Transamerica Title Ins. Co. v. Ramsey
| Decision Date | 09 March 1973 |
| Docket Number | No. 1628,1628 |
| Citation | 507 P.2d 492 |
| Parties | TRANSMERICA TITLE INSURANCE CO., Appellant, v. Mary B. RAMSEY, Appellee. |
| Court | Alaska Supreme Court |
Mary B. Ramsey sued the Transamerica Title Insurance Company (hereinafter Title Company) alleging that it had breached its contract to furnish a suitable title insurance policy and was further liable for negligent breach of duty. The trial court directed a verdict for the Title Company on the contract claim but submitted the negligence claim to the jury. The jury returned a verdict for Mrs. Ramsey of $30,000 special damages and $5,000 general damages.
The Title Company has appealed contending that there was no basis for submission of the negligence issue to the jury; that Mrs. Ramsey acting through her attorney was contributorily negligent; that there were errors in instructions to the jury and in the admission of evidence; and that the damages awarded were improper.
In April 1966 Mrs. Ramsey went to the Title Company office advising its agent, Lyle Johnson, that she wanted 'whatever is supplied by a title company to permit me to sell a valid piece of merchandise to Mr. Hartman and Mr. Summers.' 1 The property in question was owned by Mrs. Ramsey and her former husband, Mr. Smith, as tenants in common. 2 Mrs. Ramsey explained that Mr. Smith was out of town and that she intended to proceed by use of a power of attorney that he had executed in 1952 authorizing her to act on his behalf.
Mr. Johnson asked to look at the power of attorney. The next day Mrs. Ramsey brought the power of attorney to Mr. Johnson who examined it. The Title Company then issued a letter of commitment to issue a title policy. The letter indicated that title to the property was vested in Stanley E. Smith and Mary Smith, his wife, as tenants in common and made no mention of the power of attorney.
Unknown to Mrs. Ramsey, Mr. Smith had recorded a revocation of the power of attorney on February 2, 1966. A copy of the revocation was on file with the Title Company at the time that Mrs. Ramsey conferred with Mr. Johnson, but Mrs. Ramsey was never advised of the revocation and of her consequent inability to enter into an effective contract of sale on Mr. Smith's behalf. The contract of sale, providing for a purchase price of $45,925, 3 was executed by Mrs. Ramsey individually and as attorney in fact for Mr. Smith.
A few months later Mr. Smith returned to Alaska and claimed that the sale was invalid and alternatively that he was entitled to half of the proceeds. He also brought a separate suit alleging that Mrs. Ramsey had procured the divorce from him by means of fraud. After tendering the defense of the suits to the Title Company, the attorneys for Mrs. Ramsey negotiated a settlement by payment to Mr. Smith of the sum of $25,000. At the time of Mr. Smith's intervention the purchasers of the property ceased to make payment and Mrs. Ramsey was forced to borrow $4,500 to meet her other financial obligations. She also incurred attorney's fees and interest costs. After the settlement of Mr. Smith's lawsuits the purchasers resumed payments under the contract and eventually, after condemnation of the property by the state, the full purchase price was paid to Mrs. Ramsey.
The Title Company contends that since the court found it to be not liable for breach of contract, the issue of its negligence should not have been submitted to the jury. Any question as to the applicable law in Alaska on this issue was laid to rest by our decision in Howarth v. Pfeifer. 4 In that case the purchaser of an apartment building under an installment contract agreed with the vendor to secure fire insurance on the building with loss payable to the parties as their interests appeared. The vendor testified that he called the purchaser's insurance agent, and upon being advised that the purchaser had obtained the coverage, the vendor then called his own insurance agency, cancelling his policy. The property was damaged by fire and it was then ascertained that the purchasers did not have coverage. Although the vendor had no contractual relationship with the purchaser's insurance agency, we held:
The main question here is whether there should be liability for negligent language, and under what circumstances liability should exist. In England the general rule had been that there was no liability for negligence in word as distinguished from act. The American courts, however, have been more liberal and have held in some instances that a negligent statement may be the basis for the recovery of damages. But principles of law in this area are not well-defined. 'Not every casual response, not every idle word, gives rise to a cause of action.' Liability arises only where there is a duty, if one speaks at all, to give correct information. And this involves various considerations, such as the existence of knowledge, or its equivalent, on the defendant's part that the information is desired for a serious purpose and that the plaintiff intends to rely upon it, foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, and the policy of preventing future harm.
