Merrill v. Fremont Abstract Co.

• Court: Idaho Supreme Court
• Writing for the Court: BUDGE, J.
• Citation: Merrill v. Fremont Abstract Co., 39 Idaho 238, 227 P. 34 (Idaho 1924)
• Decision Date: 29 May 1924
• Parties: R. D. MERRILL and GUS ISENBERG, Copartners, Doing Business Under the Firm Name and Style of MERRILL & ISENBERG, Respondents, v. FREMONT ABSTRACT COMPANY, a Corporation, Appellant

227 P. 34

39 Idaho 238

R. D. MERRILL and GUS ISENBERG, Copartners, Doing Business Under the Firm Name and Style of MERRILL & ISENBERG, Respondents, v. FREMONT ABSTRACT COMPANY, a Corporation, Appellant

Supreme Court of Idaho

May 29, 1924

REAL ESTATE-ABSTRACT OF TITLE-OMISSION OF INSTRUMENT-LIABILITY OF ABSTRACTER-MOTION FOR NONSUIT-SUFFICIENCY OF MOTION-IMMATERIAL VARIANCE-APPEAL AND ERROR-ASSIGNMENTS OF ERROR-INSUFFICIENCY OF-DEMURRER.

1. A party purchasing real property has a right to rely upon an abstract of title covering such property furnished to his vendor and properly certified to by a bonded abstracter, and where such abstract, through the negligence of the abstracter, fails to include a mortgage upon the property so purchased and the vendee is thereafter compelled to satisfy such mortgage by payment thereof, the vendee has a right to maintain an action to recover such damages thus sustained and this right is not limited to an action upon the bond required to be given under the provisions of C. S., sec 2262.

2. The relief afforded by the provisions of C. S., sec. 2262, on account of error, omission or deficiency in an abstract of title, extends not only to the person ordering and paying for the abstract, but to all persons relying upon such abstract who suffer damage by reason of such error, omission or deficiency.

3. A motion for nonsuit should be specific and a motion stating that the proof wholly fails to show any liability on the part of the defendant is too general to be considered.

4. Reversal cannot be predicated upon an immaterial variance between the allegations of the complaint and the proof offered in support thereof where the appellant was not prejudiced in making his defense.

5. Where insufficiency of the evidence to support the judgment is assigned as error and appellant fails to point out the particulars of insufficiency in his brief, such assignment of error will not be considered by this court.

APPEAL from the District Court of the Ninth Judicial District, for Fremont County. Hon. James G. Gwinn, Judge.

Action to recover damages sustained by reason of error in abstract of title to certain real estate. Judgment for plaintiff. Affirmed.

Judgment of the lower court affirmed. Costs awarded to respondent.

Peterson & Coffin and E. G. Frawley, for Appellant.

"An abstracter's liability for damages arising from negligence or want of due care in making an examination of records and in preparing an abstract of title is contractual." (Bremerton Development Co. v. Title Trust Co., 67 Wash. 268, 121 P. 69.)

Such liability extends only to the person by whom the abstracter was employed. There must be a contract or privity of contract to create the liability as it does not originate in tort. (Russell & Co. v. Polk County Abstract Co., 87 Iowa 233, 43 Am. St. 281, 54 N.W. 218; Equitable Bldg. & Loan Assn. v. Bank of Commerce & Trust Co., 118 Tenn. 678, 12 Ann. Cas. 407, 102 S.W. 901, 12 L. R. A., N. S., 449; Thomas v. Guarantee Title & Trust Co., 81 Ohio St. 432, 91 N.E. 183, 26 L. R. A., N. S., 1210; 13 C. J. 701; Talpey v. Wright, 61 Ark. 275, 54 Am. St. 206, 32 S.W. 1072; Mechanics' Bldg. Assn. v. Whitacre, 92 Ind. 547; Security Abstract of Title Co. v. Longacre, 56 Neb. 469, 76 N.W. 1073; Glatwatz v. People's Guaranty Search Co., 49 A.D. 465; 63 N.Y.S. 691; National Sav. Bank v. Ward, 100 U.S. 195, 25 L.Ed. 621.)

In every instance where an abstracter has been held liable for errors or omissions to one not in privity of contract with him, such liability was by virtue of a statute similar to the one in this state; that is to say, suit has always been brought upon the bond conditioned as by the statute directed. (Crook v. Chilvers, 99 Neb. 684, 157 N.W. 617; Arnold & Co. v. Barner, 91 Kan. 768, Ann. Cas. 1915D, 446, 139 P. 404; Gate City Abstract Co. v. Post, 55 Neb. 742, 76 N.W. 471; Sackett v. Rose, 55 Okla. 398, 154 P. 1177.)

Suits in the above cases were all brought upon the abstracter's bonds, whereas the present suit is direct, no mention being made of a bond, nor is there any allegation or proof that the defendant complied with the statute, or that the action is brought under the statute.

