Opinion ID: 1267515
Heading Depth: 1
Heading Rank: 2

Heading: to chicago title insurance company

Text: The evidence disclosed that Guarantee as a local agent and a division of Chicago Title prepared and issued Chicago Title Insurance Company's title insurance policies but did not prepare and issue policies for any other company. From the admissions of Mr. Zimmerman, as vice-president of Guarantee, and the testimony of Mr. Chadborn, the expert witness, the evidence disclosed that from the time Guarantee took an order for a title insurance policy and filled in the application form it was acting as the agent of Chicago Title. When one calls the local agent of a title insurance company to order a title insurance policy, the agent fills out an application form and runs a title search on the property for the purpose of preparing a title report, and thereafter when the exceptions, if any, have been cleared the title policy is issued. All of these steps are preliminary to the purchase of a title policy. Guarantee was admittedly the authorized agent of Chicago Title to issue its title policies. There was no contrary evidence before the jury on the agency question. The jury could hardly have found that Guarantee was not acting as the agent of Chicago Title at the time it disbursed the Fords' money. The Clays appeal from the order distributing funds from the sale of the premises in question to the Fords, contending that the trial court erred as a matter of law and as a matter of equity. After the Fords filed suit in May of 1972 all defendants filed responsive pleadings. The Clays in their cross-petition against the other defendants alleged that Barkyoumb was acting as their real estate agent and therefore claimed entitlement to the net proceeds of the sale of the property. On the facts heretofore related it should be noted that on the same day Empire received the cashier's check from Mr. Zimmerman of Guarantee, in the precise amount indicated by the payoff letter from Empire, the funds were used by Empire to pay the Slavens' note and mortgage which had been assigned to the Wornall Bank. Empire in turn obtained a release of that mortgage. It is uncontroverted that it was $25,746.13 of the Fords' money that was used to secure the release of the Slavens' note and mortgage, which was a first and prior lien of record against the property in question. While this lawsuit was pending in December of 1973 all parties to the litigation, including the Clays, moved the court for an order to assume jurisdiction over the property in question, to sell the same and to distribute the proceeds as indicated by the equities of the parties. Subsequent journal entries were required to clear the clouds on title and get title into the Clays to effectuate a sale of the property. The net proceeds from the sale of this property were $22,886.86. These funds were paid into the clerk of the district court on June 10, 1974, which was in fact the opening day of the trial of this case before the jury. The fact of the sale of this property and the proceeds therefrom was not made known to the jury during the trial, and the distribution thereof in accordance with the demonstrated equities of the parties was left solely up to the trial court in accordance with the motions of all parties and the journal entry of December 18, 1973. Evidence during the trial with regard to the now alleged equity of the Clays in the net proceeds of the sale was as follows: In response to questions by counsel for the Clays an expert real estate broker testified that where the purchase price of the property was $28,000.00 as here, and commission to be paid on the sale by the Clays would be $1,960.00, with a mortgage lien against the property of $25,746.13, and the sellers responsible for a title insurance policy at an approximate premium of $200.00, the balance of the sale price available to the sellers in the transaction would be $93.87. The witness further acknowledged that there would probably be additional closing costs to be paid by the sellers. The Clays' counsel in questioning Mrs. Clay established that she was aware Mr. Barkyoumb was going to take the real estate commission out of the purchase price. Thereafter he asked Mrs. Clay the following question, which she answered: QUESTION: You have been here throughout. You have heard the disbursements of money that have been made, and from all apparent calculations, is it a fair statement to say that after this entire transaction has been concluded by the other defendants that, rather than having any equity, you probably owe money as a result of the sale of that home? ANSWER: Yes sir. In his final argument the Clays' attorney suggested to the jury that the Clays rather than having an equity in the property in question would probably be in the hole by approximately $203.00 under the terms of the sale. The Clays' argument is basically founded upon two facts. First, on June 7, 1974, the trial court in hearing the equitable matter submitted to it ordered that the mortgage of $24,700.00 from Clays made payable to Empire, and the mortgage instrument of October 25, 1971, executed by the Clays to Empire for the same amount regarding said property: ... [S]hall be and hereby is declared null and void and shall not be a debt of said defendants Jessie H. Clay, Jessie H. Clay, Jr. or Constance G. Clay nor a lien upon their property but is being fully paid and discharged as to all persons, firm or corporation whatsoever. On the same day, June 7, 1974, the trial court ordered the Clays to