On motion to dismiss counts 2 and 3 of the complaint.
Defendant Chelsea Title and Guaranty Company moves to dismiss counts 2 and 3 of the complaint on the ground that they fail to state a claim upon which relief can be granted.
This matter has been in litigation since 1957. By it Louisa Booth seeks damages against New Jersey Highway Authority and Chelsea Title and Guaranty Company. The first count of the complaint was dismissed on July 16, 1957. The fourth count of the amended complaint has been satisfied by condemnation proceedings. Therefore, as against the New Jersey Highway Authority, the plaintiff no longer has a cause of action.
Counts 2 and 3 seek damages in the amount of $4,000 each against the Chelsea Title and Guaranty Co., successor to Cape May County Title and Trust Co., which insured the title to an 82-acre tract described in the policy issued to plaintiff on November 4, 1953 which she purchased from Michael and Florence Manning. On April 12, 1954 the same company insured the title of the Highway Authority to another tract of land purchased by it from the same grantors. Both tracts included within their respective metes and bounds a 4.24-acre parcel, thus resulting in an overlap. Louisa Booth alleges that by insuring both titles the Title Company enabled the New Jersey Highway Authority to enter into possession of the lands and premises lawfully belonging to her, by virtue of which she was damaged in the amount of $4,000 plus interest and costs of suit. Count 2 alleges negligence, and count 3 breach of contract.
Plaintiff contends that at the time the policy was issued to her, one of the officers of the Title Company knew of this condition and of the existence of an unrecorded agreement of sale entered into between the Mannings and the Highway Authority on October 24, 1953 -- just ten days before the settlement between plaintiff and the Mannings. She contends that, despite this knowledge, the Title Company issued the policy to her, thereby agreeing to indemnify and keep harmless and guarantee Louisa Booth "from all loss or damage not exceeding $2,900.00. * * *" She bases her claim of loss on the value of the 4.24-acre tract at approximately $1,000 an acre.
"The contract of title insurance, as distinguished from that of employment to examine the title to premises, does not involve liability for negligence." 45 C.J.S. Insurance § 884, p. 950.
"The liability of the insurer under a title policy is for loss or damage by reason of defects in the title to the property or liens or encumbrances thereon." Ibid. , § 966, p. 1161.
"[The] insured is entitled to be reimbursed for all losses actually sustained, not to exceed the amount of his insurance, by reason of the defects of title or liens or encumbrances insured against; and, in the absence of a provision in the policy to the contrary, he is limited thereto." Ibid.
The Title Company, on page 1 of the policy, clearly states that it will "indemnify, keep harmless and guarantee the insured from all loss or damage not exceeding the sum of $2,900.00 * * * by reason of defects in the title * * * or because of liens or incumbrances charging the same at the date of this Guaranty (unless some other date be mentioned in Schedule A, and then at the last mentioned date." (Italics supplied.) The policy is dated November 4, 1953 and no other date is mentioned in Schedule A.
Again, on page 4, under the heading "Scope of this Guaranty," the policy clearly provides that it insures only as to actions, claims, etc., "founded upon a claim of title or encumbrance prior in date to this guaranty. * * *" In 13 ...