Title: Demopoulos v. the Title Insurance Company
Citation: 298 P.2d 938, 61 N.M. 254
Docket Number: 6051
State: new-mexico
Issuer: new-mexico Supreme Court
Date: June 21, 1956

298 P.2d 938 (1956) 61 N.M. 254 Alex DEMOPOULOS, Plaintiff-Appellee, v. THE TITLE INSURANCE COMPANY, a Foreign Corporation, Defendant-Appellant. No. 6051. Supreme Court of New Mexico. June 21, 1956. Rodey, Dickason, Sloan, Mims &amp; Akin, John P. Eastham, Albuquerque, for appellant. William J. Torrington, Albuquerque, for appellee. McGHEE, Justice. The defendant appeals from judgment rendered against it in an action on a policy of title insurance. The facts out of which the controversy arose are not in dispute. A mortgagor (not a party in this case) represented to the plaintiff-mortgagee that he was mortgaging an improved piece of real estate worth approximately $15,000, when in fact he mortgaged an adjoining unimproved lot worth $1,200. The amount loaned under the mortgage by plaintiff was $8,500 and such was the amount of the title insurance policy issued by defendant to plaintiff insuring plaintiff's interest under the mortgage. The mortgagor had purchased the vacant lot on a real estate contract. He forged the name of the grantors to a warranty deed which was placed of record and also forged his wife's name to the mortgage. At the time the insurance policy was issued there was a good record title. Some months later, a valid deed from the former owners of the vacant lot was filed for record. Only $7,500 of the money which the plaintiff had loaned on the lot was received by the mortgagor, $1,000 having been retained by a former attorney for the plaintiff as protection against mechanic's liens, etc., which might later be filed. This sum was returned to the plaintiff. Judgment was entered against the defendant for $7,500. The issue here is whether the insurance company is liable for $7,500, the amount due on the note and mortgage securing it, or for the sum of $1,200, the agreed value of the lot covered by the mortgage and insurance policy. The defendant has at all times been ready to pay the latter sum. The policy insured the plaintiff-mortgagee against loss or damage not exceeding $8,500, We think the measure of plaintiff's damage is the value of the real estate. The policy did not guarantee the mortgaged property was worth the amount of the mortgage lien. If the plaintiff had received a valid mortgage and foreclosed it, all he would have been able to realize would have been the value of the property. The defendant has offered to pay the plaintiff the agreed value of the mortgaged property, and we are of the opinion that is all he may recover, keeping in mind the fact there is no claim of negligence on the part of the defendant insurer. Such is the universal rule. See: 9 Appleman, Insurance Law and Practice, § 5217; 29 Am.Jur. (Insurance) § 1238; 45 C.J.S. Insurance, § 966. See also the annotation in Ann.Cas. 1914D, 643, where it is stated: The cases of First Nat. Bank &amp; Trust Co. v. New York Title Ins. Co., 1939, 171 Misc. 854, 12 N.Y.S.2d 703; Narberth Building &amp; Loan Ass'n v. Bryn Mawr Trust Co., 1937, 126 Pa.Super. 74, 190 A. 149; and Whiteman v. Merion Title &amp; Trust Co., 1904, 25 Pa.Super. 320, support the above texts and are in accord with our views in this case. The judgment of the District Court is reversed and the cause remanded with instructions to vacate the judgment from which the appeal was taken and to enter another in favor of the plaintiff for $1,200, the amount defendant had offered to pay in satisfaction of its liability on the policy. The defendant will also be allowed its costs. It is so ordered. COMPTON, C.J., and LUJAN, SADLER and KIKER, JJ., concur.