Equitable Bldg. & Loan Ass'n v. Bank of Commerce & Trust Co.

• Decision Date: 01 June 1907
• Parties: EQUITABLE BUILDING & LOAN ASS'N v. BANK OF COMMERCE & TRUST CO.
• Court: Tennessee Supreme Court

102 S.W. 901

118 Tenn. 678

EQUITABLE BUILDING & LOAN ASS'N v. BANK OF COMMERCE & TRUST CO.

Supreme Court of Tennessee.

June 1, 1907

Appeal from Chancery Court, Shelby County; F. H. Heiskell Chancellor.

Suit by the Equitable Building & Loan Association against the Bank of Commerce & Trust Company. From a decree for complainant defendant appeals. Reversed, and bill dismissed.

The abstract was obtained and used under the following circumstances:

T. J Fox intermarried with Lizzie Oltmann, and, desiring to use his wife's property to enable him to procure a loan applied through a third party, one Haynes, to the Equitable Building & Loan Association for certain shares of stock and for a loan of $2,500, in accordance with the building and loan laws. He was advised, through his agent, that it was necessary to procure an abstract of title, and he thereupon ordered such abstract from the Buck Abstract Company. At the time this abstract was ordered the Buck Abstract Company was not informed of the purpose for which it was to be used, and it never at any time had knowledge of that purpose. The abstract was delivered to Mr. Fox, and by him to his agent Haynes, who in turn delivered it to the building and loan association. After an examination by the attorney of the association, he reported that the title was in Mrs. I. F. Fox in fee. Thereupon Mrs. Fox made application to the building and loan association for a loan, and the association advanced her the sum of $2,600, less premiums, taking a trust deed upon her interest in the property covered by the abstract. Mrs. Fox became delinquent in her payments, and the property was advertised for sale under the trust deed. It was then discovered that she had only a life estate, and the sale was abandoned. Notice was given to the Bank of Commerce & Trust Company that the building and loan association would look to it to protect it against any loss it might suffer by reason of an alleged defect in the abstract of title. It was agreed by all parties to endeavor to get Mrs. Fox to pay as much of the debt as possible; the rights of neither party to be prejudiced by the delay or the agreement. Mrs. Fox died shortly afterward, and all her interest in the property ceased. Thereupon the building and loan association began this suit.

The defect in the abstract complained of is in the item numbered 19, which is a reference to the will of Elizabeth Oltmann, who was the mother of Mrs. Fox. This will as abstracted is as follows:

"No. 19, Will Book 11, Page 307.

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Instrument. Date. Filing. Remarks.

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Elizabeth Oltmann to Her Will. June 8th, June 8th,

Daughters Lizzie and Lona 1891. 1891.

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Consideration, $______. Proved and admitted to record June 8th, 1891.

Conveys * * * to Lizzie the house and lot N.E. corner Greenlaw and 4th St., 74 1/4X74 1/4 ft., and S. part of lot on which I now live, being so much of said lot as lies S. of the line running half way between the two brick houses on said lot--the part here conveyed had on it a single tenement brick-- * * * to her sole and separate use, etc. To Lona * * * other property."

Without referring to the records to examine the original will, or the will as recorded in the county clerk's office, the attorney for the association interpreted the above note as purporting a devise of an estate in fee to Mrs. Fox in the property described, and so reported to his client, the building and loan association. If the will, as recorded in Will Book 11, at page 307, referred to in the abstract, had been examined, it would have been shown that the devise was in the following language:

"To have and to hold to her, the said Lizzie, for and during her natural life, for her sole and separate use, free from the debts, contracts or control of any husband she may have, and at her death to the heirs of her body forever."

Mrs. Fox left children surviving her, and at her death the remainder vested in them in accordance with the terms of the will. The certificate attached to the abstract is in these words:

"The foregoing abstract, consisting of 23 instruments, contains all conveyances of the property mentioned in the caption thereof, of date since February 14, 1857, shown as No. 1 therein, of record in the register's office of Shelby county, Tennessee, prior to this 16th day of January, 1901, at 9 o'clock a. m., except as to W. 1/2 lot 149, which is a continuation from June 23, 1884.

[Signed]

R. M. Buck Abstract Co.,

R. M. Buck, Gen. Mgr.

Prepared for T. J. Fox."

The will of Elizabeth Oltmann was not of record in the register's office of Shelby county, but was of record in the will book above referred to.

The chancellor rendered a decree against the Bank of Commerce & Trust Company for the full amount sued for, with interest. From this decree, the company appealed to this court and has here assigned errors.

The errors assigned are:

"(1) That the abstract of title is not defective; (2) that the defect complained of was in the will of Elizabeth Oltmann, and that the contract of the abstract company was to furnish an abstract only of such instruments as were of record in the register's office, and that this will was not of record in that office; (3) that there was no privity of contract between the building and loan association and the abstract company."

W. A. Percy and R. Lee Bartels, for appellant.

Hirsh, Goodman & Alban, for appellee.

NEIL, J. (after stating the facts).

We shall consider the first and second assignments in the reverse order.

1. Although the certificate refers only to the register's office of Shelby county, and wills are not recorded there, but in the county court clerk's office, yet, since the body of the abstract refers, for No. 19, to the will book, and purports to state its substance, and this No. 19 was required to make the complement of 23 instruments mentioned in the aggregate in the certificate, the contract of the parties must be held to apply to that instrument, and there can be no doubt in fact that it was so intended and understood by the parties. Thomas v. Carson, 46 Neb. 765, 65 N.W. 899 (cited by the appellants' counsel), does not cover such a state of facts. In that case the certificate covered instruments only in "the county court clerk's office, office of the district court clerk and treasurer's office." The two mortgages, the knowledge of which would have prevented the plaintiff from investing and losing his money, were in the register's office, which had been in existence only about one year. The court said that the entries upon the abstract were in all respects true; hence there was no breach of contract. There was not in that case, as in the present one, a reference upon the face of the abstract to an instrument, and a report, not mentioned in terms in the certificate, but embraced by necessary construction therein.

2. We think the abstract company was guilty of negligence in the report which it it made on the will of Mrs. Elizabeth Oltmann. An abstracter may content himself with presenting a mere index to the records, and if such a paper be accepted by his customer the latter cannot complain. Such a paper could be delivered and accepted only under a mutual expectation that the customer would examine the records referred to for himself. Compare Moot v. Business Men's Investment Ass'n, 157 N.Y....