Thorne v. Johnson, 25655
| Citation | 483 S.W.2d 658 |
| Decision Date | 05 June 1972 |
| Docket Number | No. 25655,25655 |
| Parties | Louis D. THORNE, Plaintiff, v. L. Gayle JOHNSON, Defendant, and Third-Party Plaintiff, Appellant, and Production Credit Association and The Mutual Benefit Life Insurance Company, Defendants. JOHNSON LAND AND DEVELOPMENT COMPANY, Defendant and Third-Party Plaintiff, Appellant, v. Vera H. JOHNSON (Deceased), et al., Third-Party Defendants, Appellants, and Douglass-Stewart Abstract & Investment Company, Third-Party Defendant, Respondent. |
| Court | Missouri Court of Appeals |
Max W. Lilley, Lilley & Cowan, Springfield, for defendant and third party plaintiff, appellant Johnson Land and Development Co.
Thaine Q. Blumer, Kansas City, for Frank F. Hamer, Oda Evelyn Hamer, John N. Bond, Hazel Mo. Bond and Kirk Bond, third-party defendants, appellants.
Donald W. Johnson, Richard A. Erickson, Erickson, Ewing, Smalley, Elliott, Boyle & Records, Kansas City, for L. Gayle Johnson, defendant and third-party plaintiff appellant.
Don Chapman, Jr., Chapman & Chapman, Chillicothe, for respondent.
The sole issue presented on this consolidated appeal is whether the causes of action pleaded against Douglass-Stewart Abstract & Investment Company (hereinafter referred to as 'the Abstract Company') are barred by limitations. The decision from which the appeals herein are taken was the sustaining of a motion by the Abstract Company for judgment on the pleadings. Consequently, the facts pleaded by the appellants must be taken as true. Although the issue presented is narrow, the situation involved is somewhat complicated.
Prior to March 27, 1957, Mr. and Mrs. L. Gayle Johnson were owners in fee simple of the land in question. On the date stated, the Johnsons executed and delivered to plaintiff Thorne deed to a one-half interest in that land. Allegedly, Mr. Johnson (hereinafter referred to as 'Johnson') and Thorne were partners with respect to this property, and it is alleged that Johnson was authorized to sell and convey the property on behalf of both himself and Thorne. Johnson states additionally in his brief, although this fact is not pleaded, that there was an agreement between these parties that the deed to Thorne was not to be recorded.
Whatever the case concerning the relationship and agreements between Thorne and Johnson, the fact is that Thorne did record his deed on April 4, 1957. Thereafter, the Johnsons contracted to sell the property to Frank F. Hamer, Oda Hamer, John N. Bond, Hazel M. Bond and Kirk Bond. In connection with that sale, Johnson ordered the abstract of title to be brought to date by the Abstract Company, and in due course the Abstract Company, did deliver such an abstract under the usual certification that it covered all items on record affecting title during the period November 19, 1956, to September 1, 1961. Notwithstanding that certificate, the abstract omitted the deed to Thorne dated March 27, 1957. In reliance upon the certificate from the Abstract Company, the Johnsons executed and delivered to the Hamers and Bonds on December 4, 1961, a warranty deed to the entire property, for which those purchasers paid substantial consideration. The Hamers and Bonds allege that they had no knowledge at that time with respect to the Thorne deed, and Johnson disclaims any knowledge that Thorne had recorded his deed.
Thereafeter, in 1962, the Bonds for valuable consideration transferred their interest in the property to the Hamers. Still later, on March 4, 1964, the Hamers conveyed the property to Johnson Land and Development Company (hereinafter referred to as 'the Land Company'). The Land Company alleges that in connection with this purchase the Hamers delivered for inspection the abstract as certified by the Abstract Company in 1961 and that the Land Company relied upon the abstract so certified in making its purchase.
More than four years after that last conveyance, Thorne instituted this suit on October 31, 1968, against Johnson, the Land Company, and the holders of the two deeds of trust. The petition sought a partition of the real estate, an accounging of profits, and a declaration that the two deeds of trust constituted lines only upon a one-half interest in the property. It is alleged that the filing of this suit by Thorne constituted the first knowledge by any of the other parties that Thorne had recorded a deed showing an interest by him in the land.
