Greenpoint Mortgage Funding, Inc. v. Schlossberg

CATHELL, Judge. In this consolidated appeal, Greenpoint Mortgage Funding, Inc., et al. and World Savings Bank, et al. (described variably hereafter collectively as “appellants” or “lenders”) seek relief from the May 24, 2004, Memorandum Opinions and Orders of the Circuit Court for Washington County, which provided that the notices of Us pendens, filed by Preston S. Cecil and Curtis B. Hane as former receivers, along with Roger Schlossberg, current receiver and appellee, (hereafter “appellee,” “Mr. Schlossberg” or “receiver”), with the Clerk of the Circuit Court for Montgomery County, and with the Clerk of the Circuit Court for Prince George’s County, but not indexed correctly, served as sufficient constructive notice to appellants of a pendente lite lien against certain property. Both Greenpoint and World Savings appealed to the Court of Special Appeals and, before that court could consider the appeal, we granted on our own initiative a writ of certiorari on March 11, 2005, Greenpoint Mortgage Funding, Inc. v. Schlossberg, 385 Md. 511 , 869 A.2d 864 (2005), in order to address the following questions: “I. Did the Circuit Court err by holding that the filing of the notices of Us pendens on behalf of the original receivers pursuant to Rule 12-102(b), Maryland Rules of Procedure, was sufficient to place the two mortgage lenders on constructive notice of the receivers’ powers over the two parcels of real property?

II

Did the failure to properly index the notices of Us pendens in the name of the owner of the properties negate the effect of filing the notices of lis pendens as ²¹⁶ to the appellants [Greenpoint Mortgage and World Savings Bank, the lenders]?” We hold in respect to question one that the trial court erred. We answer the second question in the affirmative. Even if a lis pendens had been properly created by the express order of the judge in the underlying divorce case, 1 we hold that the failure to properly index the notices negated the effect of the filing as to the appellants. We further hold that Maryland statutes require that all instruments affecting title to real property that are recorded, must also be indexed.

And we hold that a party seeking to establish a notice of lis pendens is charged with the duty to assure the correctness of the recording and indexing of the instrument he or she has filed. Failing correct indexing, the notice of lis pendens in the instant case was, or would have been, insufficient to provide constructive notice to appellants. I. Facts In 1996, the Circuit Court for Washington County determined it prudent to appoint receivers in the pending divorce case of Moses Karkenny v. Nahil Karkenny. 2 By court order dated March 26, 1996, and clarified by order dated April 9, 1996, Curtis B. Hane and Preston S. Cecil were appointed receivers, and their counsel, Roger Schlossberg, was appointed co-receiver, for the purpose of preserving and liquidating properties located in Prince George’s County and in Montgom ²¹⁷ ery County owned by Moses H. Karkenny. 3 Messrs. Hane and Cecil, along with Mr. Schlossberg, then filed with the Clerk of the Circuit Court for Montgomery County on April 30,1996, what purported to be a Notice of Lis Pendens in Civil No. 151,150.

They filed a similar notice with the Clerk of the Circuit Court for Prince George’s County on May 1, 1996. The notices’ captions, prepared by the appellee, i.e., the receiver, which were likely copied from the divorce complaint, displayed Moses Karkenny as the plaintiff/counter-defendant and Nahil Karkenny as the defendant/counter-plaintiff. Thus, Nahil Karkenny was the defendant in the original divorce action. 4 Enumerated within the body of the Notices of Lis Pendens were several properties owned by Moses Karkenny, which were to be subject to the notices. In the body of the Montgomery County mis-indexed Notice of Lis Pendens, the listing of real property subject to the proceedings in the divorce case and asserted to be in the custody of the receivers included fourteen specifically designated properties as well as “any and all other property in which any interest is owned by or vested in the said Moses Karkenny.” The Prince George’s County notice listed five specific properties in addition to the more encompassing description of “any and all other property in which any interest is owned by or vested in the said Moses Karkenny.” 5 ²¹⁸ Messrs.

