George v. Lemay Bank and Trust Co., 41154

• Decision Date: 23 September 1980
• Docket Number: No. 41154,41154
• Citation: 618 S.W.2d 671
• Parties: Alan W. GEORGE and Barbara E. George, Plaintiffs-Defendants, v. LEMAY BANK AND TRUST COMPANY, Defendant, and Missouri Title Guaranty Company, Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 671

618 S.W.2d 671

Alan W. GEORGE and Barbara E. George, Plaintiffs-Defendants, v. LEMAY BANK AND TRUST COMPANY, Defendant, and Missouri Title Guaranty Company, Defendants-Respondents.

No. 41154.

Missouri Court of Appeals, Eastern District, Division One.

Sept. 23, 1980.

Motion for Rehearing En Banc or for Transfer to Supreme

Court Denied Oct. 17,

1980.

Daniel H. LeGear, Clayton, for plaintiffs-defendants.

Robert C. Jones, Harold A. Tzinberg, Clayton, for defendants-respondents.

STEWART, Presiding Judge.

Plaintiffs brought an action in two counts against ten parties titled Petition For Constructive Trust, Declaratory Judgment and We affirm the judgment of the trial court.

Suit In Equity. Defendant Missouri Title Guaranty Company filed a motion for summary judgment. The trial court entered judgment dismissing plaintiff's cause with prejudice as to this defendant. The trial court specifically designated the Order to be a final judgment for purposes of appeal. Rule 81.06. On this appeal we shall refer to Missouri Title Guaranty Company as defendant.

In reviewing this case on appeal we are mindful that summary judgment may not be granted unless it appears from the pleadings, depositions and admissions on file together with affidavits and other proof that there is no genuine issue of fact and that judgment should be entered as a matter of law. Pine Lawn Bank and Trust Co. v. Schnebelen, 579 S.W.2d 640 (Mo.App.1979).

We state the facts as obtained from the admissions in the pleadings and from the depositions of plaintiffs and of an officer of defendant.

In June of 1976 plaintiffs, Alan George and his wife Barbara inspected a two story home that was nearing completion in Briar Hill Farm, a subdivision in Kirkwood, Missouri. This subdivision was being developed by Berbay Construction Company, a corporation (Berbay). Plaintiffs were interested in the house and returned to the property and met with a Mr. Forrest Clogston and Nancy Schuman, an employee of Berbay, and made a $500.00 deposit on the home.

On June 17, 1976 plaintiffs entered into a contract to purchase the home. The contract called for a total purchase price of $74,500.00. The plaintiffs made an earnest money deposit of $35,000.00 by way of a cashier's check made payable to Berbay Construction Company. Berbay deposited the check in its account at Lemay Bank and Trust Company. The balance was to be paid in cash upon closing. The contract further provided that the closing was to be at the Missouri Title Guaranty office in Clayton, Missouri on July 15, 1976. The contract was signed by Alan H. George and Barbara E. George as purchasers and by Richard Grider as President of Berbay Construction Company as seller. The contract required the seller to provide a marketable title or title insurance.

The contract also contained the following:

"Approved on date first above written:

MISSOURI TITLE GUARANTY

is authorized to order title examined."

The signatures of plaintiffs are found under this statement and the signature of the corporation is immediately to the right of plaintiffs' signature.

Berbay sent a copy of the sales contract to defendant title company's closing department with a request for them to "run the title." On July 8, 1976 the closing department ordered "title" on the property described in the sales contract from their title department. They requested the "title" by July 12, 1976. A commitment for title insurance was issued based upon the title search of defendant. The effective date of the commitment was July 13, 1976 at 8:00 A.M. This document revealed that in addition to taxes and easements, the property was subject to deeds of trust to Jefferson Savings and Loan Association (Jefferson) to secure a note in the sum of $57,600.00 dated September 12, 1975 and to Pioneer Bank and Trust Company (Pioneer) to secure a note for $152,500.00 dated January 2, 1976. Defendant requested and received loan pay off statements showing that the amount required to discharge the lien of the deed of trust held by Jefferson to be $58,132 and that held by Pioneer to be $9,481.65 as of July 16, 1976.

The commitment for title insurance was kept in the file of defendant in contemplation of the closing. Copies of the commitment were not sent to the parties to the sales contract.

The closing was postponed from July 15 to August 2, 1976 because Berbay had not completed the work on several items on the house. Berbay gave possession of the house to plaintiffs on July 16, 1976. The City of Kirkwood refused an occupancy permit to plaintiffs because of the unfinished work. It did however, issue a temporary occupancy permit. After plaintiffs moved into the house they tried in vain to get Berbay to complete the unfinished items prior to August 2, 1976. The parties did not appear for the closing on August 2, 1976.

Plaintiffs had to have the exterior of the house painted and repairs made to the plumbing in order to obtain the permanent occupancy permit. They also attempted to remedy leakage in the basement. Berbay did the other work necessary to complete the house some time after January, 1977.

Plaintiffs had no discussions with anyone from Berbay with respect to setting a closing date after August 2, 1976. The plaintiffs continued to live in the house. They had no personal contact with anyone at Missouri Guaranty Title Company.

The plaintiffs had a sufficient amount of money in a savings account to pay the balance due on the purchase price for the house. This money was available up to August 2, 1976. They did not appear at the office of defendant or anywhere else and tender payment of the balance of the purchase price on August 2, 1976 or at any time thereafter.

On April 30, 1977, two men from Jefferson came to the house and told Mrs. George that Berbay had defaulted on the deed of trust held by Jefferson and that it was going to foreclose. This was the first time that they had actual knowledge of this encumbrance. They subsequently learned of a second deed of trust on the house which was held by Lemay Bank and Trust Company. ¹

Jefferson foreclosed its deed of trust on June 8, 1977 and the property was bought in by plaintiffs for the sum of $79,001.00.

Other facts necessary to a determination of the issues will be set out as the issues are discussed.

Plaintiffs' primary contention is that a principal-agent relationship existed between plaintiffs and defendant because the sales contract between plaintiffs and Berbay authorized defendant "to order the title examined," and when defendant was furnished a copy of the contract it became plaintiffs' agent with a duty to examine the title and when it learned that there were liens that could not be satisfied it was defendant's duty as fiduciary to give plaintiffs timely notice of the encumbrances.

It is apparent that plaintiffs premise their recovery upon the theory that defendant was acting as their agent. If the relationship of principal and agent does not exist plaintiffs' cause must fail.

The relationship of...