E. A. Robey & Co. v. City Title Insurance Co.

The plaintiff, E. A. Robey and Company, Inc. (hereafter referred to as Robey) brought this action against the defendants City Title Insurance Company, Inc. and Lakeport Title Guaranty Company (hereafter referred to as City and Lakeport, respectively) alleging breach of a policy of title insurance issued by the defendants. In a second cause of action plaintiff demanded damages against the defendants for alleged negligence in the examination and reporting concerning the title to real property purchased by the plaintiff after the defendants had reported that title was vested in the seller. The plaintiff’s complaint also contained a third cause of action against Luella N. Brubaker, the seller, formerly known as Luella N. Miller (hereafter called Brubaker), alleging mutual mistake in the sale of the real property in question. The alleged mutual mistake consisted in the belief by both seller and buyer that the seller owned the fee title to the real property, subject to uses in the nature of easements, whereas, in fact, the seller had no title at all. The plaintiff demanded repayment of all sums for which it had received no consideration, together with certain expenses paid by it in defending title.

The trial judge directed the jury to return a verdict in favor of the plaintiff against City on the contract cause of action, and left only the issue of damages to the jury. The trial court also ordered a nonsuit in favor of Lakeport, on the ground that Lakeport merely acted as agent for City, and that its status as an agent was fully disclosed. The court also granted a nonsuit in favor of both City and Lakeport on plaintiff’s negligence cause of action. Finally, the court directed a verdict in favor of the defendant Brubaker, on the ground that City had accepted all liability and that both buyer and seller were to look only to City for any loss resulting from failure of title.

The jury considered the evidence on the issue of damages and awarded Robey $13,400 against City. City appeals from the judgment. Robey appeals from the judgment and attacks the trial court’s order directing a verdict in favor of Brubaker. Robey also asserts error in the trial court’s failure to instruct the jury on the subject of interest claimed by it on money paid out in defense of the title to the property and on the portion of the purchase money for which it received no

There is no substantial conflict in the evidence. The record shows that some time before 1959 Bobey purchased from Brubaker resort property located on Clear Lake in Lake County, California. Bobey wished to purchase other property adjacent to the resort property. This property, also was owned by Brubaker. In September 1959. Bobey and Brubaker negotiated concerning this property. Generally described, the whole parcel may be said to be triangular in outline, its base extending along a street known as Lakeshore Drive, its apex reaching to the low water mark of Clear Lake. The property is roughly divided into two parts—a northerly and a southerly portion. There is no issue concerning title to the northerly portion. The southerly 342 feet of the property, measured along its base on Lakeshore Drive, is the area in dispute here. The easterly boundary of the property follows the irregular line of the low water mark of the lake. The disputed area is variously described in the record as “the beach property,” “the restricted beach” or “the lakeside property.” Title to the property, and the rights of the public and others to its use, was before the Court of Appeal in Morse v. Miller, 128 Cal.App.2d 237 [ 275 P.2d 545 ].

During negotiations between Bobey and Brubaker the question of the right of the public and the right of others to use the property was discussed. Bobey obtained and read a copy of the appellate court’s decision in Morse v. Miller, supra. He also consulted Donald Merger, an officer and agent of Lake-port for advice. Mr. Merger visited the property and thereafter suggested that the parties petition the court to “. . . have the court determine what exact extent ... an owner . . . could use the land for.” Brubaker, in a letter to Bobey, expressed doubt this could be done, saying further: “The public has an easement to pass over the beach to the water and to the use of the beach for sunbathing.” She also fixed the price of $8,000 for the “restricted” area. Bobey replied that the price for this part of the property was fair. These negotiations were not immediately productive, but about six months later the parties agreed upon terms closed their transaction through Lakeport, and City issued its policy of title insurance in favor of both Bobey and Brubaker. The policy recited that, as of the closing date, title to the property

Immediately after completion of the sale, Robey commenced construction of a beach house on the southerly portion of the property. Thereupon Paul E. Morse, who was the plaintiff in Morse v. Miller, supra, sued to enjoin Robey’s construction, and questioned Robey’s title to the southerly 342 feet of the property it had bought from Brubaker. This litigation resulted in a decision by the court which, in effect, held that Robey had no title whatever to the property by reason of prior dedication for public use. This judgment was affirmed by the appellate court in Morse v. E. A. Robey & Co., 214 Cal.App.2d 464 [ 29 Cal.Rptr. 734 ], Robey spent $3,373.39 in its unsuccessful defense of title.

