Source: https://law.justia.com/cases/federal/appellate-courts/F2/520/1170/271993/
Timestamp: 2019-08-21 15:27:47
Document Index: 592631899

Matched Legal Cases: ['§ 28', '§ 28', '§ 28', '§ 3974', '§ 28', '§ 28', '§ 3']

Hartford Life Insurance Company, a Corporation, v. the Title Guarantee Company, a Corporation, et al.appeal of Walker & Dunlop, Inc., a Corporation.hartford Life Insurance Company, a Corporation, Appellant, v. the Title Guarantee Company, a Corporation, et al.,walker & Dunlop, Inc., a Corporation, 520 F.2d 1170 (D.C. Cir. 1975) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › D.C. Circuit › 1975 › Hartford Life Insurance Company, a Corporation, v. the Title Guarantee Company, a Corporation, et al...
Hartford Life Insurance Company, a Corporation, v. the Title Guarantee Company, a Corporation, et al.appeal of Walker & Dunlop, Inc., a Corporation.hartford Life Insurance Company, a Corporation, Appellant, v. the Title Guarantee Company, a Corporation, et al.,walker & Dunlop, Inc., a Corporation, 520 F.2d 1170 (D.C. Cir. 1975)
U.S. Court of Appeals for the District of Columbia Circuit - 520 F.2d 1170 (D.C. Cir. 1975)
Argued April 15, 1975. Decided Oct. 14, 1975
Hartford's proposed second amended complaint alleges that until March, 1973, Walker & Dunlop fraudulently concealed from Hartford the fact that Walker & Dunlop was concerned, before the loan to Suburban was entered into in 1960, that such a loan might violate the Loan Shark Act. The statute of limitations for a cause of action based upon fraud or concealment does not begin to run until the date on which the defrauded party ascertains, or with the exercise of due diligence should ascertain, the material facts upon which the claim is based. See, e. g., Maloney v. E. I. DuPont de Nemours & Co.,122 U.S.App.D.C. 268, 352 F.2d 936 (1965), cert. denied, 383 U.S. 948, 86 S. Ct. 1201, 16 L. Ed. 2d 210 (1966); Wiren v. Paramount Pictures, 92 U.S.App.D.C. 347, 206 F.2d 465 (1953), cert. denied, 346 U.S. 938, 74 S. Ct. 378, 98 L. Ed. 426 (1954). There is nothing in the record to indicate that Hartford should have learned of Walker & Dunlop's alleged conduct any earlier than it did. Therefore, Hartford's motion for leave to file its second amended complaint, filed in June, 1973, fell well within the permissible limitations period and the District Court's denial of the motion on that ground was an abuse of discretion. On remand, the District Court should reconsider Hartford's motion without taking the statute of limitations into account.3
The legal effect of a "without recourse" endorsement is defined by the Uniform Commercial Code. D.C.Code § 28:3-417(3), (2) (d).4 Thus, whether or not this endorsement bars Hartford's claims against Walker & Dunlop must be determined with reference to the principles of commercial law established therein.
Hartford would have destroyed its warranty protection had it not acted in "good faith". D.C.Code § 28:3-417(2); Note: "Warranties on the Transfer of a Negotiable Instrument U.C.C. 3-417(2)", 17 Stan. L. Rev. 77, 94-96 (1964). There is no indication that it did not do so here. The U.C.C. definition of "good faith", contained in D.C.Code § 28:1-201(19), requires " honesty in fact in the conduct . . . concerned." (Emphasis added.) Although Hartford had full knowledge of the same facts as Walker & Dunlop and made the same "mistake" of law (see Parkwood, 461 F.2d at 175-76), it did not subjectively know when it accepted the note that a good defense existed against it. Therefore, it is entitled to the coverage of the warranty. See 17 Stan. L. Rev. at 95.6
Turning to Hartford's claim against the Title Companies, we conclude that granting summary judgment in favor of these defendants was inappropriate. Assuming that the title insurance policy covered the loss, enforcement of the policy would not contravene public policy. It is only for the knowledgeable and intentional wrongdoer that the practice of voiding insurance contracts as being contrary to public policy is reserved. See, e. g., Northwestern National Casualty Co. v. McNulty, 307 F.2d 432, 442 (5th Cir. 1962). It is settled law that a person may insure himself against the results of his own negligent violations of law. See 15 Williston on Contracts, P 1749A, p. 138; Recent Decisions Note: "Insurance Public Policy Liability of Insurer for Punitive Damages and Penalties", 40 Mich. L. Rev. 128 (1941), citing 6 Blashfield, Encyclopedia of Automobile Law and Practice, § 3974 (1935); Messersmith v. American Fidelity Co., 232 N.Y. 161, 163, 133 N.E. 432 (1921). In this case, the District Court misread our decision in Parkwood for the conclusion that Hartford had knowledge of the illegality of the loan. In fact, as already pointed out, Parkwood held only that Hartford should have known that the loan transaction violated the Loan Shark Act. Hartford could not have had subjective knowledge of any violation since it had a substantial legal claim in Parkwood that no such violation had occurred.
Under D.C.Code § 28:3-417(2) (d), the transferor of an instrument warrants to his transferee that "(n)o defense of any party is good against him . . . ." Subdivision (3) provides that "(b)y transferring 'without recourse' the transferor limits the obligation stated in subsection (2) (d) to a warranty that he has no knowledge of such a defense."
Hartford erroneously characterizes its warranty claim as based upon an express warranty of title in a 1948 agreement entered into between Hartford and Walker & Dunlop and upon the implied warranty of title specified in D.C.Code § 28:3-417(1) (a). In fact, no warranty of title claim could successfully be made in this case. It is not disputed that Walker & Dunlop had title to the instrument and that its indorsement was genuine and authorized. See 2 Anderson, supra, § 3-417:8, p. 1022