Like other policies of insurance, title policies are liberally construed against the insurer and in favor of the insured. Notwithstanding that principle of construction, courts should not write for the insured a better policy of insurance than the one purchased.
Plaintiff acquired a title insurance policy from defendant. Later, plaintiff discovered that the land purchased had less acreage than plaintiff had contemplated. Plaintiff sued defendant for damages, and the trial court found defendant liable on its policy, but not in negligence. The state high court reversed and remanded, holding that defendant was not obligated to calculate, from either its policy or from the deed plaintiff received, the acreage of the lot purchased. Since defendant's policy did not expressly recite the acreage, it did not assure the quantity of land purchased. Also, the exception from coverage in defendant's policy for matters that could have been revealed through a survey included the size of the lot purchased.
Was the defendant liable under the insurance policy?
The court concluded that plaintiff did not engage Chelsea to undertake two separate functions; that is, to prepare a title report, then a policy of title insurance. The title search which was completed by Chelsea was simply an internal procedure for Chelsea's own purposes in deciding whether or not to issue a title policy. Even though plaintiff was billed for the title search, it was the conclusion of the court that the real transaction between the parties was a policy of insurance. This conclusion means that plaintiff's remedy against Chelsea lies in contract, not in negligence. Consequently, the negligence charges against Chelsea were dismissed.