*1 MALINAK, Appellant, PAUL v. SAFECO Plaintiff IDAHO, TITLE INSURANCE COMPANY OF and Lin- Company, coln Defendants Respondents. No. 81-196. Submitted March 1982. Decided Feb. 1983.
Rehearing
April
Denied
Warden, Johnson, & Todd A. Hammer ar- Christiansen Murphy, Phillips, gued, I. Robinson, & James Heckathorn Kalispell, argued, Heckathorn for defendants respondents. opinion the the
MR. JUSTICE SHEEHY delivered Court. opinion hold- Court issued an
On November this by appellant ing appeal Paul the Malinak the taken that appeal timely dismissed. we the was not St.Rep. ordered petitioning and rehear- In for reconsideration partial appeal ing, pointed out this was that Malinak partial judgment judgment such in District Court that appealable en- District Court directed was until the not try judgment no there determined that was final just 54(b), M.R.Civ.P., reason delay for under Rule when so entry that the District Court did direct the final case, judgment appeal timely this had been filed Court, reviewing Malinak. for steps ap- This taken peal record, point, shown missed that which accepts complete this author In responsibility. determining petition for reconsideration and rehearing, we found timely filed, appeal granted and re- rehearing consideration, opinion ordered that our of November withdrawn, be and reinstated the appeal.
We come now to appeal consider this on its merits. Malinak appeals summary judgment from a granted Court, District, District Nineteenth Judicial Lincoln County, in effect determining had no of recov- ery against companies which are defend- ants in this case. summary
We determine that be re- judgment must versed, and the cause remanded further proceedings *3 the District Court. purchased
Malinak 640 acres of land in County, Lincoln Montana, in 1970. purchased At the property, time he he was aware that St. Regis Paper a York Company, New corporation, rights land, had to although timber on the was not sure of the rights. extent of those 1973,
In Regis a St. representative informed Malinak that a timber reservation Regis owned St. would expire 1973, and requested one-year Malinak extension. granted Malinak one-year request extension. At the time, same exchange Malinak sought rights other timber which he believed were on the land for graz- additional ing rights from St. Regis.
In Malinak entered into a contract to sell his land to realtor, Gerald Williams. Malinak’s Heller-Mark Com- Denver, pany of requested a commitment of title insurance from County Lincoln Title The Company. County
conducted a search of the records Lincoln prepared a through commitment Safeco Company Title Insurance of Idaho. The commitment was July dated
Malinak reviewed the title commitment and advised his exceptions B realtors that the listed in Schedule of the title commitment, nos. ex- 6 and were error. Each these ceptions commitment related to merchantable on Regis Paper apparently timber claims vested St. Com- Company through prior pany to J. re- Neils Lumber behest, corded instruments. At Malinak’s Heller-Mark and requested County Company Company Title Lincoln restrictions, check the and to delete them. County Company prepared Title
Thereafter Lincoln July endorsement,” 14, 1975, in which “date down dated exceptions It commit- those were deleted. delivered the ment, endorsement, Malinak with the down date Company. Heller-Mark and through negotiations fell to Williams and later sale property purchase were conducted and of Malinak’s Novy L. Pacific Land Com-
a sale to Lowell and Canwood completed by pany transfer, In Malinak was Malinak. selling Novy he was without warranted title to the lands relying reservations, for title commitment the timber 29, December which he had received. On agent through Idaho, its Safeco Title Insurance policy Company, in- of title Lincoln issued its modi- in accordance the title commitment surance exception was No fied the date down endorsement. policy rights be- or reservations noted in the for the timber longing Regis. St. plan Novy Regis
In the fall of St. notified Novy purchasing land cut and remove trees payment Novy from Safeco Title from Malinak. demanded *4 rights Company On on his land. for the timber Insurance January to if it had 27, 1978, Malinak that Safeco notified pay Novy rights, Malinak warranted which for the timber Novy, be Malinak. it would seek to reimbursed to associate from Safeco’s a second letter Malinak received general 1978, February counsel on which Safeco said that it had retained a Great Falls law firm to research the validity Regis’ issue of of St. timber reservations. The letter research St. stated that showed that claim to Regis’ likely the timber was to be valid. 13, 1978,
On March as plaintiff Malinak intervened Novy’s enjoin Regis lawsuit cutting St. timber on Novy. lands sold to Malinak Lincoln also named Title and Safeco Title Insurance Com- pany as defendants.
