Summary
stating that "the rule has been declared to be that the statute of limitations begins to run from the time of the occurrence of the breach of duty, and not from the time of discovery . . ."
Summary of this case from RTC Mortgage Trust 1994 N-1 v. Fidelity National Title InsuranceOpinion
Submitted February 11, 1938 —
Decided April 29, 1938.
1. A lawyer is not an insurer or guarantor of the soundness of his opinions, and since there is no implied warranty from the relation of attorney and client, an express agreement of warranty must be shown by a fair preponderance of competent evidence in order to base an action thereon.
2. It is settled law that a right of action against an attorney for making a false or incorrect report of title accrues (in the absence of fraud) when the result of the examination of the title is reported, and the statute of limitations then begins to run, not when the error is discovered or consequential damage results.
On appeal from a judgment of the Supreme Court, tried before Judge Ackerson, who filed the following opinion:
"This cause has been submitted to the court for trial without a jury upon stipulated facts and upon depositions taken by consent of the parties.
"The complaint is in two counts. In the first the plaintiff alleges that in March, 1910, he employed the defendant, an attorney-at-law, to `examine and certify the title to certain real estate' and that the defendant was negligent in the performance of the duty thus assumed in that he certified that title to said premises in fee-simple was vested in William P. Kastenhuber and Dora, his wife, who in fact had only a life estate therein, by reason of which negligence plaintiff was damaged. In the second count the plaintiff alleges, in substance, that the defendant `certified, represented and warranted that he examined the title to said lands and that title in fee-simple was vested' in said Kastenhubers, which was not the fact as hereinbefore stated, whereby plaintiff was damaged.
"The defendant's answer, aside from denying liability generally, sets up three separate defenses to both counts of the complaint. In the first separate defense the defendant denies that he was employed to examine and certify the title to said premises, but asserts that he was employed merely as an abstractor to examine the records in the Hudson county register's and clerk's offices and make report of the title as it appeared from the records of said offices which he did in a proper manner. The second defense denies that plaintiff sustained any damage and the third sets up the statute of limitations.
"It appears from the stipulated facts that on or about March 15th, 1910, defendant was employed by plaintiff to search the title to the premises in question. The nature and extent of the employment, however, is in dispute. It further appears that pursuant to his employment the defendant searched the records in the Hudson county register's, clerk's and surrogate's offices and on or about April 13th, 1910, delivered to plaintiff an abstract of the wills, deeds and mortgages in the chain of title, as they appeared of record in those offices, which indicated that the fee-simple to the aforesaid premises was vested in William P. Kastenhuber and his wife. On April 13th, 1910, said Kastenhubers conveyed said premises to James Billington, who in turn conveyed same to plaintiff's wife, Ella J. Sullivan, by deed dated June 29th, 1910.
"It further appears from the stipulated facts that on February 28th, 1911, a protracted course of litigation was begun in the Court of Chancery of this state involving the legal sufficiency of a tax sale deed in the chain of title of the premises in question, in which litigation the present plaintiff and his wife were parties. This litigation took various forms and resulted in several appeals to the Court of Errors and Appeals, until finally on May 18th, 1931, said court decided that said tax sale deed was void and that the Sullivans never had more than an estate for the life of said Dora E. Kastenhuber in said premises and a final decree to that effect was entered on July 16th, 1931.
"The gravamen of the cause of action set forth in the first count of the complaint is the hiring of a professional man to perform a service, within the line of his profession which he negligently performed to the damage of the person employing him. Our Court of Errors and Appeals in the case of Gogolin v. Williams, 91 N.J.L. 266, held that:
"`In such a situation, quite uniformly, the rule has been declared to be that the statute of limitations begins to run from the time of the occurrence of the breach of duty, and not from the time of the discovery of actual damage, as a result of such breach.'
"See, also, Wilson v. Plumner, 4 Pet. (U.S.) 172; Troup v. Smith, 20 Johns. (N.Y.) 33; Freeholders v. Veghte, 44 N.J.L. 509; 25 Cyc. 1083-1116; 37 C.J. 830.
"In 17 R.C.L. 766, § 132, the text writer sums up the principle involved as follows:
"`An action by a client for the misfeasance or non-feasance of his attorney is based on the latter's breach of duty, and not on the consequential damages subsequently resulting. In such cases the general rule is that in the absence of fraudulent concealment by the attorney, the statute begins to run at the time of the neglect or misconduct and not from the time when the wrong is discovered or the consequential damages are felt.'
"In the case of Lattin v. Gillette, 95 Cal. 317; 29 Am. St. Rep. 115 (at p. 118), which is in many respects similar to the case sub judice, the court said:
"`The running of the statute was not suspended by the fact that the plaintiff did not ascertain the error in the certificate (certificate of title) or by the fact that the existence of the error was not determined by the superior court until more than two years had expired. The judgment of the court did not constitute the negligence of the defendants, but was only evidence that they had been guilty of negligence; and the eviction of the plaintiff under such judgment was not the cause of action against the defendants, but was merely an element in determining the amount of damages that he had sustained by reason of their negligence. "Where an attorney is sued for malpractice, the cause of action arises from the time when such malpractice occurred, and that without any reference to the circumstance whether the client then knew the fact or not." Wood on Limitations, § 122.'