C. Redman Moon and Thos. B. Hargis, for Respondent.

An abstracter of title is liable on his bond to pay all damages that may accrue to any person by reason of any incompleteness, imperfection or error in any abstract furnished by him and relied on by such person to his injury, and such liability is not confined to the person for whom he makes or furnishes an abstract. (Scott v. Jordan, 55 Okla. 712, 155 P. 499; Sackett v. Rose, 55 Okla. 398, 154 P. 1177; Washington County Abstract Co. v. Harris, 48 Okla. 577, 149 P. 1075; Leeper v. Patton (Okl.), 215 P. 421; Goldberg v. Sisseton Loan & Title Co., 24 S.D. 49, 140 Am. St. 775, 123 N.W. 266.)

There are no exceptions shown by the decisions to the liability of an abstracter in states having statutes similar to ours and holding the abstracter liable to any person relying upon the abstract irrespective of the individual to whom, or for whom the abstract was furnished. Abstracts have, by reason of these statutes and the bonds given by the abstracter, been given greater weight and power than those considered under the contractual theory alone and it is no doubt due largely to this fact that abstracters are held to strict liability for the damage flowing from errors in their abstracts, irrespective of the person to whom furnished. (Western L. & S. Co. v. Silver Bow Ab. Co., 31 Mont. 448, 107 Am. St. 435, 78 P. 774; Economy Bldg. & Loan Assn. v. West Jersey T. & G. Co., 64 N.J.L. 27, 44 A. 854; Dickle v. Nashville Abstract Co., 89 Tenn. 431, 24 Am. St. 616, 14 S.W. 896; Denton v. Nashville Title Co., 112 Tenn. 320, 79 S.W. 799; 1 Am. & Eng. Ency. of Law, 211; Gates City Ab. Co. v. Post, 55 Neb. 742, 76 N.W. 471; Crook v. Chilvers, 99 Neb. 684, 157 N.W. 617.)

BUDGE, J. McCarthy, C. J., and William A. Lee, J., concur. WM. E. LEE, J., Dissenting.

OPINION

BUDGE, J.

This action was brought by respondents to recover damages from appellant on account of its alleged negligence in the preparation of an abstract of title to certain real property whereby an instrument was omitted from the same. The amended complaint, which is unverified, alleges that on October 29, 1917, appellant made, complied and delivered to one, J. F. Burnham, at his request, an abstract of title covering certain property in Fremont county, certified to date, and through mistake and fraud omitted therefrom a mortgage upon such property given by J. F. Burnham and wife to the Consolidated Wagon & Machine Company, which on August 30, 1920, amounted to $ 495.15 and which was duly recorded in Fremont county on April 19, 1915. On March 4, 1918, respondents purchased the property covered by the said abstract, relying thereon. Subsequently, by warranty deed they conveyed the property to one H. E. Bowman. Thereafter and under the terms of the warranty deed to Bowman respondents were compelled to and did pay and satisfy the said mortgage. Demand was thereupon made upon appellant for reimbursement, which was refused. Whereupon this action was brought to recover from appellant the amount expended in satisfaction of the mortgage. A general and special demurrer was filed to the amended complaint but the record fails to disclose the action taken by the court thereon. To the amended complaint appellant answered denying each and every allegation contained therein. Upon the issues thus framed the cause was tried to the court sitting without a jury. No findings of fact or conclusions of law appear in the record and it will be presumed that the same were waived. Judgment was rendered in favor of respondents in the sum of $ 544.21, with interest and costs, from which judgment this appeal is taken.

Appellant specifies as error the action of the court in overruling its demurrer to the amended complaint. The record is silent as to the action of the court upon the demurrer. In the case of Glavin v. Salmon River Canal Co., Ltd., ante., p. 3, 39 Idaho 3, 226 P. 739, this court held: "Where the record is silent as to the action of the court upon a demurrer, the demurrer will be deemed to have been waived."

To the same effect see Diamond Coal Co. v. Cook, 6 Cal Unrep. 446, 61 P. 578; Burns v. Stolze, 111 Wash. 392, 191 P. 642. It therefore follows that this assignment of error is not properly here for consideration, but since both parties, in their briefs, have treated the demurrer as though overruled, we have concluded to dispose of the question of the sufficiency of the complaint. It is the contention of appellant that the complaint fails to state a cause of action in that it affirmatively appears therefrom that the abstract of title was furnished at the request of Burnham, the original owner of the property and that the abstracter's liability, if any, for damages arising from his negligence or want of due care in making, compiling and certifying to the abstract of title is contractual and therefore binding only on the parties to the contract, that there was no privity of contract between respondents and appellant, neither can the action be converted into an action in tort since the duty to make the abstract correctly was created solely by contract and its breach is therefore merely a breach of contract. The general rule would seem to be that the liability of an abstracter in the absence of statute depends upon the privity of contract so that the abstracter furnishing an abstract to one person is not held liable to another using the same, for omissions or negligence, where the abstracter had no notice or knowledge that the abstract was for anyone other than the person ordering it. Unless, therefore, there is a...