Toth v. Berks Title Ins. Co.

• Decision Date: 31 August 1983
• Docket Number: No. 82-1444,82-1444
• Citation: 453 N.E.2d 639,6 Ohio St.3d 338
• Parties: , 6 O.B.R. 394 TOTH, Appellant, v. BERKS TITLE INSURANCE CO. et al., Appellees.
• Court: Ohio Supreme Court

Page 338

6 Ohio St.3d 338

453 N.E.2d 639, 6 O.B.R. 394

TOTH, Appellant, v. BERKS TITLE INSURANCE CO. et al., Appellees.

No. 82-1444.

Supreme Court of Ohio.

Aug. 31, 1983.

Syllabus by the Court

Any interest or defect which is referred to specifically in a muniment within the marketable record title of a parcel of property, as defined by R.C. 5301.48, is not extinguished by the Ohio Marketable Title Act. (R.C. 5301.49[A], construed.)

In 1974, plaintiff-appellant, Edward T. Toth, Jr., purchased two adjacent parcels of property for three hundred thousand dollars. One parcel is located within the corporate limits of the city of Fairlawn, the other is located within the corporate limits of the city of Akron. At the time of purchase there was no allocation of any portion of the original purchase price between the two parcels of property. The plaintiff purchased a title guarantee from defendants-appellees, Berks Title Insurance Company and Berks Akron Title Agency, Inc., at the same time he purchased the parcels. This title guarantee did not list any setback use restrictions.

Subsequently, plaintiff sold the Fairlawn property for three hundred thousand dollars to the Akron Credit Bureau. Plaintiff also reached an initial agreement with Anthony P. LaFatch, whereby LaFatch would purchase the Akron property for eighty-five thousand dollars. LaFatch contacted the Chicago Title Insurance Company to secure a title guarantee on the property. Chicago Title discovered the existence of certain setback use restrictions which had been created by a 1924 deed to Henry H. Camp, and expressed again in a recorded 1926 land plat. The title company noted the setback use restrictions would have to be listed as an exception of the title guarantee. Following the Chicago Title's report, the defendants were asked to issue a title guarantee to LaFatch which would not include the use restrictions listed as an exception. The defendants would not issue the title guarantee, as requested, and LaFatch withdrew from the purchase negotiations for the Akron property.

Plaintiff subsequently brought suit against defendants for damages payable under the title guarantee he had purchased on the Akron property in 1974. Appraisers for both parties appraised the Akron parcel of property at between twenty-five and thirty thousand dollars based upon fair market value with the setback use restrictions listed as an exception to the title guarantee. On May 30, 1980, the trial court entered judgment for the plaintiff for fifty-five thousand dollars. The defendants appealed and the appellate court vacated the judgment, based upon the improper admission of hearsay evidence, and remanded the case for a new trial.

In July 1981, the trial court again returned a judgment for the plaintiff, this time for thirty-five thousand dollars. This judgment was appealed by both the defendants and the plaintiff. The court of appeals reversed the judgment of the trial court and entered judgment for the defendants. The court held that under the Marketable Title Act, R.C. 5301.47 to 5301.56, the setback use restrictions had been extinguished and were not therefore an exception which the defendants should have noted on the plaintiff's title guarantee.

The cause is now before this court upon the allowance of a motion to certify the record.

Holder & Schiavone and William P. Holder, Jr., Akron, for appellant.

Roderick, Myers & Linton, Robert F. Orth and Frederick S. Corns, Akron, for appellees.

CLIFFORD F. BROWN, Justice.

Interpretation of the Ohio Marketable Title Act is nearly a matter of first impression. This court has addressed the issue of the marketable record title of a particular parcel of property in only one other case, Heifner v. Bradford (1983), 4 Ohio St.3d 49, 446 N.E.2d 440. In Heifner, Chief Justice Celebrezze expressed that this court was satisfied that R.C. 5301.49(D), dealing with the recording of land use restrictions under the Marketable Title Act, "ought to be construed in the manner that Simes and Taylor, as drafters of Section 2(d) of the Model Act, intended." ¹ Therefore, this court again looks to Simes and Taylor ² for direction in this case.

Simes and Taylor explain in Model Title Standards that, "[t]he recording of an instrument of conveyance subsequent to the effective date of the root of title has the same effect in preserving any interest conveyed as the filing of the notice provided for in § 4 of the Act. (See § 2(d) of the Model Act.)" ³ (Emphasis added.) R.C. 5301.49(A) expresses this same idea when it states that a record marketable title "shall be subject to: * * * [a]ll interests and defects which are inherent in the muniments of which such chain of record title is formed * * *." The Marketable Title Act also provides for the recording of restrictions which are enforceable against the marketable title of property, ⁴ but such recordings other than recorded deeds of transfer are not herein involved.

