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IN TkIV St1-PRElYtIE C01(IRT UF O$TO
STEVEN L. AtJ[.TIvIAN, et al,07 m1712
and Case No.
DIANA CALDWELLOn Appeal from the Champaign
Appellants, County Court of Appeals,Second Appellate bistrict
V.Court of AppolsCase No. 06 CA 25
WASHINGTON MUTUAL BANK, FA,
Appellee.
NOTICE OF CERTIFIED CONI?'LICT
DARRELL L. t°IECKMAN #0002389Attorney at Law107 North Main StreetUrbama, Ohio 43078(937) 6534478Fax (937) 653-9148E-mail: heckman44(u;ctcn.netAttorney for Appellant
DAVID T, BItAt)Y #0073127Attorney at Law1370 Ontario Street, Suite 1700Cleveland, Ohio 44113(216) 622-0850P$x(216) 622-0854E-mail: [email protected] for Appellee
^SEP 14 2007
CLERK OF COURTSUPREME COURT OF OHIO
NQTICT OF CERTiMD CONFLICT
Now cames Diana Caldwell through her counsol and hereby gives notice that the Court of
Appeals of Champaign County, Ohio, Second Appellate District has certified a conflict in it s
deoision in the underlying case herein Court of Appeals Case Na. 2006 CA. 25, with decisions of
tha k'iftb, Ninth and Eleventh 1Jistrict Court of Appeals as to the following question:
"Does the doctrine of equitable subrogation overcotnc the generalrule set forth in R.C. 5301,23 when, prior to paying aff a recordedmortgage or lien, a tender's sole negligence is its failure todiscover a pre-existing recorded subordinate mortgage or lienwbile sonducting a title search and where the subordin.atemortgagee or lien-holder acts without fraud?"
A oopy af tho order certifyin$ the confliot is attached as Exbibit 1. Copies of the four
court oPappeals deoisians in question are attached as F,xhibits 2, 3, 4 and S.
1^^Tieokman #0002389Attorney at Law107 North Main StreetUrbana, Ohio 43078(937) 653-4478Fax (937) 653-8148E-mail: [email protected] for Appellant, Diana Caldwell
G)xsIiTIF)<CA7T OiN' MVICE
I hereby certify that a copies of the fdregoing Notice of Certified eonflict was sentby
ordinary mail to David T. Brady, Att,orney for Appetlee, 1370 Ontat'io Streee t, Suite 1700,
Cleveland, Ohio 44113; Nick A. gelvaggio, Prosecuting Attorney, 200 North Main Street,
Urbana, Ohio 43078, tHis 12 day of September, 2007.
Darrell L. Heckman
fiOak M3T'tJAL. !
C.A. C
v. T C. NO
R C
on the ZIA,t... day cy:fi AM" , 2007
TNS m'' ► earn >•as Wbie the a-ourt on
00 CA 26
)udgment drl this ease, randwad on July 20, 2007 , is in confliat wit'h juftMorO of tk1s
Nanth and Eievert11 District Cour1s otApsials. Alegis Qmup L.P. v. Lerner, DoliluuarsApp.
No 2004-CAE-tY6tl38, 2004wtJhio°8208, Lep,ro, Inc. v. Kisfer (Jen. 31, 2001), Sumrrttt
Ap.p Nos. 20007, 20108; Assov(ates Flnion^^l Sew's. v. l^l^fer, Part^e App. No. 2,001 -P-
11io-1 t^ IdWAWI prOp006S tMe fOkIlMOAMO issue bO 06rtiftat
A
THE COURT OF API'EALS OF OHIO
p"s cerkiflmatidn, igrguing thod
NAld 1295.
o;+CNO in ^
Iion. Ert 1,9* OWN , the pr^p" auw^ ^ouobt to r
;rt
wt pri.Far to
PA cert;lflcates cif judgrraent were fi'i[ed Por recor.d. On
imber 21, 1978, the property owners and Giavoiand Faderal execute'd a second
m-origage in the amaLrnt of $44,000. The secorrd rner^trp was nekt redardod, hcrWsve:r,
ut.fiii G3^^emb*,r 29, 1076. In tiio intorlrri , the lftto df Ohio fNsd a 06411100to e^' ^m4$Morrt
o be aerHOod 17^.^ airovdy boow determEned hy the Supmma Court of Chto In
THE COURT OF APPEALS OF OHIO14 A('(1NT1 A P P P I I A T P Il7CTRICT
;Qtrlo fraudularat#y, was abie to seetseaa prtoritq aP P.
:r^ Oottabw 19, 1016 " Id. at 102-03. Tho cauii r+obd t^Ot O t^ Fil
„unusuaa d' . to the ^omwMV firm
sy
via
clatm," but failed to inquire fiur@her as to any addftnal clatrans. T'Ma^ ^upmm court
! of t?ke rsfinonar+g WNeWton, and, yet, by [1141
ich hao rogod upnn an mu d "r t
amr^ Ason. v Soo# (1 ), 08
In thear briefing of this case, the petflas oftod tu numerous cases which apalled
Jones in verMeaus ways. In ruling in 4Nasharfgficn Mutuofl's ftator, we followed F-ederal Home
Loan JU1odgage GQtp. v Moore ($opt. 37, 19W), Franklin App . Nc gtfAP-546In that
buBin'a" ptsCti(3f
t,o a moft
theMeores ho(d a personal rootOontiol rnartgogo Ioon with E:?ismond $ittrings & Looth
53 N.W. 283, in Whiah the WWM StPfOrne C
THE COURT OF APPEALS OF OHIOCAf'IlAlll ADDG11 ATFI rIIQTAIr`T
an
A
4
nk fe-asaurs a tao
the lyior?res rofinanced thetr per'-sonal m- ettgap, the tOe campeny ernpatbyad by
Diamcand mietaierrFy rnle>;ed the morkg.a; Fifth Third. Crxrrsegtaeniaiy, attten C?karnond
r•eieaeed its firet mortgage, Fifth Third's merrtoegas galned first prlority. On appeal, the
Tenth Dtafirict reversed the trial cotart's doniel of equiiable subrogetitan 04"noulahing
Jones, the appeqotte court reasoned that Diamond file:.d its mertgag:e only six buainesit days
after its oxeoutican and that Diamond's negllgence was "only an ordinary mistake by
Diamond's agent during its title search." The Tenth District further ernphaaized that the
npgiige}ice was "irnmatot'tal" becoaae Fifth Third was neither mie#eel nor injured by the
naietak;e. The court noted tt*t Fifth Third had expected to be irtferfor in priority to
DlamoneYs lien.
