Title: CLARENCE G ARCHAMBO III V LAWYERS TITLE INS CORP
Citation: N/A
Docket Number: 118508
State: Michigan
Issuer: Michigan Supreme Court
Date: June 25, 2002

____________________________________________________________________________________________ 
____________________________________________________________________________________________________________________________ 
                                          
Michigan Supreme Court 
Lansing, Michigan 48909 
C hief Justice 
Justices 
Maura D. Corrigan  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
Stephen J. Markman 
FILED JUNE 25, 2002  
CLARENCE G. ARCHAMBO, III,  
Plaintiff-Appellant,  
v 
 No. 118508  
LAWYERS TITLE INSURANCE  
CORPORATION and CHEBOYGAN TITLE  
COMPANY,  
Defendants-Appellees.  
BEFORE THE ENTIRE BENCH  
MARKMAN, J.  
We granted leave to appeal in this case to consider  
whether defendants, a title search company and a title  
insurer, are liable to plaintiff under a policy of title  
insurance, where plaintiff failed to disclose to defendants a  
known recorded tax lien as required by the title insurance  
commitment, but not required by the subsequently issued title  
 
insurance policy.  Following a bench trial, the trial court  
ruled in plaintiff’s favor, concluding that the policy is  
controlling, and thus that plaintiff is not excluded from  
coverage for failing to disclose a known recorded tax lien.  
The Court of Appeals reversed the judgment of the trial court  
and held that the commitment is controlling, and thus that  
plaintiff is excluded from coverage for failing to make such  
a disclosure.  This Court then remanded this case to the Court  
of Appeals for it to consider whether it had erred in relying  
on the commitment in light of the integration clause in the  
policy.  On remand, the Court of Appeals concluded that the  
policy 
“never 
became 
effective” 
because 
of 
“plaintiff’s 
breach  
of 
the 
conditions 
precedent 
in 
the 
title 
insurance  
commitment.” We disagree.  
The commitment provides that nondisclosure of “any  
defect, objection, lien or encumbrance” of which the insured  
has 
“personal 
knowledge or intimation” shall render the policy  
null and void as to that undisclosed “defect, objection, lien  
or encumbrance.”1  This language is not, as the Court of  
Appeals held, a condition precedent to the effectiveness of  
the policy; instead, it attempts to impose a condition  
subsequent because, rather than attempting to prevent the  
1 For simplicity’s sake and because our resolution of 
this case does not require interpretation of the language 
“personal knowledge or intimation,” this condition will 
hereinafter be described in terms of the nondisclosure of a  
known lien.  
2  
 
  
policy from becoming effective, it attempts to render an  
already effective policy null and void as to any undisclosed  
known 
liens. 
 
Accordingly, plaintiff’s failure to disclose the  
known lien did not prevent the policy that the defendants  
issued from becoming effective.  Further, because the policy  
contains an integration clause that evidences an intent to  
abrogate 
the 
commitment, 
the 
policy 
supersedes 
the 
commitment.  
Therefore, plaintiff is not excluded from coverage under §  
3(b) of the policy for failing to disclose the known tax lien  
because the policy does not require such disclosure.  
Accordingly, we reverse the decision of the Court of Appeals  
and remand this case to that Court to decide whether coverage  
is excluded under § 3(a) of the policy, which excludes  
coverage for liens “created, suffered, assumed or agreed to by  
the insured claimant . . . ,” an issue that was raised by  
defendants, but not addressed by the Court of Appeals, given  
its conclusion that coverage is excluded under § 3(b).  
I. FACTS AND PROCEDURAL HISTORY  
Plaintiff was one of three shareholders of a corporation  
that was formed in or about 1980 and that has ceased to exist  
since 1985. Plaintiff apparently had no role in the payment  
of corporate taxes or in the handling of the corporation’s  
books and records,2 and thus was unaware that the corporation  
2 The corporation installed solar equipment.  Plaintiff  
testified that his role in this corporation was limited to the 
(continued...)  
3  
  
