Walker Rogge, Inc. v. Chelsea Title & Guaranty Co.
562 A.2d 208 (1989)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A title insurance policy is a contract of indemnity that insures against defects in title, not mistakes in the quantity of land, and a standard survey exception clause validly excludes from coverage acreage shortages that an accurate survey would have disclosed. A title company is generally not liable in tort for negligence in conducting a title search unless it voluntarily assumes a duty beyond its contractual obligation to insure title.
Facts:
- John Rogge, president of Walker Rogge, Inc., was an experienced real estate professional who contracted to buy property from Kosa.
- Before signing the contract, Kosa showed Rogge a 1975 survey by Price Walker Associates indicating the property was 18.33 acres.
- The contract of sale described the property as '19 acres more or less' and set the price 'on the basis of $16,000.00 per acre,' to be adjusted based on a survey at settlement.
- Rogge, relying on his own experience, did not retain a lawyer, but ordered a title policy from Chelsea Title & Guaranty Company (Chelsea) and asked surveyor Ronald J. Price to update the 1975 survey.
- The legal description used in Chelsea's title commitment and final policy was based on the inaccurate 1975 survey, not the seller's prior deed which correctly stated the acreage was approximately 12.486 acres and which Chelsea had in its internal files.
- At the closing, Rogge relied on Price's telephonic confirmation from his office that the updated survey showed no changes from the 1975 survey.
- Six years after the purchase, a new surveyor, Dennis Duffy, hired for a subdivision project, determined that the property contained only 12.43 acres.
Procedural Posture:
- Walker Rogge, Inc. filed a complaint in the New Jersey Law Division (a trial court) against Chelsea Title & Guaranty Company, Arthur W. Hood, and Ronald J. Price.
- At the close of the plaintiff's case, the trial court granted a motion to dismiss the negligence claims against the surveyors, Hood and Price.
- Following a non-jury trial, the court ruled that Chelsea was liable under its title insurance policy but dismissed the negligence claim against it.
- Walker Rogge appealed the dismissal of the negligence claims, and Chelsea cross-appealed the finding of liability under the policy to the New Jersey Appellate Division (an intermediate appellate court).
- The Appellate Division affirmed the trial court's judgment against Chelsea but found it liable in both contract and negligence, and remanded for a recomputation of damages. It affirmed the dismissal of the claims against the surveyors.
- The New Jersey Supreme Court granted Chelsea's petition for certification and Walker Rogge's cross-petition for certification.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a title insurance policy containing a standard survey exception cover losses from an acreage shortage when the insured receives good title to the land described, and is the insurer separately liable in tort for negligence in failing to discover the shortage from its own records?
Opinions:
Majority - Pollock, J.
No as to policy coverage; remanded as to the negligence claim. A title insurance policy with a survey exception covers defects in title, not shortages in land quantity, but an insurer may be liable in tort if it voluntarily assumes an independent duty to the insured. The court reasoned that title insurance indemnifies against loss from defects in title, not inaccuracies in land quantity. Because Walker Rogge received good title to the entire parcel described by the monuments in the deed, there was no defect of title. The policy's survey exception, which excludes coverage for 'Encroachments, overlaps, boundary line disputes and other matters which could be disclosed by an accurate survey,' was held to be valid and specifically applicable to an acreage shortage. The court found the relationship between an insurer and insured is primarily contractual, limiting liability to the policy terms. However, the court remanded the negligence claim, stating that a title company could be liable in tort if it voluntarily assumes a duty beyond the contract to insure, such as a duty to disclose information it knows is material. Facts like Chelsea's prior knowledge of the correct acreage from its own files, its separate charge for a 'title examination,' and its role in the closing created a factual question for the trial court as to whether such an independent duty was assumed.
Analysis:
This decision reaffirms the traditional, limited role of title insurance as a contract of indemnity against title defects, not a guarantee of land quantity or a substitute for a professional survey. It strongly upholds the validity of standard survey exception clauses, placing the burden on purchasers to verify acreage. However, the court carves out a potential avenue for tort liability by holding that an insurer's actions might create an 'assumed duty' beyond the policy, shifting the analysis from a pure contract question to a fact-sensitive inquiry into the parties' relationship. This ruling cautions title companies that while their primary obligation is contractual, their conduct, superior knowledge, and additional services could expose them to negligence claims.
Unlock the full brief for Walker Rogge, Inc. v. Chelsea Title & Guaranty Co.