Subrogation action by title underwriter under Executive Law Section 135 for notarial misconduct. Title underwriter sought to recover attorney’s fees expended on behalf of its insured to quiet the insured’s title after a deed on which the forged signature of the grantor was acknowledged by the defendant notary enabling the deed to be recorded. The lower court dismissed the action after trial holding the underwriter had to demonstrate its insured’s detrimental reliance on the forged signature to establish the notarial misconduct was causally related to injury. The firm appealed arguing executive law 5135 does not require detrimental reliance on the notary’s acts. The Appellate Division, Second Department, agreed reversing the trial court holding the causation element under Executive Law 135.

The principal of mortgagor Kal-Pak forged his deceased father’s signature on the deed conveying title to Kal-Pak and thereby defrauded his siblings’ fee interests in the premises. Prior to commencement of the foreclosure, the principal of Kal-Pak assigned his interest in mortgagor Kal-Pak to the defrauded siblings in settlement of the siblings’ claims against him, and he agreed to continue  to make mortgage payments to lender bank. Following default on the note and commencement of the foreclosure, the mortgagor claimed it did not have valid title. Mortgagor moved for summary judgment declaring the deed void ab initio and dismissing the foreclosure. The court held that even if the deed were invalid, it was capable of being ratified by the mortgagor. Fact issues were presented whether the siblings’ acceptance of the assignment of ownership in mortgagor Kal-Pak with knowledge of the fraud was a ratification of the fraudulent acts.

Defendant attorney represented plaintiffs as mortgagees at the closing of a mortgage that subsequently was vacated on the basis the agent of the mortgagor was an imposter and the granting of the mortgage was unauthorized. The mortgage was insured by Old Republic Land Title Insurance. Plaintiffs sued defendant for legal malpractice. Defendant impleaded Old Republic for indemnity and contribution of any amount defendant may be found liable to plaintiffs. Third-part claim against title underwriter was dismissed. Defendant was not a named insured on the loan policy and title underwriter was not a joint tortfeasor.