In 1946, J. J. Cleary contracted to purchase land from the state of Nevada, but did not acquire title to the land until 1952. The land sale contract was not recorded. In 1949, Cleary granted a power line easement to Sierra Pacific Power Company, and the easement was recorded. Title passed through various owners until Ryczkowski (plaintiff) acquired title in 1964. Prior to acquiring title, Ryczkowski engaged Title Guaranty to search the record for defects in title, and contracted with Chelsea Title & Guaranty Co. to insure title. The title search performed only went back to 1952, when Cleary acquired title to the land. The search never uncovered the power line easement. Ryczkowski brought suit against Chelsea Title (Title Guaranty was defunct). The trial court entered judgment for Chelsea Title, holding that it could not be held liable. Ryczkowski appealed.