Hane and Cecil resigned from their receivership appointments in 1996 and 1999, respectively, and in both cases, Mr. Schlossberg was appointed as the sole successor receiver. On September 29, 1999, Moses Karkenny, individually, executed and delivered a deed of trust apparently creating an encumbrance in favor of World Savings Bank and its trustee as to the Glaizewood Avenue property in order to secure a loan in the amount of $98,000.00. This deed of trust was recorded in the Land Records of Montgomery County on October 21,1999. Again, on November 24, 1999, Moses Karkenny executed in favor of Greenpoint Mortgage a promissory note for a loan in the principal amount of $45,500.00, secured by a deed of trust encumbering the Greenery Lane property.

The deed of trust was then recorded among the Land Records of Montgomery County on May 25, 2000. On August 30, 2002, Mr. Schlossberg filed in the Circuit Court for Washington County two “Complaint[s] for Declaratory Judgment and Related Injunctive Relief,” 6 which included appended copies of the respective purported Notices of Lis Pendens the receivers had filed in mid-1996 and which bore the Clerk’s “filed” stamp. In each complaint, Mr. Schlossberg stated that “by virtue of the timely filing of the Lis Pendens Notice, any persons interested in any of the property of the said Moses Karkenny located in Montgomery County, Mary ²¹⁹ land [or Prince George’s County] were provided constructive and actual notice of the pendency of the Divorce Case and Receivership, as well as the vested title of the Receivers therein.” The appellants filed answers, and on November 22, 2002, and on January 3, 2003, Greenpoint Mortgage and World Savings, respectively, filed motions for summary judgment. Each motion was accompanied by a title examiner’s affidavit attesting that an inspection of the Civil Docket maintained by the Clerk of the Circuit Court for Montgomery County in which the notice of lis pendens was filed did not show a notice of Us pendens indexed in the name of Moses Karkenny.

Apparently, the Clerk of the Circuit Court for Montgomery County as well as the Clerk of the Circuit Court for Prince George’s County, both had indexed the notice of lis pendens under the name of Nahil Karkenny, not in the name Moses Karkenny, because the receiver had filed a notice containing a caption that incorrectly indicated (or at least created confusion as to whether) Nahil Karkenny was the party against whom a Us pendens was sought, instead of the party seeking it. The Circuit Court for Washington County denied Greenpoint Mortgage’s motion for summary judgment on January 7, 2003, and denied World Bank’s motion for summary judgment on January 17, 2003. Following discovery, in July 2003, appellants again filed a motion for summary judgment on the basis of the previous affidavits, an additional title examiner’s affidavit, as well as Mr. Schlossberg’s answers to interrogatories, which indicated that an examination of the indexes related to the Land Records, Judgment Records and Civil Docket maintained by the Clerk of the Circuit Court for Montgomery County in 1999 in the name of Moses Karkenny would not have revealed the existence of the Notice of Lis Pendens that had been filed in 1996 because, apparently, the notice was not indexed under the name of Moses Karkenny. On September 26, 2003, Moses Karkenny, who remained a defendant in Mr. Schlossberg’s suits, filed pro se motions to ²²⁰ dismiss the receiver’s complaints.

At oral argument on the motions for summary judgment on October 3, 2003, the Circuit Court granted Mr. Schlossberg’s oral motion to file amended complaints and directed the parties to file supplementary memoranda in respect to the effect of the receivership on the titles to the Greenery Lane and Glaizewood Avenue properties. Mr. Schlossberg answered Mr. Karkenny’s motions to dismiss on October 14, 2003, and filed amended complaints on October 21, 2003, which clarified the scope of the claim as to the receiver’s right to custody and control of the Greenery Lane and Glaizewood Avenue properties and sought orders compelling Greenpoint Mortgage and World Savings Bank to execute full releases of the deeds of trust encumbering those properties. The next day, the Circuit Court denied Moses Karkenny’s motion to dismiss. The parties filed the requested supplementary memoranda.

