Upton v. Mississippi Valley Title Ins. Co.

• Decision Date: 22 February 1985
• Citation: 469 So.2d 548
• Parties: W. Dave UPTON and Ann Y. Upton v. MISSISSIPPI VALLEY TITLE INSURANCE COMPANY. MISSISSIPPI VALLEY TITLE INSURANCE COMPANY v. V.C. HANDY, Bobbie L. Handy, Homer L. Dobbs, and Peggy R. Dobbs. MISSISSIPPI VALLEY TITLE INSURANCE COMPANY v. W. Dave UPTON and Ann Y. Upton. 83-582, 83-585 and 83-1034.
• Court: Alabama Supreme Court

Page 548

469 So.2d 548

W. Dave UPTON and Ann Y. Upton v. MISSISSIPPI VALLEY TITLE INSURANCE COMPANY.

MISSISSIPPI VALLEY TITLE INSURANCE COMPANY v. V.C. HANDY, Bobbie L. Handy, Homer L. Dobbs, and Peggy R. Dobbs.

MISSISSIPPI VALLEY TITLE INSURANCE COMPANY v. W. Dave UPTON and Ann Y. Upton.

83-582, 83-585 and 83-1034.

Supreme Court of Alabama.

Feb. 22, 1985.

Rehearing Denied in 83-585 April 5, 1985.

Charles R. Driggers of Sirote, Permutt, Friend, Friedman, Held & Apolinsky, Birmingham, for appellants/cross-appellees W. Dave Upton and Ann Y. Upton.

Larry O. Putt of Smyer, White, Taylor, Putt & Campbell, Birmingham, for appellant/cross-appellee Mississippi Valley Title Ins. Co.

Douglas Corretti and Mary Douglas Hawkins of Corretti & Newsom, Birmingham, for appellees V.C. Handy, Bobbie L. Handy, Homer L. Dobbs, and Peggy R. Dobbs.

BEATTY, Justice.

These consolidated appeals are from judgments entered in Jefferson Circuit Court against the appellants herein, Mississippi Valley Title Insurance Company and W. Dave Upton, in an action to determine liability for an undisclosed and unrecorded easement. We reverse and remand.

I.

In August 1974, W. Dave Upton and Roger D. Grubbs, who were business partners, purchased a parcel of land containing over 272 acres situated in Shelby County, Alabama (hereinafter referred to as the "subject property"). The property was purchased for a cattle farm. Grubbs lived on the property and handled the day-to-day operation and management of the farm.

On January 23, 1975, Upton was served a copy of a complaint filed in Shelby Circuit Court against himself and Grubbs. The complaint, filed by Shelby County and other named plaintiffs, sought to enforce an easement over the subject property. Because Upton considered himself a passive investor in the property, and because Grubbs handled all the business matters relating to the property, Upton contacted his partner and turned the matter over to Grubbs, who hired an attorney to handle the case. Upton did not in any way participate in the litigation: he never had any communication with the attorneys involved, and he never received a copy of the final judgment entered on November 6, 1975, granting the plaintiffs the easement or right-of-way they sought. This judgment was filed in the office of the clerk of the Shelby Circuit Court, but was never recorded in any record book in the office of the probate judge of Shelby County.

On July 11, 1978, Grubbs began bankruptcy proceedings. Upton continued to pay the partnership debts and began looking for a buyer for the subject property. He contacted Homer Dobbs about purchasing the property. Upton met Dobbs and they drove over the property together, during which time Upton claims that he told Dobbs that his (Upton's) partner, Grubbs, had agreed not to lock a certain gate so as to allow a Mr. Roy Holcomb and his hunting club access over the property. Dobbs and Handy denied this and further denied any knowledge whatsoever of any rights of ingress and egress over the property. Upton did not tell Dobbs that Holcomb and his hunting club, as well as others, had obtained a judgment granting them that right-of-way, because, Upton claims, he had not known about the judgment, and, at that time, had thought the matter was settled by a mere agreement between Grubbs and Holcomb.

On August 15, 1978, Upton, as seller, and Homer and Peggy R. Dobbs (Dobbs), and V.C. and Bobbie L. Handy (Handy), as buyers, contracted for the sale of Upton's one-half interest in the subject property, contingent on a similar sale by Grubbs's trustee in bankruptcy. The sales contract required Upton to furnish Handy and Dobbs title insurance in the amount of the total purchase price. Upton contracted with Mississippi Valley Title Insurance Company (Mississippi Valley), to have it issue an interim title binder and a title insurance policy on the subject property with the four grantees named as insureds under the policy.

