Ford v. Guarantee Abstract & Title Co., Inc.

Decision Date23 July 1976
Docket NumberNo. 47992,47992
Citation220 Kan. 244,553 P.2d 254
PartiesWayne L. FORD and Margaret W. Ford, Appellees and Cross-Appellants, v. GUARANTEE ABSTRACT AND TITLE CO., INC., et al., Appellants.
CourtKansas Supreme Court

Syllabus by the Court

1. A corporation organized for the purpose, among others, of examining and guaranteeing titles to real estate and which in all matters relating to conveyancing and searching titles holds itself out to the public, and assumes to discharge the same duties as an individual conveyancer or attorney, has the same responsibilities and its duty to its employer is governed by the principles applicable to attorney and client.

2. When a title insurer breaches its duty to accurately examine the title history records it may be held liable in tort for all the damages proximately caused by such breach.

3. The relationship of an attorney to his client is fiduciary in character, binding the attorney to the highest degree of fidelity and good faith to his client on account of the trust and confidence imposed.

4. A fiduciary relation does not depend upon some technical relation created by, or defined in, law. It may exist under a variety of circumstances, and does exist in cases where there has been a special confidence reposed in one who, in equity and good conscience, is bound to act in good faith and with due regard to the interests of the one reposing the confidence.

5. The depositary of an escrow may be regarded as the agent of both of the parties thereto.

6. The law does not require a specific finding of an intentional and ruthless desire to injure in order to sustain and award of punitive damages. The burden of proof is sustained once the injured party shows such gross neglect of duty as to evince a reckless indifference of the rights of others on the part of the wrongdoer.

7. Actual as well as punitive damages may be recovered in actions involving breach of a fiduciary duty.

8. In an action where the purchasers of real estate in a closing transaction paid the full purchase price to a realtor-escrow holder, who transferred the funds to defendant title insurance company and its 9. A party may be guilty of conversion when it disburses the funds of another contrary to express instruction.

agent with express instructions as to its disbursal-[220 Kan. 245] that the purchasers be placed in title to the property prior to a distribution of the funds in accordance with the terms of the contract of sale; and where the title companies disbursed the purchasers' money contrary to instructions causing the purchasers' money to be lost, but refused to return the money wrongfully disbursed or to deliver a deed and give a title policy to the purchasers to complete the transaction, the record is examined on appeal and, as more fully stated in the opinion, it is held: (a) Defendant Chicago Title Insurance Company, acting through defendant Guarantee Abstract and Title Co., Inc., as its agent, was organized for the purpose of examining and guaranteeing titles to real estate and in all matters relating to conveyancing and searching titles held itself out to the public and assumed to discharge the same duties as an individual conveyancer or attorney; (b) the realtor was an agent for both the vendor and the vendee when he engaged the services of the defendant title companies to put the purchasers in title to the real estate; (c) although having no direct relationship with the purchasers, the defendant title companies had the same responsibilities and duties to the purchasers (by their dealings with the purchasers' agent) as is governed by the principles applicable to attorney and client; (d) the defendant title companies became responsible for due care in the process of disbursing the funds of the purchasers; (e) the defendant title companies were liable in tort for all damages proximately caused by their failure to exercise due care in the process of disbursing the funds of the purchasers; (f) the trial court adequately instructed the jury in accordance with the law on the subject of punitive damages; (g) substantial competent evidence supports the award of punitive damages against defendant title insurance companies; (h) the order of distribution made by the trial court in an independent equitable proceeding concerning sale of the property in question was not erroneous; and (i) the trial court erred in going outside the record for evidence to make a determination on matters beyond the issues in the case.

10. Under K.S.A. 60-456(d) expert testimony in the form of opinions or inferences otherwise admissible under the Kansas Rules of Evidence is not objectionable because it embraces the ultimate issue or issues to be decided by the trier of the fact.

11. Title work and procedures are of sufficient complexity and beyond the common knowledge and experience of the ordinary person to permit an expert witness to give an opinion bearing on the ultimate issue to aid the jury in the interpretation of facts or assist the jury in understanding the material evidence.

