PROCHASKA v. MIDWEST TITLE GUARANTEE COMPANY OF FLORIDA (1997)

Midwest Title Guarantee Company of Florida appeals the trial court's order on summary judgment establishing Helmuth and Beverley Prochaska's superior claim to real property located in Whatcom County, and the court's subsequent judgment quieting title to the property in favor of the Prochaskas.   Because Midwest Title's judgment lien commenced upon the filing of the certified copy its out-of-state judgment with the Whatcom County Clerk nine minutes before the deed conveying title to the Prochaskas was recorded, and because several conditions of closing were not fulfilled until several days after recordation of the deed, so that the Prochaskas took title to the property subject to the judgment lien, and because the Prochaskas are not entitled to the protection of the bona fide purchaser doctrine, we reverse and remand for entry of judgment in favor of Midwest Title.

FACTS

Helmuth and Beverley Prochaska, then residents of South Carolina, were vacationing in the Pacific Northwest in the summer of 1988 when they found a lot in Whatcom  County upon which they wanted to build their retirement home.   The lot was owned by John Oldfin, a Florida resident.   On August 11, 1988, the parties entered into a purchase and sale agreement under which the Prochaskas agreed to pay $95,000 for the lot.   The purchase and sale agreement was sent to Select Escrow for closing.

On September 7, 1988, Select Escrow sent the closing documents to the parties.   The Prochaskas signed the documents on September 8, 1988, and returned them to Select Escrow with a cashier's check in the amount of $45,415.13.   The remainder of the purchase price was paid through a loan from Community State Bank, the proceeds of which were deposited with Select Escrow on September 13, 1988.   Oldfin signed the closing documents on September 9, 1988, and returned them to Select Escrow along with the statutory warranty deed and the excise tax affidavit.   On September 13, 1988, Select Escrow forwarded the deed and a check for the excise tax to Ticor Title Insurance Company with instructions to record the deed.   Ticor Title recorded the deed with the Whatcom County Auditor on September 14, 1988, at 10:14 a.m.

Meanwhile, on September 7, 1988, Midwest Title Guarantee Company of Florida had obtained a judgment in the amount of $122,210.50 against Oldfin in the Circuit Court of Collier County, Florida.   A certified copy of the judgment was filed with the Whatcom County Clerk on September 14, 1988, at 10:05 a.m., nine minutes before the Prochaska's deed was recorded.   Midwest Title's judgment was entered on the execution docket on September 16, 1988.   Although Midwest Title was successful in collecting a portion of the judgment owed by Oldfin, by April of 1994 over $100,000 remained unsatisfied.   On April 26, 1994, Midwest Title caused a writ of execution to be issued against the Whatcom County property purchased by the Prochaskas from Oldfin.   The Prochaskas assert that they first received notice of Midwest Title's judgment at this time.

On May 16, 1994, the Prochaskas brought a motion  under RCW 6.19.030(2) to determine the probable validity of their claim to the Whatcom County property levied upon by the sheriff.   On June 16, 1994, the Whatcom County Superior Court found that the Prochaskas had established the probable validity of their claim to the property as against Midwest Title's judgment lien and the Whatcom County Sheriff's levy, and released the property from the levy.   Two months later, in August of 1994, the Prochaskas moved for summary judgment seeking to establish their superior claim to the Whatcom County property free and clear of Midwest Title's judgment lien.   On September 22, 1995, the court granted the Prochaskas' motion.   Subsequently, on November 15, 1995, the court denied Midwest Title's motion for reconsideration, and entered judgment quieting title to the Whatcom County property in favor of the Prochaskas.

This timely appeal followed.

DISCUSSION

Midwest Title contends that the trial court erred in concluding as a matter of law that the Prochaskas took title to the Whatcom County property free and clear of its judgment lien.   It argues that its judgment lien commenced upon the filing of the certified copy of the judgment with the Whatcom County clerk at 10:05 a.m. on September 14, 1988, and that because the deed conveying title to the Prochaskas was not recorded until nine minutes later, the Prochaskas took title to the property subject to the judgment lien.   The Prochaskas argue that the judgment lien did not commence until the judgment was entered onto the execution docket on September 16, 1988, and that because the deed conveying title from Oldfin to them was recorded two days earlier, Midwest Title's judgment lien did not attach to the Whatcom County property while Oldfin owned it.