  
had failed to pay its withholding taxes for the year of 1985.  
However, because of the corporation’s failure to pay such  
taxes, the Internal Revenue Service in 1987 filed a lien  
against plaintiff, as well as the other two shareholders.3  
After the corporation’s demise, plaintiff formed a new  
company.  This new company built a home for Victoria Bonus.  
In 1992, when a dispute arose regarding Ms. Bonus’ ability to  
pay for the home, plaintiff purchased the home from her.  At  
this point, plaintiff allegedly believed that there was no  
longer a tax lien in his name.4  
First of America Bank financed plaintiff’s purchase of  
the home and obtained title insurance from Cheboygan Title  
Company, an agency of Lawyers Title Insurance Corporation,  
which failed to discover the tax lien.5  The commitment and  
2(...continued) 
installation of such equipment.  
3 This tax lien was filed with the Cheboygan County 
Register of Deeds in 1987.  See MCL 211.663. It is undisputed 
that in 1987 plaintiff was aware of this lien and that a 
Notice of Federal Tax Lien Under Internal Revenue Laws had  
been received by plaintiff.  
4 Plaintiff testified that in 1987 he had spoken with an 
IRS agent who had told him that the lien would only be valid 
for five years.  He further testified that, had he known that 
there was a valid tax lien in his name, the property he 
purchased from Ms. Bonus could have been titled to his company 
or to a relative.  
5 The bank originally told Cheboygan Title Company that 
plaintiff’s name was “Clarence Archambo,” and thus Cheboygan 
searched under that name, and did not discover the tax lien 
that would have been discovered had they searched under 
(continued...)  
4  
policy ordered by the bank insured plaintiff’s interest as  
owner of the home.6
 When plaintiff subsequently sold the  
property to Mr. and Mrs. Roberts, in 1993, the tax lien was  
discovered.7  In order to clear the title, plaintiff had to  
borrow money from the bank in order to pay the IRS.  Plaintiff  
subsequently brought suit against defendants to recover this  
payment and the interest that he has had to pay on that loan.  
The commitment between the parties required disclosure of  
known liens, whether publicly recorded or not.8
 It  
specifically provided:  
This commitment is delivered and accepted upon 
the understanding that the party to be insured has 
no personal knowledge or intimation of any defect, 
objection, lien or encumbrance affecting subject 
land other than these set forth herein and in the  
title insurance application.  Failure to disclose  
such information shall render this commitment and  
5(...continued) 
plaintiff’s correct name, “Clarence G. Archambo III.”  
Plaintiff’s father’s name is “Clarence Archambo.” Cheboygan 
was 
subsequently 
provided 
with 
plaintiff’s 
correct 
name 
before 
issuing the policy, but when it searched using plaintiff’s 
correct name, it only searched for liens recorded after the 
date of the first search, and thus the lien again was not 
discovered.  
6 Although both plaintiff and First of America were 
insured by this policy, only First of America Bank applied for 
the policy.  
7 
 The tax lien was filed against plaintiff, but once 
plaintiff purchased the property from Ms. Bonus, it attached 
to that property. See 26 USC 6321.  
8 Given our resolution of this case, we need not address 
the effect of the commitment’s apparent attempt to exclude 
coverage 
of 
recorded 
defects, 
objections, 
liens, 
or  
encumbrances.  
5  
 
 
 
any policy issued pursuant thereto, null and void as 
to such defect, objection, lien or encumbrance.  
The subsequently issued policy, however, only required  
disclosure of known unrecorded liens.9
 The policy also  
included an integration clause.10  
Following a bench trial, the trial court ruled in  
plaintiff’s favor, holding that the policy controlled.  The  
Court of Appeals, in a split decision, reversed, holding that  
the commitment breached by plaintiff in not disclosing the  
9 The policy, § 3(b), excludes from coverage liens  
not known to the Company, not recorded in the  
public records at Date of Policy, but known to the 
insured claimant and not disclosed in writing to 
the Company by the insured claimant prior to the 
date the insured claimant became an insured under  
this policy . . . . [Emphasis added.]  
10 The policy, paragraph 15, entitled “Liability Limited 
To This Policy; Policy Entire Contract,” provides:  
(a) 
This 
policy 
together 
with 
all  
endorsements, if any, attached hereto by the  
Company is the entire policy and contract between 
the insured and the Company.  In interpreting any 
provision of this policy, this policy shall be 
construed as a whole.  
(b) Any claim of loss or damage, whether or 
not based on negligence, and which arises out of 
the status of the title to the estate or interest  
covered hereby or by any action asserting such 
claim, shall be restricted to this policy.  
(c) No amendment of or endorsement to this 
policy can be made except by a writing endorsed 
hereon or attached hereto signed by either the 
President, a Vice President, the Secretary, an 
Assistant Secretary, or validating officer or  
authorized signatory of the Company.  
6  
 
  
  
