Sandler v. New Jersey Realty Title Ins. Co.
| Decision Date | 30 March 1961 |
| Docket Number | No. L--12943,L--12943 |
| Parties | Lewis N. SANDLER and Richard M. Sandler, Plaintiffs, v. NEW JERSEY REALTY TITLE INSURANCE COMPANY, an insurance corporation of the State of New Jersey, Defendant. |
| Court | New Jersey Superior Court |
Alan V. Lowenstein, Newark, for plaintiffs.
Gassert, Murphy & Gassert, Newark, for defendant (Thomas S. Murphy, Newark, appearing).
This matter comes on before me on the defendant's motion to dismiss the complaint, or in the alternative for a summary judgment for defendant on the ground that there is no genuine issue of any material fact, and that the defendant is entitled to judgment as a matter of law. Plaintiff has filed a cross-motion for summary judgment as to the issue of liability on the first count. By subsequent stipulation, there being agreement as to the facts, the case was submitted for final determination.
The plaintiffs are children and sole beneficiaries of the late Maurice Sandler. They are also his sole executors, although they do not sue as such. On July 25, 1946 the defendant, New Jersey Realty Title Insurance Company, issued to Maurice Sandler a policy of title insurance in the amount of $10,000 covering certain premises located in the Township of Springfield, Union County, New Jersey. On December 20, 1946 Sandler conveyed the premises in question to Richard Sandler Realty Co., Inc., a body corporate of the State of New Jersey, by bargain and sale deed. No notice was given to the defendant of this transfer of title and no application for title insurance was ever made on behalf of the corporation. On December 29, 1950 Richard Sandler Realty Co., Inc. reconveyed the identical premises to Maurice Sandler. On January 2, 1951 he, in turn, conveyed to the plaintiff, Richard M. Sandler, by bargain and sale deed, an undivided one-third interest in the premises. At the same time he conveyed to the plaintiff, Lewis N. Sandler, an undivided one-third interest therein. Maurice Sandler died on January 22, 1955 seized of the remaining undivided one-third interest in the premises. Under his last will and testament, which was duly probated, his undivided one-third interest was devised as part of his residuary estate to his sons, the plaintiffs herein.
On October 31, 1956 the plaintiffs and their respective wives contracted to sell approximately 5,000 square feet of the premises covered by the title policy. Thereafter an adverse claim was filed and the plaintiffs requested the defendant to remove the cloud from plaintiffs' title. Defendant denied liability. Thereafter the plaintiffs and their wives entered into a supplementing agreement with the purchaser substituting an alternative parcel which was conveyed for a consideration of $20,000. Examination of the title revealed that Maurice Sandler had not owned title to two of the tracts embraced in the description contained in the title insurance policy.
The first count of the complaint seeks recovery by way of indemnification under the policy. The second count seeks damages for negligence in making the search.
Defendant's contentions may be briefly summarized as follows:
(1) Plaintiffs were not insured and were thus not entitled to indemnification under the policy.
(2) The policy was not assignable or negotiable and thus terminated and expired upon the initial transfer of title from Sandler.
(3) Defendant owed no duty to the plaintiffs and hence is not responsible for loss or damage by reason of negligence.
Certain additional facts appear in the case by stipulation: Maurice Sandler was the beneficial owner of 100% Of the capital stock in Richard Sandler Realty Co., Inc., to which he conveyed the subject premises, and the conveyance to the corporation was a capital contribution to that corporation. The market value of that portion of the property originally purchased and insured by the defendant for which the plaintiffs herein seek damages by virtue of title defects was $30,000, but the damages, if any, which the plaintiffs may recover from defendant are limited to the policy limit of $10,000.
The Richard Sandler Realty Co., Inc. was dissolved on December 31, 1950.
The title policy in question contained a clause reading as follows:
'That it will indemnify, keep harmless and insure Maurice Sandler hereinafter called Party Insured, and the person or persons upon whom the insured estate or interest devolves from the Party Insured by descent, devise, bequest or the laws governing intestacy, and all persons or corporations to whom this policy of title insurance may be transferred as provided in the conditions hereof with the assent of the Company, testified by the signature of its properly authorized officer endorsed thereon, from all loss or damage not exceeding the sum of Ten Thousand Dollars which the Party Insured shall sustain by reason of defects in or unmarketability of the title of the Party Insured to the estate or interest described in Schedule A * * * The obligation and liability of the Company hereunder shall be limited to and established in the manner provided by, and the amount of loss and damage sustained by the Party Insured hereunder shall be ascertained in accordance with, the scope and conditions of this policy of title insurance which are annexed to, incorporated in and made part of this contract, and not otherwise.'
Under the section of the policy entitled 'Scope and Conditions of this Policy of Title Insurance,' the following provision was set forth:
The policy contained another provision regarding sales and mortgages of the premises as follows:
'Whenever the party insured shall sell or mortgage any or all of the estate or interest insured by this policy and application is made for title insurance for the grantee or mortgagee of the party insured, then if the risk be again accepted by the Company, premium will be charged at the reduced rate then current and in effect in the Company for reissue title insurance to the amount of this policy, and at the Company's regular premium rates then in effect on any amount in excess of the amount of this policy.'
On the back of the policy was endorsed the following:
It is undisputed that no notice was given to the defendant of the transfer from Maurice Sandler to the corporation, nor was any notice given of the retransfer. Likewise, no notice was given of the conveyance to the two sons, the plaintiffs herein. No additional fee was paid and there was no consent to the transfer.
Defendant's motion for summary judgment on the first count of the complaint is premised upon its contention that the conveyance from the insured to Richard Sandler Realty Co., Inc. on December 20, 1946 terminated its obligation under the policy to the insured and his devisees. Any rights which Sandler acquired through the subsequent reconveyance of the property to him on December 29, 1950 were those of a subsequent purchaser, i.e., the right to obtain coverage upon the payment of an additional premium, as provided for in paragraph 12 of the policy. Since no additional premium was ever paid, there could be no liability.
Plaintiffs concede that had there been a loss during the period of ownership by the corporation, the defendant could not have been held liable. They urge however that upon the reconveyance to the insured, the obligation of defendant was reinstated. They also urge that their rights under the policy were not forfeited by the transfer to the corporation since it was wholly owned by the insured and upon its dissolution its assets were retransferred to him.
The contract here in question was one of indemnity, issued to protect the parties insured from loss or damage sustained. Booth v. New Jersey Highway Authority, 60 N.J.Super. 534, 159 A.2d 460 (Law Div.1960); Westville Land Company v. Handle, 112 N.J.L. 447, 171 A. 520 (Sup.Ct.1934). In construing the contract, we may not enlarge or restrict the normal usage of the tokens of intention contained in the contract, except as it may be reasonably necessary to serve its general design and purpose. The intention of the parties is to be gleaned from the contract itself. Gusaeff v. John Hancock Mutual Life Insurance Co., 118 N.J.L. 364, 192 A. 528 (Sup.Ct.1937); George M. Brewster and Son v. Catalytic Construction Co., 17 N.J. 20, 109 A.2d 805 (1954). When the terms of an insurance contract are clear, it is the function of the court to enforce it as written and not to make a better contract for either party. Kupfersmith v. Delaware Insurance Company, 84 N.J.L. 271, 86 A. 399, 45 L.R.A. (N.S.) 847 (E. & A.1913). In the event of ambiguity, such ambiguity is generally construed against the company which prepared the policy and in such a manner as to avoid a forfeiture. Boswell v. Travelers Indemnity Co., 38 N.J.Super. 599, 605, 120 A.2d 250 (App.Div.1956).
It is urged by the defendant that the...
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