When reviewing an order granting summary judgment, an appellate court engages in the same inquiry as  the trial court.  Failor's Pharmacy v. D.S.H.S., 125 Wash.2d 488, 493, 886 P.2d 147 (1994);  Fisher v. Aldi Tire, Inc., 78 Wash.App. 902, 906, 902 P.2d 166 (1995), review denied, 128 Wash.2d 1025, 913 P.2d 816 (1996).   All facts and reasonable inferences must be considered in the light most favorable to the nonmoving party.  Mountain Park Homeowners Ass'n, Inc. v. Tydings, 125 Wash.2d 337, 341, 883 P.2d 1383 (1994).   This court will affirm an order granting summary judgment if there are no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law.  CR 56(c).

A. Commencement of the Judgment Lien

 A foreign judgment becomes enforceable as a judgment of a court of this state upon its transfer under the Uniform Enforcement of Foreign Judgments Act, Ch. 6.36 RCW. Idaho Department of Health & Welfare v. Holjeson, 42 Wash.App. 69, 73, 708 P.2d 661 (1985), review denied, 105 Wash.2d 1005 (1986).   Specifically, RCW 6.36.025(1) provides:

(1) A copy of any foreign judgment authenticated in accordance with the act of congress or the statutes of this state may be filed in the office of the clerk of any superior court of any county of this state.   The clerk shall treat the foreign judgment in the same manner as a judgment of the superior court of this state.   A judgment so filed has the same effect and is subject to the same procedures, defenses, set-offs, counterclaims, cross-complaints, and proceedings for reopening, vacating, or staying as a judgment of a superior court of this state and may be enforced or satisfied in like manner.

RCW 6.36.025(1).   Thus, when Midwest Title transferred its Florida judgment to the clerk of the Whatcom County Superior Court, the clerk was required to treat the judgment “in the same manner as a judgment of the superior court of this state.”  RCW 6.36.025(1).

RCW 4.56.200 governs the commencement of judgment liens in Washington.   That section provides in pertinent part:

 The lien of judgments upon the real estate of the judgment debtor shall commence as follows:

(1) Judgments of the district court of the United States rendered in the county in which the real estate of the judgment debtor is situated, and judgments of the superior court for the county in which the real estate of the judgment debtor is situated, from the time of the entry thereof;

(2) Judgments of the district court of the United States rendered in any county in this state other than that in which the real estate of the judgment debtor to be affected is situated, judgments of the supreme court of this state, judgments of the court of appeals of this state, and judgments of the superior court for any county other than that in which the real estate of the judgment debtor to be affected is situated, from the time of the filing of a duly certified abstract of such judgment with the county clerk of the county in which the real estate of the judgment debtor to be affected is situated, as provided in this act[.]

RCW 4.56.200(1), (2) (emphasis added).

Relying on RCW 4.56.200(1), the Prochaskas assert that Midwest Title's judgment lien did not commence until the judgment was entered onto the execution docket on September 16, 1988.   We disagree.  RCW 4.56.200(1) applies only when the judgment at issue is that of either the United States district court located in the county in which the property of the judgment debtor is situated or the superior court for the county in which the real estate of the judgment debtor is situated.   Because the judgment in the present case was rendered in a county other than that in which the property is situated, RCW 4.56.200(1) does not govern the commencement of Midwest Title's judgment lien.¹

 Instead, RCW 4.56.200(2) governs the commencement of the judgment lien in this case.   That section applies, inter  alia, to “judgments of the superior court for any county other than that in which the real estate of the judgment debtor to be affected is situated,” and provides that the judgment lien commences upon filing with the county clerk.  RCW 4.56.200(2).   Thus, we conclude that Midwest Title's judgment lien commenced upon the filing of the certified copy of the judgment with the Whatcom County clerk at 10:05 a.m. on September 14, 1988, rather than two days later when the judgment was entered on the execution docket.²

 B. Judgment Debtor's Interest in Property

 Under RCW 4.56.190, a judgment creates a lien against the judgment debtor's nonexempt real property to commence as provided in RCW 4.56.200.  Hartley v. Liberty Park Assocs., 54 Wash.App. 434, 437, 774 P.2d 40, review denied, 113 Wash.2d 1013, 779 P.2d 730 (1989).  RCW 4.56.190 provides in pertinent part:

The real estate of any judgment debtor, and such as the judgment debtor may acquire, not exempt by law, shall be held and bound to satisfy any judgment of the district court of the United States rendered in this state and any judgment of the supreme court, court of appeals, superior court, or district court of this state, and every such judgment shall be a lien thereupon to commence as provided in RCW 4.56.200 and to run for a period of not to exceed ten years from the day on which such judgment was entered unless the ten-year period is extended in accordance with RCW 6.17.020(3).

RCW 4.56.190.   A judgment creditor's lien attaches only to whatever interest the debtor has in property;  the lien does not give the creditor a greater interest than that held by the debtor.  Aberdeen Fed. Sav. & Loan Ass'n v. Empire Manufactured Homes, Inc., 36 Wash.App. 81, 84, 672 P.2d 409 (1983), review denied, 100 Wash.2d 1041 (1984).

