Phoenix Title & Trust Company, a Corp. v. Continental Oil Company, a Corp.

• Decision Date: 05 March 1934
• Docket Number: Civil 3352
• Citation: 43 Ariz. 219,29 P.2d 1065
• Parties: PHOENIX TITLE & TRUST COMPANY, a Corporation, Appellant, v. CONTINENTAL OIL COMPANY, a Corporation, Appellee
• Court: Arizona Supreme Court

29 P.2d 1065

43 Ariz. 219

PHOENIX TITLE & TRUST COMPANY, a Corporation, Appellant, v. CONTINENTAL OIL COMPANY, a Corporation, Appellee

Civil No. 3352

Supreme Court of Arizona

March 5, 1934

APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment reversed, with directions.

Messrs Kibbey, Bennett, Gust, Smith & Rosenfeld, for Appellant.

Messrs Cunningham, Carson & Gibbons and Messrs. Frazier & Perry, for Appellee.

OPINION

LOCKWOOD, J.

Continental Oil Company, a corporation, hereinafter called plaintiff brought suit against Phoenix Title & Trust Company, a corporation, hereinafter called defendant, to recover damages for the alleged negligence of defendant in preparing a certain abstract of title to property which was purchased by plaintiff from N. B. Cooper and Nell B. Cooper, his wife, in reliance upon said abstract. The case was tried to a jury which returned a verdict in favor of plaintiff in the sum of $15,199.86, with interest, and judgment was duly rendered thereon, and after the usual motion for new trial had been denied, this appeal was taken.

There are some twelve assignments of error, which we shall consider as appears advisable. The ultimate facts necessary for a determination of the case, taking the evidence as strongly as is reasonably possible in support of plaintiff's theory of the case as we must do under the verdict of the jury, are as follows: In the early part of June, 1929, the Coopers were the owners of lot 9 in block 4 of the East Evergreen addition to the city of Phoenix, which lot is situated at the northwest corner of the intersection of Seventh and Roosevelt Streets. They listed his property for sale with the Dwight B. Heard Investment Company, hereinafter called the investment company by which it was sold to one E. G. Roell, under an option agreement dated June 10, 1929. This option was for the sum of $17,500, and contained the following clauses:

"The parties of the first part agree, within ten days from the date hereof, to furnish and deliver to the party of the second part an abstract of title continued and certified to date, showing fee simple title, free and clear of liens, encumbrances, and objections affecting marketability, to said property vested in the parties of the first part, except (here state encumbrances if any):

"Unpaid paving taxes in the amount of $438.00 (Four hundred thirty-eight dollars).

"Failure to furnish abstract of title within the time aforesaid may be treated by party of the second part as a default hereunder, or as an extension of option period equal to delay in furnishing abstract. . . .

"It is understood that party of the second part desires to use said property, if purchased, for the construction and maintenance thereon of petroleum merchandising service station, which may require the securing of a permit therefor from City, Town, County or State authorities, and that if such permit cannot be obtained, parties of the first part, upon surrender of this option, will return to party of the second part the consideration paid herefor." -- and was signed by the Coopers, as parties of the first part, and by Roell, as party of the second part.

On the day following the signing of the option, the investment company ordered an abstract of the property from the defendant on the regular blank used by it for that purpose. This order requested an abstract of title to the lot above described, stated the title was vested in N. B. Cooper and was signed by the investment company, and ordered the abstract delivered to it. The abstract was completed and certified as of June 17, 1929, and delivered to the investment company on June 19th. There is no evidence that defendant, or any of its agents, had any knowledge of the specific purpose for which the abstract was desired, nor did it know that it was to be furnished to or for any particular person, except the investment company and the Coopers, though it did know that usually abstracts were desired for the purpose of being furnished either to a purchaser or to a person intending to loan money on the property, although this was not invariably the case.

The investment company received the abstract and delivered the same to Roell, who gave a receipt to Cooper, the owner of the premises, acknowledging receipt of the abstract, which was signed by himself personally, and also a receipt to the investment company for the same abstract, which was signed "Continental Oil Company by E. B. Roell."