City contends it was error for the trial court to direct a verdict in behalf of Robey because there was a conflict in the evidence. As we understand this contention it is that appellant City intended to except from the coverage of its policy any loss of title resulting from the decision in Morse v. Miller, supra, whereas the plaintiff Robey understood the policy to except only public use of the property.

We think that the trial court was entirely correct in directing a verdict in favor of Robey and against City. There was no substantial conflict in the evidence. Where such is the case the court may direct a verdict. (See Estate of Lances; 216 Cal. 397 , 400 [ 14 P.2d 768 ] ; 2 Witkin, Cal. Procedure (1954) pp. 1857-1858, and cases cited.) As we have seen, City’s policy first declared that title to the property was vested in Luella N. Brubaker. This declaration covered the entire property described by metes and bounds in the policy

Schedule “B” of City’s policy excepted from coverage the “right of the public to use” the southerly portion of the property as a beach and athletic field. We think it apparent, however, that only rights in the nature of an easement were excepted. There is no suggestion from the language used that City intended to .give Robey no insurance at all on this portion of the property, which is the sense of City’s contention here. Robey had a right to expect something for the premiums paid for the insurance. (Lagomarsino v. San Jose etc. Title Ins. Co., 178 Cal.App.2d 455 , 464 [ 3 Cal.Rptr. 80 ].) Moreover, if the language used in the exception be deemed ambiguous, it must be construed against City, since City .prepared the exception. It cannot rely upon an ambiguity in its policy which, if construed as it contends, would deprive the beneficiary of the benefits of the policy. (See Narver v. California State Life Ins. Co., 211 Cal. 176 [ 294 P. 393 , 71 A.L.R. 1374 ].)

It is settled that a person who has paid money to another for full performance of a contract voidable for mistake, and who has received only part of the agreed exchange, is entitled to keep what he has received, and have restitution for so much of his payment as has not been compensated for by the other’s part performance. (Levy v. Wolff, 46 Cal.2d 367 , 368 [ 294 P.2d 945 ], and cases cited; see also Rest., Restitution, §25.) This rule is directly applicable here. Robey received nothing for whatever was paid for the southerly 342 feet of the property supposedly owned by Brubaker. Thus Robey was entitled to recover that portion of the purchase price attributable to the property for which it received no title.

As previously noted, the court directed a verdict in favor of Brubaker and against Robey on the ground that the sale was a three-party transaction in which some infirmity in the title to the southerly portion of the property was known to all, and that City, upon issuance of its policy, accepted the entire risk. Both seller and buyer were named as insureds under the policy. But to support the directed verdict in favor of Brubaker we must accept the policy of title insurance as substantial evidence that buyer and seller had agreed to look only to City in the event of some title defect. We do not think the mere designation of both buyer and seller in the policy may be given that effect. We must look at the evidence from Robey’s point of view, since the verdict was directed against it, and .consider the legitimate inferences that may be drawn from all of the evidence presented in its behalf. Prom the evidence we have described we think it reasonable to suppose

Robey argues the jury should have been instructed that it was entitled to interest on the sum of $3,373.39 court costs paid out by it in defending title to the beach property. We agree.

Civil Code, section 3287 provides for the allowance of interest when damages are certain or capable of being made certain by calculation, and where the right of recovery is vested on a particular day. (See Overholtzer v. Northern Counties Title Ins. Co., 116 Cal.App.2d 113 , 127 [ 253 P.2d 116 ].) The evidence is clear that Robey paid out $3,373.39 in court costs and expenses in defending title. These allowable costs consisted of many items, each in a different amount and paid at various times. As to each, however, the amount being certain, Robey was entitled to have interest calculated from the date of payment. (Civ. Code, § 3287.)

Robey also contends it is entitled to interest on that portion of the purchase money paid for the southerly 342 feet óf the property lost by failure of title. But damages here were not certain, and could not be made certain until such time as the jury evaluated all of the expert testimony and fixed the value of the disputed property by its verdict. Thus, interest here must run from the date of the judgment.

1. The judgment in favor of E. A. Robey and Company, Inc. against City Title Insurance Company, Inc. is reversed with directions solely for the purpose of permitting the trial, court to correct the judgment by adding, interest on the sum'of. $3,373.39 at the legal rate, computed.from the date of the. various payments making up the principal sum, in accordance-with the undisputed evidence 3. . ...

2. : The .judgment of dismissal. in. "faivor of I/uella N. Bra-, baker and against E. A. Robey-, and Company,. Inc. is, reversed¡