In ruling that Moofe preeented the proper appreech under the fftts o'f thie case, we
expressly indioaftd that Moore was bt odds with dVHlfar and Klefer. In lWller, the Eleventh
District affirmed the denial of Pan American Bank's request for equitable subrogation when
the bank's agent conducted a title search but failed to discover a preexisting mortgage.
The Millercourt reasoned that Pan American "was in complete control of the loan process,
and there is no aitagatlon that appollee aoted fratadulontly or otherwise tried to conceal Its
properly recorded mortga^e fromaptzoilant." ThecourtrejecteCl Pan American's contention
that the appeAee was unjustly enriched simply because the bank's negligence provided it
with a benefit. The court concluded: "Equitaiale subrogation will not be used to benefit
parties who were negligent in their business transactions, and who were obviously in the
best position to protect their own interests." We recognized that the Ninth District in itiefer
had also adopted this view. Although we did not address Lerner in our opinion, that case
THE COURT OF APPEALS OF OH1O
^Idw r^^^^^! ^rt^s
atinfirst
and a judgrr^orif
fttf to di^oouer the s.ovon.d mortgage
with Ca10w.el1 that our ftnisiQn In this cess Is in qoo.fllot with the dojpisions
of the Fifth, N#rsth, and E1auonth Vistriot Cauds of App-eats. Ho+rxevs:r, we egree with
Washington Mutual that CaIdwelt"spreprased issras for certificat'ron is not narrowly tailored
to address the factual ciroum stanoes that these cases address. We therefore aertify the
following questlon to the Supreme Court af Ohio for review:
"Dos$ the dootrine of equi#obie subrmgation overcome the general rule set forth in
R,Q. 001,23 when, prior to paVing off a rssarded mortpp or lien, a ionder'i
Is its failure to d'tsorkver a preoxisting r^ecor^ted subar^dio^,'te rno^^o or lioa^
while conducting a title searrh and where the subordinate rnortgages or lEen^Nrok
without fr'aud?"
IT IS 80 QRDEREQ.
:ht^ tr^^ ►eths
'I'HE C'OUR'I' OF AI'PEALS OF OHIO
THE COURT OE APPEALS OF OHIOSECOND APPELLATE DISTRICT
Z=kH10iT I
tN TRI 0,00- T Of AP1^^^^^ FOR Gi^^^tGN COL
WAWNGT"ORJ MUTUAL RANkf, FA
PlairtIfF=Appollsnt
v.
V^^IEN L. AULTMAN, st ai.
9110.l:"
C.A CA$E NO 2006 CA 25
T C NO. 2002-CV-315
(Cfui1 .: l frt2t'ncommoM Fless Coult)
Rendered on the _.Z'"_ doy of 2001.
PAVIQ T. BFdAiJY, Atty R". No 0073127, 1370 ® ntitrifl Street, Suite 1700, Cievaland,Oyrip 44113
Attorney for Plainttff'-Arppallant
DApgRELL L. kiECK[y1A51, Alty. Reg. No . 0002389, 107 FUoxth Wn Strsat, lJfbans, Ohio43078
Attorney for DePenda>7t-Appellaa Diana Calduvail
WOLFF, P.J.
Washington Mutual Bank, FA, appeals from a judgment of the Champaign County
Court of Common Pleas, which denied Its motlan for summary judgrnent and granted the
THF C'(111RT OF APPFAIR C1F (1HI(1
'K4SO granted a rn:O on the Church 8010st #^rOOOrty to CalOw0li in the amaunt of
12g-122 Ent
Church Mr.aet in ftana, Ohie, to 41town an'd Kathy A.uGtrr ►an.' 1"Ne Atsltmens ebtWrted a
Peoples Savings Benk did not aatisfy the full purohase pnce. Gonseqiaently, the Auitmane
mortgage loan from Reoplee Savings Benk in the amount of $63,000 The loan from
Crtidaa+ows rrr!
Nevort+ber 1, 2003. A domti for the proCtr^ and PWP!OS $&(w
00
The P^ots urrderiVq% 'Ct€is t
4, ^^dwiW! fReti her rnrzrti
Peoples Savinge Bank's rnca
is
I
an
On Oe : r
a Roco:dor'e OflFiee. The parties
mior in prior€ty to Getdwefi's mo.rtgep:e.
it
On August 13, 1997, the Aultmane obtained a mortgage loan fron, American Equity
Mortgage, Ine., in the ernourfit of $97,500 . American Equity used $152,234 of the loan
praoWs to satisfy the Peeplea Savings ftnk mor(;.g"a. The Auitn9ertffi received the
balance of the proceeda in aeah None of the proceeds were uaed to pay ofiP the Cairlwell
mortgage. On the same day, American Equity assigned the mortgage to North American
Mortgage Company, Washington Mutual's predscesanr in interest. The mortgage and the
'Aithough CaJdwell's affidavit states that she sold the property on or aboutDecember 1 1994, the Gertifloate of Preliminary Judicial Title Report filed with thecourt on December 23, 2002 noted asurvivorehip deed from Gafdwell to theAult-mans dated November 26, 1994 and filed on November 28, 1994. Thase arethe same dates that the mortgage was exeouted and subsequently flied,
THE COURT OF APPEALS OF OHIO
Aultm,
The Auttmortm . WtO aa
ier 24, 24ft, Washltoon Mutu
. We* the 00MVlSIrtt aaknoWiG" .
a val9d first and best tli
On Arpril f;i, 2004, tha tr'tal
:ed that her rnortgago
a t;httr+sh
El
ts
air* tho
d, I^ Port, thiot its moftags be
!-_ property. In her snmer, CatftkwWl
d bUt Efan on the property.
a defoutt 1udgment of foraelopure apinst
the ,Auftrserts, and it os '. a qtseriffe safe of tksa pmpertaj Tho sktwiff'a $410 was
on
filed a rrrotion for surrrma
7.
Conse,queritfy, on
CaidwaA also fiied
a summary judgment motion seeking to sst4b11sh that her rnortgaga had priority over
cawwoli ftd to . 10 the
owftor 14, 2004, , , g n WtW
Ittn priority in the amount of $62,234
plus intertst due to aqubtobts sw0ragation. After Witlonai
ng#on Mutual's mortgage.
On June 30, 2006, the triskl a:ouft grarxted Ga1dwetl's rwxo;;{on for v it en#
and overruled Washington Mutuei's rnot'iian. The court noted that, under R.C 5301.2a(A),
Celdwetl's mortgage has pricartty over Washington Mutuaf's mortgage. Although the court
racognized that equitable subrogetion can defeat the priority scheme set forth in R.C.
