Hillock v. Idaho Title & Trust Co.

• Decision Date: 12 September 1912
• Citation: 22 Idaho 440,126 P. 612
• Parties: CHARLES HILLOCK and BERT T. PARKER, Appellants, v. IDAHO TITLE & TRUST CO., Respondent
• Court: Idaho Supreme Court

126 P. 612

22 Idaho 440

CHARLES HILLOCK and BERT T. PARKER, Appellants, v. IDAHO TITLE & TRUST CO., Respondent

Supreme Court of Idaho

September 12, 1912

STATUTE OF LIMITATIONS-FALSE ABSTRACT OF TITLE-DAMAGES INCURRED ON ACCOUNT OF FALSITY OF ABSTRACT-WHEN ACTION ACCRUES.

(Syllabus by the court.)

1. Where a prospective purchaser of a tract of land purchased from an abstract company an abstract of title to such property, accompanied by certificate to the effect that such abstract contained a notation of all instruments of record affecting the title, including tax certificates and tax deeds, and relying upon the correctness of the abstract and the truth of the certificate annexed thereto, the purchaser of the abstract subsequently purchased the land therein described, and it thereafter developed that at the time of the making and delivery of such abstract there was an outstanding tax deed to such property which was not disclosed by the abstract, and the purchaser of the abstract and land therein described was obliged to expend money to procure a cancellation and release and satisfaction of the tax deed and thereafter commenced an action against the abstract company to recover damages sustained on account of the mistake and false representation made by the abstract and certificate thereto: held, that the limitation of such action is governed by subd. 4 of sec. 4054 of the Revised Codes, and that the cause of action in such case does not accrue until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.

2. An abstract company, duly and regularly authorized to transact business under the laws of this state, which engages in the business of making and selling abstracts of title, thereby represents to the purchasers of such abstracts that its employees are competent and qualified to make examinations of the records and to furnish such abstracts and that they are expert therein, and that the purchaser of such abstract may safely rely upon the statements and representations contained in the abstract and certificate thereto.

3. One who sustains damage by reason of the mistake and false and fraudulent representation contained in an abstract may, under the provisions of subd. 4 of sec. 4054 of the Rev. Codes commence his action to recover damages within three years after discovering the fraud or mistake.

APPEAL from the District Court of the Third Judicial District for Ada County. Hon. Carl A. Davis, Judge.

Action for damages on account of mistake and misrepresentation. Judgment for the defendant and plaintiffs appeal. Reversed.

Reversed and remanded, with directions. Costs awarded in favor of appellant.

J. C Johnston, for Appellants.

In actions for relief on the ground of fraud or mistake, the action in such case is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake. (Shain v. Sresovich, 104 Cal. 402, 38 P. 51; Hayes v. Los Angeles Co., 99 Cal. 74, 33 P. 766; Tarke v. Bingham, 123 Cal. 163, 55 P. 759; Smith v. Irving (Cal.), 22 P. 170; Christensen v. Jensen (Cal.), 40 P. 747.)

Where no duty is imposed by law upon a person to make inquiry, and where under the circumstances a prudent man would not be put on inquiry, the mere fact that means of knowledge are open to the plaintiff, and he has not availed himself of them, does not debar him from relief when thereafter he shall make actual discovery. (Tarke v. Bingham, supra; Prouty v. Devin, 118 Cal. 258, 50 P. 380; Watson v. Molden, 10 Idaho 570, 79 P. 503.)

If plaintiff, without any fault or neglect on his part is ignorant of the mistake, the statute begins to run when, and only when, the mistake is discovered. (25 Cyc. 1195, 1196, note 23; Manatt v. Star, 72 Iowa 677, 34 N.W. 784.)

Where a person undertakes for hire the performance of a duty demanding skill as well as care, he is understood to have engaged to use a degree of diligence and skill adequate to the due performance of his undertaking; and one who undertakes the examination of title is liable for want of ordinary care or skill in the performance of the task. (7 Am. & Eng. Ency. of Law, 2d ed., 220.)

The measure of damages is the employer's actual loss, as measured by the amount which he has had to pay to get title, or the amount it has cost to remove the encumbrance. ( Dodd v. Williams, 3 Mo.App. 281; Morange v. Mix, 44 N.Y. 315; Chase v. Heaney, 70 Ill. 268; Nat. Savings Bank v. Ward, 100 U.S. 195, 25 L.Ed. 621.)