Midwest Title contends that Oldfin was the owner of the Whatcom County property when its lien commenced at 10:05 a.m. on September 14, 1988, and that, accordingly, the Prochaskas took title to the property subject to the judgment lien.   Noting that the statutory warranty deed was not recorded until nine minutes after its judgment was filed, and that other conditions of escrow were not fulfilled until several days after the recordation of the deed, Midwest Title argues that title to the Whatcom County property had not passed from Oldfin to the Prochaskas as of the time its lien commenced.

 The Prochaskas respond that because the parties had deposited all documents and funds necessary to close the  transaction with Select Escrow by September 13, 1988, and because Ticor Title was committed to issue the title insurance policy before the deed left its offices on the morning of September 14, the sale closed and Oldfin ceased to have an interest in the property before the filing of Midwest Title's judgment with the Whatcom County Clerk.   Thus, according to the Prochaskas, Midwest Title's lien did not attach to the Whatcom County property because Oldfin had no interest in the property at the time the judgment was filed.³

 Midwest Title has the better argument.   The deposit of a deed into escrow does not constitute a present conveyance if the conveyance is subject to conditions precedent yet to be satisfied.   See Lieb v. Webster, 30 Wash.2d 43, 190 P.2d 701 (1948) (holding that loss created when escrow agent absconded with funds would be borne by buyer when escrow agent held funds as buyer's agent and evidence indicated that he never ceased to hold funds in that capacity;  escrow agent never received title insurance policy, and conveyance to buyer was never recorded).   See also Angell v. Ingram, 35 Wash.2d 582, 586, 213 P.2d 944 (1950);  Washington Real Property Deskbook, § 39.24 (2nd ed. 1986) (title will not pass to a buyer while a deed is in escrow until the conditions of escrow have been fulfilled).   Here, several conditions precedent to the conveyance of title remained unsatisfied at the time Midwest Title filed its judgment lien.   In particular, the statutory warranty deed had not been recorded, the policy of title  insurance had not been issued, existing encumbrances set forth in Schedule B of the preliminary commitment had not been removed, and taxes had not been prorated.⁴  Thus, title to the Whatcom County property had not passed from Oldfin to the Prochaskas at the time Midwest Title's judgment lien commenced.   Accordingly the Prochaskas took title to the property subject to the lien.

C. Bona Fide Purchaser Doctrine

 The Prochaskas assert that even if this court concludes that Midwest Title's judgment lien attached to the Whatcom County property prior to the passing of title from Oldfin to them, they deserve the protection of the bona fide purchaser doctrine.   The bona fide purchaser doctrine provides that a good faith purchaser for value, who is without actual or constructive notice of another's interest in real property purchased, has a superior interest in the property.  Levien v. Fiala, 79 Wash.App. 294, 298, 902 P.2d 170 (1995) (citing Tomlinson v. Clarke, 118 Wash.2d 498, 500, 825 P.2d 706 (1992)).

We conclude that the Prochaskas are not entitled to the protection of the bona fide purchaser doctrine because the filing of Midwest Title's judgment provided constructive notice that the Whatcom County property was encumbered by its lien.   Although the Prochaskas assert that notice is not provided until a judgment is entered on the execution docket, their assertion is supported by neither the law nor the record in this case.   In Hartley, this court held that the filing of a decree of dissolution in the King County Superior Court provided constructive notice to any subsequent purchaser or mortgagee that the debtor's King County property was encumbered by the  judgment creditor's lien.  54 Wash.App. at 438, 774 P.2d 40.   See also Federal Intermediate Credit Bank v. O/S Sablefish, 111 Wash.2d 219, 229, 758 P.2d 494 (1988).   Moreover, the record indicates that Ticor Title, which issued the title insurance policy in this case, makes its decision to insure title based upon a review of the public records contained in the company's title plant:  “The title plant is composed primarily of documents recorded with the county auditor as well as judgments that may affect title to real property․   Judgments filed with the clerk are inputted in the title plant as they are received from the clerk's office.”   Clerk's Papers at 80 (emphasis added).   Thus, contrary to the Prochaskas' argument, the record fails to indicate that entry of a judgment on the execution docket is necessary to provide notice to subsequent purchasers of the affected property.

D. Conclusion

Because Midwest Title's judgment lien commenced before title to Oldfin's property passed to the Prochaskas, and because the Prochaskas are not entitled to the protection of the bona fide purchaser doctrine, their remedies must lie against Oldfin, who issued the statutory warranty deed, or against Ticor Title, which issued the policy of title insurance, and not against Midwest Title.