5301.23, the court held that Washington Mutual was not entitled to equitable subrogation
in this case. The court reasoned that Washington Mutual had failed to discover Caldwell's
properly recorded rn.ort,gage, that there was no evid.enoe that Washington Mutual was not
THF ('f171RT ne APPAni C!lF f11-11l1
Wi4
6
mn^ssi rtor r
,,, ,
4
n Wtta.al The
in the imatorat matior, an inn:^osrd third POrPY, ` " COi.dwOil, would be Muafmad." The
provided that It was subject t-0
"encumbrances of record. ° The ceurt thus cencluded that WesMirtgton Mutu:ai's failure to
dieevver a properly rees.crded meartgage renglered equitatitie eubrogoticn +napprrrpria.te En this
ceurt turtFw etototl
it. "THE TRIAL COURT ^RREE) IN FtNOtNG AS FACT THAT WASHWON
MUTUAL'S i^^^DIECESSOR IN Wfi'^RUT ACCEPTED TNEE SUS,JEECT MQATGAGE
'aUB,lEGT TO "EMCIiNMRRNCES OF RECORD°"
in its second assignment of error, Washington Mutual cia,ims that the trial court
erroneously found that the bank had accepted the rnmrti9ap subject to "encumbronees of
rd
in ruling that WashingtQn Mutual was not entitled to equitable subrogstion, the trial
court made the following finding:
"34. The mortgage deed from Defendants Auitman to Amencan Equity stated that
the instant mortgage was issued subject to ' encumbrances of record.' Thus, it is clear that
Plaintiffs predec.essor in interest accepted the mortgage subject to encumbrances of
record, but that it faiied to discover D.efendent Galdweil'a properly recorded mortgage. See
it Catdw+
0 tw ihe 0181 cwwr
and that the I^t^ar^y i^
*umberad, exciwt far ^nsu►nbronces of movd. Srrower wei
gemoratttr the tttls to the Property agaiast all elslms and dernarvds,
ancumbranoas of raoord." Waa#°rlngton Mutual st ^ . that in Chis provtaion, the Aui•tmans
d the bank a covenant of sAolsen and a covanant agsrirtst aneurnbranoas. The bank
thm WasMi
arrtic qulbble of i1#Gia s1orr0Jaa+tea " She c"ndi
urrdoubtedty rrtode to further disClrquish this case trorn [Fedoml Homa Le^r, MoW^
Corp. v Moore (ftpt 27, 19,90), Fr»rrlclin App No 90AcP-6401 by showing t-hilt no orrD
averred that there were no clther mprtOag0s of record. """ The point is the mortgage was
sti..bjact to qftr rnvrtg,ages as a rnoftr of law and no aMdavit by the appeilse, the sellers
or anyone alse atated the cmrrtrary."
in our view, the provision in the mcartoage at iss.ue merely stated that the borrower
warranted that there were no encurnbrences, other than those of record, on the property.
The provision did not specify what encumbrances existed Moreover, it did not indicate
that the mortgagee agreed that it would subordinate the mortgage to any or all ¢f those
eneumbranoes. To the contrary, other provisions in the mortgage required the Aultmans
to dlscharge any lien that had priority over the American Equity mortgage. For example,
o,hish '. ` : "^^srrewar to 1aWtuft s01s.^^ offt astft he
his prov#eton d3d not " serve to put all perttrais on nottes that WAshtrgton Mutual
r
I'o to Lomdor; (b) m,
t1i
ovent the errf'oraernerrt of tlio lion; or (^) seatrres ftrn the heitWr of the l1on
an agreement eAstiatqotvey to Lender subordinating the lion to this S.acuraty Instrumerrt. If
Larrder daterminea that any port of the Property is subject to a lion which may aftain prtortty
t`sver this Socurkty Instrument, Lomder
orr
The 14 ftr^?ti:ly r"dod. tfro
Btarreuor shall not s#lo-w any Iton inferior to the gaurkty kn$trun!rerrt to be ps
REVERSIBLE ERROR WHEN IT DENIED THE MOTION FOR SUMMARY JUDGMENT
OF WASHINGTON MUTUAL, FA, AND GRANTED THE MOTION FOR SUMMARY
JUDGMENT OF CALDWELL, FlNDIMG THAT WASHINGTON MUTUAL BANK, FA, IS
1la
h Washington
Mutual that, to the earterrt that the tf1al court found that W'a8hirrgton Mutual haad ^read to
take tts morEgage subject to - and subordinate to - oxistk.nq encumbrarrces that fiitd ft is
not suppQrW by the martgage document.
The second assignment of error is sustained.
1. "THE TRIAL COURT ERRED AS A MATTER OF LAW AND COMMITTED
the Property without Lender's prior writen porrnlssion."
Based on the unambiguous terms of the martgage, vcr
THE COURT OF APPEAI..S nF l1Hi0
o rootlvs ideftfyimg tho lion.
As on
priar'iy for only $62,234 of Its
was usad to poty ot?f the Peopios ;
is not at isaue.
4ur ravieuv of the ttil
Oiu,R. SO(C) p
0 le
is no W.utne m of
The b
OOf " 4^f rROUI"fiAS
i97, $00 loan
"., (2) th's rtOWO party Is
of the nanrnovinp party, reasonable minds can cnrvne to but one Gon:olu#Rrrn and tM,st
conclusion is adverse to the party againat whom the motion for stirrtmaay ludgmsnt is
ar /*l. Grady v.
Ahi^-2-21, 037 N.E.20 $43, Haft" w.
84, 66,66, 375 M1.2d 46.
In some circumstances, the doctrine of equitable su#arcagation can overcome the
determined simply by reviewing the recording chronology.
29301.23(A). Accordingly, under the ststutory scheme, the priority of a mrartgage is
recorded has preference over a subsequently presented and recorded mortgage. R.C.
R. C. 5301.23 sete forth the ge,neral rule that the first martgaga that is presantad and
SATl;l^'
iblo awwwolan a
A"OctSW. CI0vOlartd Federal hir*dMtd{Wd Titloto poftrm i
N,E 440. In order to be ariiitisd to equitable subrooofiicn, "the equity must be strong and
['t#►e] case clear." Jortes, 61 Ohio S1.2d st 102.
in dams, the Suprom Court of Ohio cam od whether a marotpo wee antMod
rty.
