Shine v. Nash Abstract Investment Co.

The weight of authority sustains the rule that one engaged in the business or calling of making abstracts of title to real estate for hire, under employment of a vendor, is not liable, because of negligence in the preparation of the abstract, to the vendee, in the absence of notice or knowledge that the abstract is to be furnished to, and used by, the vendee in consummating the sale of the property. National Savings Bank v. Ward, 100 U.S. 195, 25 L.Ed. 621; 1 C. J. 369, § 12; 1 R. C. L. 94, § 7.

And some courts hold that the application of the rule is not affected by knowledge on the part of the abstracter that the abstract is for the use by the vendee. Zweigardt v. Birdseye,57 Mo. App. 462.

But we are of opinion that sound reasoning and the weight of modern authority sustain the rule of liability for negligence resulting in injury to the vendee, where the vendor is under duty, or assumes the obligation, to furnish such abstract for the use of the vendee, and the person making the abstract on the vendor's order has knowledge or notice that the abstract is for such use, this on the ground that in such circumstances the engagement of the abstracter by the vendor is a contract made for the benefit of the vendee, and under such engagement the abstracter owes the vendee, who is to use and rely on the abstract, the duty of using reasonable care and skill in examining the records affecting the title and making the abstract. 1 R. C. L. 94, § 7; Economy B. L. Ass'n v. West New Jersey Title Guarantee Co., 64 N.J. Law, 27, 44 A. 854; Denton v. Nashville Title Co., 112 Tenn. 320, 79 S.W. 799; Anderson v. Spriestersbach, 69 Wn. 393, 125 P. 166, 42 L.R.A. (N.S.) 176; Murphy v. Fidelity Abstract Title Co., 114 Wn. 77,194 P. 591; Brown v. Sims, 22 Ind. App. 317, 53 N.E. 779, 72 Am. St. Rep. 308; Western Loan Sav. Co. v. Silver Bow Abstract Co., 31 Mont. 448, 78 P. 774, 107 Am. St. Rep. 435; Lawall v. Groman, 180 Pa. 532, 37 A. 98, 57 Am. St. Rep. 662, 2 Am. Neg. Rep. 69.

In the case of Glanzer v. Shepard, 233 N.Y. 236,135 N.E. 275, 23 A.L.R. 1425, the Court of Appeals of New York, in a very able opinion treating a kindred question involving the liability of a person engaged in the business of weighing commodities — in that case beans, — on the engagement of the seller for the use of the purchaser, observed:

"We think the law imposes a duty toward buyer as well as seller in the situation here disclosed. The plaintiffs' use of the certificates was not an indirect or collateral consequence of the action of the weighers. It was a consequence which, to the weighers' knowledge, was the end and aim of the transaction. Bech, Van Siclen Co. ordered, but Glanzer Bros. were to use. The defendants held themselves out to the public as skilled and careful in their calling. They knew that the beans had been sold, and that on the faith of their certificate payment would be made. They sent a copy to the plaintiffs for the very purpose of inducing action. All this they admit. In such circumstances, assumption of the task of weighing was the assumption of a duty to weigh carefully for the benefit of all whose conduct was to be governed. We do not need to state the duty in terms of contract or of privity. Growing out of a contract, it has none the less an origin not exclusively contractual. Given the contract and the relation, the duty is imposed by law. * * * There is nothing new here in principle. If there is novelty, it is in the instance only. One who follows a common calling may come under a duty to another whom he serves, though a third may give the order or make the payment. * * * 'It is the duty of every artificer to exercise his art rightly and truly as he ought.' * * * The surgeon who unskillfully sets the wounded arm of a child is liable for his negligence, though the father pays the bill. * * * The bailee who is careless in the keeping of the goods which he receives as those of A does not escape liability though the deposit may have been made by B. It is ancient learning that one who assumes to act, even though gratuitously, may thereby become subject to the duty of acting carefully, if he acts at all. * * * The most common examples of such a duty are cases where action is directed toward the person of another or his property. * * * A like principle applies, however, where action is directed toward the governance of conduct. The controlling circumstance is not the character of the consequence, but its proximity or remoteness in the thought and purpose of the actor. There are decisions that a lawyer who supplies a certificate of title to a client is not answerable to a third person whom he did not mean to serve. National Savings Bank v. Ward, 100 U.S. 195, 25 L.Ed. 621. * * * No such immunity, it has been held, protects the searcher of a title who, preparing an abstract at the order of a client, delivers it to another to induce action on the faith of it."

And it was not of consequence that the abstract of title is not delivered to the vendee directly, but is delivered to the vendor for his use, with knowledge or notice on the part of the abstracter that the vendee will use and rely on the abstract in consummating the sale. However, the abstracter of titles is not a guarantor, unless he expressly so undertakes, and, if liability exists, in the absence of express guaranty, it must be grounded on negligence. Pinkston v. Arrington Graham,98 Ala. 489, 13 So. 561; 1 R. C. L. pp. 92, 93, §§ 4 and 5; Wacek v. Frink, 51 Minn. 282, 53 N.W. 633, 38 Am. St. Rep. 502; Walker v. Bowman, 27 Okl. 172, 111 P. 319, 30 L.R.A. (N.S.) 642, Ann. Cas. 1912B, 839.

The rule of liability arising from contract made for the benefit of a third person does not go to the extent of giving to a third party, whose interest in the contract is merely indirect or incidental, but only to those whose interest is direct, and out of which an immediate duty arises, though the benefit may be postponed to the happening of a definite contingency, and to sustain liability there must be "a debt or duty owing by the promisee to the" third "party claiming the right to sue." Lovejoy v. Bessemer Waterworks Co., 146 Ala. 374,41 So. 76, 6 L.R.A. (N.S.) 429, 9 Ann. Cas. 1068; Meyerson v. New Idea Hosiery Co., ante, p. 153, 115 So. 94.

The proof in this case clearly fails to sustain the counts of the complaint declaring on a contract between the plaintiff and defendant, and renders innocuous errors committed, if such intervened, in the ruling of the court on the demurrers to the first and second counts of the complaint. Going v. Ala. Steel Wire Co., 141 Ala. 537, 37 So. 784.

The fault in plaintiff's case as presented by the other counts — the seventh and eighth — is that plaintiff's loss occurred through the failure of the title of Margaret Davis, and the seventh count declares on a breach of a contract made between the defendant and Margaret Davis, and there is an absence of evidence showing, or tending to show, that Margaret Davis was under any duty or obligation to furnish such abstract, or that she had any part in the procurement of such abstract, or that B. L. Davis acted for her as her agent in ordering the abstract. For all that appears, the only interest B. L. Davis had in the transaction was to procure an abstract of title to the lands which he owned and conveyed, and he had no interest in the Margaret Davis tract. In these circumstances, viewed in the light of the principles stated above, it cannot be said that the defendant owed the plaintiff a duty in respect to investigation of the title of the Margaret Davis tract. This view justifies the trial court in directing a verdict for the defendant.

In reaching this conclusion, we have not overlooked the testimony of the witness Kyser that he was acting for both of the Davises, but his testimony shows that he had nothing to do with ordering the abstract, and there is nothing in his testimony to indicate that the defendant had any notice that he was acting for Margaret Davis.

Affirmed.

ANDERSON, C. J., and SOMERVILLE and THOMAS, JJ., concur.