The Land Company cross-claimed against Johnson and filed a third-party petition against the Hamers, the Bonds and Vera Johnson, based upon the warranties of title contained in the deeds from those parties. TheJohnsons then filed a third-party petition against the Abstract Company based upon the latter's negligent certification of the abstract. The Hamers, the Bonds and the Land Company also cross-claimed against the Abstract Company on the same theory.
In response to those claims against it, the Abstract Company by its answer, raised the defense of the five-year statute of limitations, § 516.120. It then filed a motion against each of the appellants for judgment on the pleadings, based solely on that defense of limitation. The court below sustained those motions and dismissed each cause of action against the Abstract Company with prejudice. The appellants filed separate appeals, but those separate appeals have been consolidated by order of this court.
As noted, the Thorne suit was filed more than five years after the Abstract Company made and delivered its certificate. If the causes of action now alleged against the Abstract Company arose at the time that certificate was delivered, then § 516.120 applies and the claims are barred. On the other hand, appellants allege that they suffered no damage and had no knowledge or reason to seek knowledge of plaintiff's deed (in the of Johnson, the recording thereof) until the Thorne suit, filed in 1968. If the latter date marks the accrual of the cause of action, then the claims are well within the five-year statutory period and they are not barred by limitation. Hence, the question for determination here resolves itself into the question of when appellants' causes of action did accrue.
There has been much litigation and a large body of case law developed over the years on the issue of when the statute of limitation commences to run against an abstractor for the preparation and certifying of an incorrect abstract of title. The rules which eventually became generally accepted throughout this country and England on this subject can be summarized as follows: The action against the abstractor is based upon the contract of employment, and unless that contract be in writing, the action is governed by the period of limitations applicable to oral contracts. The certification by the abstractor is not an indemnity and, therefore, the cause of action does not arise for the first time when damage is suffered from an adverse claim. Rather, the cause of action arises immediately upon the wrongful breach of contract, which is delivery of the incorrect certificate, and the period of limitations commences on that date. These general rules are set forth in 1 Am.Jur.2d, 'Abstracts of Title', § 23 and 24, p. 245; 1 C.J.S. Abstracts of Title § 11, p. 389 and § 13, p. 399; 54 C.J.S. Limitations of Action § 161, p. 110; 118 A.L.R. 215, 218; and 18 A.L.R.3d 978, 1011. Those general rules have been accepted and applied in the past by Missouri Courts: Rankin v. Schaeffer, 4 Mo.App. 108, l.c. 110--111; Schade v. Gehner, 133 Mo. 252, 34 S.W. 576, l.c. 578.
If th foregoing general rules are not be applied in this case, then we have reached the end of our inquiry and the judgment of the trial court would clearly have to be sustained. However, we have yet to consider what effect is to be given to an important amendment to the statute of limitations which was adopted by the Missouri Legislature in 1919, subsequent to the decisions in the Rankin and Schade cases. The 1919 amendment is incorporated in what is now § 516.100, the amendment being the emphasized portion of the following quotation:
'Civil actions * * * can only be commenced within the periods prescribed in the following sections, after the causes of action shall have accrued; provided, that for the purposes of § 516.100 to 516.370, the cause of action shall not be deemed to accrue when the wrong is done or the technical breach of contract or duty occurs, but when the damage resulting therefrom is sustained and is capable of ascertainment * * *' (emphasis added)
There has been no decision by any Missouri court interpreting the effect of the 1919 amendment as it applies to suits against the abstractors. However, the amendment could hardly have been worded more appropriately to evidence an intention to reverse the result which had been reached in the Rankin and Schade cases. In those cases, as well as in the whole line of authority of which they are a part, the courts made it very clear that they were making a deliberate choice between having the period of limitations commence to run from: (1) the date on which the wrongful act (breach of contract) occurred, or (2) the date on which actual damage was suffered by the one who had relied upon the abstract certification. Those decisions clearly state the election in favor of commencement on the date of the technical breach. Thus, the Rankin opinion states:
The choice was made in even sharper terms in the Schade case where the opinion states:
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