Mr. Schlossberg argued that his filing of the notice of lis pendens in compliance with Md. Rule 12-102(b) 7 had provided the necessary constructive notice of the receivership to any future party seeking to encumber property titled to Moses Karkenny. On the other hand, appellants urged that it was the responsibility of the Receiver and his or her predecessors to verify the proper recording and indexing of the notice of lis pendens by the Clerks of the Circuit Court, and either failing a correct indexing so as to provide constructive notice or failing appellants’ actual notice of the Washington County suit, appellant’s interests in particular property titled to Moses Karkenny were superior to any equitable claim that the receiver might then assert. ²²¹ Following an April 29, 2004, hearing on the pending motions for summary judgment, the Circuit Court issued two Memoranda Opinions on May 24, 2004, and entered Orders on July 21, 2004, finding that both deeds of trust were inferior in priority to the receivership. In the two similarly worded opinions, the Circuit Court observed that “the uncontroverted affidavits of the two expert title examiners verify that neither the Circuit Court for Prince George’s County nor the Circuit Court for Montgomery County indexed the Notice of Lis Pendens in the name of Moses Karkenny.” Nevertheless, relying solely on the plain language of Md. Rule 12-102(b), the Circuit Court reasoned that the language does not mandate recording and indexing, but merely filing of the notice of Us pendens, and policy considerations exist to allocate the risks to the lending entities of an improperly indexed, or non-indexed, notice. The Circuit Court for Washington County in the two actions based upon the purported Notices of Lis Pendens, apparently did not consider (or at least made no reference to) the Maryland statutes in respect to recording and indexing.

On August 2, 2004, Greenpoint Mortgage and World Savings noted appeals to the intermediate appellate court. In response to the appellants’ Motion to Consolidate Appeals, their appeals were consolidated by order of the Court of Special Appeals dated December 9, 2004. In March 2005, we granted certiorari. Greenpoint v. Schlossberg, 385 Md. 511 , 869 A.2d 864 , (2005.) II.

Discussion A. Doctrine of Lis Pendens Lis pendens, a doctrine with deep roots in the English courts of chancery, apparently can be traced to around 1618 during Sir Francis Bacon’s time serving as Lord Keeper of the Great Seal. This doctrine is discussed in a multitude of cases and is formally defined as: “1. A pending lawsuit. 2. The jurisdiction, power, or control acquired by a court over property while a legal action is pending. 3.

A notice, recorded in the chain of title to real ²²² property, required or permitted in some jurisdictions to warn all persons that certain property is the subject matter of litigation, and that any interests acquired during the pendency of the suit are subject to its outcome.” Black’s Law Dictionary 950 (8th ed. 2004). Its essence, then, is one of notice to an otherwise unknowing party. Lis pendens has no specific separate existence apart from its basic function to advise a person who seeks to acquire an interest in property subject to a lis pendens that he will be bound by the outcome of the noticed litigation. It was argued in an earlier case that “-The principle of lis pendens is, that the specific property must be so pointed out by the proceedings as to warn the whole world that they meddle with it at their peril.’ ” Feigley v. Feigley, 7 Md. 537, 556 (1855) (citing 1 Strob.

Eq. Rep., 182, Lewis v. Mew). The Court apparently accepted the argument, stating that “The doctrine of lis pendens has no application whatever to this case. As well might a pending action at law, to recover an ordinary debt, be a lis pendens as to the property of a debtor, as a proceeding like the present, the purpose of each being to subject the property of the debtor to the payment of debts.

Lis pendens is a proceeding directly relating to the thing or property in question.” Id. at 563 ; see also Green v. White, 7 Blackf. 242, 243 , (Ind.1844) (“The principle is now too well settled to be even doubted, that a lis pendens, duly prosecuted, is notice to a purchaser, so as to affect and bind his interest by the decree.”). Thus, a party who purchases while the litigation ensues is deemed a “purchaser pendente lite.” See also Applegarth v. Russell, 25 Md. 317, 321 (1866); First Midwest v. Pogge, 293 Ill.App.3d 359, 363 , 227 Ill.Dec. 713, 716 , 687 N.E.2d 1195, 1198 (1997); Admiral Builders Corp. v. Robert Hall Village, 101 Ill.App.3d 132, 136 , 56 Ill.Dec. 627, 631 , 427 N.E.2d 1032, 1036 (1981). The rule of lis pendens generally arises in the context of disputes in which one or more parties have possession of real property and the potential of premature, precipitous, undue or ²²³ untoward alienation of that property needs to be avoided. Some states limit its application to disputes affecting only title to real property while others allow application of the rule of lis pendens more generally to any dispute that touches on the possible alienation of property.