The August 1676 search revealed aniy the exiatirtg rmortpge. After the title soorch but
prior to executing the refinancing loan and mortgage, an IRS lien and two CPA cortifi.ca:tes
of judgmsnt waro filed for record. On 8"rnh..ar 21, 1076, the prcrperiy owners and
Cleveland Fod.erai emcuted a second monMe in tKe arnourat of $44,000. The soccnd
ha
t n-Yv Jansot1 a9 Qhio 614d00,102 d
g Fodorsl Union l,* trks Co. v. D~ t1934>, 127 C3bic St. SOZ, 6'4t1, 189
not recorded, however, until Doso rnber 29, 1976. In the interim, the State
of Ohio filed a csrtificate of judgment lien in the arnaunt of $70 000. In January 1977,
Cieveland Federal satiafied the federal tax lien and the two CPA judgment liens, and it
aEquitabie subragaticn is distinct from conventianstl suprtagotiion, which ispremised on the contractual 4biigatipns of the papties. "The focus of conventionalsuprQ^.^tion is the agresment cfthe parties which must, in essence, alidw tba payor-ereditrzr to be substituted for the creditpr who is being discharged by the paypr'sioan." Jones, 61 Qhio St.2d at 101.
amh cireurhomr^as t* hs 4s in aq
THF ('flI1RT OF APPFAI C!lF fll-11(1
Inaction,s, the st-ste, without arting frauduiantly, was able to secure pnarity of Its claims by
its fl4ing on fJqtober 19, 1976." Id, at 102-03 The eourt noted that Cleveland Fede-ral
oxpmiaraly t:ald the titlo ccmwy rre4 to fiEe the s or moa Voge untEl instructsd te do aa,
wal had w d Pie own mada
twere of the "unusual
mtr. The a
0 ountin
C Federal %A
a® the timtorrro4 Reverrue Savtoe
Gla:icn," but failed to inqtiire further as tc any adclftienal olairns. The suprame court
supported its decision by reference to Ft. DoOge @uikfirtg A Loan Assn, v. Scott (1 $82), 86
Iawa 431, 53 in1.W. 283, in which the Iowa Supr.err+e Court denl+sd equitsbi.e subrovation
to a rnoftMos wllt;ch had retted upon an cautdated abstract of title, eorttmry to erdinary
buffiines,s proctl:pe.
Washington Mutuai asserts that the present circumstances are distinguishable from
Jones in that it did not act imprudently. Although Washington Mutual's title examiner
missed the Catdwell mortpage in its title sosrah, the bank had obtained an updated title
search, the bank intended to take first priority on the Church Street property, and it
prarnptlyfiled the rnorkgage for record six days after executian. Washington Mutual asserts
THF C'flI1l2T O F APPEAIF OF (lYl l!1
npsrty employed by Diamond mistaken4y rr+tssed the nlortgages to Ftfth Third.
60,000 business loan. When th:o Mooras r ^^ #l^^ir per-sonel
svlr» & Leon
uently, when piars:srttl rol.^a"d its first mo : ,Fifth Thlyd's mefte." goinecl
tlrst prlority. On app"l, the Tanth Dlotrkt r sed tho tpW cowt's d"W of : lo
"mly s
I that DRvr
4#^
11
The TOW 0i011ftot
o F*h T#rlr4 usi'ow rtefter
d nor injured by the rnistake. The court noted that Fitth Third had expactod to be
inferior in priority to Dtamond's lion.
Washing.ton Mutual fiufthssr asserts t^hat the trial court InappropristoPy ralled upon
tt!h, Nitith, and EIov" Distri:sts, as wOU as more reoent c^ses ftrn the
Tenth District. See l?^ashirrgBon Mutual 4arrk v. Lovolend Franklin App. No. 04AP-9.20,
2005-0hio-1542; kteybank Nati. Assn. v. Mortgage Corp., Frar7kiin App. No. 02AP-
1283 20Q3-Qhio-6881; Chase Manhattan Bank v Westin, Clarmont App. No. CA2002-12-
099, 2003-ahio-5112; i~irstMerit Bank, N.A. v. Andrews, Portage App, No. 2003-R-121,
2004-Ohio-5104. Washington Mutual argues that the #aotuai ciraurnstarTCas in each of
these cases is distinguishable, because the party seeking equitable sukarogation was
THE COURT OF APPFALS OF ONIO
^^finwin+ te Chur
idfd n
at propsrty Moreover, the ^ank "ims thot o"we11 vo.ud
unJyot1y enr#ohod by the fW il*n pfttity booetas ohs did not bwasin for #imt lion
pw no coneideration for that prtority.
In respqnse, Catt#wstl argues thitt this rnefter is gaverned by ,1ones, and thsit
hknqton Mutuei's nagPigence precludes the apptication of equltabia subrogation.
Although Caidwe)l anarts
;Iti^ sooraM but faflod to
and there Is no atleption that appolie,e acted treud-ulently or otherwise trltO to conasal its
properly recorded mof^Ggage from appollant." The court rejected Part Amwican's contention
that the mppellee was unjustly enrieftdd simply because the bank's negtlgoncs provided it
with a benefit The court oorvoivel*d: "Eqwitabie a>abroWlon will not ^s used to banafit
The U#* court rwonod that [M'on Artaerican "WAS In eempitAs control tt6 tk
ies who were negiigent in thoir busine" transaotions, Ond who were ©bviously In the
best position to protect their own interests."
Caldwell asserts that Moore was decided wrongly, and that the Tenth District failed
to rationally distinguish Jones. Caldwall also states that Moore involved refinancing by the
some lender while the present case involves a different lender and a different amount.
Caldw®li further argues that negligence in faiiing to conduct a property title search
'rur r'nflRT n8 APPF4I C nF nN,n
Kur viow, ^SWWStl
uktublo subrogation becawao the party aeekini iaan had Pailad to act
in cvnforrrtity with ordinary arrd re"enable praztaos to establish their first priority Soe,
P),
Ths sa+ne woo fruo in LovsMna!, K±
rik
ure that Fifth Third Bank, wifh which t
4tj
bie
VM"Vn. In LevdAW, #W Toilth
4 atrbmotMon when fhebank ti1ed
ars haid s reualving line of credit,
dlosed the home equity line. The court stated: "fA}ppeltant fiq#led to f-ollow the prpper
Id. atJ1 3. The LoveJend court cIted wlth iappraval Koyftnk, in which the Tenth District did
not apply equitabie subrogation where the bank seeking subrogation knew of the s.ecand
rnortgage but failed to get a subrog,atian agreement, which the bank knew was required.
