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Sandler v. New Jersey Realty Title Insurance Co.

Decided: March 30, 1961.

LEWIS N. SANDLER AND RICHARD M. SANDLER, PLAINTIFFS,
v.
NEW JERSEY REALTY TITLE INSURANCE COMPANY, AN INSURANCE CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT



Labrecque, J.s.c.

Labrecque

[66 NJSuper Page 598] This matter comes on before me on the defendant's motion to dismiss the complaint, or in the alternative for a summary judgment for defendant on the ground that there is no genuine issue of any material fact, and that the defendant is entitled to judgment as a matter of law. Plaintiff has filed a cross-motion for summary

judgment as to the issue of liability on the first count. By subsequent stipulation, there being agreement as to the facts, the case was submitted for final determination.

The plaintiffs are children and sole beneficiaries of the late Maurice Sandler. They are also his sole executors, although they do not sue as such. On July 25, 1946 the defendant, New Jersey Realty Title Insurance Company, issued to Maurice Sandler a policy of title insurance in the amount of $10,000 covering certain premises located in the Township of Springfield, Union County, New Jersey. On December 20, 1946 Sandler conveyed the premises in question to Richard Sandler Realty Co., Inc., a body corporate of the State of New Jersey, by bargain and sale deed. No notice was given to the defendant of this transfer of title and no application for title insurance was ever made on behalf of the corporation. On December 29, 1950 Richard Sandler Realty Co., Inc. reconveyed the identical premises to Maurice Sandler. On January 2, 1951 he, in turn, conveyed to the plaintiff, Richard M. Sandler, by bargain and sale deed, an undivided one-third interest in the premises. At the same time he conveyed to the plaintiff, Lewis N. Sandler, an undivided one-third interest therein. Maurice Sandler died on January 22, 1955 seized of the remaining undivided one-third interest in the premises. Under his last will and testament, which was duly probated, his undivided one-third interest was devised as part of his residuary estate to his sons, the plaintiffs herein.

On October 31, 1956 the plaintiffs and their respective wives contracted to sell approximately 5,000 square feet of the premises covered by the title policy. Thereafter an adverse claim was filed and the plaintiffs requested the defendant to remove the cloud from plaintiffs' title. Defendant denied liability. Thereafter the plaintiffs and their wives entered into a supplemental agreement with the purchaser substituting an alternative parcel which was conveyed for a consideration of $20,000. Examination of the title revealed that Maurice Sandler had not owned title to two

of the tracts embraced in the description contained in the title insurance policy.

The first count of the complaint seeks recovery by way of indemnification under the policy. The second count seeks damages for negligence in making the search.

Defendant's contentions may be briefly summarized as follows:

(1) Plaintiffs were not insured and were thus not entitled to indemnification under the policy.

(2) The policy was not assignable or negotiable and thus terminated and expired upon the initial transfer of title from Sandler.

(3) Defendant owed no duty to the plaintiffs and hence is not responsible for loss or damage by reason of negligence.

Certain additional facts appear in the case by stipulation: Maurice Sandler was the beneficial owner of 100% of the capital stock in Richard Sandler Realty Co., Inc., to which he conveyed the subject premises, and the conveyance to the corporation was a capital contribution to that corporation. The market value of that portion of the property originally purchased and insured by the defendant for which the plaintiffs herein seek damages by virtue of title defects was ...


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