Appeal from the Circuit Court of Cook County; the Hon. Myron
T. Gomberg, Judge, presiding.
PRESIDING JUSTICE HARTMAN DELIVERED THE OPINION OF THE COURT:
Rehearing denied May 7, 1984.
Jean Elliott (Elliott) brought an action against Chicago Title Insurance Company (CTI) for damages resulting from an alleged breach of a title policy issued to her and her husband Richard Elliott. The policy showed title to their residence in joint tenancy although it was actually recorded as tenancy in common. The circuit court granted her motion for summary judgment and denied her request for attorney fees and damages. CTI appeals from the order granting summary judgment. Elliott cross-appeals from the denial of attorney fees and damages.
The issues raised by CTI include whether: (1) summary judgment was properly granted; (2) CTI's exclusion clause exculpates it from liability for mistakes in describing title; (3) a necessary party was omitted; and, (4) CTI's policy is one of indemnity rather than guaranty, thereby limiting damages to actual loss. The issue raised on the cross-appeal is whether CTI's defense was vexatious and unreasonable and its allegations and denials unreasonable and untrue so as to entitle Elliott to attorney fees and damages.
On October 26, 1956, Richard and Jean Elliott purchased and were deeded in joint tenancy residential property from Durable Construction Company (Durable), which shall be described as "Lot 82," subject to a mortgage obtained by Durable on October 6, 1956. The proceeds of this mortgage were credited to the purchase price. Adjoining Lot 83 was sold by Durable to the Elliotts by an installment contract, secured by an installment note, to be paid in full by December 1961, at which time title to Lot 83 would be transferred to the Elliotts.
In April 1958, the Elliotts and Durable entered into an $11,215 contract for an addition to their residence, on which the Elliotts paid down $1,000 cash. Durable's 1956 mortgage on Lot 83 was released; Durable secured a new mortgage on Lots 82 and 83; and the installment note was increased. As security for the increased installment note, the Elliotts executed a quitclaim deed to Lot 82 to the construction company. In 1959, Durable resubdivided Lots 82 and 83 into Lot 1.
The Elliotts paid off the installment note in 1968 and retained their own attorney to clear title and draft a deed to Lot 1, transferring title to them from Durable. The deed did not contain essential joint tenancy language. In 1970 the attorney ordered a commitment for title insurance from CTI giving it all documents relating to the purchase and financing of the property of which he was aware, including the warranty deed conveying Lot 1 from Durable to the Elliotts. CTI issued a title insurance policy showing title in the Elliotts as joint tenants, however, and mailed it to the Elliotts' attorney on November 17, 1970.
In June 1973, the Elliotts retained a different attorney to draft their wills and a trust agreement and gave him the title policy. Assertedly relying on the policy showing their home in joint tenancy and believing it would pass to the survivor upon either's death, the attorney drafted wills and trust agreements conveying all the husband's assets to a testamentary trust, with a bank as trustee (trustee) without specifically referring to their home.
In July 1981, Richard Elliott died, and his estate was opened in Du Page County.
In March 1982, Elliott retained the previous attorney to represent her in the sale of the subject home. He prepared an installment sales contract for $90,000 between Elliott, as sole owner, and the purchasers, which both parties executed. A commitment for title ordered by the purchasers from a title company other than CTI reported that title to the property was not in joint tenancy but rather in tenancy in common. Elliott's attorney immediately notified CTI of the finding, and it issued a new commitment showing Elliott and the trustee of the testamentary trust as tenants in common, each with an undivided one-half interest in the property.
On April 1, 1982, the sale for $90,000 was consumated, the proceeds eventually to be distributed equally between Elliott and the trustee, each receiving $45,000.
On April 5, 1982, Elliott notified CTI of her loss of $45,000, the amount distributed to the trustee. On April 7, 1982, and May 7, 1982, Elliott demanded that CTI pay her for such loss, as provided in the title policy. On May 14, 1982, Elliott filed a two-count complaint against CTI, claiming a loss of $45,000 and CTI's engagement in improper claims practice thereby entitling her to reasonable attorney fees and other costs. CTI's amended answer denied Elliott's allegations and set forth affirmative defenses, specifically that: the 1958 deed to the construction company was actually a mortgage; the claim is barred from coverage under the policy's exclusionary clause; and Elliott sustained no actual losses.
Elliott's motion for summary judgment, supported by affidavits, sought the right to recover damages sustained because of her reliance upon the policy's erroneous description of title. CTI's countervailing memorandum, to which the affidavit of its office counsel was attached, claimed that there were issues of fact and law which precluded summary judgment. CTI's subsequent request for admission of genuineness of certain documents was admitted in the absence of objections. (87 Ill.2d R. 216.) The documents and another affidavit of office counsel were filed by CTI as exhibits in opposition to Elliott's motion for summary judgment. Elliott answered CTI's additional brief, disclaiming the allegation that the deed to the construction company was a constructive mortgage and emphasizing her rightful reliance on the policy's joint tenancy language.
The circuit court found that: CTI's policy showing title in joint tenancy when the record indicated title was held in tenancy in common, was in error; the 1982 commitment describing Elliott and the trustee as tenants in common was an admission by CTI that the 1970 policy was a mistake; the tenancy in common created by the 1968 deed, drafted by Elliott's attorney, was not a defense affecting the nature of Elliott's cause of action; and the Elliotts had a right ...