In UVastin, the Westins took out two small business loans which wsre secured by
two mortgage liens on their property. The Westins subsequently obtained two residential
mortgage loans (loans 3 and 4), and they ag.reed to subordnate the two small business
uraffi to have the eccount c1osod and also 1~eifed to confirm that the equ3ty l#ne had
gn olosed and propedy rel^^ed toonsum tiW it I12^^ flrat prk;arity in the publtc fiewrds. °
v Gunther ( tG09), 127 ONW App.M 338, 713 N.E.2d 7 (denying
THF. COURT OF APPEALS OF OHlcl
an ft 'Iracor,root and uWnformed
for the wwN busbvns IoamJ waWd oubnWO
*po liorts to Chose's rteuv mo rtgage, Cion CPLime nover verftd Mth hiorth Side that
Ciaose would ra*n prirarity a#Or paying off Loans 3 and 4. Chase was in cornpioto ocrr+trvl
a Ioan promoe
es roady distinquishabie f
wn ira^^fsots The m '.: e
ob!e pr . '.. to p t thet
As noted by Ca►etaueii, the Wawdh qiWict in War refu oiy oq.uitabie
ei wMon the barak's agent felted to dfswuor a proexlotlrig rnortMe iion ciurIr2g a itVs
x+ah. The Ninth District has also ROOPWO tiii.s viOW. tne, v. KJO&r (Jan. 31,
), Sumrn4t APp. Nos 2,t^►87, 20108. Aftr amd Kiofipr are thus at ^do vAtb Moore,
which pOrrrritted equitable aubr^gailon under tbeSe eftumstaness. 50e, also , F[tsf lJnion
Naf'1 Bank v. Harmon, Pranklin App. No. 02AP-77, 2002-Qhio-4448 (allowing equitable
subrogation when title agent missed existing second mortgage during review of title
sbstract prior to reflniancing).
In our view, Maoce presents the better approach to the circumstr•ances bafare us.
As stated in Jpnes, one of the purposes of employing equitable subrogation is to provide
k f^Red to obtai
ditatory in filing the mnrpge.
of Poe ev ank in the a.rnaunt of $82,234 uv#ttI tho proomeds of its loan fc
express purpw of alataining the first rne on the proporNy. The mort
d:us solely to the title RSSnt'e ine:dve.rterft failure to discover CaJdnae#t`s p"xtstir<g
ftkeeJ
Based on the record, VVashington Mutual's failure to eehleve first ilen pesition was
only to the extent that it paid off the Peoples Savings Sank rnortgat'ge and not to the fuA
was originally in the second lien position, and Washington Mutual has sought suarogption
Moreover, Gaidwell's position would not change as a result of subrogation. Celdwell
the doctrine's purpose of providing relief from mistakes.
proteet its interests. The application ofequitabte subragsfilon in this Instarree comports with
tington Mutuoi's nooftomoe•wae e"rns►e mistake,° eRd ite t4ilurote oOtatn
fir#t Hen position was not due to the taarak's fa(iure to follow ordinory kausinses ptectioes to
At 19, 1W, six di" after oIOS#ttS on the koon C^^11 aaknew*
THE COURT OF APPEALS OF OHIO
and averru.led Cal0wolNs r^oton for au
TMo first .:Ipmem mf ormr !s suotaimal.
TN
i^ADY, J. and DON'QVA?1, J, , caneur.
Copies rnait'ocl to:
David T. Braety1^^rretl L. M.^ckmonHcan MnaF 13 Wilson
THE COURT OF APPEALS OF OHIO
wt aWOWnont - by Citation - 2004 Qhio 6205 Pape I of 5b
N-02004 Qhttv OROS
wee -us- ROVER 1), WRNER; BR AL, 0afandgdta-AppaICbnis
2004 04,14 024$; 2004 OVOo Ap
Gas:a No. 2004-CAIE-4503E
COURT CtH APREAi:$ OF qMIfl, FMki .RPPEILATE U)`Id'f`Hi)t;9', DOI..AwARiF COUNTY
PRS", RYi [**I) Gh#k.RAC'i"E'sGonMyr" 0 l4aa, Case NQ. 03-03-109,
Reversed and Remal7ded.
F PRQ''aJiifDtNG: Civtl appeal from the Delaware County Court of
Il#ARiY
w:o 01.
a aracacul;od, thertgosee 17ank rd°
)q Incarreo¢ly rapartatortgagee bi
an dei'auited on the
on recorded a m.otrotary )?pu® rnortmors' iom. 7Md
ae r
ahet the sacond rstortgoga had baan rel*Md aerd did not d1sci.oae anytk palci off the prior mtartVW and reear0d its new rrjortgaip. Th:aecpnd mortgaiga. A eoratt^int In f4Fbci,oaura rras fiiad. The trial court
^tqot tlte r•^o^^e90d the aql,+0labla aubrO ^Nimn dvarritr^ to f)bd! aAl^libtd court fl^oui^'d ^^t no ciy4turriaorwas exkaw tti-st
vit1g the mv ae ba* ftn'1 pr9ority wb.8n Its priortty
4'W4. ^ , ^ '^kts trial coupro^^^6sis.
s judgment was reversed, and the case was remanded for furth®r
Zt?RN 7OM* mortgage, second mortgage, equitable subrogation, summary judgment, subrogation,ecordad, third mortgage, first morGgage, refinanced, statutory scherme, iine of credit, payor-creditor,Ilschargad, payoff, f&icia, decree of foreclosure, prlor mortga®e, business loan, title search, reconslderation,lefaultad, leider
I.exisNaxi>s(R) t1eattnates *
> MaraA^^^ ^.Sltlt^t ^^et^rltv.^F34^rumsn^ ^ ^sr^QlaS^r^^ ^ 4^^Q^r^^ ^^A^tf3W ^;wt c.Qde Rnp• § 530)..^3 sets fortih the general rule regarding priority of mflrtgag:es. It
prcvitle9 afl mortgages shall be recorded in the office of the county recorder In the county in whichthe mortgaged premises are situated and shall take effect at the time they are delivered to the
vt a WOUR-tent - by Citataan - 2004 Ohio 6205 Pa:ge 2 of 5
vtrit fWsl ar to grantd clrcumstanraa of aagh partloutar
5l wa, Ok1.
°Ap.pallant: J. WWARQ FOLEY, Wsatiorvitia, OH.
itin: W. Scott Gwin, P.J., Hon: tN1Yl{am S. HatRrnan, J., Mmn: John F, BQg;g;ina, J. By Gwin, P.J.,HaRMOrt, J., and Boggins, J., concur.
OP' " OVP Gwin
j•kVfn, p,i.
[*11044 o*rtt ftutbprtpt, Inc. appeals a summar^ ^udarment of tha Csaurt of comrrrot) Rrsam ofg, which ^rarrt^d a d^cr^ of Parestlesure agat^st the property 4wned lay 4pp^1
ind APPil ]. La.rn0r, and a,^tttbllated the prlor€ty of mortgae,ea anti lians against thte prraporty. A0pelt^n^rssi" a aittgll0 error to the trlal coaart:
[*R2] °i, THE TRIAL COURT pRRRtJ, ABUSED ITS DISCRETION ANp COMMITTED REVERSTBLe ERRORNHSN fT ApPL,IEIJ THE DO'GTRTNE OF EQUITABLE SUBIROGATIOlN AND Q&tAISITEi? PARTIAL SUMMARYUDGMI$NT TO THE DEFENDANT, U.S. BANtC, AND UNtED THE MOTION OF DEFENDANT, SOUTHPRINT,NC.MR nOQNSIDERATION ON THE ISSUE OF LIEN PRIC}RITY."