In our state, the lis pendens doctrine has its foundations in common law and remains mostly there. In our state the only procedural reference to lis pendens is set out in Md. Rule 12-102, which contains no substantive modification of the common law. Except for the statute in respect to divorce cases above noted, the Maryland General Assembly has not seen fit to enact further statutes modifying Us pendens as other states have done. Accordingly, Maryland’s jurisprudence in respect to lis pendens generally has been developed through our case law.

In Angelos v. Maryland Casualty Co., 38 Md.App. 265, 268 , 380 A.2d 646, 648 (1977), this State’s intermediate appellate court explained: “The chancellor entered judgment on behalf of Maryland Casualty Company under the doctrine of lis pendens. Lis pendens literally means a pending action; the doctrine derives from the jurisdiction and control which a court acquires over property involved in an action pending its continuance and until final judgment is entered. Under the doctrine, one who acquires an interest in the property pending litigation relating to the property takes subject to the results of the litigation. It is clear that the doctrine has no application except where there is a proceeding directly relating to the property in question, or where the ultimate interest and object of the proceeding is to subject the property in question to the disposal of a decree of the cou'ti.” (Emphasis added.) Accordingly, it is clear in Maryland that generally, prior to judgment, the nature of the action must be such that it directly involves the property, if the property is to be subject to a Us pendens. ²²⁴ As early as Applegarth v. Russell, 25 Md. 317, 327 (1866), involving an action in the county where the real property was located, we began to apply limits to the doctrine’s application.

In that case, appellee argued that “fljis pendens begins from the moment the bill is filed,” but the Court held to the contrary, upholding a conveyance where the bill, “at the time of the purchase, did not disclose with sufficient certainty the land sought to be charged by it.” Id. at 328 . Much later, in DeShields v. Broadwater, 338 Md. 422 , 659 A.2d 300 (1995), also a case where the pending action was in the county where the property was located and thus did not involve a “formal” notice of lis pendens because the action itself was required to be indexed in that county and was itself the lis pendens and not a mere notice, this Court discussed lis pendens in the context of a constructive trust. There we noted: “The doctrine of lis pendens is well-established in Maryland. It literally means a pending lawsuit, referring to the jurisdiction, power, or control which a court acquires over property involved in a lawsuit pending its continuance and final judgment.

Under the doctrine, an interest in property acquired while litigation affecting title to that property is pending is taken subject to the results of that pending litigation. Thus, ‘[ujnder the common-law doctrine of lis pendens, if property was the subject of litigation[ 8 ], the defendant-owner could transfer all or part of his or her interest in the property during the course of litigation, but not to the detriment of the rights of the plaintiff.’ Janice Gregg Levy, Comment, Lis Pendens and Procedural Due Process: A Closer Look After Connecticut v. Doehr, 51 Md.L.Rev. 1054, 1056 (1992). This Court stated the same proposition thusly, in Inloes’ Lessee, 11 Md. at 524 (quoting I Story Eq.Jur. §§ 405, 406): ‘A purchase made of property actually in litigation, pendente lite, for a valuable consideration, and without any ²²⁵ express or implied notice in point of fact, affects the purchaser in the same manner as if he had such notice; and he will accordingly be bound by the judgment or decree in the suit.... ’ See [Permanent Financial Corp. v.] Taro, 71 Md.App. [489,] 492, 526 A.2d [611,] 612 [(1987)]. “Lis pendens has no applicability, therefore, except to proceedings directly relating to the title to the property transferred or in which the ultimate interest and object is to subject the property in question to the disposal of a decree of the court. “A ‘lis pendens is a general notice of an equity to all the world,’ not notice of an actual lien. Consequently lis pen-dens proceedings do not technically prevent alienation; they place a cloud on title to the property.... “Thus, when, after the complaint has been filed, the defendant transfers his or her interest in the property which is the subject of the lawsuit, lis pendens applies to subject that property to the result of the pending litigation whether or not the plaintiff is aware of the transfer....” DeShields, 338 Md. at 432-36 , 659 A.2d at 305-06 (footnotes omitted) (some internal citations omitted).