  
  
known tax lien effectively voided the policy.  The dissenting  
judge stated that the policy controlled because of the  
integration clause.  Plaintiff filed a motion for rehearing,  
which was also denied in a split decision.  This Court then  
remanded this case to the Court of Appeals,11 which affirmed  
its previous decision, with the original dissenting judge  
again 
dissenting. 
Subsequently, 
this 
Court 
granted  
plaintiff’s application for leave to appeal. 465 Mich 884  
(2001).  
II. STANDARD OF REVIEW  
This 
case 
involves 
issues 
concerning 
the 
proper  
interpretation of contracts, which are questions of law that  
are subject to de novo review by this Court.  Henderson v  
State Farm Fire and Casualty Co, 460 Mich 348, 353; 596 NW2d  
190 (1999).  
III. ANALYSIS  
A. EFFECTIVENESS OF POLICY  
The commitment requires disclosure of all known liens,  
while the subsequently issued policy only requires disclosure  
of known unrecorded liens. In this case, plaintiff failed to  
11 That order provided:  
In lieu of granting leave to appeal, the case 
is remanded to the Court of Appeals as on rehearing 
granted to consider plaintiff’s argument that, in 
light of paragraph 15 [the integration clause] of 
the policy of title insurance, the Court erred in 
relying on the title commitment.  [463 Mich 889 
(2000).]  
7  
 
 
disclose a known recorded tax lien,12 and thus it can be argued  
that he breached the commitment while not breaching the  
policy.  The Court of Appeals held that the policy never took  
effect because of plaintiff’s breach of the commitment.  We  
respectfully disagree.  
MCL 500.7301(d) defines “title insurance commitment” as  
“a document issued by a duly authorized title insurer offering  
to issue a title insurance policy upon performance of the  
conditions set forth in the document.”  Thus, a commitment is  
an agreement between an insurance company and a potential  
insured that, if the potential insured meets certain  
conditions, the insurance company will issue a policy.  Such  
conditions are ones that the insured must meet before the  
insurer is obligated to fulfill his contractual duty under the  
commitment to issue a policy.  In other words, such conditions  
relate to whether the insurer must issue a policy to the  
insured.
 Accordingly, such conditions do not serve as  
conditions precedent to the effectiveness of a policy; rather,  
12 Because we conclude that the policy controls, and thus 
that plaintiff was not required to disclose the recorded tax 
lien, there is no need to address whether plaintiff “knew” of 
the lien.  Accordingly, we assume arguendo that plaintiff 
“knew” of the lien, despite his contention that, although he 
knew of the lien in 1987, he did not know that it continued to 
obtain in 1992.  We also note that the trial court did not  
address this issue because it also concluded that plaintiff 
was not required to disclose the recorded tax lien.  Although 
the Court of Appeals did not expressly address this issue, a 
finding of “personal knowledge” is implicit in its conclusion 
that defendant breached the commitment by failing to disclose 
the lien.  
8  
 
 
they serve as conditions precedent to the insurance company’s  
obligation to issue a policy. 
Therefore, in the normal  
situation which, as explained below, we do not deal with here,  
when an insured fails to meet one of these conditions, the  
insurer has no obligation to issue a policy; but if, despite  
this failure, the insurer does issue a policy, the policy is  
nonetheless effective.  
In this case, the Court of Appeals held that a condition  
precedent contained in the commitment was not met, and thus  
that the policy never became effective.  We do not agree. The  
relevant language of the commitment provides that “[f]ailure  
to disclose [the known lien] shall render . . . any policy .  
. . null and void as to such . . . lien . . .” 
(Emphasis  
added.)  First, clearly this is not a condition precedent to  
the insurance company’s obligation to issue a policy.  The  
condition speaks to voiding part of a subsequently issued  
policy, not to avoiding the obligation to issue a policy.  
Second, this condition is also not a condition precedent to  
the effectiveness of the entire policy.  That is, if this  
condition was not met, the policy would nevertheless become  
effective when issued.  Rather, this condition is an attempt  
to render the policy, as to those liens of which a claimant  
had knowledge and failed to disclose, null and void.13
 In  
13 We use the word “attempt” because, as we explain below, 
the policy that was issued expressly superseded the terms of 
(continued...)  
9  
 