Reversed and remanded for entry of judgment in favor of Midwest Title.

FOOTNOTES

1.   Moreover, although RCW 4.56.200(1) uses the phrase “from the time of the entry thereof” to describe when a judgment lien commences, we do not believe that the Legislature intended the phrase to mean entry on the execution docket, as the Prochaskas contend.  RCW 6.01.020 provides:For purposes of this title and RCW 4.56.190 and 4.56.210, a judgment of a superior court is entered when it is delivered to the clerk's office for filing.   A judgment of a district court of this state is entered on the date of the entry of the judgment in the docket of the court.   A judgment of a small claims department of a district court of this state is entered on the date of entry in the docket of that department.RCW 6.01.020.   Because a foreign judgment must be treated “in the same manner as a judgment of the superior court of this state,” RCW 6.36.025(1), we conclude that even if RCW 4.56.200(1) did apply in this case, the judgment was entered, and the lien commenced, when the judgment was delivered to the clerk's office for filing as provided in RCW 6.01.020.   Although the Prochaskas point out that RCW 6.01.020 does not explicitly refer to RCW 4.56.200, the statute does refer to RCW 4.56.190 which provides that a judgment shall be a lien upon the judgment debtor's real estate, “to commence as provided in RCW 4.56.200.”  RCW 4.56.190.   Thus, RCW 6.01.020 implicitly applies to RCW 4.56.200.  See also Hartley v. Liberty Park Assocs., 54 Wash.App. 434, 438, 774 P.2d 40, review denied, 113 Wash.2d 1013, 779 P.2d 730 (1989) (holding that lien arising from decree of dissolution entered by King County Superior Court attached to property in King County under RCW 4.56.200(1) on date decree was filed).

2.   Although the Prochaskas recognize that the appellate courts of this state have never considered whether a judgment lien commences upon filing with the county clerk or, instead, upon entry onto the execution docket, they argue that other jurisdictions require “some sort of docketing or indexing of a judgment before a judgment lien commences.”   Brief of Respondents at 15.   The cases cited by the Prochaskas, however, interpret and apply statutes that, unlike Washington's, explicitly require docketing or indexing before a judgment lien commences.   See, e.g., First American Title Co. v. Howe, 281 N.W.2d 605, 606 (S.Dak.1979) (applying a South Dakota statute which provides:  “A magistrate, on the demand of a party in whose favor he shall have rendered a judgment must give a certified transcript thereof which shall be filed in the office of the clerk of courts of the county in which the judgment was rendered and such clerk must thereupon enter such judgment in the judgment books, and upon the judgment docket;  and, from the time of the docketing thereof, it becomes a judgment of the circuit court and a lien upon real property”);  In re Fleishman-Wilson, 72 B.R. 30, 31 (Dist.S.C.1987) (applying a South Carolina statute which provides:  “Final judgments and decrees entered in any court of record in this State ․ shall constitute a lien upon the real estate of the judgment debtor situate in any county in this State in which the judgment or transcript thereof is entered upon the books of abstracts of judgments and duly indexed, the lien to begin from the time of such entry on the books of abstracts and indices and to continue for a period of ten years from the date of such final judgment or decree.”).

3.   Citing RAP 9.12, the Prochaskas assert that this court should not review the issue of whether Oldfin had an interest in the Whatcom County property at the time Midwest Title's lien attached, because the issue “was not briefed or argued nor was all the evidence necessary to address that issue before the trial court on the Prochaskas' motion.”   Brief of Respondents at 23.   It is impossible to determine from the record before this court what was and was not briefed and argued to the trial court, in that none of the memoranda submitted in support of and in opposition to the motion for summary judgment have been designated, and because the trial court's order does not state the basis for the ruling.   The issue has been fully briefed for this appeal.   Moreover, the Prochaskas have failed to identify any additional evidence that was not before the trial court and that is necessary to decide the issue.   Thus, we will review the issue of Oldfin's interest in the Whatcom County property.

4.   Although the Prochaskas offered the testimony of John McKnight, a former Ticor Title employee, that Ticor Title was committed to issue its title insurance policy prior to the recordation of the deed, the explicit directions of the preliminary commitment and the written escrow instructions are to the contrary.   The discrepancy between McKnight's testimony and the written documents does not raise an issue of material fact, in that other conditions remained unsatisfied even if the title company was so committed.   We are also unpersuaded by the Prochaskas' reliance on Miller v. Marysville Dev. Co., 75 Wash.2d 590, 452 P.2d 741 (1969), as it is a specific performance case.

KENNEDY, Acting Chief Judge.

COLEMAN and COX, JJ., concur.