by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
(Note that there are two entries in this posting)
Thanks to DIRT reader Richard Bernstein for this case.
JUDGMENT LIENS; FOREIGN JUDGMENTS: Under Uniform Enforcement of Foreign Judgments Act, a foreign judgment is entitled to treatment equivalent to a judgment issued by a court other than a court in the county of recording.
Prochaska v. Midwest Title Guarantee Co. Of Florida, 85 Wash.App. 256, 932 P.2d 172 (1997) (This case is also discussed under the heading "Recording Acts; Notice"
The judgment creditors delivered the foreign judgment to the Whatcom County Clerk nine minutes prior to the recording of the deed to third party purchasers of the judgment debtor's property. The judgment was not discoverable through an index until three days later. The Uniform Enforcement of Foreign Judgments Act provides that a foreign judgment shall be enforceable as a judgment of a Washington court:
"A copy of any foreign judgment authenticated in accordance with the act of congress or the statutes of this state may be filed in the office of the clerk of any superior court of any county of this state. The clerk shall treat the foreign judgment in the same manner as a judgment of the superior court of this state. "
Washington law provides that a judgment rendered by a court in the county of record shall be effective "from the date of entry," which the court and the parties apparently took to mean from the time of recording in the execution docket. Judgments from Washington courts outside of the county of record are effective from the time a copy of the judgment is filed with the county clerk. The question in this case is the interpretation of the Uniform Enforcement of Foreign Judgments Act language stating that the foreign judgment shall be treated "in the same manner as a judgment of the superior court of this state." The court here concluded that necessarily this meant that the judgment should be treated as the judgment of a court in a Washington county other than the county of record, which meant that it became effective as of time of delivery to the clerk, even though it was "invisible" for a number of days thereafter.
RECORDING ACTS; NOTICE: Purchaser of property is not a bona fide purchaser without notice as regards a foreign judgment lien recorded nine minutes prior to delivery of deed to purchaser, even though such delivery is pursuant to an earlier executed binding contract and even though the foreign judgment is not "discoverable" in the official records because not indexed for three days.
Prochaska v. Midwest Title Guarantee Co. Of Florida, 85 Wash.App. 256, 932 P.2d 172 (1997) (This case is also discussed under the heading "Judgment Liens; Foreign Judgments."
The seller had executed the deed and delivered it into escrow, and the buyer had deposited all necessary funds. The court here, however, made much of the fact that there were still material elements of the contract left to be performed as conditions prior to delivery of title at the time the foreign judgment was recorded. Outstanding liens had not been satisfied, taxes had not been prorated, the deed had not been recorded, and the title company had not issued its policy. Consequently, under the Washington statute, the judgment lien attached.
The purchaser argued nevertheless that it had no effective notice of the judgment lien, and therefore should be treated as a bona fide purchaser without notice. The court's first response to this is not particularly surprising. It states that delivery to the recorder places all subsequent parties on constructive notice of an instrument as a matter of law, whether or not the instrument is properly indexed. This rule, although it creates certain hazards for buyers, is a common one. Its one of many reasons that title insurance is popular and, indeed, vital in American conveyancing.
But the court's second thread of analysis is somewhat more interesting. It states that, in addition, it is apparent that the purchaser's title company does not rely upon indexing, but rather upon the entry of instruments into a tract index at the company's title plant, and consequently the purchaser should not be excused from being held to a duty of notice because the index is not complete at time of closing. Although the court may not realize what it is doing, through this analysis the court extends the interpretation of what constitutes constructive notice beyond the four walls of the courthouse and into the practices and records of private title insurers.
Comment 1: To the editor, the court's extension of the definition of constructive notice to take into account the practices of title insurers is folly. The title insurance industry, of course, relies heavily upon the official notice rules governing documents filed at the courthouse. To utilize the title industry's own indeces as part of the notice available to purchaser creates a circular analysis that has no end. The editor hopes that this little piece of mischievous dicta will bebrushed aside quickly by subsequent courts.
Comment 2: Readers may wonder why the real estate contract itself did not establish the buyer as a bona fide purchaser of an interest in the property, at least to the extent of monies invested, and perhaps to the extent of the whole title. Didn't the contract evolve into the transfer of an equitable title through the doctrine of equitable conversion?
Although the editor has not practiced in Washington, he has heard tell that Washington is a jurisdiction that has wholly rejected the concept of equitable conversion. In other cases, the Washington courts have come up with doctrines that performed the same equitable function as equitable conversion, but it didn't happen here.
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