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SUPREME COURT, STATE OF COLORADO Court Address: 2 East Fourteenth Avenue Fourth Floor Colorado State ... - page 18 / 22





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One might answer that this was obviously a "distress" sale (since the two other deeds of

trust were released without consideration), so the alternative to this sale was foreclosure of the

Washington Mutual deed of trust, and Hicks is no worse off now than he would have been if

Washington Mutual had foreclosed. But there isn't any way of knowing that. If the title

company hadn't missed the lien, something might have been worked out, such as substitution of

other collateral for this property, or a discounted payment, or the like. Hicks was deprived of the

opportunity to assert what leverage he had in this situation – additional value arising only

because of his priority - because of the title company's error.

The result reached by the Court of Appeals is incongruous. It says the Londres and

Chase Manhattan were not negligent because they bought title insurance, and that the presence or

absence of title insurance is not relevant to the application of the doctrine of equitable

subrogation. If that's the rule, then from now on everyone in Colorado will be bound by the

record title except title insurance companies and their customers, unless in each case someone

with an intervening lien can prove that he or she is prejudiced by the invoking the doctrine of

equitable subrogation.

This makes no sense. Colorado law treats a judgment lien creditor as a good faith

purchaser for value without notice, and confers a preference in the judgment lien creditor's favor

over one who is negligent, either directly or through an agent. There is nothing about this case

that compels equity to intervene. Missing a properly recorded transcript of judgment should be

deemed to be negligence per se. Maybe in 1908 an abstracter could have followed the correct

and accepted procedure for searching title and, even though he missed a judgment lien, be

deemed not to have been negligent. But in this century the judgment records are in a


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