Facts: In 1906, P retained D to search the title to land in Brooklyn which P’s were about
to buy. D reported the title was good and marketable. He made up an abstract which
showed in 1861 title in Clark and Anderson as tenants in common. Clark left a will by
which his real estate passed to devisees in fee. Power to sell the land and dvide the
proceeds was given to the executor. The executor in 1863 conveyed his testator’s
undivided interest to the co-tenant. Anderson, the grantee, conveyed to the executor an
interest in another parcel. The transaction was not a sale for money, but an exchange.
She conveyed the land to Grimme, whose title passed thereafter by means conveyances to
P’s vendors. A power to sell and distribute the proceeds of land is not the power to
exchange. There was thus a flaw in the record title and D made no mention of this to his
clients. He made no investigation of the occupation of the land. He supplied no evidence
of adverse possession. He let Ps complete the purchase on the assumption that the record
title was perfect. In 1910, P sought to resell the land and the purchaser rejected title
because of the flaw in the record. D represented P’s at the closing. Even then he
supplied no evidence of adverse possession. He made no claim that the title could be
sustained upon that ground. The purchaser sued for the deposit and the expenses of
searching title. P lost the suit, represented by another counsel and their title was deemed
unmarketable. This action was brought to compel D to respond to the damages resulting
from his negligence. He argued that adverse possession for 50 years made the title
marketable, and the trial court agreed. Appellate division ruled that D had been negligent
and reversed.
Issue:
Holding: Affirmed.
Rationale:
– It is negligence to fail to apply the settle rules of law that should be known to all
conveyances. D knew the facts, and should be chargeable with the knowledge of
their significance. In the absence of clear and cogent evidence of adverse
possession, the title was unmarketable. Mere lapse of time is insufficient without
proof of a hostile holding. D does not acquit himself of negligence by showing
that evidence could have been collected. He must show that it was collected, and
until that duty has been fulfilled the title is unmarketable.
– P’s title to an undivided half is independent of the power of sale, and it is
undoubted. Their title to the other half is independent of the power of sale, and is
undoubted. Their title to the other half, is not undoubted, has been supported by
evidence which would make out a prima facie case in any contest with an adverse
claimant
– D has proved that for more than 50 years Ps and their grantors have been in
hostile and unchallenged occupation of the land. There can be no recovery either
of the whole purchase price or of half of it, even if we assume it is to be the
proper measure of damage where title to the whole or the half has already failed.
– D thinks the damages should be nominal. But, P relied on D’s assurance that they
had a marketable title. Relying on that assurance, they made a fruitless contract
of resale. They have lost the commissions paid their brokers. They have been
forced to reimburse the purchase for the cost of an examination of the title. If D
had been diligent, these expenses would have been saved.
– P is not entitled to profits of the resale. They are still the occupants, and it may
be, the owners of the land.