 
other words, this condition is an attempt to render the policy  
null and void, “as to” an undisclosed lien, upon the failure  
to disclose such lien.  But, it is not an attempt to render  
the entire policy null and void “as to” all liens upon such a  
failure.  
The Court of Appeals majority provided:  
In the instant case, the title insurance 
commitment contained a specific reservation of  
rights to void the policy if plaintiff failed to 
disclose the existence of a lien.  Plaintiff  
acknowledged at trial that he did not disclose the 
federal tax lien to his insurers.  Therefore, 
pursuant to the explicit language of the title 
commitment, the resulting policy was void with  
regard to the federal lien. [Slip op at 2 (emphasis  
added).]  
In our judgment, this paragraph contains two inconsistent  
statements.  First, the Court of Appeals provides that the  
failure to disclose the tax lien “void[s]” the policy.  But,  
in the very next breath, the Court provides that a failure to  
disclose only voids the policy “with regard to” the  
undisclosed lien, thereby acknowledging that the commitment  
did not attempt to render the entire policy void for failure  
to disclose. 
Rather, the commitment merely attempts to  
exclude coverage for that undisclosed lien.  Accordingly, the  
failure to meet this condition does not prevent the issued  
13(...continued) 
the commitment.  Accordingly, because the policy does not 
include 
such 
a 
condition, that condition no longer effectively 
exists.  
10  
 
 
 
 
 
 
policy from taking effect.14  
Finally, and most importantly, the condition contained in  
the commitment is not a condition precedent of any sort.  
Rather, it is an attempt to make null and void some coverages  
in a subsequently issued policy after that policy becomes  
effective.  Hence, it is an attempt at a condition subsequent.  
A “condition precedent” is a condition that must be met by one  
party before the other party is obligated to perform; a  
“condition subsequent” is a condition that, if not met by one  
party, abrogates the other party’s obligation to perform. See  
8 Corbin, Contracts (rev ed), Conditions, § 30.7, p 14;  
14 During oral argument, defendants’ counsel herself 
conceded that the policy took effect:  
Justice Taylor: But do you agree it leaves the  
policy extant? In other words the commitment does  
not say failure to meet this condition precedent 
ends the policy. It just says it ends coverage as 
to the undisclosed lien.  
Ms. Powers: I agree with that, Your Honor.  
* * *  
Justice Young: Are you saying that any defect 
in the commitment voids the entire policy? I fail  
to disclose one kind of encumbrance and therefore  
any policy that issues, whether the policy covers 
that defect or not, the whole policy is voided?  
Ms. Powers: Not the whole policy, no Your 
Honor.  I would submit to the Court, as I believe 
in response to Justice Markman’s question before 
and also Justice Taylor, Your Honor, in this 
particular case I agree with the amicus in that the  
voiding part of the policy only speaks to the lien 
or defect or what have you at issue.  It does not  
speak to the entire policy.  
11  
 
 
 
 
Black’s Law Dictionary (6th ed).  In this case, the condition  
provided that, if the insured failed to disclose a known lien,  
the policy would be rendered null and void as to that  
undisclosed lien.  Accordingly, this is not a condition  
precedent, as the Court of Appeals asserted.  It is an attempt  
at a condition subsequent.  Therefore, the Court of Appeals  
erred in concluding that, because this condition was not met,  
the policy did not take effect.  Rather, after issuing a  
commitment, the insurance company issued a policy, and that  
policy took effect, despite the insured’s failure to meet the  
condition in the commitment.  
B. COMMITMENT SUPERSEDED BY POLICY  
Because the policy took effect, there are two contracts,  
the commitment and the policy. 
Under the commitment,  
plaintiff was required to disclose the known tax lien, even  
though it was recorded.  However, under the policy, plaintiff  
was not required to disclose the known tax lien because it was  
recorded.
 Therefore, the issue is which of these two  
contracts is controlling.  The issuance of the commitment  
preceded the issuance of the policy. Accordingly,  
[t]he problem at hand can best be analyzed as a case 
of contract substitution.  It is hornbook law that  
parties to a contract are not forever locked into 
its terms.  They are at all times free to alter, 
amend, or modify their agreement.  Moreover, the 
parties may execute a substituted agreement which 
totally supersedes the terms of the original. 
[Lawyers Title Ins Corp v First Federal Savings Bank  
& Trust, 744 F Supp 778, 783 (ED Mich, 1990).]  
12  
 
In this case, the subsequently issued policy contains an  
explicit statement of intent to abrogate the antecedent  
commitment.  This intent is evidenced by the integration  
clause of the policy that provides in paragraph 15(a) that the  
policy represents the “entire policy and contract between the  
insured and the Company.”  Further, paragraph 15(b) of the  
policy provides that “[a]ny claim of loss or damage . . .  
which arises out of the status of the title to the estate or  
interest covered hereby or by any action asserting such claim,  
shall be restricted to this policy.”  It is clear from these  
provisions that the policy was intended to supersede the  
commitment.  
As the Court of Appeals dissenting judge asserted on  
remand:  
I do not agree with the majority’s conclusion 
that the integration clause, and therefore the 
condition of the exclusion that requires that the 
lien not be of record to be excluded, can be ignored 
because the policy is null and void based on a 
clause in the title commitment.  The insurance  
company issued a policy that purported to contain 
the entire agreement of the parties, and which 
purported to insure for this lien; plaintiff was 
entitled to rely on the policy’s representation that 
it embodied the entire agreement of the parties. 
The terms of the policy therefore control, and the 
inconsistent 
provision 
of 
the 
earlier 
title  
commitment cannot be relied on to void coverage 
because the policy itself grants coverage, and does 
not exclude it where the undisclosed lien is of  
record. [Slip op at 3.]  
Because “an integration clause nullifies all antecedent  
agreements,” UAW-GM v KSL Recreation Corp, 228 Mich App 486,  
13  
 
