Richard O'Leary, et ux. v. Ann Johnson, et al.

This case involves a payoff of a loan secured by a deed of trust on real estate and the failure to release the deed of trust on the record. In connection with a refinancing by the property owner, the title company closing agent issued a check to pay off the existing loan secured by a deed of trust. The check-payees, husband and wife, failed to negotiate the check and did not release the deed of trust. Some ten years later, after the death of the husband, the wife-payee found the check in her husband's files, and her attempt to negotiate the check failed because the account on which it was drawn was closed. She duly notified the title company closing agent, but it refused to reissue the check. Some three years later, the owners of the property tried again to refinance their loan, and in examining the title, it was discovered that the deed of trust, which presumably had been paid off, had not been released. The property owners filed suit against the title company closing agent and the holder of the note secured by the unreleased trust deed. The holder of the note filed a counter-claim against the property owners and a cross-claim against the title company closing agent. After a nonjury trial, the trial court awarded plaintiffs judgment against the title company closing agent for the amount of the payoff check issued to pay the previous loan and dismissed the cross-claim against the title company. The holder of the previous loan was awarded a judgment against the property owners for the amount of the principal balance due, plus attorney fees. The title company has appealed. We vacate in part, modify and affirm as modified.