Malinak’s claim for relief against Safeco Lincoln Title costs, damages expenses, travel involving attorneys fees damages and other he incurred in attempting which Novy’s defend the timber. Malinak’s complaint al- leges that relied on the correctness the title commit- ment as amended the date down endorsement war- all ranting rights Novy. timber complaint Malinak’s sought recovery on the grounds negligence and breach warranty. paid Novy
Safeco Title has value the timber rights, Malinak, and the only remaining parties are Lincoln County Title and Safeco Title Insurance Company. Safeco against County Title, cross-claimed Lincoln and both defendants against counterclaimed Malinak. Both defend- ants moved for summary judgment claim on Malinak’s against them. On November the District Court granted summary against defendants’ motion for judgment 6, 1981, On January Malinak. hearing after on Malinak’s motion to amend the the District judgment, Court found just entry there was no reason for delay directed 54(b), judgment under Rule sum- M.R.Civ.P.. From this mary judgment, timely appealed. Malinak
A summary judgment proper deposi- if pleadings, tions, answers interrogatories, and admissions file show any there is no as to fact genuine issue material moving parties are a mat- judgment entitled to a 56(c), ter of case, law. Rule In this Malinak M.R.Civ.P. *5 74 (1)
principally in de- contends that the District Court erred termining companies not that the title insurance were liable (2) genuine Malinak, as a law that a matter of to material issue of existed as to Malinak’s state of mind fact respect knowledge as to of his timber the status rights Therefore, the land. Malinak contends that on improper. summary judgment against him was Lipinski Company case, In a v. Title Insurance recent (Dec. 1982), 23, 202 Flathead Title St.Rep. 655 P.2d 39 this Court held that Mont. company for fail- a title insurance was liable to its insured ditch easements ure determine and disclose certain of the title would have revealed. which a search record liability aspect of the Malinak contends here for a different liability company, is, vendor of a that providing land, title com- or seller of the seller a in the mitment fails to disclose to the seller defects which title, where the seller relies the title commitment seller’s selling. to warrant the title indemnify in is a contract to against through or loss in the insured title sured defects may against the insured liens or encumbrances that affect policy v. Marler is issued. Walters title at the time the 1978), Cal.App.3d Cal.Rptr. (Cal.App. Un 83 may doubtedly policy in a enforce named insured in the of title insurance for defects terms of the contract conveyed and insured. title category
A is in a somewhat different title commitment Ordinarily policy commit- from the title that follows it. exhibiting by purpose it for the ment is ordered the seller quality buyer representation the title of the to the as a buyer. expects natu- A sell to the title commitment seller by rally contemplates the chain the title insurer of a search expert by reveals, opinion of what the search title, an an guaranty the title and that that search was accurate expresses quality the seller of the title of commitment person title insur- who seeks the record. as shown expects anee commitment a professional to obtain title search, opinion as well as a professional legal to the con- title guaranty expressed dition and a the commitment will be policy insured to the extent of the coverage. A title not propose commitment does the ti- will company tle property; insure the rather that the title company insurer, course, will insure the title. The title title; commitment, does not agree clear the rather the title agrees to in a coverage policy afford *6 later be issued insuring according the title to its commit- ment. The function of a title insurance commitment not lost on appellate the California Tran- court Jarchow v. samerica (1975), 917, Title Insurance 122 Cal.App.3d 48 470, Cal.Rptr. 485, where said: it presents “When a title insurer a buyer prelim with both a inary report title policy insurance, and a of title two dis responsibilities tinct rendering are assumed. In its first ser vice, the insurer serves as an abstractor of title must list public all matters of prop record regarding subject the erty preliminary report (Hardy v. Admiral Com Oil 841, pany, 894, 310; 56 Cal.2d Cal.Rptr. 16 2 366 P.2d Miller Starr Current Law Real Estate of California (1968), 284-285). at duty imposed upon The an ab § rigorous stractor of title is a one: ‘An is abstractor title professional skill, hired because of his searching when public client, the records on behalf of a he must use of care degree professional with commensurate . skill. report .The abstractor must all matters which could affect his client’s are readily interests and which discovera ordinarily ble from public those records examined when a cases) reasonably diligent (Citing is Sim title search made.’ ilarly, a is to list negligent title insurer liable failure . . preliminary reports. recorded encumbrances title cases).” (Citing duty
