ILNews

Judges rule on first impression escrow matter

Jennifer Nelson
April 28, 2011
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For the first time, the Indiana Court of Appeals addressed whether it’s possible to create an escrow absent an escrow agreement or fee.

In Meridian Title Corp., v. Pilgrim Financing, LLC, No. 45A05-1010-CC-613, the appellate court had to decide whether Meridian Title Corp., a title insurance company, negligently disbursed the net closings of proceeds from a refinancing transaction involving Pilgrim Financing. The trial court had ruled in Pilgrim’s favor on the claim.

Pilgrim sued Meridian after Meridian released proceeds of a property sale to the two property buyers instead of Pilgrim. The buyers had mortgages with Pilgrim. Meridian argued it didn’t have a relationship with Pilgrim that would serve to impose a duty of care on Meridian; Pilgrim claimed Meridian assumed a duty to it gratuitously.

Meridian argued it could not have assumed a duty in escrow as Pilgrim claimed because there wasn’t an escrow agreement or payment of an escrow fee. The Court of Appeals noted there is very little jurisprudence regarding the general standards for escrow, and cited cases from 1881 and 1921 to find that Indiana traditionally hasn’t required an escrow agreement or fee to establish an escrow. The judges also declined to adopt such a requirement.

They held there is sufficient evidence to establish that Meridian held Pilgrim’s payoff letter and partial release in escrow. The letter and partial release served as security to Meridian that Pilgrim would provide the original release of mortgage upon satisfaction of the conditions of the letter. The judges also concluded that parties to an escrow bear a duty toward one another to act with due care.

The Court of Appeals found that Meridian didn’t adequately clarify the nature of the two property buyers’ transactions to Pilgrim, so Pilgrim didn’t have all the necessary information to make an informed decision regarding Pilgrim’s rights to the proceeds.

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  1. I'm not sure what's more depressing: the fact that people would pay $35,000 per year to attend an unaccredited law school, or the fact that the same people "are hanging in there and willing to follow the dean’s lead in going forward" after the same school fails to gain accreditation, rendering their $70,000 and counting education worthless. Maybe it's a good thing these people can't sit for the bar.

  2. Such is not uncommon on law school startups. Students and faculty should tap Bruce Green, city attorney of Lufkin, Texas. He led a group of studnets and faculty and sued the ABA as a law student. He knows the ropes, has advised other law school startups. Very astute and principled attorney of unpopular clients, at least in his past, before Lufkin tapped him to run their show.

  3. Not that having the appellate records on Odyssey won't be welcome or useful, but I would rather they first bring in the stray counties that aren't yet connected on the trial court level.

  4. Aristotle said 350 bc: "The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of an modes of getting wealth this is the most unnatural.

  5. Oh yes, lifetime tenure. The Founders gave that to the federal judges .... at that time no federal district courts existed .... so we are talking the Supreme Court justices only in context ....so that they could rule against traditional marriage and for the other pet projects of the sixties generation. Right. Hmmmm, but I must admit, there is something from that time frame that seems to recommend itself in this context ..... on yes, from a document the Founders penned in 1776: " He has refused his Assent to Laws, the most wholesome and necessary for the public good."

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