Vernon v. Title Guarantee & Trust Co.

FRICKE, J., pro tem. Action on a policy of title insurance. It appears that in 1928 Otho S. Vernon, as attorney for one Mabel C. Noyes, brought an action for money against James Hamilton and secured a judgment by default upon which an execution was issued and the property of Hamilton, the realty involved in the present action—stipulated to be worth $6,000—was sold pursuant to the execution to appellant herein on March 6, 1929, for $440, and a year later she received a deed to the property. Thereafter Vernon, as agent for appellant, who had become his wife in August, 1929, applied for, and on March 20, 1930, secured, a policy of title insurance on the real property, naming appellant as the insured under the name of “Mildred Stanford”. It appears further that James Hamilton was during all of the time mentioned physically and mentally incompetent, and was so formally declared and a guardian for him appointed by the superior court on January 10, 1929.

On April 10, 1930, an action, referred to in this opinion as the Dunning ease, was commenced by said guardian against Mabel C. Noyes, Otho S. Vernon and appellant herein to set aside the deed issued under the execution levied in the action first above mentioned. Though requested so to do, respondent title company, owing to the conditions which existed at the time the policy was written, declined to defend this action or to assume any liability resulting therefrom. On April 13, 1932, the superior court granted the relief prayed for, and in accordance with the decree plaintiff therein paid defendants therein $492.80 and said defendants executed a grant deed to the plaintiff. The findings in the Dunning case, which are conceded by counsel to be conclusive in the present action, included "findings that Otho S. Vernon, as attorney for Mabel C. Noyes, had granted to defendants’ counsel in the first action additional time in which to answer the complaint, but had nevertheless entered a judgment by default against said Hamilton upon the exact day when a default might have been entered had the time to answer not been extended; that said Vernon had personally served the summons and complaint upon Hamilton, who was then mentally and physically, incompetent and who became hopelessly in[173]sane; that said Vernon did not have a guardian ad litem appointed for said Hamilton, nor did he ever serve the summons and complaint upon the general guardian who was appointed January 10, 1929, and that notwithstanding these matters said Vernon secured a judgment by default and levied upon the real property of Hamilton; that said Vernon was well aware of the incompetency of Hamilton and the appointment of his general guardian prior to the sale of the property under the execution; that the property was bought at the sale for $440 by appellant, who was then a client of Vernon and later married him in August, 1929; that the reasonable value of said property was $6,000, “and that as such client and wife of said Vernon the said Mildred Stanford [Vernon] was charged with the knowledge of said Vernon of this matter”.