Sec. 119. The liability of a title company or of an abstracter of records is to the party employing it or him and not to any one else. The person named in the certificate, or abstract, as he at whose request it is made, is the person in whose favor the liability exists. If a certificate of title or an abstract is ordered by the owner of land for the purpose of making a sale to a purchaser, and a sale is effected, and the purchaser is injured by reason of errors and omissions in the certificate of title or abstract, the purchaser cannot recover damages therefor from the title company or abstracter; he must look to the seller for such damages and the seller must look to the maker of the certificate or abstract. The measure of such damages is the actual loss to the party injured.

Sec. 120. Conveyances and other papers are also oftentimes placed in escrow with banks. (See Form No. 44.) The bank makes an envelope for the escrow as per Form No. 46.

Sec. 121. Real estate dealers and others will find Form No. 45 very convenient for caring for escrows. This is an envelope, in which all papers relating to the escrow can be kept and entries made on the outside for reference or for the book-keeper.

Sec. 122. Insurance.

(1.) Insurance is a contract whereby one, called the insurer, undertakes to indemnify another, called the insured, against loss, damage or liability arising from an unknown or contingent event. The sole object of insurance is to indemnify the insured and the latter must have an insurable interest in the thing insured.

(2.) A policy of fire insurance is a written instrument whereby insurance is effected, and which sets forth the name of the insured, a description of the property, the rate of premium, the time during which the insurance is to continue and the interest of the insured in the property, if he is not the absolute owner thereof.

(3.) A change of interest in the thing insured, unaccompanied by a corresponding change of interest in the insurance, suspends fire insurance to an equivalent extent until the interest in the thing and the interest in the insurance is vested in the same person. A transfer of the thing insured does not transfer the policy until the same person becomes the owner of both the policy and the thing insured.

(4.) When real estate, which is insured, is transferred, it is necessary that the policy be transferred by a written assignment contemporaneously with the transfer of the title, and such assignment of the insurance must be assented to in writing by the agents of the insurance company.

(5.) Where the seller disposes of property which is insured and takes back a mortgage as part of the purchase price, and also where a mortgage is given for money borrowed, a "mortgage clause" is attached, providing that the insurance shall be payable to the mortgagee as his interest may appear.

Sec. 123. Taxes.

(1.) Taxes are revenues collected for the purpose of administering the government. The design of the law is that all property, not exempt, shall be taxed in proportion to its value. Taxes are assessed by officers appointed for that purpose, called assessors. The County Assessor makes his assessment between the first Mondays of March and July of each year, and he must ascertain the names of all taxable inhabitants and a list of all property in his county subject to taxation, and must assess such property to the person by whom it was owned or claimed at 12 o'clock noon, the first Monday of March. Land, in parcels not exceeding 640 acres, and the improvements thereon, are assessed separately; these, and also all personal property, are assessed at their full cash value, namely, the amount at which the property would be taken in payment of a just debt from a solvent debtor. The assessment is made on blanks furnished by the assessor, and such blanks, when filled up, must be sworn to, if required. Every person refusing to make a statement or subscribe an affidavit is liable to a fine of $100.00. Any property wilfully concealed, transferred, or misrepresented to evade taxation must, upon discovery, be assessed at not exceeding ten times its value. Any property discovered by the assessor to have escaped taxation in the last preceding year, if such property remains under the control of the party who then owned it, must be assessed at double its value. Taxes are a judgment lien and have the effect of an execution and the lien attaches on the first Monday of March.

(2.) The assessor must collect taxes on all personal property unsecured by real estate at the time of making his assessment, and such taxes are computed on the basis of the rate for the preceding year. If the taxpayer thinks the assessor in error, he should pay the taxes and bring the matter before the Board of Equalization, as that is his only legal remedy. On the first Monday of July, the assessor turns over the assessment rolls of both real and personal property to the clerk of the Board of Supervisors. After turning over his books, the assessor cannot collect personal taxes.

(3.) The Board of Supervisors in each county, convenes as a County Board of Equalization on the first Monday of July and remains in session until the third Monday in July, and during such time, the assessment rolls are open for the inspection of taxpayers. The taxpayer should then examine the rolls to ascertain the valuation which has been placed upon his property by the assessor, and at that time complaints can be made to correct such valuations. Such complaints are made as per Form No. 43, which must be verified upon oath, and no reduction will be made unless such application is filed. The person making the application must attend and answer under oath any inquiries pertinent to the application.

(4.) The Board of Supervisors on the third Monday in September must fix the rate of taxes and levy state and county taxes. The taxes upon all personal property secured by real property, and one-half of the taxes on real property, are due and payable on the second Monday of October, and are delinquent on the last Monday in November next thereafter at six P. M.; unless paid prior thereto, fifteen per cent will be added to the amount thereof, and if the said first one-half is not paid before the last Monday in April, an additional five per cent is added thereto; the remaining one-half of the taxes on real property are payable on January first next thereafter, and are delinquent on the last Monday in April next thereafter, and unless paid prior thereto, five per cent is added. All taxes may be paid at the time the first installment is payable. All such taxes must be paid at the office of the tax collector. City taxes are levied and collected in practically the same manner.

(5.) After each delinquent date, a list of delinquent taxes is published in a newspaper, and if not paid, the property will be sold to the State. The property so sold may be redeemed by the owner or any party in interest within five years from the date of the sale. Application to redeem is made to the County Auditor and the redemption money is paid to the County Treasurer. If not redeemed within the time limited, the tax collector must make a deed to the State.

(6.) Property incumbered by mortgage or deed of trust, and situate in California, has, for the purposes of taxation, two separate and distinct taxable interests. The taxable interest of the owner of the fee is the difference between the value of the land, if unincumbered, and the value of the mortgage; the taxable interest of the mortgagee is the value of the mortgage security. The holder of the mortgage at the time of the assessment, must pay the taxes on the mortgage interest; and the owner of the fee, in making out his assessment list, should show the value of the land, less a deduction for the value of the mortgage, the remainder being the amount on which he is to pay taxes. Either party may pay the taxes on both interests. The State constitution provides that every contract whereby a debtor is obligated to pay any tax or assessment on money loaned, or on any mortgage, deed or trust or other lien, is void, and that the agreement to pay interest is invalidated. Because of this law, it is customary to make the rate of interest in the mortgage note higher than the rate actually to be paid, and to enter into a collateral agreement, allowing the mortgagor a certain percentage of rebate in interest, provided he pays the taxes on the mortgage. The agreement is so worded as not to obligate the mortgagor to pay the taxes on the mortgage, and to offer him an option which he may exercise to his advantage. (See Form No. 42.)

(7.) The Fiscal Year of the United States, and of the State of California, begins July 1st, and ends June 30th of the following calendar year. Property is assessed, therefore, in the latter part of the fiscal year, to-wit, between the first Monday of March and the first Monday of July next following. The assessment, so far as it relates to real property, means entering a description of it on the tax list, together with the name of the owner, and the valuation. The law requires the assessment of all taxable property to be completed practically before the fiscal year begins, and before the rate of taxation is determined. The Board of Supervisors levies the rate of taxation on the third Monday in September. The taxes levied in September, in the year 1905, will be referred to as "Taxes of 1905-1906," and will be payable in November, 1905, and in April, 1906.