Application of those factors here makes a case for the jury on the question of negligent misrepresentation. (Footnotes omitted.) 5
Applying these principles of law to this appeal, the jury could have found that the Title Company was advised by Mrs. Ramsey that she intended to enter into the contract of sale by use of the power of attorney. Mr. Johnson, its agent, requested that she furnish him with a copy of the power of attorney. He knew that she desired information as to her legal capability to sell the property by use of the power of attorney, a serious purpose, and that she intended to rely upon that information. There was foreseeable harm to Mrs. Ramsey and sufficient connection between the Title Company's conduct and the injury suffered.
It is true that the commitment to issue the title policy did not refer to the power of attorney at all, merely indicating that title was vested in Mr. and Mrs. Smith (now Mrs. Ramsey). The jury could have found, however, that the Title Company was fully advised of Mrs. Ramsey's intentions, and by its actions led her to believe that she could properly sell the property by use of the power of attorney. Under those circumstances the company breached its duty of care which was owed to her, by not revealing to her that the power of attorney had been revoked. 6 That information was readily available to the Title Company by means of checking its own files.
As we stated in Howarth:
Assuming the presence of the essential factors establishing a duty of care, then those engaged in the insurance business are required to speak carefully regarding insurance matters because of the foreseeability of pecuniary harm if they speak without reasonable care. Such persons understand perfectly well the peculiar urgency of the need for correct information on whether property is covered by insurance or not. 7
The jury could well find that the Title Company had a duty 'to speak carefully' to Mrs. Ramsey and to advise her of the revocation of the power of attorney. There was evidence presented from which the jury could further find that the Title Company violated that duty proximately causing injury to Mrs. Ramsey. We see no reason to distinguish between the misfeasance involved in the Howarth case wherein erroneous information was furnished by the insurance agent and the nonfeasance of the Title Company here involved in failing to advise Mrs. Ramsey that the power of attorney had been revoked. The underlying purpose of the misfeasance-nonfeasance distinction was recognized by Justice Cardozo in the landmark case of H. R. Moch Co., Inc. v. Rensselaer Water Co., 247 N.Y. 160, 159 N.E. 896, 898 (Ct.App.N.Y.1928):
'It is ancient learning that one who assumes to act, even though grantuitously, may thereby become subject to the duty of acting carefully, if he acts at all.' . . . The hand once set to a task may not always be withdrawn with impunity though liability would fail if it had never been applied at all. A timehonored formula often phrases the distinction as one between misfeasance and nonfeasance. Incomplete the formula is, and so at times misleading. Given a relation involving in its existence a duty of care irrespective of a contract, a tort may result as well from acts of omission as of commission in the fulfillment of the duty thus recognized by law. . . . (Citations omitted, emphasis added.)
If we were to attempt to distinguish Howarth on the basis of the nature of the violation of the duty owed to Mrs. Ramsey by Transamerica we would be falling into the conceptual trap Cardozo was warning against. The holding of Howarth goes to the type of duty owed the public by one who holds himself out as a professional giver of information. If a violation of that duty is established it is irrelevant if the violation is a 'misfeasance' or a 'nonfeasance'. Accordingly, we affirm the trial court's denial of a directed verdict since there was sufficient evidence to go to the jury on the negligence issue. 8
The jury awarded Mrs. Ramsey $5,000 general damages and $30,000 special damages. The award of $5,000 general damages for Mrs. Ramsey's mental suffering anguish, embarrassment and humiliation is not contested. With reference to special damages the court indicated that the jury might consider:
1. The costs of settling the lawsuits
in the sum of $25,000.00
2. Loan costs incurred to effect the
settlement of approximately 700.00
3.
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