Ticor Title Ins. Co. of California v. Graham

• Decision Date: 27 August 1991
• Docket Number: No. 02A04-9011-CV-561,02A04-9011-CV-561
• Citation: 576 N.E.2d 1332
• Parties: TICOR TITLE INSURANCE COMPANY OF CALIFORNIA, Appellant-Plaintiff, v. Eileen M. GRAHAM, Appellee-Defendant.
• Court: Indiana Appellate Court

Page 1332

576 N.E.2d 1332

TICOR TITLE INSURANCE COMPANY OF CALIFORNIA, Appellant-Plaintiff, v. Eileen M. GRAHAM, Appellee-Defendant.

No. 02A04-9011-CV-561.

Court of Appeals of Indiana,

Fourth District.

Aug. 27, 1991.

Edward J. Liptak, Miller, Carson & Boxberger, Fort Wayne, for appellant-plaintiff.

Daniel E. Serban, Shambaugh, Kast, Beck & Williams, Fort Wayne, for appellee-defendant.

CONOVER, Judge.

Plaintiff-Appellant Ticor Title Insurance Company of California (Ticor) appeals the trial court's order granting an involuntary dismissal as requested by Defendant-Appellee Eileen Graham (Graham).

We reverse.

Ticor presents four issues for our review:

1. whether the evidence established a breach of the real estate seller's warranty as a matter of law;

2. whether the real estate seller was unjustly enriched 3. whether the evidence failed to establish an estoppel as a matter of law; and

4. whether the doctrine of estoppel was inapplicable as a defense to the claims for breach of warranty and unjust enrichment made against the seller Graham.

On April 8, 1986, Graham purchased real estate located at 7934 Imperial Drive, Fort Wayne, Indiana (the property) at a sheriff's sale. The sheriff's deed showed the title to the property was subject to liens in favor of Metropolitan Life Insurance Company and Weyerhaeuser Company, among others.

Graham ordered title insurance for the real estate in June, 1986, from Dreibelbiss Title Company in order to determine the identity of the mortgage holders. The title insurance commitment indicated the mortgages were held by Metropolitan Life Insurance Company and Weyerhaeuser Company, as shown on the sheriff's deed.

The Metropolitan mortgage was originally given by Robert Hauser to Colonial Mortgage Company, securing the principal sum of $18,650, recorded June 11, 1968, at Mortgage Record 915, pages 268-270, then assigned to Metropolitan by an instrument recorded August 1, 1968, in Mortgage and Assignment Record 919, page 338.

The Weyerhaeuser mortgage was originally given by Robert H. Hauser to Colonial Mortgage Company securing the principal sum of $3,750 recorded June 11, 1968, in Mortgage Record 915, pages 271-273, then assigned to Weyerhaeuser by an instrument recorded August 1, 1968, in Mortgage and Assignment Record 919, page 339.

The Dreibelbiss title commitment did not inform Graham who was collecting the mortgage payments owed on the property. In cleaning the premises, she found a notice which led her to determine that Midland Mortgage Company in Kansas City held the mortgages. In July and August, 1986, Graham corresponded with Midland Mortgage concerning the amount of the payment owed on loan no. 1703398, for the outstanding mortgages against the real estate. Thereafter, Graham received a payoff statement for one of the mortgages dated November 3, 1986, showing a payoff of $2,445.19 on the smaller of the two mortgages.

In February, 1987, Graham began making monthly payments to MetFirst Financial as directed by Midland. The October to December, 1986, payments showed a loan number of 1703398. The January, 1987, payments showed a loan number of 2492940.

During the period that Graham was making these mortgage payments, she listed the real estate for sale on two occasions. Both profile sheets for the real estate showed an outstanding $12,100 mortgage to Midland Mortgage.

On June 3, 1987, Graham entered into an agreement with Harry J. Muta and Abbe S. Johnson for the purchase of the real estate for $68,400. Prior to entering into the agreement, Graham called MetFirst Financial. Graham gave the loan number on the payment booklet, her name, the name of the prior owners, and the address of the property. ¹ However, MetFirst could find no record of a mortgage. Graham reduced her listing price from $69,900 to the sales price of $68,400.

Graham engaged a different title company (Three Rivers) to prepare a commitment for title insurance necessary for the sale to the Johnsons. In July, 1987, the title insurance was issued by Ticor naming the buyers Harry Muta and Abbe Johnson as insureds. The schedules to the title insurance commitment showed no outstanding mortgages.

As of the closing date, the unpaid principal balance and accrued interest on the mortgages totaled $13,757.38.

