Miller v. Transamerica Title Ins. Co.

• Decision Date: 01 April 1975
• Citation: 533 P.2d 325,271 Or. 622
• Parties: Carl A. MILLER and Esther M. Miller, husband and wife, Respondents, v. TRANSAMERICA TITLE INSURANCE COMPANY, a corporation, formerly Oregon Title Insurance Co., a corporation, formerly Commonwealth Title Insurance Co., a corporation, dba Title Guarantee and Abstract Co., a corporation, Appellant.
• Court: Oregon Supreme Court

Page 325

533 P.2d 325

271 Or. 622

Carl A. MILLER and Esther M. Miller, husband and wife, Respondents, v. TRANSAMERICA TITLE INSURANCE COMPANY, a corporation formerly Oregon Title Insurance Co., a corporation, formerly Commonwealth Title Insurance Co., a corporation, dba Title Guarantee and Abstract Co., a corporation, Appellant.

Supreme Court of Oregon.

Argued and Submitted March 4, 1975.

Decided April 1, 1975.

Malcolm J. Corrigall, Coos Bay, argued the cause for appellant. With him on the briefs were Orrin R. Ormsbee, and McNutt, Gant & Ormsbee, Coos Bay.

Harry A. Slack, Slack & Slack, Coquille, argued the cause and filed a brief for respondents.

Before McALLISTER, P.J., and DENECKE, HOLMAN, TONGUE, HOWELL, and BRYSON, JJ.

HOLMAN, Justice.

This is an action for damages by property owners upon a policy of title insurance issued to them by defendant. Defendant appeals from a judgment for plaintiffs in the sum of $20,000 entered pursuant to a jury verdict.

The property in question is devoted to use as a motel. Defendant neglected to include as an exception in its title policy an easement for a private roadway which purports to cover the north ten feet of plaintiffs' property. The easement was for the benefit of the property adjacent that owned by plaintiffs. Two of the motel buildings, each including several living units, intruded into the 10-foot strip which was subject to the easement. One of the buildings was parallel to the 10-foot strip but its eaves overhung the strip. The other building was at a slight angle to the strip covered by the easement and at one end its foundation was over the easement boundary about three feet. This intrusion gradually diminished until the foundation cleared the easement strip at a point a little more than half the length of the building. However, the eaves of the entire length of this building overhung the property subject to the easement.

The judge instructed the jury that the title was unmarketable and that the only issue was the extent of plaintiffs' damages, if any. He also instructed the jury that the damages were the difference between the fair cash market value of the property without being encumbered by the easement and the fair cash market value of the same property while encumbered by the easement. These instructions are not assigned as error.

Plaintiffs' value witnesses testified that the building whose foundation intruded upon the easement strip would have to be torn down to conform with the easement and attributed more than $17,000 to such destruction out of a claimed total of $21,500 damages. This building had been standing in its present location since 1948 and was there when plaintiffs purchased the property in 1958. The building which had only its eaves overhanging the easement strip was constructed by plaintiffs in 1962. This action was commenced in 1974. Plaintiffs discovered the easement when they became interested in selling their property.

It was defendant's contention that the building would not have to be torn down because plaintiffs had destroyed by adverse possession the easement over that portion of the ten-foot strip upon which the buildings intruded. It is plaintiffs' contention that defendant's liability is delineated by the instrument of record and that no inquiry can be made into the present extent and validity of the easement because the title is unmarketable and defendant is liable upon its contract of insurance.

Much of defendant's brief is devoted to contending that the trial court erred because it prevented value witnesses and an attorney from testifying that in their opinion adverse possession had taken place. The trial court did not err in this respect, since the existence of adverse possession is not a subject for expert testimony.

Defendant next contends the trial court erred when it refused to give requested instructions submitting the issue of adverse possession to the jury. The trial judge stated:

'You may have your exception. Your instructions 5, 6 and 7, of course, were toward your theory that there was adverse possession here and, as the Court indicated right from the beginning, we were not going to try an equity suit here in adverse possession to this jury * * *.'

The trial judge refused to submit the issue because the holder of the easement was not a party to the action and could not be bound by the outcome of the case. He also thought it would be improper to submit the issue of adverse possession to the jury since it is usually a matter for decision by the court.

There is no contention by plaintiffs nor finding by the trial court that the form of the adverse possession instructions was in any respect improper. It is our opinion that, in view of plaintiffs' testimony that the two buildings had been used continuously for motel purposes for more than ten years prior to the commencement of this action, there was sufficient evidence to raise the issue of adverse possession, provided it was a proper issue to be litigated in this case.

5 Couch on Insurance 2d § 57:177 states:

'The insurer may always show that the adverse claim is invalid and that consequently the insured has not sustained any loss therefrom. Thus it may show that a restriction in a former deed is invalid and cannot be enforced, a conclusion which means that the title to the insured's land is not made unmarketable by such restriction, and that there is no loss for which the insured can require indemnity.' (Footnotes omitted.)

We believe it was not intended by this section that the insurance company would not be responsible for the cost of clearing the cloud from the title. In this case, whether the building must be destroyed is determined by whether the easement still covers the land upon which the building stands and this, in turn, is determined by whether plaintiffs' continuous use of the building for more than ten years destroyed the easement.

While in this case the issue of adverse possession could not be tried between plaintiffs and the owners of the dominant estate, the present issue of the extent of plaintiffs' damages cannot fairly be tried without a determination of the...