The option was afterwards assigned to plaintiff by Roell, and the abstract forwarded to plaintiff's attorneys in Denver, Colorado. It was examined by them, and they gave a written opinion thereon, pointing out seventeen matters, shown in the abstract, that required investigation. A deed in the chain of title, which we shall hereinafter call the Christy deed, was shown by the abstract, which was said to contain certain building restrictions, as follows:

"That no saloon or place for the sale of intoxicating liquors, and no hospital, sanitarium, hotel or lodging house, used or occupied as such for the care of persons suffering from disease shall ever be permitted upon said premises. That no dwelling house shall be erected thereon to cost less than $2000 and the front wall of such building shall not be placed nearer than 35 feet of the front property line. Covenants attach to the land and run with the title hereto."

And plaintiff's attention was called to the fact that the title was subject to these restrictions, but no suggestion was made that there should be a further examination of the deed containing them. They further suggested that the abstract, and their opinion, be referred to Messrs. Chalmers, Fennemore & Nairn, well-known attorneys of Phoenix.

About the 1st of July, Roell brought the abstract to the office of these attorneys and interviewed Mr. Fennemore. The latter was a property owner in the vicinity of the lot in question, and knew about the restrictions thereon. When he learned of the purpose of Roell's consultation, he informed him that he could not represent him as attorney in the matter, advising him that there were restrictions on the property that would prevent the erection of a service station. Roell then asked Fennemore to recommend some other attorney, and he referred him to Messrs. Cunningham & Carson and Mr. Moeur, of Phoenix. Shortly thereafter Roell appeared at the office of Cunningham & Carson and took the matter up with them, and after various investigations and correspondence, they advised plaintiff that the title was in satisfactory shape to close the purchase. Cunningham & Carson made an original investigation in the county recorder's office, of nearly all the matters referred to by the Denver attorneys in their opinion as affecting the title, with the exception of the one in regard to the building restrictions upon the property, but apparently did not examine the Christy deed which contained these restrictions. Thereafter, and on the eighth day of August, the deal was closed, and plaintiff paid the Coopers the balance still due of the $17,500.

Plaintiff thereupon commenced the erection of a gasoline and oil service station on the property. Fennemore and other property owners in the vicinity proceeded to file suit in the superior court enjoining them, on the ground that the restrictions in the Christy deed prevented the erection of such a structure. The matter finally came to this court, and the injunction was made permanent; the court holding that the restrictions found in the Christy deed did prevent its erection.

Thereafter plaintiff filed suit against Cooper, on account of an alleged breach of a warranty contained in the deed executed by him and his wife to the plaintiff, and shortly thereafter brought this suit against defendant, to recover damages alleged to have been sustained by it on account of its alleged reliance on the abstract.

The lot in question had passed through various mesne conveyances to the Coopers. In their chain of title there appears a deed made by Lloyd B. Christy and his wife, at that time the owners of the said lot, which contains the following provisions:

"It is hereby mutually covenanted and understood between the parties hereto that East Evergreen, within which the above described premises are situate and of which they constitute a part, has been platted and laid out as a choice and attractive residence addition to the City of Phoenix; and to protect all lot owners in the enjoyment of their respective lots therein, it is hereby covenanted on the part of the parties of the second part, their heirs, executors administrators and assigns, that neither they nor any of them will erect or maintain or suffer or permit to be erected or maintained on the above described premises any building or structure other than a dwelling house, hotel, lodging house or boarding house, with the necessary and usual outbuildings, and that no saloon or place for the sale of intoxicating liquors and no hospital, sanitarium, hotel, boarding or lodging house used or occupied as such for the care, lodging and entertainment of persons suffering from disease, and no building used or occupied for any purpose that shall depreciate the value of the neighboring property for dwelling house purposes shall ever be maintained, kept or permitted upon said premises or any part thereof.

"Said second parties for themselves, their heirs, executors administrators and assigns, further covenant and agree that neither they nor any of them shall or will construct, build or maintain on said premises any dwelling house, hotel, boarding or lodging house which shall cost to construct less than Two thousand ($2000) Dollars, and that the front line of such building shall...