execute a warranty deed in favor of the purchasers (Jackson & Scherer, Inc.). The second fact relied upon by the Clays is that on June 21, 1974, on trial to a jury, the jury returned a verdict in favor of the defendants Clay and against plaintiffs Ford in the Fords' contract action against the Clays. Thereafter on July 9, 1974, the Clays filed a motion for distribution of funds held in the office of the clerk of the district court claiming fee title to the property on the ground that the Fords proceeded against them in contract, and the defendants Clay were held not liable in contract as shown by the jury verdict. The Clays alleged in their motion that the action by the Fords against the other defendants, Barkyoumb, Guarantee, Chicago Title and Empire were all in tort, not in contract, and none of the defendants were ever fee titleholders, but were wrongful and tortious actors and were in reckless disregard of the rights of the Clays in the light of the findings of the court on June 21, 1974. The Clays argued the other defendants have no standing on which to claim an offset on a verdict against them in tort and punitive damages, and that it would be compounding the wrongful act by utilizing funds upon receipt from a contract sale of property from defendants Clay to other persons not parties to this litigation. On August 22, 1974, the trial court by letter to counsel overruled the Clays' motion for distribution of funds held by the district court to them and sustained the motion of the Fords, filed June 25, 1974, for distribution of the funds from the sale of the real estate. The trial court's letter of August 22, 1974, ruled: The motion of the plaintiffs that a distribution of the amount now on deposit in the Clerk of the District Court's office will be sustained, and all funds will be paid over to the counsel for the plaintiffs, less court costs. The Clerk is directed to credit the account of the defendants Barkyoumb, Guarantee Abstract and Title, Chicago Title and Trust Company and Empire Mortgage and Investment Company with an amount equal to one-fourth of the amount distributed to the plaintiffs. The fallacy in the Clays' argument is that they seek to commingle the benefits of two proceedings to establish their entitlement to a windfall by ignoring facts established in these proceedings undesirable to them. Here the Clays joined with all parties to the litigation to have the court take jurisdiction of an equitable proceeding for the purpose of selling the property and converting it into a liquid asset. In this equitable proceeding the Clays' unrecorded mortgage to Empire, originally designed to raise funds to pay off the Slavens' construction mortgage on the property, was set aside because Empire failed to use the funds for that purpose and permitted the Slavens' mortgage to stand as a first lien on the property. Since the Ford's money was used to pay off the Slavens' mortgage, the trial court, sitting as a court of equity, found that the Fords had an equity in the property, or any proceeds from the sale thereof, in the amount of $25,746.13. The net proceeds from the sale of the property were $22,886.86, and it is readily apparent the established equity of the Fords exceeded the net sale proceeds by approximately $3,000.00. When the trial court distributed the net proceeds of the sale to the Fords it did not announce the equitable principle by which this action was taken. The Clays seize upon the fact these funds credited to the Fords were indirectly used to benefit the tort defendants in the civil action. The Clays contend these tort defendants do not come into a court of equity with clean hands and are therefore entitled to no relief. By this process of reasoning the Clays claim they are entitled to a windfall. Novel theories are advanced by the Clays in their brief, but we find no merit in them. Counsel for the Fords suggests several theories upon which the action of the trial court can be sustained on equitable principles: Restitution ( Holloway v. Water Co., 100 Kan. 414, 424, 167 Pac. 265, 2 A.L.R. 161); unjust enrichment ( Anderson v. Anderson, 155 Kan. 69, 72, 123 P.2d 315); legal subrogation ( United States Fidelity & Guaranty Co. v. Maryland Cas. Co., 186 Kan. 637, 352 P.2d 70); and equitable lien ( Hill v. Hill, 185 Kan. 389, 345 P.2d 1015). We shall not undertake to discuss all of these equitable theories. Clearly the equitable lien theory is applicable. In Hill v. Hill, supra, the court said: An equitable lien is not a right of property in the subject matter of the lien nor a right of action therefor, nor does it depend upon possession; but is merely a right to have the property subjected to the payment of a debt or claim, and it applies as well to charges arising by express engagement of the owner of property as to a duty or intention implied on his part to make the property answerable for a specific debt or engagement. (Syl. 5.) There is no substance to the Clays' argument that their property was taken without due process. The Clays, along with other parties to the civil litigation, moved the court to take jurisdiction of the property for the purpose of causing it to be sold, and to thereafter distribute the proceeds as the equities of the parties should be established. No property was ever taken from the Clays; they voluntarily placed their interest, if any, in the court and thereafter failed to prove they had any equity in such property. The court, in its process of causing the property to be sold, established the Clays as the record fee