[*FS] The rqcord indicates on December 21, 1995, appellsas Steven and April t.ernar executed aortpg:p ^* *'Oa in favor of First Deposit National Bank in the amoUnt of $ 119,200. On the same day, the
srriers aNacutetl a second mort^agQ to Fiist Dapoait for $ 10o0O@. The ^rartqaga;a were filed in DelavrareQunty, '! hit^. in March, 2Q01, t"irst Depo9it assigned the second mort^ava to plaintiff-appellee Alegisiroup, and the assignment was filed in the Delaware County Recorders Office as well.
t a Docutrlunt - by Citatican - 2004 OW 6205 Aag.e 3 of 5
1F wietsC Rgven I-*trner In th
r me it Am W, wm f^mot3 *m tbrliod Pa0Gan; snd U.S. 108-if for the tas1onte owsd on its e
C*1111,73 Smnhf riot and 1k1og1e fNed rn4tions ^r recortqF##ra#Wrt, whAteo OP Apr't# 6, 21104, the court entiored a decree of ftt'ectaaure, and
^ Tpto twkal court @ownd the doctrtn:s or..,. ^:.. . .. ..__ . ... _ _
+t,e dec1h'irA of subragoulan Is sor^oltwes app.fkaftd bytiub Waan oenemNy aubs¢ktuten one paPty In the plac;s of another v
uil%J on April 22, 200A.l erisued.
alter the natutary ao4m:e.nse to the otlher's clttln'i or
yoty inod
Irlis.l.^f!,^tt..40,ftkt v..Ma Gllla). 44 ._^ITTi9_APpI
[*Pl$j In the hloQre case, relied u:pon by the trial court, the Mnore'9 refinaneed several existingiort(;i"s qn their home. The property carried a pers9ftal first mortgAg-e and a partnership rnortgage onhe rps i^*nco. I^atsr, thers vyoa a third mortgage to ascure a bus[nass Ioan. At this point, all the len.dsrsrerb 4^are of th-a first mt?rtgage. However, vo.hon Moore's refit?a.ttoad thg1r loans, they €ailed to ddstltasa thehlrf4, I^^n^ la^n, and tMS tltla searehers mts"d the Nen. On th"s F,^^ts, th^ 1~ourt of 4^p^^1a for theQth ^t^ri^t ^aund the q^nle's neglt^nce wds nat material as to e1dit,at7ld sut^rs^^^lan, be^nuse th^ liank
^rl^ ^[^ 3^ r^^^^e. The an^y maiS take Ms ^^*63 In the title a^r^h,^jured by bh
1s nrisCake. The cdurt found no one changed their po$ititun in r^Nanc® on the mistal^e, ^atd tMeretas no pro,judaoe because the holder of the third mortgage never bargained for or expected to be first inriority. The Franklin County Court of Appeals found to elevate the third mortgage to a first lien position
at abmvviu7ont - by CiiatiQn - 2004 Oktio 6205
ij rqaans, the jod"ent of the Court of Common Ph
^t". ^tr^lk^rt ^e
to
tIc
Ps9p 4 of 5
:M^
`pr ettl. A review
Deiawa,recsuse E0 rem*mldtd ta that court Ptrr €urkhe.r ptroceedirtgs tn accq.rd with
ly owip, R.).,
{ ofP4'nar+, J., and Boggins, J., concur
UQCMEN'T EN"f'13Y
or the reasons stated in our accompanying Memarandum-Oplnion, the fudgment of the Court of Common9eas of 0414YiFare County, Ohio, is reversed, and the cause is remanded to that court for fureherroCeediltgs in accord with iaw and consistent with this opinion, Costs to appellee U.S. Bank.
k v*
We a foat'wal rnlmpr^owdwlile ah4 in g,"d U-th, #rt41(4)
11
U.S. Rank ur9los appeilent 41d not fklo a prl'of in czpppsltjon to U.S.
) Whtcrit;a the r
144 Ohty fllod a mptYon for rodnrts'idArotion after ths court entered [s not substantiate this assarCion.
f error iai sustained.
Servlee: Q gy t k1C&E8SCitatlon ^ifilp A1pp. Lexis 5e7©
ulew: Pull
7 4Y 7 vqt:uwNI'S
%' `OL4LL
F? filli;;
^1^?aT:T:T7
'IL34YS ^ ^k.'
_ IfmPP^^b)
:T, &CIMOM
Rqge 1
io Apl?
at L,^w, GlowlaATmph 9. T^oibr, utiil
1.
Page 2
2001 Olti© App. I,k1X16 293, *
I The;ee was RIO aA*ra1 419of $ 14AM03, wWPlV W
'thoudwsom1i. Thatm ^etqsiitg, OW is not ait tgso in
Qn I3eomtiot 18, 1908, LeP4v la,f^rcrl,pm* 40insC ft onems andLsws jtt^^ow Ron 'kU vau'tiaw }w.
^ _mpmw wvrs www OWVV, MIRs4w wt $m Mp1^^o ShOW m14oprtst, ig 0
to
AND C(ITY TO LBOQ,1NC. AND 8
a1W69*te p"M tlO ft ttiW aadetatQaml: ft WIM2^tnt^ pt#i^ ^ tha ft=it SWlk
WO, wmok Gk`48 amAls 40 w8 poIB ofon, iRotwoo
y.E►34iI
^p ^ 100%100), 61OhO Si. Id AdiftAeYnu €.'us, & &r. Cv. u I10nASt. Zd$g, * N:,N„2d ^37 TW^# g,gp
51 Qf o sowndv. .foney
dt^ 1,215,Yo
inno
u®stiaem
Thia <mixrt (
Page 3
;12d af 10,2
o. v, .LoJtstlh (1994),. 440. l^Owmvet, ft 14r1-
Am is t4 prevecit u,n-v. C^TWtkgr (IpoB),
n111St be
w1odo 00 .
ik6 4[+Il®n the
MltlM to p
.,
7. ^^, IlS^s {aT`
obtaJftg Pi4rity O"r Ni
,fPNS] T.,wyo ia an
t9^^), pd;
wxm (3)
ga.
