Metropolitan News-Enterprise


Monday, August 13, 2001


Page 3


Escrow Agent’s Knowledge of Judgment Lien Imputed to Purchaser—C.A.


By a MetNews Staff Writer


A purchaser of real property has constructive knowledge of a judgment lien when the escrow officer knows that the seller uses another name, and the lien is recorded against the debtor under that name, the First District Court of Appeal has ruled.

The court Thursday reversed a Humboldt Superior Court judge’s ruling that Dana Gregg could not levy on the home sold by her former husband, James Michael Cloney, to Lloyd Launer.

Cloney and Gregg divorced in 1984, and Cloney was ordered to pay $100 per month in child support, plus $200 in monthly spousal support for a period of three years. He later remarried, and he and his new wife purchased a home in Eureka.

The property was deeded to “Mike” Cloney and spouse in joint tenancy. His ex-wife subsequently recorded the dissolution judgment in Humboldt County, and he was listed as “James Michael Cloney” in the index to the county records.

In 1999, Cloney and his second wife agreed to sell the property to Lloyd Launer, with First American Title Company being employed by Launer as his title insurer and designated by both parties as the escrow agent for the sale.

Cloney went to First American’s local office to sign papers, and presented his driver’s license to the escrow officer, Stacey Holcomb, who was also a notary public. The escrow officer told him to sign the notary book and the deed as “Mike Cloney,” but made a notation in the book that the name on his driver’s license was “James Michael Cloney.”

She did not, however, inform her company’s title department or Launer of the discrepancy. Escrow later closed, with no mention of the judgment and no payment to Gregg.

Gregg later learned that the property was sold without regard to her lien, and levied execution about two months after the closing. Her motion for sale was denied by Humboldt Superior Court Judge J. Michael Brown, who ruled that because Cloney’s first names on the deed and the judgment lien were different, there was no constructive notice to Launer.

But Presiding Justice William McGuiness, writing for the Court of Appeal, said the trial judge was wrong. Brown shouldn’t have focused on the scope of the title insurer’s duties in searching the records, the presiding justice explained, but on the scope of the escrow officer’s agency.

“[I]nsofar as the escrow agent—acting within the course and scope of his or her agency duties—acquires specific material information pertinent to matters within the same escrow that could have a substantial adverse effect on the principal, such knowledge will be imputed to the principal” under general principles of agency law, McGuiness explained.

Because Holcomb was acting as escrow officer as well as notary public when she obtained Cloney’s identification, had him sign the papers, and notarized his signature, her knowledge of Cloney’s identity was obtained as agent for Launer and that knowledge is imputed to him as a matter of law, McGuiness declared.

“At the very least, imputed knowledge of the fact the seller of the Property was actually named James Michael Cloney placed respondent on reasonable inquiry notice of possible clouds to his title to the Property recorded under this name,” the jurist added.

The jurist rejected the argument that Holcomb was actually acting as a notary rather than an escrow agent when she obtained the information. If Holcomb wasn’t a notary, he reasoned, it would still have been her responsibility to make sure the papers were signed and notarized, and she would still have been under an obligation to ascertain Cloney’s identity, McGuiness reasoned.

The case is In re Marriage of Cloney, A093238.


Copyright 2001, Metropolitan News Company