titleholders by causing a copy of the Slavens-to-Clays deed to be recorded. This action was merely a method of clearing the title and establishing a chain of title so that the Clays could effectively convey to the purchasers the property which the court had ordered sold. The procedure was one of convenience, and it established no property right or equity interest in the Clays. It follows that the order of distribution made by the trial court concerning the net proceeds of the sale was not erroneous and must be sustained. In their cross-appeal the Fords contend the trial court erred in that portion of its post-trial order of October 7, 1974, wherein it altered the jury verdict by reducing the punitive damage awards against Guarantee and Chicago Title without the consent of the prevailing party. At the pretrail hearing of the case in December of 1973, the trial court, with discretion to then allow or deny, permitted the Fords to amend their petition so as to state separate causes of action for punitive damages against the tort defendants, and to increase their prayer for punitive damages to $50,000 against the defendant Guarantee and $100,000 against the defendant Chicago Title. At this juncture the amounts of punitive damages prayed for did not shock the court or it could have disallowed the requested amendment. On June 21, 1974, at the conclusion of a two-week trial, the jury returned its verdict awarding plaintiffs compensatory damages against the tort defendants and punitive damages of $35,000 against the defendant Guarantee and $70,000 against the defendant Chicago Title. These awards were substantially less than the punitive damages prayed for by the plaintiffs. On June 26, 1974, the trial court expressly confirmed the jury's verdict and awards by signing and filing its journal entry. At this juncture the trial judge had heard all of the evidence in the case, had listened to the lengthy arguments of the numerous lawyers involved, both within and without the presence of the jury, and had contemplated the matter for five days subsequent to the verdict. His conscience was not then shocked by the amount of the punitive damage awards or he would not have approved and confirmed the same by signing and filing the journal entry of judgment. On July 1, 1974, Chicago Title and Guarantee filed their respective motions and other post-trial matters and motions. In the court's letter of August 22, 1974, the trial judge indicated that he was overruling certain motions, including Guarantee's and Chicago Title's motions for directed verdicts and/or new trial, that he was reducing the punitive damages against Guarantee to $25,000 and against Chicago Title to $25,000 as the punitive damage awards by the jury were so excessive as to shock the conscience of the court. These reductions were made without the consent or approval of the Fords and without ever extending to them the option to either accept the reduction or have a new trial. It is apparent from the record the trial court was influenced by matters outside the record to reduce the punitive damages awarded against Guarantee and Chicago Title. In arguing the post-trial motions on August 2, 1974, counsel then representing Guarantee and Chicago Title suggested to the trial court that Chicago Title, as the principal, would be entitled to complete indemnification from its agent Guarantee of all damages awarded by the jury. The record then discloses inquiry by the court as follows: THE COURT: There's a question I would like you to answer, if you would, please. It's very important to me in consideration of the eventual disposition in this case, either on your theory of indemnification of a principal against an agent or by any present existing agreement between your client and Guarantee, assuming there would be no further action in this case and this judgment would stand as far as the judgment against your client is concerned, to what extent would Guarantee be looked to to satisfy that judgment?  (Emphasis added.) When the attorney responded he was not in possession of any such document, the court requested that he obtain the same for the court, and the attorney agreed to do so. All of this was over the objection of Fords' attorneys who pointed out: (1) That if Chicago Title had any claim for indemnification against Guarantee it could and should have asserted the same by cross-claim but had not done so; (2) that the court's request for information outside the trial record was prejudicial and improper; (3) that any dispute between the judgment defendants as to who would be required to pay the plaintiffs' judgment would have to be the subject matter of a separate lawsuit; and (4) that it was highly improper for the court to consider any of those matters in making any decision in the case. The record does not disclose that the requested agency contract was produced, but from the foregoing the Fords are entitled to a presumption that the trial judge became so obsessed with the thought that Guarantee might have to pay the punitive damages assessed against Chicago Title that he then made an about-face and reduced the punitive damages by describing the jury's award of punitive damages as shocking his conscience. The trial court's journey outside the record probably resulted in a misconception of an attempt to contract away punitive responsibilities, which are generally held to be violative of public policy. (See, Koch v. Merchants Mutual Bonding Co., supra.) It is no concern of the trial judge as to how or by whom a judgment will