"Since it is not claimed that the defendant herein was guilty of any fraudulent concealment, it follows that the plaintiff's cause of action, as stated in the first count of the complaint, accrued when the defendant reported the result of his search to the plaintiff on April 13th, 1910, and since this action was not instituted until September 30th, 1932, more than twenty-two years after the cause of action accrued, it is barred by our statute of limitations. 3 Comp. Stat., p. 3162.
"Nor do we find that the second count of the complaint is any more potent than the first either from a factual or a legal standpoint. The theory of this count is breach of warranty, and the pertinent allegation is that the defendant `certified, represented and warranted to the plaintiff that he had examined the title to said lands and that title in fee-simple was vested in said William P. Kastenhuber and Dora Kastenhuber, his wife,' c. That plaintiff acted thereon and was damaged because said last named parties only had an estate therein for the life of said Dora Kastenhuber.
"In the first place, it is settled that a lawyer, without express agreement, is not an insurer. He is not a guarantor of the soundness of his opinions. McCullough v. Sullivan, 102 N.J.L. 381. Since no implied warranty results from the relationship of attorney and client, it became necessary for the plaintiff herein to prove by a fair preponderance of the competent evidence the warranty upon which this second count of the complaint is rested. After a careful examination of the depositions bearing upon this factual issue, I find that the plaintiff has failed to bear this burden of proof and cannot, therefore, prevail.
"In the second place, assuming that a certificate of title had been given, in the absence of the production of the paper-writing itself, we would have to rely upon plaintiff's version of the contents thereof which is as follows:
"`I certify to James A. Sullivan that I have examined the title to Lot F * * *, and state that the title to Lot F * * *, is vested fee-simple in William Kastenhuber and Dora E. Kastenhuber, his wife, * * *.'
"Certainly it cannot be claimed that this amounts to an express warranty of title, such for example as is found in a warranty deed.
"The defendant did not claim to be the owner of the premises. He was not engaged to sell same to the plaintiff. He did not engage to defend the title, nor did he expressly guarantee the correctness of his work. The alleged certificate is not the evidence of the obligation of the defendant to the plaintiff, but is merely evidence of the act done by the plaintiff in purported satisfaction of the obligation assumed by him in accepting his employment to search the title to the premises in question. Lattin v. Gillette, supra. The obligation assumed by the defendant was that created at the time of his acceptance of the employment by the plaintiff, and antedated the making of the certificate. This obligation was, according to plaintiff's own testimony, merely `to make a complete search of the title of Lot F in City Block 1865.' There was no obligation assumed to guarantee or warrant the title to the premises in question, nor the correctness of the defendant's work.
"There was however, an implied obligation to exercise reasonable care and skill in making the search of the title to the premises in question. That arose out of the oral agreement of employment, and if broken, it was by the giving of the alleged faulty certificate. As in the case of an erroneous deed drawn by an attorney or a defective plat made by a surveyor, or a wrong prescription given by a physician, the alleged certificate was only evidence in support of the averment that the implied contract for the exercise of skill and care was violated, and is not the contract itself. Lattin v. Gillette, supra.
"In the third place, even if we assume that the defendant misrepresented the true state of the title to the premises in question (there being no claim of fraud), or warranted the correctness of his work, nevertheless, the cause of action would still be barred by the statute of limitations. Such a situation would be similar to and governed by the same rule applicable to warranties of soundness, kind and quality in sales of personal property, which is that the warranty is broken as soon as made. 37 C.J. 836, § 188; Woodland Oil Co. v. Byers, 132 Am. S. Rep. 737 (at p. 740) (Pa.).
"A misrepresentation of the condition of the title, in the absence of fraud, would not postpone the running of the statute until the fact of misrepresentation was discovered. 37 C.J. 936, § 305. Even if we accept plaintiff's version of the contents of the alleged missing certificate of title, it amounts to nothing more or less than a report of the state of the title in question resulting from defendant's examination thereof pursuant to his employment. It is settled that a right of action against an attorney for making a false or incorrect report of a title accrues (in the absence of fraud) when the result of the examination of the title is reported, and the statute of limitations then begins to run, not when the error is discovered or consequential damage results. 37 C.J. 864, § 229.
"I, therefore, find in favor of the defendant and against the plaintiff, a verdict of no cause of action."
For the appellant, James A. Sullivan, pro se.
For the respondent, Edward P. Stout, pro se.
The judgment under review herein should be affirmed, for the reasons expressed in the opinion delivered by Judge Ackerson in the Supreme Court.
For affirmance — THE CHANCELLOR, CHIEF JUSTICE, TRENCHARD, PARKER, CASE, BODINE, DONGES, HEHER, PERSKIE, PORTER, HETFIELD, DEAR, WELLS, WOLFSKEIL, RAFFERTY, WALKER, JJ. 16.
For reversal — None.