Mertens v. Berendsen
1 P 2d 440, 1931 Cal. LEXIS 491, 213 Cal. 111 (1931)
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Rule of Law:
A minor structural encroachment on public property does not render a real estate title unmarketable if the encroachment is slight, can be removed at minimal cost, and does not pose a substantial risk of mandatory removal or significant damages by municipal authorities.
Facts:
- A purchaser entered into a written agreement to buy a lot and a three-story concrete building located on the northeast corner of Kearny and California Streets in San Francisco from the seller for $150,000.
- The purchaser paid a $1,000 deposit when the agreement was signed, and the contract allowed seven days to report title or survey defects.
- Within the specified time, the purchaser notified the seller of rescission and demanded the return of the deposit, claiming the building encroached upon the street, rendering the title defective.
- The building encroached on property belonging to the City and County of San Francisco along the California Street frontage for at least 35 feet, with the encroachment measuring two inches on the westerly end and tapering to seven-eighths of an inch on the easterly end.
- The encroachment consisted only of the marble veneer at the base of the building and a slight overlap of concrete behind the marble.
- The seller refused to return the deposit.
- The overlap could be eliminated at a cost of $200.
Procedural Posture:
- A purchaser initiated an action in the trial court to rescind a contract for the sale of real estate and to recover a $1,000 deposit.
- The trial court found that the building on the premises encroached slightly on city property.
- The trial court concluded that the title to the property was nevertheless marketable and that the contract of sale was valid and enforceable, issuing a judgment in favor of the seller.
- The purchaser appealed this judgment to the Supreme Court of California.
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Issue:
Does a minor structural encroachment onto public property, which can be easily and inexpensively remedied and does not present a substantial risk of removal or significant damages, render a real estate title unmarketable?
Opinions:
Majority - Langdon, J.
No, a minor structural encroachment onto public property that can be easily and inexpensively remedied and does not present a substantial risk of removal or significant damages does not render a real estate title unmarketable. A marketable title is defined as one free from reasonable doubt, allowing a reasonably prudent person to accept it, retain the land peacefully, and sell it without undue concern for future flaws. Mere suspicion or speculative possibilities do not make a title unmarketable; rather, there must be a 'moral, not mathematical, certainty' that the title is good. The court reasoned that if the city had a right of action based on the encroachment and enforcement of that right would cause substantial loss to the owner, only then would the title be considered not free from reasonable doubt. Citing California precedents like Rothaermel v. Amerige and McKean v. Alliance Land Co., the court established that for slight encroachments, where the injury is minimal (de minimis) and full compensation can be made in damages, courts typically will not grant mandatory injunctions for removal nor award substantial damages. Given the small size of the encroachment (two inches tapering to seven-eighths of an inch) and the low cost of removal ($200), there was no reasonable probability that the City and County of San Francisco would successfully sue for removal or substantial damages. The court distinguished this case from New York decisions involving substantial encroachments (e.g., bay windows, porticos projecting a foot or more) that threatened significant loss to the owner and involved high removal costs.
Analysis:
This case significantly clarifies the definition of 'marketable title' in California, particularly concerning minor structural encroachments. It establishes a practical threshold, emphasizing that not every technical defect or trespass renders a title unmarketable. By requiring a 'substantial loss' or a 'reasonable probability' of successful municipal enforcement action, the court prevents purchasers from using trivial imperfections as a basis for rescinding contracts, promoting certainty in real estate transactions. The decision balances strict property rights with equitable considerations, effectively defining when a defect moves from a mere shadow to a genuine impediment to ownership or market value, thereby influencing future disputes involving minor property line issues.