It is necessary to digress to a small degree so that all the Revised Code terms that are germane to the present case can be sufficiently defined. R.C. 5301.47(A) defines "marketable record title" as a "title of record, as indicated in section 5301.48 of the Revised Code, which operates to extinguish such interests and claims, existing prior to the effective date of the root of title * * *." A "root of title" is defined in Subsection (E) as "that conveyance or other title transaction in the chain of title of a person, * * * upon which he relies as a basis for the marketability of his title, and which was the most recent to be recorded as of a date forty years prior to the time when marketability is being determined. * * * " Subsection (F) defines "title transaction" as "any transaction affecting title to any interest in land, including title by will or descent * * *." R.C. 5301.48 provides that one " * * * who has an unbroken chain of title of record to any interest in land for forty years or more, has a marketable record title to such interest * * * subject to the matters stated in section 5301.49 of the Revised Code. ⁵ A person has such an unbroken chain of title when the official public records disclose a conveyance or other title transaction, of record not less than forty years at the time the marketability is to be determined, which said conveyance or other title transaction purports to create such interest * * *."

In the present case the root of title of plaintiff, Edward Toth, is a 1928 deed transferring title in the property herein involved from Henry H. Camp to Anna M. Camp. This deed contains no mention of the setback use restrictions which are in controversy. The setback use restrictions were set forth in a 1924 deed which had transferred the interest in the property to Henry H. Camp. Following Henry H. Camp's transfer of the property in 1928 to Anna M. Camp, the "root of title" transaction, no recorded act transpired which affected the Akron property until June 17, 1966, when the estate of Anna M. Camp transferred title in the property to Meyer Myers, Louis S. Myers and Isidore C. Myers. It was the Myerses who transferred the title in the Akron property to plaintiff on October 18, 1974.

Plaintiff's interest in the Akron, Ohio property is subject to any use restrictions which are a part of the marketable record title of the Akron property in accord with R.C. 5301.47 to 5301.56. The only transactions which could have an effect on the Akron property are the 1928 transfer to Anna M. Camp from Henry H. Camp, the 1966 transfer by Anna M. Camp's estate and the 1974 transfer to the plaintiff. The 1928 deed had no mention of the setback use restrictions. The 1966 deed did contain a specific note which specifically referred to the setback use restrictions which are the center of this controversy. The defendants-appellees, Berks Title Insurance Company and Berks Akron Title Agency, Inc., assert that the reference in the 1966 deed is not sufficient because it is general and it points to a 1926 land plat as the source of the restriction. It is defendants-appellees' contention that the 1926 plat cannot be part of the muniments of plaintiff's record title because it is not a title transaction as defined in R.C. 5301.47(F).

The 1966 deed is a muniment within the record marketable title of the property now owned by the plaintiff. The 1966 deed specifically refers to the very use restrictions which are the subject matter of the controversy involved herein. R.C. 5301.49(A) states: "Such record marketable title shall be subject to: * * * [a]ll interests and defects which are inherent in the muniments of which such chain of record title is formed * * *." The court need not look further than this first clause of R.C. 5301.49(A) for the settlement of the within controversy. The remaining portion of Subsection (A) deals with the requirements necessary to make a general reference to a use restriction a part of the record marketable title. ⁶ The reference in the 1966 deed to the setback use restrictions was specific, not general, and as such, it is an interest or defect which is "inherent in the muniments." ⁷ Any interest or defect which is referred to specifically in a muniment within the marketable record title of a parcel of property, as defined by R.C. 5301.48, is not extinguished by the Ohio Marketable Title Act.

Since the setback use restrictions were specifically referred to in the 1966 deed, which is a part of the plaintiff's marketable record title, the court of appeals erred in reversing the final judgment of the trial court. For the foregoing reasons the judgment of the court of appeals is reversed and the judgment of the trial court is reinstated.

Judgment reversed.

WILLIAM B. BROWN, SWEENEY and HOLMES, JJ., concur.

FRANK D. CELEBREZZE, C.J., and LOCHER and JAMES P. CELEBREZZE, JJ., dissent.

FRANK D. CELEBREZZE, Chief Justice, dissenting.

Because I feel the majority opinion gravely misconstrues R.C. 5301.49(A), I am forced to...