104 Misc. 607 | N.Y. App. Term. | 1918
On or about June 15, 1906, the defendant delivered to the plaintiffs its title insurance policy whereby it agreed to keep harmless and indemnify the assured: “ against all loss or damage not exceeding $3,000 which the said assured shall sustain by reason of defects or unmarketability of the title of the assured to the estate, mortgage or interest described in Schedule A hereto annexed or because of liens or encumbrances charging the same at the date of this policy. * * * The loss and the amount to be ascertained in the manner provided in the annexed conditions and to be payable upon compliance of the assured with the stipulations of said conditions and not otherwise.”
On November 29, 1912, the plaintiffs entered into a contract for the sale of both lots for $1,500, but on the closing day the purchaser rejected the title because of defects not excepted in the policy. The plaintiffs complied with all the conditions of the policy and gave to the defendant notice as required by the policy of such rejection within ten days thereafter. It appears that the title at the time the plaintiffs made the contract of sale was defective in that one of the two lots covered by the premises was subject to an outstanding undivided two-thirty-fifths interest. Before the beginning of the action the defendant obtained for plaintiffs the outstanding two-thirty-fifths interest in this lot, but such interest was subject to the lien of a judgment for $576.64. Upon these facts the trial justice has held that since the plaintiffs had entered into a contract of sale for the property for the sum of $1,500 on November 20, 1912, and they lost the benefit of the sale, “ the amount of their damage was the sum agreed to be
This dictum implying that a plaintiff in an action for breach of covenant of seizin could recover damages for the loss of a sale of the property is the only authority cited by the plaintiffs or by the court to sustain the measure of damages applied in this case. There seems to be, as a matter of fact, a dearth of authority in regard to the measure of damages applied in an action on an insurance policy, and even in Sutherland’s great work on' damages the question of the usual measure of damages is not discussed but the author contents himself with a single section referring the student to the chapter of his book devoted to the measure of damages in actions brought by a grantee against his grantor for breach of the various covenants of title. The policy of title insurance, however, goes somewhat further than a covenant of warranty, for it includes not only defects or lack of title but also includes unmarketability of title amongst the matters for which it gives insurance. Nevertheless, in many points the covenants of title contained in a deed and the covenant of indemnity contained in a title insurance are analogous, and in the absence of express words in the contract of insurance the same rules would apply. The measure of damages in an action for the breach of the covenant of seizin is ordinarily the consideration paid by the grantee for the property, and the grantee need not wait until he has been evicted by superior title but may bring his action as soon as he discovers his grantor’s lack of title. Suth. Dam. § 597.
This measure of damages is applied upon the theory that since the grantor had no title he had none to convey, and the grantee may therefore recover the money paid without consideration, but if the grantee
The trial judge stated in his opinion that the judgment will provide that on payment of the judgment herein the plaintiffs shall execute and deliver to the defendant a deed quit-claiming all their right, title and
It is true, as stated above, that in an action at law, for a breach of the covenant of seizin, the grantee may recover the full consideration paid for the grant without tendering a deed of the property reconveying the land to his grantor. The reason for this rule, however, appears in the opinion in the case of Parker v. Brown, 15 N. H. 176,188, where the court said: “No wrong is done by the maintenance of the action; for if the grantee recovers damages for the breach of the covenants of seizin, on the ground that the grantee had no title whatever, the operation of it must be to estop the grantee from setting up the deed afterwards, as a conveyance of the land, against the grantor. We see not why the grantor may not again enter, if he chooses, as against the grantee. A recovery in trespass or trover, with satisfaction, vests the property in the
In the present case, however, the original grantor did have some title to the premises and not merely possession thereof, and the plaintiffs have acquired by valid grant such title as the grantor originally had. The defendant never had title to this property and even if it were called upon to pay the full value of the property a judgment to that effect with satisfaction could not in any possible way vest in it the title to the property. It follows that the plaintiffs in this action are entitled to recover only the actual loss suffered by them through the existence of the encumbrances which at most would be the difference between the value of the property as encumbered and its unencumbered value or the price which they could have secured for it if it had been unencumbered.
Judgment must, therefore, be reversed, and a new trial ordered, with costs to appellant to abide the event.
Weeks, J., concurs; Finch, J., concurs in result.
Judgment reversed, and new trial ordered, with costs to appellant to abide event.