See also Warfel v. Brady, 95 Md.App. 1, 7 , 619 A.2d 171, 174 , cert. denied, 331 Md. 88 , 626 A.2d 371 , cert. denied, 510 U.S. 977 , 114 S.Ct. 470 , 126 L.Ed.2d 422 (1993); Permanent Fin. Corp. v. Taro, 71 Md.App. 489, 492 , 526 A.2d 611, 612 , cert. granted, 311 Md. 193 , 533 A.2d 670 (1987), appeal dismissed, January 26, 1988; Angelos v. Md. Cas. Co., 38 Md.App. 265, 268 , 380 A.2d 646, 648 (1977); Creative Dev. Corp. v. Bond, 34 Md.App. 279, 284 , 367 A.2d 566, 569 (1976); Corey v. Carback, 201 Md. 389, 403-04 , 94 A.2d 629, 638 (1953); Hall v. Jack, 32 Md. 253, 263-64 (1870); Tongue v. Morton, 6 H. & J. 21, 23-24 (Md.1823).

But see Price v. McDonald, 1 Md. 403, 412 (1851) (observing that claim of lis pendens was unavailing where the parties had prosecuted the case in an “exceedingly dilatory manner”). ²²⁶ We have detected a general admonition that lis pendens must be carefully executed in order to achieve its notice aims. To this end several states have imposed — either by statute or by common law — conditions upon the doctrine that must be satisfied if it is to be invoked (as indicated, Maryland has not enacted by a statute relating generally to all cases, any limitations on the general application of the doctrine.) 9 A delay between the defendant’s filing of a notice of lis pendens of his suit to collect from his wife the proceeds of the sale of the home and the recording of the notice was pivotal in the case of Aldridge v. Aldridge, 527 So.2d 96 (Miss.1988). At least three days elapsed after the notice was filed before the clerk actually recorded the notice in “The Lis Pendens Records,” during which time the notice languished in the “Instruments Left for Recording” file and the wife conveyed the property to purchasers whose lender had not found any notices or encumbrances upon the property. Id. at 98 .

In declining to enforce the husband’s lien and determining that the buyers were bona fide purchasers, the Supreme Court of Mississippi stated that “Mississippi case law clearly illustrates that a hen is not obtained by the mere filing of a Lis Pendens Notice.” Id. at 99 . The court then examined Mississippi’s several relevant lis pendens statutes, among them Miss.Code Ann. § 11-47-3 (1972), which stated: “When any person shall begin a suit in any court, whether by declaration or bill, or by cross-complaint, to enforce a hen upon, right to, or interest in, any real estate, unless the claim be founded upon an instrument which is recorded, or upon a judgment duly enrolled, in the county in which the real estate is situated, such person shall file with the clerk of the chancery court of each county where the real estate, or any part thereof, is situated, a notice containing the names of all the parties to the suit, a description of the real estate, and a brief statement of the nature of the hen, right, or interest sought to be enforced. The clerk shall immediately file and record the notice in the lis pendens record, ²²⁷ and note on it, and in the record, the hour and day of filing and recording.” In addition, the Aldridge court noted a Mississippi statute that imposes liability on a clerk’s failure to perform his duties, and went on to conclude that the clerk failed to comply with the statute, holding “a lis pendens notice must be actually recorded in The Lis Pendens Records to constitute notice.” Aldridge, 527 So.2d at 100 . In Lamng v. Jaynes, 285 N.C. 418 , 206 S.E.2d 162 (1974), the plaintiffs allegedly had exercised their recorded option to purchase the defendant’s property pursuant to the terms of the option, but when the defendant refused to convey the land, the plaintiffs instituted an action for specific performance.

The plaintiffs recorded with the clerk of the court a notice of lis pendens, but there was a nearly seven-year delay between the time of its filing and the time it was cross-indexed by the clerk in the “Record of Lis Pendens.” In the interim the defendant conveyed the land to a third party. The applicable North Carolina statute provided that the cross-indexing of the notice of lis pendens provided constructive notice to a purchaser of the affected property. Id. at 422 , 206 S.E.2d at 165 . Since the cross-indexing was not accomplished until after the conveyance to a third party, the court determined that the cross-indexing did not constitute constructive knowledge to them.

