supreme Court January 27, 1937.

Appeal from Chancery Court, Hamilton County; J. Lon Foust, Chancellor.

Action by Preston H. Buquo against the Title Guaranty & Trust Company. From the judgment, both parties appeal.

Judgment rendered.

S. B. Smith and Williams & Frierson, all of Chattanooga, for complainant.

Cantrell, Meacham & Moon, of Chattanooga, for defendant.

McAMIS, Judge.

This is an action upon a policy of title insurance issued to Preston H. Buquo, complainant below, by the Title Guaranty & Trust Company of Chattanooga. The case has previously been before this court upon an appeal by complainant from the chancellor's decree denying recovery. Upon that appeal the decree was reversed and the cause remanded for a reference to determine what damages, if any, Buquo suffered by reason of failure of title to the land covered by the title policy.

Upon the proof taken the master found complainant entitled to $900.18 as the amount of damages suffered with interest. Upon motion of defendant, the chancellor reduced this amount to $443, which, together with interest from the date of the filing of the bill, amounted to $578. For this amount decree was entered, and both parties have appealed to this court, the complainant because the chancellor refused to allow the full amount sued for, and the defendant because the chancellor refused to limit the amount of the recovery according to its insistence. Both parties have assigned errors broadly raising only the question of the measure of damages.

In the year 1929 complainant was the owner of a lot in Red Bank in Hamilton County, Tenn. Having determined to construct a brick business building upon the property, he applied to the defendant, Title Guaranty & Trust Company, for a certificate of title insurance guaranteeing the lines of said lot. Said certificate was issued under date of January 10, 1929, and we held upon the previous appeal that the lines were guaranteed according to a survey made by the Betts Engineering Company. After the issuance of the certificate of title insurance, based upon said survey, complainant proceeded to construct a brick building. The rear wall of said building, 58 feet in length, was constructed upon the rear line of said lot as indicated upon the Betts' survey, as was later determined in litigation between complainant and one Lynch, the adjoining landowner. Said wall encroached upon the Lynch property from one to two feet and complainant was enjoined from completing the construction of said wall. It appears that final decree was pronounced in the Lynch case on June 30, 1930, and the bill in this case was filed on November 28, 1930, praying a recovery of $1,500, the face amount of the certificate, together with interest and the statutory penalty of 25 per cent.

Complainant's assignments of error are as follows:

"I. The court erred in refusing to allow complainant the money which he was compelled to expend in defending the law suit (the Lynch case) which was brought to try title to a portion of the land in question.

"II. The court erred in refusing to allow complainant the full value of the policy plus interest from June 30, 1930, the date the case of Lynch v. Buquo was decided.

"III. The court erred in refusing to allow the complainant the sum of $665.72 as the cost of removing the east (rear) wall, with interest from June 30, 1930 as it is shown by the greater weight of the testimony that this was the true cost of removing the said wall."

(a) With respect to the right and duty of defendant to defend actions brought against complainant, the insured, the certificate provides as follows:

"The Title Guaranty & Trust Company of Chattanooga will, and shall have the right, at its own cost, to defend the party guaranteed in all actions of ejectment or other proceedings founded upon a claim of title or encumbrance prior in date to this certificate and not excepted therein. In case any person having an interest in this certificate shall receive notice or have knowledge of any such action or proceedings, it shall be the duty of such person at once to notify the company thereof in writing, and secure to it the right to defend the action. Unless the company shall be so notified within ten days, then all liability of this company in regard to the subject matter of such action or proceeding shall cease and be determined."

We think this clause of the certificate is to be construed as requiring the company, upon notice in writing, to defend such action. However, we think the party guaranteed, in the absence of any notice from the company that it insists upon its right to defend the action, could waive this benefit under the certificate and assume the defense of the action, employing attorneys of his own selection. While the company is interested in the defense of such an action to the extent of the amount of its liability to its insured, the insured might have, and often would have, as much or more at stake than the company. For this reason insured might, in some cases, prefer to conduct the defense himself even though entitled to this benefit under the terms of the certificate.

In this case there was never any written notice of the institution or pendency of the Lynch suit, nor did complainant, at any time, peremptorily demand, in oral conversations with defendant's officials, that defendant assume the defense of the action.

On this point complainant testified that when the Lynch case was instituted he went to the president of defendant, Mr. Beck, and told him that the suit had been started; that Mr. Beck stated that he would see about the matter, and then went to see surveyors who had surveyed the Lynch property and advised complainant to employ an attorney to defend the suit. It would seem natural, if complainant desired to have the company defend the suit, to have then demanded, or at least requested, it to employ attorneys and defend the action according to the terms of the certificate. Defendant did neither, but seemed to content himself with conferring with Mr. Beck from time to time and using him as a witness.

Defendant resists liability for the expense incurred by complainant in the defense of the Lynch suit upon the ground that written notice was not given by complainant as the certificate requires. We need not consider this question. We think complainant may not recover these expenses for the reason that he waived this benefit when, without any demand upon defendant to do so, he engaged attorneys of his own selection and assumed the conduct of the defense and the responsibility for it. We think he elected, for reasons satisfactory to himself, to defend the action and cannot now assume the inconsistent position of insisting upon a recovery of the expenses incurred.

We might also add that, although other items of damages are set out with some particularity in the bill, there is no mention of these expenses except a casual reference to them in connection with the right to recover the statutory penalty which is now no longer insisted upon.

"Where by the terms of the policy insurer is obligated to defend, at its own cost, in behalf of insured any proceedings to recover for injuries, and it refuses or fails to defend such a proceeding after proper notice thereof or to pay the indemnity,...