be paid. The court is not privileged to go beyond the issues in the case and make any determination whatsoever on matters outside of those issues. ( In re Estate of Grove, 158 Kan. 444, 451, 148 P.2d 497; and see, Agee v. Kansas Highway Commission, 198 Kan. 173, 422 P.2d 949.) Irrespective of whether or not the trial judge's improper journey outside the record caused his about-face, he was without authority to deny the Fords their consitutional right to a jury determination of fact issues by his reduction of the jury's verdict without their consent. Prior to 1964 in cases tried by a jury the court, with the consent of the prevailing party, could reduce the verdict by such part as was not warranted by the evidence and render judgment for the residue, or grant a new trial when justice required it pursuant to G.S. 1949, 60-3004. Cases decided under that statute held a trial court was without authority to reduce a verdict for the plaintiff without the plaintiff's consent. ( McAlister v. McNown, 174 Kan. 608, 258 P.2d 309.) In our new Code of Civil Procedure, effective January 1, 1964, there is no corresponding statute expressly granting the authority of remittitur to the Kansas courts. The authorities unanimously hold that a court, whether trial or appellate, is powerless to reduce the verdict of the jury in an action for unliquidated damages and render judgment for a less amount, unless the party in whose favor the verdict was rendered consents to the reduction, since a reduction under such circumstances invades the province of the jury, and violates the Seventh Amendment right to jury trial under the United States Constitution. The proper course, if a remittitur is refused, is to set aside the verdict and grant a new trial. (Annot., 53 A.L.R. 779 [1928]; Kennon v. Gilmer, 131 U.S. 22, 33 L.Ed. 110, 9 S.Ct. 696; Dimick v. Schiedt, 293 U.S. 474, 79 L.Ed. 603, 55 S.Ct. 296; and Annot., 95 A.L.R. 1163 [1935].) Language to the contrary in Rooks v. Brunch, 202 Kan. 441, 449 P.2d 580 and Madison v. Wichita, Sedgwick County Health Dept., 213 Kan. 736, 518 P.2d 935 is disapproved. This is the law today. It was recently stated by the Sixth Circuit Court of Appeals in Brewer v. Uniroyal, Inc., 498 F.2d 973 (1974) that: ... [T]he District Court must offer the party awarded damages the choice of a new trial or the amount of the Court's remittitur. Dimick v. Schiedt, 293 U.S. 474, 476, 55 S.Ct. 296, 79 L.Ed. 603 (1935); Kennon v. Gilmer, 131 U.S. 22, 29, 9 S.Ct. 696, 33 L.Ed. 110 (1889); Manning v. Altec, Inc., 488 F.2d 127, 130 (6th Cir.1973). The District Court cannot, without the consent of the parties, substitute its judgment for that of the jury on the issue of just compensation. United States v. 93.970 Acres of Land, 258 F.2d 17, 31 (7th Cir.1958), rev'd on other grounds, 360 U.S. 328, 79 S.Ct. 1193, 3 L.Ed.2d 1275 (1959). To permit the Court to do so would erode the parties' Seventh Amendment guarantee of a jury trial. (p. 976.) (See also, Burnett v. Coleman Company, 507 F.2d 726 727 [6th Cir.1974].) The Kansas cases which have dealt with the subject of remittitur have confined the discussion to our former statutory language, not constitutional guarantees. (See, McAlister v. McNown, supra; Ellis v. Kansas City Public Service Co., 131 Kan. 555, 292 Pac. 939; and Leinbach v. Pickwick Greyhound Lines, 135 Kan. 40, 10 P.2d 33.) Since the trial court refused to grant a new trial on the motions of the various defendants, and did not extend to the prevailing parties any such alternative, it must be concluded the trial court did not find the jury's verdict to be the result of passion and prejudice, in which event it would have been compelled to grant a new trial. It is apparent the trial court did not intend to grant a new trial for any of the reasons stated in K.S.A. 1975 Supp. 60-259 ( a ). (See, Herbel v. Endres, 202 Kan. 733, 451 P.2d 184.) Accordingly, we hold the trial court erred in reducing the punitive damage awards against Guarantee and Chicago Title. The judgment entered by the trial court on the jury's verdict in accordance with its journal entry filed June 26, 1974, is reinstated against Guarantee and Chicago Title. (No appeal was taken by Barkyoumb or Empire.) Considering all of the facts and circumstances presented by the record herein, we conclude the verdict of punitive damages against Chicago Title in the sum of $70,000, and against Guarantee in the sum of $35,000 was too large by 50% and should be reduced by that amount. Accordingly, the judgment for punitive damages against Chicago Title is reduced from $70,000 to $35,000, and the judgment for punitive damages against Guarantee is reduced from $35,000 to $17,500 upon the condition that the Fords accept the reduced amount of punitive damages in writing within ten days after this decision becomes final, by filing their acceptance with the clerk of the district court, or, upon their failure to accept the remittitur within the time allotted, the Fords are granted a new trial on the issue of punitive damages against the appellants Chicago Title and Guarantee. Accordingly, the judgment of the lower court rendered on June 21, 1974, (filed June 26, 1974) is affirmed as modified; and the order of the lower court distributing the net proceeds from the sale of the property in question to the Fords and crediting the account of each of the tort defendants, Barkyoumb, Guarantee, Chicago Title and Empire with an amount equal to one-fourth of the amount distributed to the Fords is affirmed. FROMME, J., not participating.