Id. at 426 , 206 S.E.2d at 167 ; see also ABN AMRO Mortgage Group, Inc. v. Jackson, 159 Ohio App.3d 551 , 824 N.E.2d 600 (2005); Gene Hill Equip. Co. v. Merryman, 771 S.W.2d 207 (Tex.App.1989); McWhorter v. Brady, 41 Okla. 383 , 140 P. 782 (1913). Based on our summary review of the cases it seems clear that, at a minimum, the amalgamated requirements for a notice of Us pendens call for the notice to state the names of the party against whom the Us pend,ens is claimed, to describe accurately the affected property, and to explain the nature of the lien right or the interest that the person filing the notice seeks to enforce and that it be properly recorded- — and indexed. ²²⁸ B. Filing, Recording and Indexing Generally A central issue to the case sub judice is which party should bear the burden, or possible loss, occasioned by an incorrect indexing of an apparently properly filed (although possibly mis-captioned) notice of lis pendens. The receiver argues “that the [Clerks’] improper indexing of the notices of lis pendens did not negate the effect of filing of said notices as to Appellants.” In appellants’ view, on the other hand, their inability to locate the filed but incorrectly indexed notices of lis pendens among the Clerks’ records, prompts them to depict themselves, although they are not technically purchasers, as more akin to bona fide purchasers than to purchasers pendente lite.

Maryland Code (1974, 2003 RepLVol.), § 3-301 of the Real Property Article entitled “Record Books” combined with Real Property Article Section 3-302 “Indexes,” read together as they must be, express the intent of the Legislature in this area. Section 3-301(a) Land Records., provides in relevant part: “..., the clerk of the circuit court of each county shall record every deed and other instrument[ 10 ] affecting proper ²²⁹ ty in well-bound books to be named ‘Land Records’, if that is the practice in the county, or on microfilm, if that is the practice____” Section 3-302(a) In general, provides in relevant part: “The clerk of the circuit court of each county shall make and maintain a fall and complete general alphabetical index of every deed, and other instrument in a well-bound book in his office.... ” (Emphasis added.) Section 3-302(e)(2) provides in relevant part: “The clerk shall rely on the instrument that is accompanied by the intake sheet for indexing of grantor’s and grantee’s names.” A notice of lis pendens is intended to, and does, affect the title to property, in that its purpose is to notify any future purchaser of the title to the property that they will take the property subject to the result of the pending litigation. Because a notice of lis pendens affects title to real property, it is required by statute to be recorded “in well-bound books ” to be named “Land Records.” If it is required to be recorded in the Land Records, as we hold it is, then it comes under the provisions of the statute that require it to be maintained in a complete alphabetical index. The Legislature has required any instrument affecting title to real property, to be both recorded and to be indexed.

The stated purpose of Md. Rule 12-102 is to facilitate the creation of constructive notice in respect to any action that “affects title to ... real property.” Section (a) “Scope.” This Court’s adoption of Rule 12-102, and its language as to filing, must be considered in light of the requirements of the statutes and common law it was intended to facilitate, and thus must be read broadly as incorporating the indexing (and other) requirements of the various statutes. ²³⁰ Were the Court to hold that because the Rule does not contain a direct indexing requirement, it affords notice without indexing, we in effect, would overrule the statutory requirement that instruments affecting title must be indexed. Such an interpretation would change the statutory requirements for the placing of notices, i.e., instruments affecting title to real property in the land records of a county — and that they be indexed. It is helpful to understand one of the important purposes of recording and indexing in the first instance. Instruments of conveyance (including mortgages) were, under the common law, valid as between the grantor and grantee even if never recorded.

Recordation systems, as they relate to real property, evolved in order to insure that owners of property were not able to convey or mortgage the same property to several people at the same time. A primary purpose of the recording and indexing statutes that came into being was to provide a way to give notice to purchasers, mortgagors, lien holders and the like, of the prior conveyances of, or encumbrances on, the property of a particular person. Recording and indexing was not necessary to determine title to property as between the seller and buyer but only to determine priorities as between subsequent claimants to title interests, i.e., third parties, such as the banks in the instant case. This Court long ago recognized the importance of recording and indexing in the case of Plaza Corp. v. Alban Tractor Co., 219 Md. 570, 583 , 151 A.2d 170, 176-77 (1959), where we were concerned with a legislative enactment relating to the recording and indexing of certain instruments in Baltimore County.

