The Lawyers Title and Guaranty Company, by a policy of insurance, agreed to give the plaintiff a clear title, free of all requirements, objections and defects, except as these were noted in the policy of title insurance. It is not necessary that the objection or requirement should amount to a lien, but what is stated in the policy of title insurance is that any defect is insured against except those noted. Here, by the conceded facts, this plaintiff's property was subjected to a fixed assessment for a local improvement which was to become due and payable yearly in forty equal annual *Page 325 installments, commencing in the year 1929, with interest on the unpaid balance at the rate of four and one-quarter per cent per annum, the amount of assessment to be added each year to the annual tax.
The certificate upon which the plaintiff relied certified to the plaintiff that title to the premises was vested in Eleanor M. Grieve, clear of all requirements, liens, incumbrances and defects, except as in said certificate noted, and agreed to insure the plaintiff against the existence of any and all requirements, liens, incumbrances and defects not therein noted. The complaint is based on the foregoing certificate. The plaintiff alleges in his complaint that this defect amounts also to a lien, but the plaintiff may succeed upon proof that the future installments are an objection to title not noted in the policy although they do not amount to liens. That this assessment for a park constitutes a defect and objection to title admits of no doubt. It is payable in annual installments for forty years to come, with interest at four and one-quarter per cent from the time the assessment was completed and could have been paid without interest. Such interest also is to be computed on the entire amount of the assessment, and not on the amount of each installment. The interest is either a penalty for non-payment of the assessment or is a charge for the extension of the time for payment by the exercise of the option to pay in installments. In either case, this evidences the fact that the entire assessment was payable when this amount was determined and lends support to the plaintiff's contention that this objection and defect also amounts to a lien. But, as already noted, this defect in title need not amount to a lien to come within the terms of the certificate, which agrees to protect plaintiff against not only liens but also against all requirements, defects and objections not noted in the policy by way of exception as not being insured against. *Page 326
Every year for forty years this additional amount will be added to plaintiff's ordinary tax bill. In accordance with established practice, the total amount of these unpaid installments of assessments would have been deducted from the purchase price at the time of closing of title, if they had been disclosed to appellant as the title company agreed to do.
The title company urges that although no policy was issued the certificate is to be construed as containing all the terms and conditions contained in the policy ordinarily issued by the company. This contention would not seem justified by the facts, but even assuming that it were so, it does not avail respondent. The agreement of the title company was to note among the exceptions not insured against, the existence of any and all requirements, objections and defects, and in default thereof to insure against their existence. The fact that the policy of insurance to be issued merely stated that plaintiff was not insured against assessments payable in installments is not material to excuse the failure to comply with the agreement by the title company to bring to the attention of the insured the existence of future installments by way of exception. In any event, the wording of the policy in this regard is ambiguous and in accordance with the usual rule must be taken most strongly against respondent.
The measure of damages of the appellant is at least the difference between the value of the property subject to the assessment and free from it. (755 Seventh Ave. Corp. v.Carroll, 266 N.Y. 157.)
Title insurance policies are intended to inform the purchaser of any defects in the title, claims against or burdens or requirements on the property. Unless defects or objections are noted, at least in the exceptions, the policy becomes valueless. An assessment levied against the property, although not a lien nor payable until the future, is clearly a burden on the property concerning which the purchaser seeks information. To hold that *Page 327 although objections to a title are not noted either by way of exception or otherwise, those insuring the title are not liable, is to render useless title insurance.
The judgment dismissing the complaint should be reversed and a trial had for the purpose of determining the damages of plaintiff.
CRANE, Ch. J., LEHMAN, O'BRIEN and CROUCH, JJ., concur with LOUGHRAN, J.; FINCH, J., dissents in opinion in which HUBBS, J., concurs.
Judgment affirmed.