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. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

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