On the day of the real estate closing, the closing agent told Graham's realtor a payoff figure for the outstanding mortgage was needed. The agent called Graham and they estimated a figure of $13,000, which was given to the closing agent. At the closing, which was handled by Three Rivers, a check had been issued to Midland Mortgage in the sum of $13,000, but there were no payoff documents concerning the mortgage. Graham refused to pay that amount to Midland Mortgage and demanded that the closing agent re-issue the check to Graham. The closing agent then revised the settlement statement to show payment of $13,000 to Graham. Graham said she would take care of paying the mortgage herself. She then executed the warranty deed, closing affidavit and representations, and affidavit of seller.

In September and October, 1987, Graham received form letters from MetFirst Financial concerning delinquency in payments. In 1988, she received a statement from MetFirst Financial showing Ticor had paid off the mortgage loan no. 249294-0 by paying $13,681.29.

In September, 1988, Ticor filed a complaint alleging it had paid off two mortgages on the real estate sold by Graham to the buyers. Ticor brought the action as subrogee and assignee of the buyers under the title policy Three Rivers had written. A trial was held in August, 1990. At the end of Ticor's case, the trial court granted Graham's motion for involuntary dismissal under Ind.Trial Rule 41(B) and entered judgment for the defendant.

The trial court stated its basis for the ruling was Ticor failed to prove the existence of valid unpaid mortgage at the time of the real estate closing and Ticor was estopped from asserting its claims due to the representation of Three Rivers, whom the trial court found to be Ticor's agent. Ticor appeals.

These claims were dismissed pursuant to Ind.Trial Rule 41(B) which states in pertinent part:

(B) Involuntary Dismissal: Effect Thereof. After the plaintiff or party with the burden of proof upon an issue, in an action tried by the court without a jury, has completed the presentation of his evidence thereon, the opposing party, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the weight of the evidence and the law there has been shown no right to relief. The court as trier of the facts may then determine them and render judgment against the plaintiff or may decline to render any judgment until the close of all the evidence....

Here the trial judge dismissed these claims after Ticor had presented its evidence. We note Ticor had the burden of proof on each allegation and is, therefore, appealing from a negative judgment. For this court to reverse we must find that the judgment is contrary to law; that is, where the evidence is without conflict and leads to a conclusion opposite to that reached by the trial court. In addressing the question of whether a negative judgment is contrary to law, we consider only the evidence on the record most favorable to the prevailing party without reweighing the evidence or judging the credibility of witnesses. In Re Marriage of Wooten (1990), Ind.App., 563 N.E.2d 636, 639.

Ticor contends the trial court's entry of an involuntary dismissal against Ticor was contrary to law because the evidence it presented supported every element of Ticor's claims for breach of warranty and unjust enrichment against Graham. In order to prevail, Ticor was required to prove there were existing mortgages on the real estate at the closing date which were known to Graham.

The elements of Ticor's case for breach of warranty, the seller's warranty by Graham, the amount paid to extinguish the mortgages, and the existence of the mortgages on the real estate closing date, were clearly established. The record reveals the warranty deed executed by Graham complies with the form described in IND.CODE 32-1-2-12 guaranteeing the property to be free from all encumbrances. The grantee in a warranty deed may sue his or her immediate grantor for breach of covenant in the deed. Grantee has the right to remove an encumbrance and recover the amount thereof from the grantor. E.g., McClure v. McClure (1879), 65 Ind 482, 486; Rinehart v. Rinehart (1883), 91 Ind. 89, 90.

Graham argues Ticor did not prove valid unpaid mortgages existed at time of closing. The record reveals documents and testimony establishing the existence of the mortgages in 1968 and continuing in existence until August, 1988. The Sheriff's Deed in 1986 was subject to liens in favor of Metropolitan Life Insurance Company and Weyerhaeuser Company. (R. 76). The Dreibelbiss Title Company commitment showed the recording of the Metropolitan and Weyerhaeuser mortgages on June 11, 1968, at Mortgage Record 915, pages 268-273. (R. 101). The mortgages were assigned to Ticor in July, 1988. Ticor released the mortgages in August, 1988. The assignment of mortgage and release of mortgage for each of the two mortgages referred to the same mortgage book and page numbers shown on the Dreibelbiss title commitment. (R. 77-80). In 1988, Graham received a statement from MetFirst Financial showing Ticor had paid off $13,681.29 on the mortgages. (R. 185).

Graham also urges Ticor failed to prove its damages. In an action for breach of a real estate warranty, the buyer may recover the amount paid to remove an encumbrance. Rinehart, supra, at 90. Damages for a breach of contract are to be proven with reasonable certainty. Indiana Bell Tel. Co. v. O'Bryan (1980), Ind.App., 408 N.E.2d 178, 183.

On Ticor's other theory of liability, for the recovery of the excessive amount of money mistakenly paid to...