Judgment #At?tryad,
w
0084j, 15 Ohio St 3d $4,
2091 f}W App. LEMS 293, *
Edvt
nage 4
30t a00tazzt'ziOM - by FaA,y hlame - Aasaciates AND Igtitler Z-tHr;, ri Page 1 of 6
R> Z002 o App• €.WAS t; 1
-ve- ^^^RWk4a, et al.,
, 04 : i;rvAppoitaint.
AC,
C"O.41R'I Qf ARO , et N-Tkl APftk1,A"M MS`fRIC'T, FORl"AGE COtiPOTY
A!gg N,O. Za€l i4404fi
2002 O4tPS^ ^610; MA OFtlv App. LgX-IS 1545
April 5, 2002, Deciei:ad
W 9Ftt€; [ * 17Coo hAo, g-^ c-v 0932.
WMWOMMMI AffitMed•
CMARAC"€E-R OF RRtJ^EIED.£PIG$: Civii Appeal from the Court of C4mmon plea$.
0VXftV. - The bank argued th;at sutr+rrAary judp:nmant shouid nat have bean granted becat.ise It 4enttlilod to ral4gf under the domine of equitsble $ubro#atio.n. Tho court of a&aptols conciurdoo thet titrial cgtkrt did not err In denying the b.artk's request for etyuitataie suhrtsgatitrn. Claariy, when the bank'sa9^rtt ^nd^aRati the title search, it Pailed to discover the mortq*pree2eiating martgape,Fu "m, 0e btxnk was In complete crarilirol of the laion Proom, aad there was np a4k e.n that the
Wad €raudttlentiy or othSaruul" tried to conv"i Its pr"" rergai<rdg;¢I nloltpoe 4rtsM theWRU also arg.u.eO that because the mort^We wiMA0 a^epted an ittftr'ior fion po*,tan when
* the corrtprom a mo. aro the ^ivporty,, it ho'm wn uiuttly anriailld Ay the6 the pre%0044 mortgooos, However,
t? the rn.ffrtgisgieq did not nseessetxfly mean tftt the mtrrrtpgois was wniutstly ta`rtrl+;hed.
O1bTAZGM
a.Ubrw.gation were asplled, an innocont third p(trty, the martgagoe, would be hirmed.
i The judgment was af€irmed.
Ctkl'ik^ TE 18TilM mortgage, summary judgrnent, equitabie suhrogation, nonmoving party, second mortgage,title search, tax lien, subrogation, initial burden, moving party, consent judgment, complete control,gEnui+te issue, matter of law, certi€icate, nonmoving, genuine is&ue of material fact, entitled to judgment,as8'iptTm?ant of error, unjustly enr-iChed, reconsideration, d'rataurs,ernsnt, fraudulently, preexisting, recording,reileve
l.exisl!Igxi^s(R) Meadttettes ► Hide H^g:dnr^^ee
ctv.tt.P.r.oe®auce > S.simmar.y-iia.gn?ant > Motlons.for ^urnma y..7^d.^trn^nt > Gengr.4l_2rgrriew tiu;
it a ^o4^rli^ - by Pamty Nm .e - Asaoa'iato Wer Fa,gQ 2 of 6
0
parw'y must preveii as a rnotter of
of the saiit under the
o a ,}taral, or uTrhath:er it Ys so
U M
tAw of
AM.e^;uee > 4urnntAry.WOOnsAM > 5arolm oP,i4r.^duatx^rz ^,Pr.+^€sf > Msvant^ '^u010f PFSXItl.AW€tARrA45t > flArAtkt.sM4R
Wi1 thO $tl°OttCld ti.tO 04 nOftMOuJb9O Wty cikFTnt•kt pPk3u9 itS
0.0 the triai aovrt of the 440 for the motiw WW sfw4is of
ti couMove i.
n to ris a I
ay antIa kle"M
WUN r .. . . : . W.'. : .. ewIt the rttOV-l01 party's irtitiad burby afftftvEt Qr aia otherwise pr,Is'eua of feet 4Luitooto for MAt.
rn, ary jtfdome ttt against that gi
lon Is met, tiAa nonrnoving partyt in the rule, In an Oftrt to
:ha nonmovirn.g party falls torty if
agai> pitiancktg > 1S7artaaaes & tIlGner 5e ur1CU-tnstrumenta > Fgre viq urea > cnenarai G1 aeUleW ^sii
HN-FASY[Ooption fs the substitution of one person in the place of another with reference to a lawfulclaim or right. More uke T1ii^..iigadnaSQ
contratlts 6aw > ^a t IUeroretatlon IDrzon4J$.lllCies 4lti
GonBraeCa Law > Third Partles > 5y.gX^ ^l!
4i^1EOC^i^19Gi^R *^ .FI.+A4^lflfY..Rld^fX^.^;^1k3Al^1#9um*^+;i,th4i1&.e conventipnsl subrogation, which Is premised on the contractual obligations of the parties,
e 4^i•it.^4* su_br©gation ariaes by operation of law wMen on:e having a liability or right or a fiduciaryri^aticin in the premises pays a debt due by another under such circumstances that he Is In equityentltled to the security or obligation held by the creditor whom he has paiti. Mare ^ike rnM _tiQad>LOte
dJBN > ^^Sn[T.ipLy..^W.S^$17s&11L > A12Ji11Wl1S..RLf^PQ^.tl4'GIAn..^s P..r.RAP > hig1(^t't^, °̂
im > A4Unmy-^t > Ourtlena PJSL1n1gmAM
w for sumfti^acal bu
qt aDoeltimtw - by par ty Naw - Aasast6tes AND K111or Page 3 of 6
ro their businesstto were obutowo1y in btte twot I
tit.Ara.l:l^ll.;.iytl^.l<t^^tit!lh?t^ ^ ^hii•'^;tt^(;:~^^._R^^^'l^.l^y.t^l^:^tti^ts
A'F°i Y. RlCf£ C. 00SJ AW, k.0W*R, N#
HO1.MAN, Oak,wpCrd Vt1koga, OH (ftr i^^rtd^rttt ^p^^Jt^n^).
V'^ Jl)DT'1°H A. GHRTSTLEY
, P.7., NADE61, J., concur.W.ILI.IAM M. EI'NRSt_L, P.J., HflN. JUDITH A. CHRISTLEY, J., HON. R®BeRT A. NAf3ER, J.
CFRWLRY, a.
ThoMMS Sumtler ("Siamltter") ctanv&M toRsay loogW at 34^29 pttaneo Mtchool and Cyntrktia Mliiar ("the Mtl)l^r^"). 1#10 R^#16r9 $ub1&}u0ntly gran.ted a rn:ol^gtoe mn
the ^op*" to appetioe in the amount of $ 123,326.$0 on fty 14, 1946,
On A . tq'b*r 12, 1997, Summer fEled a complaint to regain title, [*:Zl dainning that the Millers hadfraudWl*t4#y a,cclulreatl the property from him. "f=h:s case was resolved when a consent judgment entry washilQd on March 13, 1998, in which the Mille.rs were ordered to cransfar tltle back to Summer.
