HOWARD P. MILLER AND MILDRED D. MILLER, HIS WIFE, APPELLANTS,
v.
COMMERCIAL STANDARD INSURANCE COMPANY, A CORPORATION OF FORT WORTH, TEXAS, APPELLEE
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A title insurance company admitted it issued a policy on a misdescribed parcel but argued the insureds had not proved damages because they failed to take enforcement action. The court held that title insurance is not a continuing obligation to cover mortgage losses, but rather to defend against title invalidity claims, and that the insureds must pursue their remedy in the correct forum (the county where the land is located) before damages can be established.
Title insurance is a contract to defend the insured's title against claims of invalidity, not a continuing obligation to cover mortgage losses. The insureds must bring an action in the county where the land is located to enforce their rights; only then can the title insurance company's obligation to defend be invoked and damages properly established. The judgment correctly declared the insurer's liability on the policy but should have dismissed the damages claim without prejudice, allowing the insureds to pursue their remedy in the correct forum.
[1] A title insurance policy obligates the insurer to defend the title insured against claims of invalidity, not to purchase a mortgage that becomes uncollectible.
[2] A title insurance company's contractual obligation continues and may be sued upon in the correct forum, even if damages are not presently provable.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“The title insurance contract is not a continuing obligation to purchase a mortgage which goes sour, as plaintiffs seem to think, but rather to defend the title insured against a claim of its invalidity.”
Establishes the fundamental nature of title insurance as a defensive contract, not a guarantee against mortgage losses.
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Join FLexlaw to unlock all legal intelligenceThe Millers owned a mortgage on Alachua County land, given by mortgagors who held a deed but whose grantors owned property south of a certain point of…
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Plaintiffs owned a mortgage on Alachua County land lying North of a certain point of beginning, given by mortgagors who held a deed to the same parcel but whose grantors owned property South of that point of beginning. The complaint alleges that no payments have been made since 1965, the parcel South has since been encumbered and their mortgage is uncollecti-ble. The defendant title insurance company admitted that it had erred but alleged that the plaintiffs had not proved damages, *676since no action had been taken to enforce the mortgage, or even to reform it. Defendant’s motion for judgment on the pleadings was granted, and the final judgment determines that the title insurance company is liable on its obligation, fixes damages at zero and states that “the parties shall go forth henceforth without day.”
The title insurance contract is not a continuing obligation to purchase a mortgage which goes sour, as plaintiffs seem to think, but rather to defend the title insured against a claim of its invalidity. The option to pay the owners of the mortgage and succeed to their interest is the insurer’s. Clearly the plaintiffs should have brought an action' in Alachua County, whereupon the title insurance company would be obligated to support their mortgage against claims of invalidity on account of title.
In an early stage of this case, the trial judge granted summary judgment on liability and directed plaintiffs to allege their damages with particularity. They did not, and could not, but persisted in their attempt to bypass the essential Alachua County proceedings. Whether in those proceedings the plaintiffs should attempt to reform the mortgage or attempt to foreclose on the misdescribed land is a question we need not determine.
As a declaration of defendant’s liability on the policy, the judgment appealed from is correct, if useless. The contractual obligation set forth in the margin1 continues and may be sued on in the correct forum.
The final judgment should have declared the insurer’s liability on the policy but dismissed the claim for damages without prejudice, and is accordingly affirmed in part and reversed in part and remanded.
HOBSON, Acting C. J., and Mc-NULTY, J., concur.
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Youngblood v. Lawyers Title Ins. Corp., 923 F.2d 161 (11th Cir. 1991)…he principle which it might apply in an appropriate case would be that “a mortgagee must sue to enforce or reform the mortgage and have its title disputed before it suffers a loss under a title policy,” citing Miller v. Commercial Standard Ins. Co., 248 So. 2d 675 (Fla.Dist.Ct.App.1971)4. 494 So. 2d at 13. We conclude therefore that the district court plainly erred in directing a verdict for breach of contract under the terms of the insurance policy without proof of actual financial loss.5 See Newman v. St. P…