Trenton Potteries Co. v. Title Guarantee & Trust Co.

Citation176 N.Y. 65,68 N.E. 132
Decision Date06 October 1903
CourtNew York Court of Appeals


Appeal from Supreme Court, Appellate Division, First Department.

Action by the Trenton Potteries Company against the Title Guarantee & Trust Company. From a judgment of the Appellate Division (74 N. Y. Supp. 170) affirming a judgment in favor of defendant, plaintiff appeals. Affirmed.

Howard R. Bayne, for appellant.

George Coggill and John L. Cadwalader, for respondent.


This action is brought to recover upon a policy of title insurance the amount of an assessment which became a lien upon the property of the plaintiff after it had taken title thereto and gone into possession thereof, but before the date of the policy. It appears that the plaintiff, a New Jersey corporation, was formed for the purpose of taking over the property and business of five pottery plants in Trenton,N. J., known as the ‘Empire,’ ‘Crescent, ‘Equitable,’ ‘Delaware,’ and ‘Enterprise,’ and it employed the defendant to search the titles and to insure them. Early in July, 1892, the titles to four of these plants were ready for transfer, but the title to the Empire plant was incumbered by certain infants' interests that could not be conveyed without judicial sanction in proceedings instituted for that purpose. This complication led to an interview between a representative of the plaintiff and another of the defendant, in which it was decided to have a single policy to cover all of the properties, and to defer the issuance thereof until the Empire title could be perfected. At this interview the deeds conveying to the plaintiff the Crescent, Equitable, Delaware, and Enterprise potteries were delivered to defendant's representative, and by him recorded, and thereupon the plaintiff went into possession of these four plants. The defects in the Empire title were removed and the conveyance of that property was made on April 19, 1893, the deed being recorded April 24, 1893, on which date the policy in suit was issued. On the 12th of October, 1892, an assessment for a street opening became a lien on the Crescent property. This was three months after the plaintiff had taken title thereto, and seven months before the defendant issued its policy. The plaintiff, having paid the assessment, called upon the defendant for reimbursement, which was refused, and this action was brought.

There have been two trials. Upon the first trial it was held that the plaintiff could not recover, because it was the owner of the property upon which the assessment was made at the time it became a lien. The judgment entered upon that decision was reversed at the Appellate Division upon the ground that it could not be held as matter of law that a policy dated subsequent to the assessment, and which in terms purported to insure against liens and incumbrances charging the property at the date of the policy, was intended to cover only such liens and incumbrances as existed when the plaintiff took title. Upon the second trial the defendant was permitted to introduce oral evidence in support of its allegation that by inadvertence and mistake the policy was dated April 24, 1893, when in fact it should have been dated July 1, 1892, as to the four properties conveyed on the latter date. The learned trial court held that the allegation of mistake was abundantly supported by the evidence, and the judgment in favor of defendant, entered upon that decision, has been unanimously affirmed by the learned Appellate Division. The learned counsel for the appellant, realizing the limitations imposed upon him by the unanimous affirmance, takes the position that, if the incompetent evidence received over his objections was expunged from the record, it would be barren of proof tending to show inadvertence or mistake in the framing of the contract of insurance. This contention is amply justified so far as it relates to the evidence of so-called ‘experts' in title insurance who were permitted to give their opinions as to what they would have done or what ought to have been done in the issuance of such a policy under the conditions above described. There is so much of that kind of incompetent evidence received under the objections and exceptions of plaintiff's counsel that we cannot attempt to reprodure it here, and we shall only give two or three specimen questions and answers to illustrate how far afield the defense was permitted to go in its attempt to secure a reformation of the contract on the ground of inadvertence and mistake. One Van Buskirk, a lawyer, and a director of the defendant, was asked: ‘If you had issued a policy of insurance at or about that time on the closing of these titles, upon the four titles which were pronounced to be good, what would have been the date of that policy of insurance?’ The witness answered, ‘The date of the recording of the deeds.’ Another witness for the defendant, named Green, who was manager of a New York title insurance company, was asked: ‘In a case where several pieces of property were transferred, but on different dates, and the record date of the different deeds bore, of course, different dates, what, under such circumstances,does the policy, if it bears a single date and is a single policy, show in the custom of your business?’ The answer of the witness was: ‘As a matter of form, it would bear the date of the face of the last deed, but as to its application it would only have the application of the record dates of the several deeds.’ And, again, a witness (Bailey) was asked, ‘In what respect does this policy fail to conform to the usual form of title insurance policy under these circumstances?’ His answer was: ‘It insures against liens subsequent to the date of the acquiring of the title of a number of the properties set forth in the policy.’ In these three instances, which, as we have said, are merely illustrative of numerous others, defendant's witnesses testified to what they would have done under similar circumstances, to the custom of other title insurance companies in such cases, and to the legal conclusion that the policy should have been different in form. This unique and summary disposition of the whole case would excite no less surprise than criticism were it not for the embarrassments by which the learned trial court and the counsel for the defendant were surrounded. A former trial court had held, in substance, that the mistake in the policy was obvious on its face, or that it should at least be so construed as to cover no liens or incumbrances accruing after several titles had vested in the plaintiff. The appellate court had disagreed with this view, and ordered a new trial on the ground that the policy, as written, covered the assessment, which became a lien upon the Crescent property prior to the date of the policy, although after defendant took title thereto, and that the policy would have to be reformed before the defendant could be relieved from liability. These embarrassments were...

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