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Walker Rogge Inc. v. Chelsea Title & Guaranty Co.

Decided: August 9, 1989.

WALKER ROGGE, INC., A NEW JERSEY CORPORATION, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
CHELSEA TITLE & GUARANTY COMPANY, DEFENDANT-APPELLANT AND CROSS-RESPONDENT, AND ARTHUR W. HOOD AND RONALD J. PRICE, DEFENDANTS-CROSS-RESPONDENTS



On certification to the Superior Court, Appellate Division, whose opinion is reported at 222 N.J. Super. 363 (1988).

For affirmance in part, reversal in part, modification and remandment -- Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None. The opinion of the Court was delivered by Pollock, J.

Pollock

This case focuses on the respective liabilities of two land surveyors and a title insurance company for a deficiency in acreage when the insured purchaser acquires all the land described in the contract of purchase, but the land so described contains less acreage than the insured contemplated.

The matter proceeded in the Law Division as a non-jury trial. Because of the absence of expert testimony establishing the relevant standard of care, the court dismissed at the close of plaintiff's case the negligence claim against the surveyors, Arthur W. Hood and Ronald J. Price. After the entire trial, the court ruled that the title insurance company, Chelsea Title & Guaranty Company (Chelsea), was liable under its title policy, but not in negligence. The Appellate Division affirmed the judgment, but remanded the matter to the Law Division for recomputation of damages. 222 N.J. Super. 363 (1988). In affirming, the Appellate Division found that Chelsea was liable in both negligence and in contract. We granted Chelsea's petition for certification and the cross-petition of plaintiff, Walker Rogge, Inc. (Walker Rogge). We reverse the judgment against Chelsea, modify and remand the judgment in favor of Price and Hood, and remand the entire matter to the Law Division.

-I-

Our analysis of the facts involves consideration of the nature of the relationship between a real estate purchaser and a title insurance company, the special characteristics of real estate transactions, and the details of the subject transaction. The central figure in this matter is John Rogge (Rogge), president, director, and the majority shareholder of Walker Rogge. A licensed real estate broker since 1946, Rogge has been in the business of buying, selling, and appraising real estate for over forty years. He has participated in over 4,000 transactions with Chelsea, with which he had a long-standing business relationship. The trial court accurately described him as "a sophisticated and successful realtor."

Chelsea is a corporation engaged in the business of insuring titles, with its principal place of business in Northfield, New Jersey. Toward that end, it examines titles and conducts real estate closings. Price was formerly in business with John Walker as Price Walker Associates (Price Walker), and continued in business as Price Engineering Company (Price Engineering). Hood was one of the employees of Price Engineering. Price and Rogge were personal and business friends, and Rogge was indirectly responsible for Price's appointment as engineer for the town of Brigantine, where Rogge had served as a committeeman and mayor.

The property in question is a tract of land in Galloway Township, in Atlantic County, formerly owned by Alexander and Constance Kosa (jointly described as Kosa), who had acquired the property from one Aiello. Rogge initially became interested in the property while acting as a broker, but subsequently negotiated a purchase for Walker Rogge. Before Rogge signed the contract of sale on December 12, 1979, Kosa showed him a survey dated February 27, 1975, by Price Walker. Together Kosa and Rogge walked the boundary lines of the property. Rogge, however, did not retain a lawyer to represent him or his corporation in drawing the purchase contract, arranging

for the necessary searches or survey, or at the closing. Instead, he relied on his own experience and his long-standing relationships with Chelsea and Price.

The 1975 Price Walker survey indicated that the tract consisted of two lots with a combined acreage of 18.33 acres: Lot 35 contained 18.01 acres and Lot 36 contained .32 acres. The contract indicated the quantity of land to be "19 acres more or less." It called for a price of $363,000, which was determined "on the basis of $16,000.00 per acre," and was to be adjusted "for deviations from the amount of 19 acres, as shown by Price's Survey at settlement, bounded and described as follows: Being Lot 35 and 36, Block 1167." Because Lot 36 included a house, the actual sale price was greater than the product of the number of acres times the price per acre.

The contract stated that the $363,000 purchase price would be paid by $80,000 in cash, with Kosa taking back a four-year purchase money mortgage for $283,000. Signed on December 12, 1979, the contract called for a closing two and one-half weeks later on December 31, with time of the essence.

On the day after signing the contract, December 13, Rogge ordered a title insurance policy from Chelsea and asked Price to update the 1975 survey. Although Rogge testified at trial that he had ordered from Chelsea a title search, as well as a title policy, the trial court did not believe that testimony. In rejecting Rogge's testimony that he had requested a title search, the court stated "that testimony just did not have the ring of truth to it." Consequently, the court concluded "that plaintiff [Rogge] simply requested that the title work be handled by Chelsea."