Afiter rdgia#ping title, Summer obtained a loan frqm ap"tent, uwhiah wea secured by a mortgage on t epropoaqly, "Fto record strt+wio that a pa3rtien of the lean proceeds wos used to ea€Gtngiaisrh two other rrlprtgage
oro O)r $4,myraer to thlurrfitrtoton N4414001 Banit („Hun^arAr, hlat*l.atol"') and COK-Wtd Sevirtgs iIoptt'oU+!-̂ 1e e6ritatfd lavlrtdis"1 In 19$1 tsrlor tr, transfiarrlnm ttrta mrrnr"eeu tn Plqm Wt*rit n 1
-------------- Footnotes ---_-----------
nl Aith,qWgh not relevant to this appeal, we would note that It is unclear how clean title to the property wasoassed between Summer and the Millers considering the existence of the prior mortgages.
-----------End Footnotes--------------
fUhan the Millers defaulted on their mortgage payments, appaltee filed a complafnt in the Portage County^ourt of Golt'tmon Pleae seeking to foreclose on the property. In additl.an to the Millerrs, appellee also [*3]iamed Surottrler, Jane Doe (Summer's unknown spouse), Cortiand Savings, appeliant, and the State of)hio, Department of Taxation, as defendants. n2
r Trail,
t a D#Vurtten2 -.by Party Nama - Asscidatus AND M0,11
-°-------- POOtl: - ---------------
Qas
00, the ^**j trlai ctsurt
ri wae a prlor rnoogu
------------ Endpeafihet.es------------
4:_
Page 4 of 6
fid not rtarn:a the Wa:k
, the trial cuurt held that equitable sub:regation sho,uld not be used to rollave the company
las "rr,ade any r^pr^^nt^^i'^n to [appol;slnt) that 'r^ 400 would be gtven prtorlify.°
nos
o the t-riad court, appo'ant, wha was in (mrraptee control qf tMe lian sqareh,ent 1*03 of tlra luan fu.no, "o(rr+friy m:isted l^plootlloe'aJ nnertgaWj° a,lad rrei#her
.ent, apprsliaot flled a tirnely etotice pf appd•el with thts cq^art. Wn4ar its sel:a aaaignment of
es of this case, It weis antltled to rellef unCter the dattr'ine of equktabla sul,7maisf:en.Sm,ss thos sumrtaryjudarnertt should not have been OrantO Mcattss, pursvam to the
it the ci.utaet, we note that HNaVsummary ,}udgrnent Is proper when: ( 1) there Is no genulne t$sue as tony rnittafial fact; ( 2) the movirrg party is entitled to judgment as a matter of law; and (3) reasonableninds can come but to one conclusion, and that conclusion Is adverse tio the party against whom thenotion for summary j udgrnent Is made, that party being entitled to have the evidence construed mosttrongfy In his favor. 4;,1y,-R._ 50).; 1-.a1^?rql^h_Y. .2R4fr19arailonA1nc,_(.^.99-j.),._f 7S?tltt? 5t.3020,.?0. 617
[*0,) Material facts are those facts that might affect the outcome of the suit under trhe gc4verning lawf tlte ca5e. Z^msr v. tefae+er 67 Qttin 50d 3^7, 340, 617 N.E.2d 112^ citing ^gmor( v. t`ibertv
477 U.1 242, 24.8, 91 L. Od 2d 202, yDq S. Q. 4585. '"r"W?'o (1etarnnine whatonstN.4itCos a g:enuine issue, the court mUst dtacid,e whether the evidence presents a sufficient disagreement) require subrnission to a jury, or whether it Is so one-sJded that one party must prevail as a matter of
ft aR49umAt1t - by Aatty AJame - A,*sv^i0as ANA MRler Fage 5 of 6
a0arvj44 ,mu^^
l^tn^, ^A^"su{are^ktarWNl el4icn or rwht.'" TJ
il.... Vl
A
04tm ... . i,n Alatoftonsr
RYw
[n JmRs, Ct-eve.la'nti Federal Saving5 & Loan Asaociatlon of Cuyahaaga County ("Glaveland Federal") agre.edco r ^an earlier merrtqaga tliot hgO been given to the c+antfafty by Wnard and Wnie Jones ("the)onaiah), MR Iit{e ffioetrily, Jnc. (441tfttry'd") osrrdwaed aPa0HMInar;r titla search of the suOleek prat^srtyin Atl^st 1#A which only rave4ftd Clevelarrtl P44eraP's pravi.etim morrhg"a.
sh't#* AftrtW prolintinery titi^ aearch, the Revqrtua Strvtge R{O ato tMn etn Ike pt;^oparty on5e *V A, 19M. ptrur d" 1out, prsrnJa, $Mrir & Charrey, C.P.A., lied two certificaoss dt?jtttant'lens. Us W-fl.ess, on UptiotOer 2 L 1078, i a'tnd Foderal emeuW aseicond mortgage on tise,arqpafty V441 was not filed until f *101 Clecetmbor 29, 1976.
9etwe'Zn the time of the executian and recording of the second mortgage, the State of Ohio, Department ofraxotion, fFhed a certificate of judgment lien on the praperty, When Rldtand conducted an updated titleaearch pricr to the reeording of the second mortgage, the company discovered the Internai RevenueService tax fien and the two certificates of ]udgment liens. However, the state's tax lien was neitherIfscaNare1 nor reported to Cleveland Federal before the second morCpge was flied. As a result, Clevelandk&ra;l only satisfled the three t4iecovered liens and the company's own ffrst mortgage.
Nh,^n tlle stqte instituted foreclosure procesdings, Cleveland Federal waa na.rn.ad as a defendAnt andrialtl'tn.iJi^ati that its mortgupe was entitled to pri4rtty over the s'ta-te's tax lien thriaug-h equitableubroqatton. Tn rejecting this argument, the Supreme Court of GhfA ok7served that It was Cleveland7ederal'8 "own actions [that] led to Its dilemma of not obtaining the best priority lien." Jones at 102.
unrapartao, 700;:r00- 0-Ytl4.Ap%1XX1A.42A3Y Praftlin A'pp, No. 94At"44
by Fany Name - Aseaciates V,
, J,
CGM
;Q
stabM"ioFl ar6N not be u9ft to tmOfi#t i^titend who warie Oviaualy In t•hie bost
Ilatee atrd Mittar) (F.diUmb I u8ig"ISwiWIP1 >19y-1mph)
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