Where the cause of action is based on consequential, as distinguished from direct, damage, and involves an act or omission which might have proved harmless, the cause of action must be taken as accruing only upon the actual occurrence of damage, so that the statute runs only from that time. (19 Am. & Eng. Ency. of Law, 2d ed., 200; Power v. Munger, 52 F. 705, 3 C. C. A. 253; People v. Cramer, 15 Colo. 155, 25 P. 302; Steele & Johnson v. Bryant, 49 Iowa 116.)

Wyman & Wyman, for Respondent.

An action against an abstractor of titles for damages for giving a wrong certificate of title is not one on the bond which he has given pursuant to the statute nor on an agreement in writing, but on a contract not in writing, and hence barred in three years. (12 Am. Dig., p. 1498; Provident Loan T. Co. v. Wolcott, 5 Kan. App. 473, 47 P. 8; Russell v. Polk County Abstract Co., 87 Iowa 233, 43 Am. St. 381, 54 N.W. 212.)

The right of action against an abstractor for damages resulting from an incorrect abstract accrues at the time the examination is made and reported, and not when the error is discovered or damages result therefrom. (1 Cyc. L. & P. 217, and cases cited; 1 Am. & Eng. Ency. of Law, 2d ed., 221, and cases cited; Equitable Bldg. & L. Assn. v. Bank of Commerce [118 Tenn. 678, 102 S.W. 901], 12 L. R. A., N. S., 454, 12 Ann. Cas. 407; Warville on Abstracts, p. 9.)

AILSHIE, J. Stewart, C. J., and Sullivan, J., concur.

OPINION

AILSHIE, J.

This action was instituted against the Idaho Title & Trust Co. to recover damages for selling and delivering to the appellants herein, in the month of April, 1907, an incomplete abstract of title to a certain tract of land accompanied by a false certificate.

It was alleged in the complaint that the plaintiffs, about the month of April, 1907, applied to the defendant, which was engaged in making abstracts, for a full and perfect abstract of title to a certain tract of land, and that they thereafter prepared, made and certified an abstract of title for which plaintiffs paid the required compensation, and that, relying on the truth and correctness of the certificate and abstract, the plaintiffs purchased the land, and that thereafter, and about the 16th of September, 1911, they discovered for the first time that there had been a mistake made in compiling the abstract, and that, in truth and in fact, the land had been sold for taxes for the year 1894 and a tax deed had been issued therefor, and that the abstract which the plaintiffs purchased from defendant failed to show these facts; and they alleged that the certificate of abstract was false and untrue, in that it failed to disclose this outstanding tax deed, and that plaintiffs suffered damages in the sum of $ 500, which sum they had to pay out in order to remove the tax deed and clear the title to the land covered by the abstract.

This action was commenced on the 12th of January, 1912. The abstract of title was sold and delivered to the appellants on the 15th day of April, 1907. The defendant company filed a demurrer to the complaint, on the grounds that the cause of action was barred by the statute of limitations as prescribed by secs. 4050 and 4053 of the Rev. Codes. The court sustained the demurrer and this appeal has been prosecuted.

The trial court held and the respondent contends here that the cause of action pleaded is governed by secs. 4050 and 4053 of the Rev. Codes, and that at the time of the filing of the complaint the cause of action was barred by the provisions of these sections of the statute. Appellants contend that the cause of action pleaded is governed by sec. 4054 of the Rev. Codes, and was not barred by the statute of limitations.

Secs. 4050 and 4053 of the Rev. Codes are as follows:

Sec. 4050: "The periods prescribed for the commencement of actions other than for the recovery of real property, are as follows: . . . ."

Sec. 4053: "Within four years: An action upon a contract, obligation, or liability, not founded upon an instrument of writing."

That portion of sec. 4054 which is involved in this case and on which appellants rely reads as follows: "Within three years: . . . . (4) An action for relief on the ground of fraud or mistake. The cause of action in such case not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake."

It will be seen, therefore, that the appellant contends that this is an action for relief on the ground of mistake, or the constructive fraud resulting therefrom, and that the cause of action did not accrue until the discovery of the fraud or mistake which caused the injury. The respondent, on the other hand, contends that it is an action upon contract, not founded upon an instrument of writing. The courts appear to have considered this question in other states, some of them upon statutes similar to ours and others independent of statute. The concrete cases against abstract companies seem to be generally with the position taken by respondent.

Russell v. Polk County Abstract Co., 87 Iowa 233, 43 Am. St. 381, 54 N.W. 212, was an action against an abstract company for negligence in making an abstract and damages arising on account of such negligence. It was held by the court in ...