First United, Inc., appeals the order of the Garland County Circuit Court granting the motion for summary judgment by appellees, Chicago Tide Insurance Company and Hot Springs Tide Company, on the grounds that a title insurаnce policy written and issued by the appellees did not cover First United’s potential liability as a successor-in-interest under the Arkansas Time Share Development Act. Jurisdiction in this case is pursuаnt to Ark. Sup. Ct. R. l-2(b)(1). We find no error and affirm.
The appellant, First United, Inc., owns a mortgage on a parcel of land in Garland County that is insured by a title insurance policy written by appellee Chicago Title Insurance Company. The policy was issued by appellee Hot Springs Title Company. A time share development sits on the land, which is surrounded by the Lake Hamilton Resort and is adjacent to a hоtel. The time share development has been the subject of extensive litigation over a period of years, which is chronicled in our decisions of National Enterprises, Inc. v. Kessler,
On November 18, 2004, First United filed a complaint in the Garland County Circuit Court, alleging that the appellees had breached the title insurance policy. The appellees moved for summary judgment, аnd on June 10, 2005, the court granted the motion for summary judgment, and dismissed the appellant’s claim with prejudice. First United appeals that ruling.
The first point on appeal is: The trial court erred in granting summary judgment to Chicago Title Company.
Summary judgment should be granted only when it is clear that there are no genuine issues of material fact to be litigated, and the party is entitled to judgment as a matter of law. Riverdаle Dev. Co. v. Ruffin Bldg. Sys., Inc.,
The issue to be resolved in this case is whether the policy contractually obligates Chicago Title to reimburse First United in the еvent that First United takes title to the land and therefore becomes liable for the judgment. Thus, the decisive question is whether the policy covers the judgment. The policy, in pertinent part, provides:
Subject To The Exclusions Prom Coverage, The Exceptions From Coverage Contained In Schedule B And The Conditions And Stipulations, Chicago Title Insurance Company, a Missouri corporation, herein сalled the Company, insures, as of the Date of Policy shown in Schedule A, against loss or damage, not exceeding the amount of insurance stated in schedule A, sustained or incurred by reason of:
2. Any defect in or lien or encumbrance on the tide.
3. Unmarketability of title. . . .
The appellant asserts that the liability for the judgment that it would assume, upon taking title to the land, constitutes a defect in title, which is covered by the policy. The appellees contend that stаtutory liability or loss arising from ownership is not a “defect” covered by the policy. Defective title is defined as “a title that cannot legally convey the property to which it applies, usuаlly because of a conflicting claim.” Black’s Law Dictionary 1492 (7th ed. 1999).
In support of their argument, the appellees cite Chicago Title Insurance Co. v. Kumar,
In the present case, the appellant does not dispute that, should it choose tо take title to the land, it would have the right to possess, control, and dispose of the property. There are no conflicting claims to the property. Instead, the appellant is simply аsserting that because the pending judgment makes the property unattractive to potential purchasers, a defect in title exists. We do not agree, and for the foregoing reasons, we hоld that the loss in real estate value as a result of a purchaser’s potential liability as a successor-in-interest under the Time-Share Act does not constitute a “defect” in title for purpоses of title insurance.
The appellant also contends that the title is unmarketable, while the appellee argues that the appellant is confusing the marketability of the title with the markеtability of the land itself. In support of its argument, the appellees direct us to a treatise, Powell on Real Property, § 92.05, which states that, “[M]odern cases emphasize the differences betwеen marketability of title and marketability of land.” In further support of the distinction, the appellant cites Kumar, supra, where the court noted that marketability of title related to “defects affecting legally recognized rights and incidents of ownership” and was distinct from the lack of economic marketability of the land itself. The court in Hocking, supra, also emphasized the distinction, stating,
Although it is unfоrtunate that plaintiff has been unable to use her lots for the building purposes she contemplated, it is our view that the facts which she pleads do not affect marketability of her title to the land, but merely impair the market value of the property. She appears to possess fee simple title to the property for whatever it may be worth. . . .
Hocking,
The appellees also cite Lick Mill Creek Apartments v. Chicago Title Insurance Co.,
Similarly, the aрpellant here appears to possess fee simple title to the land, whatever it might be worth, and we agree that it is possible to hold perfect title to land that is valueless. The appellant has failed to appreciate the distinction between land that is unmarketable and title that is unmarketable, and its arguments emphasize factors that relate to the lack of economic value of the land itself, rather than to a title that is unmarketable. The appellant is free to possess and control the land, or to sell it to whatever purchaser desires to buy it. Accordingly, we hold that the judgment in this case does not make title to the land unmarketable. Because we conclude that the judgment is not covered by the policy, which insures against defects in title аnd unmarketability of title, as opposed to the unmarketability of the property itself, we need not address the additional questions raised by the appellant of whether specific exclusions within the policy apply to the judgment. The trial court’s ruling on this point is affirmed.
The appellant’s second point on appeal is: The trial court erred in granting summary judgment to Hot Springs Title Company
First United argues that Hot Springs Title, which actually issued the policy, was not acting as an agent of Chicago Title, which created the policy. There is undisputed evidence that Hot Springs Title informed First United that it was acting as an agent for its principal, Chicago Title, and no evidence that Hot Springs Title did anything that could be construed as being outside the scope of its agency in issuing the title to First United. An agent that acts within the scope of its authority for a disclosed principal is not liable on an insurance contract. McCullough v. Johnson,
Affirmed.