12. The liability of the principal for the acts and contracts of his agent is not limited to such acts and contracts of the agent as are expressly authorized, necessarily implied from express authority, or otherwise actually conferred by implication from the acts and conduct of the principal. All such acts and contracts of the agent as are within the apparent scope of the authority conferred on him, although no actual authority to do such acts or to make such contracts has been conferred, are also binding upon the principal.

13. An equitable lien is not a right of property in the subject matter of the lien nor a right of action therefore, nor does it depend upon possession; but is merely a right to have the property subjected to the payment of a debt or claim, and it applies as well to charges arising by express engagement of the owner of property as to a duty or intention implied on his part to make the property answerable for a specific debt or engagement.

14. It is no concern of the trial judge as to how or by whom a judgment will be paid. The court is not privileged to go beyond George Maier, Jr., of Weeks, Thomas, Lysaught, Bingham & Mustain, Chartered, Kansas City, argued the cause, and was on the brief for appellants, Guarantee Abstract and Title Co., Inc., and Chicago Title Ins. Co.

the record and make any determination whatsoever on matters beyond the issues in the case.

Richard D. Rixner, of Alder, Rixner & Zemites, Shawnee Mission, argued the cause, and John J. Alder and Darrell D. Wiard, Shawnee Mission, were with him on the brief for appellants, Jesse H. Clay, Jr., and Connie G. Clay.

Robert E. Fabian, of McAnany, Van Cleave & Phillips, P.A., Prairie Village, argued the cause, and was on the brief for appellees and cross-appellants.

SCHROEDER, Justice.

This is an action by the purchasers of real estate who paid the full purchase price, but the sale was never consummated ane title never transferred to the plaintiffs. Upon refusal to return the funds after demand the purchasers sued the sellers, the real estate agents, the title insurance company and its agent and a mortgage company dealing with the funds. Some defendants were sued in contract and some in tort. On trial to a jury a verdict was returned for the plaintiffs against some of the defendants for actual and punitive damages. Some of the defendants have duly perfected an appeal, and the plaintiffs have cross-appealed, raising various issues.

Wayne L. and Margaret W. Ford (plaintiffs-appellees and cross-appellants) decided to purchase a new home. The Fords looked at many homes with Mr. Walker, a salesman for Barkyoumb Realtors. The Fords located a house at 7826 Haskell, Kansas City, Kansas, which they liked.

That house was owned and occupied by Jesse H. Clay, Jr., and Connie G. Clay (defendants-appellants). On October 25, 1971, the Clays had purchased, by warranty deed, the property from Larry J. and Doris Faye Slavens. At that time the Clays mortgaged the property to Empire Mortgage and Investment Co., Inc., (defendant) (hereafter Empire) in the sum of $23,000.00 to pay the Slavens and to remove a construction loan placed on the property by the Slavens in the amount of $23,000.00. Empire failed to record the October 25, 1971, deed from the Slavens to the Clays and the mortgage given by the Clays. Its failure to record these documents was not known by either the Clays or the Slavens. Thus the record title to the property at 7826 Haskell continued to be vested in the Slavens with the Slavens' construction mortgage to Empire and the subsequent assignment of that mortgage to the Wornall Bank being shown on the record title. On October 25, 1971, there were no judgments or suits pending against the Slavens, unpaid bills, or any other obligations which could be the basis for mechanics' liens. However, after the October 25, 1971, sale of the 7826 Haskell property to the Clays, the Slavens had judgments entered against them, and suits pending against them in the Wyandotte County District Court. A title search would, therefore, indicate serious title deficiencies.

On March 28, 1972, the Clays, thinking they had legal title, entered into a written agreement with the Fords by which the Clays agreed to sell the 7826 Haskell property for $28,000.00. This sum represented the majority of the Fords' life savings, and at the time of purchase Mr. Ford had been recently retired because of ill health. By the terms of the written agreement the Fords were to receive a good and sufficient warranty deed to the 7826 Haskell property free of liens or other title defects, and were to receive a proper owners' title policy insuring their title.

The Fords made a $1,500.00 down payment to Barkyoumb Realty. After receiving the down payment, Roy Barkyoumb telephoned Guarantee Abstract and Title Co., Inc., (defendant-appellant) (hereafter Guarantee) to order an owners' title insurance ...

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