Lesamiz v. Lawyers Title Ins. Corp., 34299

• Citation: 322 P.2d 351,51 Wn.2d 835
• Decision Date: 06 March 1958
• Docket Number: No. 34299,34299
• Court: United States State Supreme Court of Washington
• Parties: Victor LESAMIZ and Golden Lesamiz, his wife, Appellants, v. LAWYERS TITLE INSURANCE CORPORATION, a Washington corporation, Respondent.

Page 835

51 Wn.2d 835

322 P.2d 351

Victor LESAMIZ and Golden Lesamiz, his wife, Appellants, v. LAWYERS TITLE INSURANCE CORPORATION, a Washington corporation, Respondent.

No. 34299.

Supreme Court of Washington, Department 2.

March 6, 1958.

John Hancock, Okanogan, for appellants.

Johnson & Johnson, Okanogan, Croson, Johnson & Wheelon, Seattle, for respondent.

HUNTER, Justice.

This is an appeal by Victor and Golden Lesamiz, husband and wife, from an order of the trial court sustaining a demurrer to their complaint and dismissing their cause of action when they refused to plead further. Although his wife was made a party to all proceedings referred to in this opinion, for the purpose of clarity, Victor Lesamiz will be referred to herein as though he were the sole member of the community involved.

In his complaint Victor Lesamiz alleged that, on November 12, 1954, he sold certain timber to the Landreth Timber Company which he believed he owned; that on November 18, 1954, he was informed by the Landreth Timber Company that the Biles-Coleman Lumber Company had requested it to stop cutting and removing the timber for the reason that it (Biles-Coleman Lumber Company) claimed title and ownership of the timber in question; that on the following day, November 19, 1954, without disclosing this information, he purchased a policy of title insurance from the Okanogan County Abstract Company, an agent for the defendant Lawyers Title Insurance Corporation. The policy issued by the defendant showed clear record title in the plaintiff and insured him against loss or damage not exceeding $30,000.

On December 17, 1954, the Biles-Coleman Lumber Company instituted an action against Victor Lesamiz in which it claimed title to the timber situated on the premises covered by the title insurance policy, and sought to quiet title in its name and reformation of a recorded deed.

On December 23, 1954, Lesamiz caused the defense of that action to be tendered to the Lawyers Title Insurance Corporation, contending the same came within the coverage of the title policy. He specifically relied upon the following provision:

'Notice of defect, suit or action: The Company will and shall have the right, at its own cost, to defend the Insured in all suits, actions or proceedings founded upon a claim of title, incumbrance or defect which existed or is claimed to have existed prior in date to this policy and not excepted herein; * * *.' (Italics ours.)

The insurer refused to accept the defense of that action on the ground that the insured had notice of the claim, which was not of record, prior to when he secured the title policy and that, therefore, the action on such a claim was one excepted in Schedule B of the policy, which provides in part as follows:

'This policy does not insure against:

* * *

* * *

'2. Rights or claims of persons in possession or claiming to be in possession, not shown of record; rights claimed under instruments of which no notice is of record and rights or claims based upon facts of which no notices are of record, but of which the insured has notice; * * *.' (Italics ours.)

As a result of this refusal by the insurer, Lesamiz was required to defend the action himself which he did successfully in the superior court of Okanogan county. The judgment was affirmed by this court on appeal in Biles-Coleman Lumber Co. v. Lesamiz, 1956, 49 Wash.2d 436, 302 P.2d 198.

Thereafter, he commenced this action against the Lawyers Title Insurance Corporation for the expenses of this defense, which he alleged were incurred by reason of the defendant insurer's failure to defend the action in accordance with the provision of the title policy.

The trial court sustained the defendant's demurrer to the complaint and dismissed the plaintiff's action when he refused to plead further. This appeal followed.

Appellant argues: (1) The complaint on its face shows he had no knowledge of the facts upon which the Biles-Coleman Lumber Company based its claim to the timber; (2) there was no duty on the appellant to disclose to the respondent the claim of the Biles-Coleman Lumber Company to the timber in the absence of his knowledge of the facts upon which the claim was based; (3) the dismissal of the action brought by Biles-Coleman Lumber Company was an adjudication that there were no facts upon which its claim was based.

We are unable to agree with the appellant's rationale.

Standing alone, the pertinent portion of the exclusionary clause relied upon by the respondent when it refused to defend the Biles-Coleman case, supra, reads as follows: 'rights or claims based upon facts of which no notices are of record, but of which the insured has notice.' This case turns upon the...