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SUPREME COURT, STATE OF COLORADO Court Address: 2 East Fourteenth Avenue Fourth Floor Colorado State ... - page 16 / 22

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Manhattan will not suffer any loss, because they both bought title insurance policies that didn't

show this judgment lien as an exception to their coverage. Chances are they would not have

bought the property, or would not have paid as much, if they had known about the judgment lien,

and they would certainly have required the lien to be released or would have negotiated a mutual

agreement for its subordination before going forward with the transaction. This is exactly how

the "value" of a junior lien is protected in actual practice where liens are discovered.

Furthermore, it is incorrect to say that the Londres and Chase Manhattan made the

payments to protect their own interests. They had no interests in the property until the moment

they made the payments, and if they had known about the judgment lien they would not have

made them. If by chance they had gone ahead with knowledge of the lien, then they would

certainly have been subordinate to it under Colorado law. Although the Restatement, (Third) of

the Law of Property—Mortgages § 7.6 (1997) says that "subrogation can be granted even if the

payor had actual knowledge of the intervening interest; the payor's notice, actual or constructive,

is not necessarily relevant," it is obvious that this rule does not apply to facts such as these.

Imagine a situation where a surety on a loan pays it off, intending to be subrogated to the lien

that was released, in order to enforce the primary obligor's duty to repay the surety. In a case

like that, all the factors for invoking equitable subrogation apply, and knowledge might indeed

be irrelevant. In this case, the Respondents did not pay money to protect their own interests (and

were, therefore, "volunteers"), the interests of the judgment creditor are prejudiced, and the only

thing that kept them from having actual knowledge of the judgment lien was the negligence of

the title agent which should have been imputed to the principals. There isn't any other kind of

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