Opinion ID: 1144948
Heading Depth: 1
Heading Rank: 1

Heading: Covenant to Furnish Title Insurance

Text: My first area of disagreement is with the majority's interpretation of the agreement as requiring that sellers [p]rovide buyers, Price and Sedam, with a title insurance policy showing `merchantable fee title in Bakkens'. While I cannot deny that the literal language of the agreement so provides, I do not believe that this language reflects the intentions of the parties because it imposes an absurd obligation. Ordinarily it is presumed that parties read and understand the terms of their contract and that their intentions are manifested in the contract. J.W. Denio Milling Co. v. Malin, 25 Wyo. 143, 165 P. 1113, 1115 (1917). As a general rule courts will ascertain the intentions of the parties by interpreting the language that is used in the contract and will not resort to adding what has been omitted or omitting what has been added. Goodman v. Kelly, Wyo., 390 P.2d 244, 248 (1964). However, if the plain language of the contract imposes an impossible or absurd condition upon one of the parties the contract will be interpreted so as to effectuate the intentions of the parties at the time of contracting. Schaffer v. Standard Timber Company, 79 Wyo. 137, 331 P.2d 611, 614 (1958). In arriving at an interpretation that will give a reasonable meaning to the contract a court may disregard, supply or transpose a phrase in the contract. McNeil v. Graner, 91 Cal. App.2d 858, 206 P.2d 38, 42 (1949). Keeping these general rules in mind, the interest of the parties must be determined. The sole purpose of securing title insurance was to protect the buyers in the event there should develop a flaw in the title. Affidavits of the parties show they contemplated the purchase of only one title policy. I feel it would be an exercise in futility for the sellers to be insured, since they would part with all title upon execution of the conveyance, and the buyers are the ones who need the insurance. Furthermore, title insurance policies are not issued for the purpose of reflecting a title; that is the office of an abstract of title. A title policy insures against loss. Although paragraph 8 of the agreement refers to SELLER, it must be read in conjunction with paragraph 10. This latter paragraph requires that a commitment for insurance be furnished within 15 days after acceptance of the offer indicating the willingness of the insurer to issue the required Title Insurance Policy upon completion of sale.  (Emphasis added.) A sale is completed when the deed is executed and delivered. I do not believe that the two paragraphs, read together, can mean anything except that it is the buyers' title that is to be insured. The only reasonable explanation of why the contract requires that the title insurance policy reflect merchantable fee title in SELLER is that there was an error in drafting this paragraph. In order to give effect to the intentions of the parties the phrase reflecting merchantable fee title in SELLER must be transposed. I would move the phrase, reflecting merchantable fee title in SELLER, now appearing at the end of paragraph 8 to the approximate middle of the paragraph so that the paragraph would read: Promptly after SELLER'S acceptance of this offer, SELLER shall, at SELLER'S expense, deliver to BUYER or his AGENT or Attorney an Abstract of Title extended to approximate date hereof, reflecting merchantable fee title in SELLER, or in lieu thereof to furnish BUYER a Title Insurance Policy in the full amount of the purchase price of the real property in a Title Insurance Company authorized to do business in the State of Wyoming, reflecting merchantable fee title in SELLER ... (Emphasis and overstrike indicate transposition.)