City Consumer Services. v. Metcalf

Jane Vickers (plaintiff) and her husband, Bruce Vickers, owned a house as joint tenants with a right of survivorship. The house was worth approximately $100,000. Attorney Harold Metcalf (defendant) and Bruce worked in the same building and were casual acquaintances. Bruce went to Metcalf’s office with a woman that Bruce introduced as his wife, Jane. However, the woman was not Jane. Bruce also presented Metcalf with a quitclaim deed supposedly signed by Jane transferring Jane’s interest in the house to Bruce, giving Bruce full ownership. However, the deed’s signature had been forged. Without asking the woman to verify her identity or to acknowledge the signature on the deed, Metcalf notarized the signature. Bruce then claimed to be the house’s sole owner and used the house as security to take out a $60,000 loan from City Consumer Services, Inc. (City) (plaintiff). Later, Jane and Bruce divorced. Jane received full ownership of the house in the divorce, still unaware of the forged deed or the loan from City. However, because Bruce had not repaid the loan, City tried to foreclose on the house. Jane sued to stop the foreclosure, and City was limited to foreclosing on the half of the house that Bruce legitimately owned as a joint tenant when the loan was issued, which was worth $50,000. Unable to find Bruce, Jane and City sued Metcalf for having negligently notarized the forged deed. At trial, evidence was presented showing that banks were unlikely to issue loans secured by only one-half of a property held in a joint tenancy. Evidence was also presented that other notaries considered a husband’s introduction of a woman as his wife to be sufficient evidence of the woman’s identity. A jury found that Metcalf’s notarization of the deed was negligent and ordered Metcalf to pay (1) $10,000 to City for the balance still owed on its loan and (2) $50,000 to Jane to buy back the foreclosed half of the house. Metcalf appealed. The appellate court reversed the award to Jane, finding that Bruce legally could have mortgaged his half of the house without Metcalf’s negligence. The Arizona Supreme Court agreed to review the case.