Court Opinion

ID: 9770995
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:28:06.859282+00
Date Added: 2024-06-11T15:37:49.625442
License: Public Domain

EDELMAN, Justice,
dissenting.
My concurrence in only the result of the opinion issued on July 23, 1998 is withdrawn and the following dissenting opinion is issued in its place.
The insurance policy in this ease excepted from coverage any easements which (a) were not known to Old Republic or shown by the public records but were “known to” Mann at *352the time he acquired the property (the “known to” exception), or (b) “a survey or physical inspection of the premises might disclose” (the “inspection” exception). With regard to the “known to” exception, the policy defines “knowledge” as “actual knowledge, not constructive knowledge or notice which may be imputed to the Insured by reason of any public records.” Old Republic’s motion for summary judgment argued that the facts necessary to establish each of these exclusions were established in the previous federal court ease.
The federal court case was an action to quiet title. The trust alleged that the two easements claimed by the United States were void because they were not properly recorded when Mann purchased the property in question. The United States contended that its open and obvious use of the target site, access road, and observation towers were sufficient to charge Mann with inquiry notice of the easements. Following a trial on the merits, the federal court entered a judgment denying the trust relief on the ground that it “must be deemed to have been aware of the two easements at the time that it purchased the property.”
In the “Applicable Law” section, the federal court’s Findings of Fact and Conclusions of law state that “[t]he key legal dispute ... is whether the [trust] had any further duty to inspect the property and make further inquiries other than what [Mann] actually saw and was told by [the seller] during his solo visit to the ranch.” The Conclusions of Law section answer this question by stating, “Because the law imputes to the [trust] such knowledge as its agents would have acquired by the exercise of ordinary diligence, the [trust] must be deemed to have been aware of the two easements in question at the time it purchased the subject property.”
The majority opinion in this case concludes that, “[b]ecause the federal district court determined that Mann had actual knowledge of the easements on the property, the United States prevailed in the previous action.” (emphasis added). Footnote four of the majority opinion elaborates on this conclusion:
To avoid collateral estoppel, Mann attempts to create a distinction between the knowledge imputed to him in the federal court judgment, and knowledge as defined in the Old Republic title insurance policy. That policy defined knowledge as “actual knowledge, not constructive knowledge or notice which may be imputed to the insured by reason of any public records.” (emphasis added) The policy also defines “public records” as “records which impart constructive notice of matters relating to the land.” Actual notice exists when a person actually knows the facts charged to him, or should have known them if he had inquired about them, after learning of facts which put him on inquiry. Because the federal court judgment was not based on Mann’s constructive knowledge imputed from public records, but rather on actual knowledge imputed to Mann for failure to make even a minimal investigation after learning facts which put him on inquiry, Mann’s asserted distinction is untenable,
(citations omitted) (emphasis added).
Actual knowledge, i.e., what a person actually knows, is generally that which is distinguished from constructive or imputed knowledge, i.e., what a person doesn’t actually know but objectively should know or has reason to know. See, e.g., State v. Tennison, 509 S.W.2d 560, 562 (Tex.1974) (stating that duty to warn licensees of dangerous condition arises only when licensor has actual, not constructive, knowledge of the condition). However, because the definition of “knowledge” in the policy excludes constructive knowledge or notice that is imputed from public records, footnote four apparently infers that the definition thereby includes actual notice or imputed or constructive knowledge arising from sources other than the public records.
I do not interpret the policy definition of knowledge to include anything less than actual subjective knowledge, i.e., what a person really knows. In this case, the “known to” exception would therefore require actual knowledge of the easements rather than merely the things that Mann observed on his visit that would put him on inquiry notice. Therefore, because the federal court did not find that Mann had actual subjective knowledge of the easements, but only that he was *353deemed to be aware of them, I do not believe it determined the facts necessary to establish the “known to” exception.
As to the “inspection” exception, the federal court’s finding of facts specifically set forth what Mann actually saw on his visit to the property and what he would have seen upon further inspection. These are the facts that would be considered in determining whether “a survey or physical inspection of the premises might disclose” the easement in this case. However, the federal court did not conclude that Mann was deemed to be aware of the easements based solely upon what an inspection would have revealed, but also upon what would have been determined by further inquiry. By contrast, the “inspection” exception is confined to only what a survey or physical inspection might reveal and does not expressly extend to any additional information that would become known only upon further inquiry. Because the federal court did not determine whether a survey or physical inspection might alone disclose the easement, it did not decide the facts necessary to establish the “inspection” exception.
Because I therefore do not believe the federal court decision established Old Republic’s grounds for summary judgment, I would reverse the judgment of the trial court and remand the case for further proceedings.