Chelsea issued a title commitment that, curiously, is dated December 5, 1979, one week before the date of the contract. In the commitment or binder, the property is described as follows:

ALL that certain tract or parcel of land and premises, hereinafter particularly described, situate, lying and being in the Township of Galloway, in the County of Atlantic and State of New Jersey, bounded and described as follows:

BEGINNING at a stake in the Northwesterly line of Shore Road being corner to lands now or formerly of Mary E. Fries; and extending thence

(1) Along the same, North 43 degrees 51 minutes, 00 seconds West, 2643.48 feet to a point in line of lands now or formerly of James Grant; thence

(2) Along the same North 32 degrees 41 minutes 22 seconds East, 349.80 feet to a corner which is known as the Northwesterly corner of William Reed's Plantation in the original Deed to the herein conveyed premises from George W. Matthews and Mary Matthews, his wife, to Thomas Hartley dated June 21, 1883 and recorded in Deed Book 93, page 422 which corner is another corner of lands now or formerly of James Grant; thence

(3) Along the same, South 42 degrees 03 minutes 00 seconds East, 2740.34 feet to the Northwesterly line of Shore Road; thence

(4) Along the same, South 49 degrees 19 minutes 15 seconds West, 254.51 feet to the place of BEGINNING.

BEING KNOWN AS 1083 New York Road, Oceanville, (Galloway Township), New Jersey and further known as Lots 35 and 36 in Block 1167 on the Official Tax Map of the Township of Galloway.

The preceding description differs from that in the deed from Aiello to Kosa (the Aiello deed), in which the property is described as follows:

BEGINNING at a stake in the Northwesterly line of Shore Road being corner to lands now or formerly of Mary E. Fries; and extending thence

(1) Along the same North 43 degrees 51 minutes West 1810.30 feet to a point in line of lands now or formerly of James Grant; thence

(2) Along the same North 19 degrees 38 minutes East 348.99 feet to a corner which is known as the Northwesterly corner of William Reed's Plantation in the original Deed to the herein conveyed premises from George W. Matthews and Mary Matthews his wife, to Thomas Hartley dated June 21, 1883 and recorded in Deed Book 93 page 422 which corner is another corner of lands now or formerly of James Grant; thence

(3) Along the same South 42 degrees 30 minutes East 1965.18 feet to the Northwesterly line of Shore Road; thence

(4) Along the same South 45 degrees 50 minutes West 265.98 feet to the place of BEGINNING.

CONTAINING 12.486 acres.

BEING commonly known as 1083 New York Road, Oceanville, (Galloway Township) New Jersey.

Although it does not so indicate, the Aiello deed is substantially based on a 1971 survey done by Wood & Schilling (Schilling) for Kosa when they purchased the property. As is revealed by a comparison of the above-quoted descriptions, the description in the title commitment and that in the Aiello deed

call for the same monuments, but the distances and bearings of the respective courses differ. The property lines, particularly those of the first and third courses, as described in the title commitment are considerably longer than the comparable courses in the Aiello deed. As a result, the title policy, which incorporates by reference the description contained in the deed from Kosa to Walker Rogge, describes a tract with more acreage than is described in the Aiello deed. Unlike that deed, which indicated that the tract contained 12.486 acres, neither the title commitment nor the Kosa deed indicates the acreage of the tract. Furthermore, the commitment does not incorporate or refer to the description in the Aiello deed.

Perhaps because of the passage of time, memories of the participants have grown dim and their testimony uncertain. No one knows why a description based on the Price Walker survey, rather than one based on the description in the Aiello deed, was inserted in the commitment and in the Kosa deed.

Although Chelsea had six back files in its title plant and had issued two prior title policies on the subject property, none of the descriptions in the back files was the same as the description in the Kosa deed or the title commitment. Two of the Chelsea files, one pertaining to the Aiello deed and the other to a mortgage later given by Kosa, contained copies of the 1971 Schilling survey, which, like the Aiello deed, described the property as containing 12.486 acres.

The title binder or commitment expressly provided:

Schedule B of the policy or policies to be issued will contain exceptions to the following matters unless the same are disposed to the satisfaction of the Company:

4. Encroachments, overlaps, boundary line disputes and other matters which could be disclosed by an accurate survey and inspection of the premises.

Rogge apparently assumed the responsibility for obtaining a survey and asked Price to update the 1975 survey. It further appears that Rogge did not receive an updated survey by December 31, so he ...


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