Jarchow of a involved the respect purchaser property. to the The courts duty applied Hawaii and Alaska have to title insurers the 76
carefully report in Chun to sellers to examine and title (Hawaii 1970), 905, 907, P.2d v. 51 Hawaii Park Ramsey Title Insurance v. and Transamerica (Alaska 1973), P.2d they are
The insurers in this case contend that any liability fol to Malinak virtue of the absolved lowing clause in the title insurance commitment: contained
“This the condi- Commitment further conditioned stipulations coverage of the tions and and exclusions from policy policies or insured. basic form of the committed be public by Company The examination of the records made wholly A made as to the determining set out schedule was land insurability said of the title to land reporting not for on condition the record.” say foregoing is, condition of the title commitment ambiguous. least, It be difficult for a trained law- would yer speak layman, distinguish not to of a the difference “insurability of the title” after examination between public records, But and the “condition of the record.” possible ambiguity rely in the not clause we do expectations of the issue. It is within the determine this parties, ordering the ti- the seller the title commitment and inspecting public records, com- insurer tle *7 insurability accurately title, of will mitment reflect public may be, record, or as the case the condition of part duty respect of the title. find a on the to that We later insurer it title commitment which title when issues a policy, particularly insurance forms the basis for a title commitment, relies on title to base where the seller reasonably report upon diligent ti- and title commitment duty public A of that search of records. breach tle negligence. would constitute ground, by upon in District
A Court second relied granting summary judgment “knowl- Malinak had convey agreed edge” of the defects at the time he title Novy. the land and to warrant its title possible summary judgment stage, Malinak’s At the
77 of in knowledge point. the defects title not in Bar- are ring circumstances amounting part, fraud Malinak’s possible comparative or his negligence conveying in the title reasonably so, when a prudent person might not do knowledge Malinak’s is status of his title irrelevant with respect liability to the It the title insurer. is stated in Maggio Mortgage v. Abstract Title Corporation (1950), App.Div. 98 N.Y.S.2d 1013:
“In the case of a policy, the insurer under- takes if indemnify the insured the title turns out to be defective. is purpose That insurance procuring the knowledge in by of defects the title the insured in no way lessens the liability the insurer. The skill doctrine of or has negligence application no contract of title insurance.”
See also Shotwell v. Transamerica Title Insurance Com- pany (Wash.1978), Wash.2d 588 P.2d
It is evident that a material issue of fact exist does to Malinak’s in knowledge the circumstances under which conveyed and warranted Novy. his title to
Accordingly, the summary judgment entered the Dis- trict against Court Malinak is reversed and this cause is re- manded for further proceedings with this accordance opinion. HARRISON,
MR. JUSTICES DALY, SHEA and THE MELOY,* HON. PETER JUDGE, G. DISTRICT concur.
* Sitting MR. JUSTICE MORRISON. MR. HASWELL, CHIEF concurring part JUSTICE dissenting part: I pre- concur that summary judgment improper. It is cluded genuine existence issue of material facts toas whether Malinak had knowledge of the title defects at question Novy. the time he warranted the I strenuously dissent from holding *8 duty diligent companies have a search a conduct they a to insure a land ti- defects when issue commitment rely extent, tle, seller has a thereon to that the damages lies in favor of the seller for an action for and that duty. breach of that purpose title search insurability title, of a not defects of
is to determine the land from the terms record therein. This clear commitment: public
“. . records made .The examination wholly determining Company. . .was made the insura- bility reporting on the condition title. . .and not for of the record.” duty beyond my majority view,
In have created additionally, scope coverage And of the commitment. they right of reliance thereon out of thin air. have created a
MR. WEBER: JUSTICE foregoing.
I concur