Prior to issuing an interim title binder, Mississippi Valley performed a title search on the subject property, which entailed a search of certain public records affecting real property in Shelby County. The search included the records of the tax assessor, tax collector, U.S. Bankruptcy Court, and the probate judge's office. Mississippi Valley did not, however, search the records of the clerk of the Shelby Circuit Court. Mississippi Valley issued an interim title insurance binder to Handy and Dobbs on October 23, 1978, which was expressly made "subject to the terms, provisions, and conditions and stipulations of the form of policy applied for." ¹ The binder did not list as an exception from coverage the November 6, 1975, judgment granting a right-of-way over the property.

Grubbs's trustee in bankruptcy conveyed Grubbs's one-half interest in the subject property to Handy and Dobbs on November 28, 1978; and on December 12, 1978, Upton conveyed by warranty deed his one-half interest to Handy and Dobbs. Mississippi Valley issued a title insurance policy to Handy and Dobbs dated December 13, 1978. This policy also did not expressly exclude the 1975 right-of-way judgment, but did exclude "easements ... not shown by the public records," as well as a "[r]ight of way for road and rights in connection therewith as granted to Shelby County, Alabama, as shown by instrument [dated December 8, 1952] recorded in Deed Book 157, page 64." Furthermore, the policy itself expressly defined "public records" as "those records which by law impart constructive notice of matters relating to said land."

Following the conveyance, a dispute arose between Upton and Handy and Dobbs relating to certain participation certificates (capital stock) in the Federal Land Bank of New Orleans. Upton contended that he did not intend for these certificates, worth approximately $13,000, to be transferred to Handy and Dobbs at the time of the conveyance of the subject property. Handy and Dobbs disputed this and claimed that they knew they were supposed to get the certificates in the deal. The dispute escalated into a lawsuit filed by Upton in the Jefferson Circuit Court, seeking reformation of the transfer of the Federal Land Bank certificates due to a mutual mistake and misunderstanding.

Handy and Dobbs filed a counterclaim against Upton, alleging a breach of the warranties of title contained in the warranty deed from Upton. Dobbs had learned of the November 6, 1975, judgment from Roy Holcomb in June 1979, and in their counterclaim, Handy and Dobbs asserted that this judgment constituted an encumbrance that had not been disclosed to them and that greatly diminished the value of the subject property. The counterclaim was severed from the reformation suit and transferred to the "law side" of the Jefferson Circuit Court, where it was tried separately. The reformation suit, which remained in the "equity side," is not a part of this appeal. ²

Upton filed a third-party complaint against Mississippi Valley, alleging that its failure to find and list as an exception the 1975 easement judgment was a breach of both the title insurance binder and policy. Upton sought indemnification from Mississippi Valley for all sums adjudged against Upton based on the counterclaim filed by Handy and Dobbs. Later, by amendment, Upton claimed expenses and attorneys fees, alleging Mississippi Valley had a duty to defend him.

Handy and Dobbs cross-claimed against Mississippi Valley, alleging negligence in its failure to uncover an easement of public record. Handy and Dobbs further claimed that in deciding to purchase the subject property they detrimentally relied on the expertise of Mississippi Valley in its preparation of the interim title insurance binder, which failed to list the 1975 judgment as an encumbrance on the title. They also alleged that Mississippi Valley breached the title insurance policy by failing to reimburse Handy and Dobbs for the resulting reduction in the value of the subject property.

Mississippi Valley then counterclaimed against Upton, alleging a breach of the warranties of title, and sought to be subrogated to the rights of Handy and Dobbs against Upton for all sums adjudged against Mississippi Valley in favor of Handy and Dobbs.

The following illustration may be helpful in explaining the various claims of each of the parties:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Mississippi Valley's motion for summary judgment was denied. Trial ensued. At the close of the trial, Handy and Dobbs dismissed their claims against Upton. Mississippi Valley and Upton each moved for a directed verdict, and both motions were denied. The jury returned a verdict of $103,000 for Handy and Dobbs against Mississippi Valley, and a verdict of $48,000 for Mississippi Valley against Upton. Judgment to this effect was entered, and all post-judgment motions were denied. Upton and Mississippi Valley appealed, and, by order dated June 5, 1984, these appeals were consolidated for hearing in this Court.

II.

The threshold issue raised in this case is whether Mississippi Valley's appeals are due to be dismissed because its post-judgment motions were not timely filed in the proper court. Judgment was entered in this case on October 20, 1983. Mississippi Valley then filed motions for judgment notwithstanding the verdict or, in the alternative, for new trial on November 17, 1983, less than 30 days after the entry of judgment. Rule 59(b) and (e), A.R.Civ.P. These motions, however, were filed in the office of the District Court of Jefferson County, rather than the Circuit Court of Jefferson County. The motions were transmitted to the circuit court office by the district court office on November 29, 1983, more than 30 days after entry of judgment. Handy and Dobbs contend that this constituted a late filing. We disagree.

Mississippi Valley correctly points out that Rule 5(e), set forth below, governs the place for filing these post-judgment motions:

"The filing of...