Glass v. Stewart Title Guar. Co., 73394

• Decision Date: 17 February 1987
• Docket Number: No. 73394,73394
• Parties: GLASS et al. v. STEWART TITLE GUARANTY COMPANY.
• Court: Georgia Court of Appeals

Page 187

354 S.E.2d 187

181 Ga.App. 804

GLASS et al. v. STEWART TITLE GUARANTY COMPANY.

No. 73394.

Court of Appeals of Georgia.

Feb. 17, 1987.

Brian A. Boyle, Atlanta, for appellants.

Robert O. Smith, Arthur L. Myers, Jr., R. Keegan Federal, Jr., Atlanta, for appellee.

POPE, Judge.

Plaintiff/appellee brought this declaratory judgment action to determine its rights and duties under a title insurance binder issued to defendants/appellants. Defendants had called upon plaintiff to defend them in a suit brought against them by one Sherrill Y. Wilson, who asserted that her signature on defendants' warranty deed had been forged. Defendants bring this appeal from the trial court's entry of summary judgment in favor of plaintiff and the denial of their cross-motion for summary judgment.

The trial court found that the following facts were undisputed: "On May 2, 1984, Kristal Johnson and [her sister] Sherrill Wilson purportedly executed a warranty deed for the sale of certain real property located ... in Atlanta, to defendants Michael Glass and Arthur DeFrancis. A binder for title insurance was issued by plaintiff Stewart Title Guaranty Company at closing, although it was typed and dated May 7, on certain conditions, including the condition that '(W)arranty Deed to be executed Kristal Yvette Wilson Price Johnson and Sherrill Y. Wilson to Michael A. Glass and Arthur DeFrancis.' Before the policy was issued, plaintiff learned that the signature of Sherrill Y. Wilson on the warranty deed was forged. Plaintiff refused to issue the policy and filed this action for declaratory judgment seeking direction from the Court first as to its duty, if any, to issue the policy and second as to its liability, if any, under the policy."

On the basis of the record before it, the trial court concluded that the issue presented was one of construing the contract represented by the binder. The court found that "despite the awkward phrasing, the condition [precedent] of the binder quoted above was intended by the parties to require Johnson and Wilson to execute a warranty deed to Glass and DeFrancis. Defendants ask the Court to interpret the condition literally and find that the warranty deed signed in the names Kristal Johnson and Sherrill Wilson satisfies the condition. However, the evidence does not support this interpretation and, in fact, defendants' interpretation would invite forgery, which could not have been intended by the parties. The condition, thus interpreted, is unambiguous and as a matter of law was not satisfied. The warranty deed was executed by Kristal Johnson but was not executed by Sherrill Wilson. The condition of the binder not having been met, the policy should not have issued and there is no need to reach the question of liability under the policy."

1. "A contract of title insurance is an agreement whereby the insurer, for a valuable consideration, agrees to indemnify the assured in a specified amount against loss through defects of title to real estate, wherein the latter has an interest, either as purchaser or otherwise...." Beaullieu v. Atlanta Title etc., Co., 60 Ga.App. 400, 404, 4 S.E.2d 78 (1939); OCGA § 33-7-8. "Nothing else appearing, title insurance operates to protect a purchaser or mortgagee against defects in or encumbrances on title which are in existence at the time the insured takes his title. [Cits.]" National Mtg. Corp. v. American Title Ins. Co., 299 N.C. 369, 374, 261 S.E.2d 844 (1980). Clearly, title insurance presupposes an insurable interest of some kind by the party seeking coverage.

As a condition precedent to coverage in the case at bar, the binder plainly required defendants to obtain a warranty deed in their names and "executed Kristal Yvette Wilson Price Johnson and Sherrill Y. Wilson." Compare Baker Mtg. Corp. v. Hugenberg, 145 Ga.App. 528(1), 244 S.E.2d 56 (1978), wherein the loan commitment contract did not state explicitly that the borrowers must have fee simple title to the property which was to be the security for the loan. " 'In the case of a condition precedent, the condition must be performed before the contract becomes absolute and obligatory upon the other party. [OCGA § 13-3-4.]' " State Farm Mut. Auto. Ins. Co. v. Sargent, 162 Ga.App. 127, 128, 290 S.E.2d 326 (1982). Notwithstanding the pendency of Sherrill Wilson's suit against defendants to quiet title, the parties here are in apparent agreement that Wilson's signature on the subject warranty deed is, in fact, a forgery. "It has been uniformly established that a forged document is void ab initio and constitutes a nullity.... [Cits.]" Wutzke v. Bill Reid Painting Svc., 151 Cal.App.3d 36, 43, 198 Cal.Rptr. 418 (1984); Luther v. Clay, 100 Ga. 236(4), 28 S.E. 46 (1897). "[T]his is true even...