 
499; 579 NW2d 411 (1998), citing 3 Corbin, Contracts, § 578,  
p 404,15 when the terms of a commitment and a subsequently  
enacted policy conflict and the policy contains an integration  
clause, the terms of the policy must control.  Lawyers Title,  
supra at 783. As observed in UAW-GM, supra at 495:  
This conclusion accords respect to the rules  
that the parties themselves have set forth to  
resolve controversies arising under the contract. 
The parties are bound by the contract because they 
have chosen to be so bound.  
The Court of Appeals majority, on remand, itself recognized  
that, if the policy had become effective, the integration  
clause would have protected plaintiff.16  See slip op at 3.   
15 Subject only to evidence of certain kinds of “fraud (or 
other grounds sufficient to set aside a contract) and for the 
rare situation when the written document is obviously 
incomplete ‘on its face . . . .’” UAW-GM, supra at 495, citing 
3 Corbin, Contracts, § 578, pp 402-411.  
16 We note that it is not always necessary for a later 
contract to contain an integration clause in order for this 
later contract to supersede an earlier contract. Rather, if 
the later contract covers the same subject matter as the 
earlier 
contract 
and 
contains terms that are inconsistent with  
the terms of the earlier contract, the later contract may 
supersede the earlier contract, unless it appears that this is 
not what the parties intended.  Joseph v Rottscafer, 248 Mich 
606, 610-611; 227 NW 784 (1929).  However, where the later 
contract contains an integration clause, it cannot be said 
that the later contract does not supersede the earlier 
contract on the basis that that is not what the parties 
intended.  Obviously, in such a situation, the integration 
clause provides clear evidence to the contrary, i.e., that the 
parties did intend the later contract to supersede the earlier  
contract. Therefore, the existence of an integration clause 
in the later contract necessarily indicates that the parties 
intended 
the 
later 
contract to supersede the earlier contract, 
and thus provides dispositive evidence with regard to which 
contract is controlling.  
14  
 
 
  
Because we conclude that the policy did become effective,  
and because the policy contains an integration clause, we  
conclude that the policy supersedes and operates to abrogate  
the commitment.  Therefore, the commitment and its provision  
requiring the disclosure of known recorded liens did not  
continue in effect after the formation of the integrated  
policy agreement.  Accordingly, we must examine the language  
of the policy to determine whether plaintiff’s failure to  
disclose the known recorded tax lien excludes him from  
coverage.17  The policy simply does not require the disclosure  
of known recorded liens.  Therefore, plaintiff is not excluded  
from coverage under § 3(b) of the policy for failing to  
disclose the known lien.  
IV. CONCLUSION  
Despite plaintiff’s failure to disclose the known  
recorded tax lien, as required by the commitment, the policy  
took effect.  Because the subsequently issued policy contains  
an integration clause that evidences the parties’ intent to  
17 
During 
trial, 
the 
president 
of 
Cheboygan 
Title 
Company, 
himself admitted that the policy language controls:  
Q. Now, in the policy itself, when a claim was 
made, the language in the policy is what we rely 
on, isn’t it, as far as denial of claims and so on?  
A. Yes, that’s correct.  
Q. Not the language in the commitment, 
correct?  
A. Correct.  
15  
 
 
 
 
abrogate the commitment, the policy controls.  The policy does  
not require the disclosure of known recorded liens, and thus  
plaintiff is not excluded from coverage under § 3(b) of the  
policy.  Accordingly, we reverse the decision of the Court of  
Appeals and remand this case to that Court to decide whether  
coverage is excluded under § 3(a) of the policy, which  
excludes coverage for liens “created, suffered, assumed or  
agreed to by the insured claimant . . . .”  
CORRIGAN, C.J., and CAVANAGH, 
WEAVER, 
KELLY, 
TAYLOR, and YOUNG,  
JJ., concurred with MARKMAN, J.  
16