A provision of the Baltimore County Code provided “that in cases where an instrument affects title to, or any interest in, both land and personal property that the clerk ‘shall include a notation that such instrument has been recorded among such Land Records ...’ ” in the chattel index. Id. at 583 , 151 A.2d at 177 . As relevant to the instant case, the Court went on to note that the statutory provision “makes the entry or notation in the chattel index constitute an essential part of the actual ²³¹ recordation of the instrument in the Chattel Records.” Id. We noted our reasons, reasons equally relevant in the real property indexing case sub judice: “If this were not so, we would have this anomalous situation: We would have a registry statute requiring the clerk to keep a set of Land Records, a set of Chattel Records and a separate general alphabetical index for each; when an instrument is presented for record that covers both real and personal property, the statute provides that it shall be spread upon the Land Records and not upon the Chattel Records, but a notation thereof shall be made in the general index of the Chattel Records, which shall have the same effect as though it were spread in full upon the Chattel Records; if this [were to] be treated as a mere failure to index and not as a lack of a complete recording, there would be no possible way for a subsequent prospective purchaser or creditor to locate the instrument dealing with [the] personal property 'without a search of the Land Records, something that no one would do---- “....

The clerk spread it upon the Land Records and the general index of the Land Records, but failed to comply with the statute in noting the same in the general index of the Chattel Records. Who must suffer for the clerk’s mistake? There is a division of opinion in this country as to the correct answer to this question. Some cases hold that the grantee [In the case sub judice the Receiver is the person seeking to establish his priority and is in essence in the position of what the Plaza Corp Court refers to as a “grantee” 11 ] controls the instrument; he can record it or not as he pleases; he, alone, has the light and the opportunity to see that it is properly recorded by the registration officer; hence, if he fails to give the notice required by law, he must bear the consequences, and third persons need not go beyond the records to ascertain the title of the property ²³² involved.

Other cases, under certain statutes and construction of statutes, which make instruments operative as records from the time they are filed for record, hold to the contrary, and state that any error occurring after the instrument is filed for record is chargeable to third persons. ... 4 American Law of Property, sec. 17.81; 5 Tiffany, Real Property, (3rd Ed.), sec. 1273. “Tiffany, op. cit, and the American Law of Property place Maryland in the first category with the case of Brydon v. Campbell, 40 Md. 331 [(1874)]. There, a deed conveyed a four-tenths portion of a tract of land. By mistake, the clerk transcribed it upon the register as a fourteenth part thereof. This Court held that a third party was only chargeable with constructive notice of what the record disclosed. “The American Law of Property, supra, at page 620 agrees with the Brydon case, and points out with force and persuasive reasoning that sound logic implies that ... the record itself is the only evidence upon which a later purchaser is to rely, or which should be considered in deciding whether he has record notice; otherwise a purchaser’s only safe course would be to insist upon an opportunity to inspect all of the original instruments in his grantor’s chain of title, something that is entirely impractical.[ 12 ] We therefore hold that as the notation of the Plaza mortgage in the general Chattel Record index was an essential part of its recordation and the clerk failed to note it in said Chattel Record Index, he failed to ‘record’ the same in the Chattel Records, which rendered it ineffective to constitute constructive notice to third parties.” Id. at 583-585, 151 A.2d at 177-178 (some emphasis added); accord Waicker v. Banegura, 357 Md. 450 , 745 A.2d 419 (2000). ²³³ One of the issues in Brydon, supra, involved an issue extremely similar to the present issue as to who should bear the burden of mistake in respect to mistakes made by a clerk in the recording process.

It involved who, if anyone, would bear the risk when the clerk manually copied a deed presented for record. 13 We initially noted, “[b]ut it is very clear that such notice can only be of what the record disclosed.” Brydon, 40 Md. at 337 . When copying from the original document, the clerk had written in the land records that the particular instrument conveyed: “ ‘[TJhe undivided fourteenth part of the land. This, it seems, resulted from a mistake of the clerk, which was corrected long afterwards, so as to read four-tenths, according to the words of the original deed; this correction was made as late as August 7th, 1865, after the commencement of this suit. So far, therefore, as Brydon is affected with constructive notice from the land records, it can only be, of an interest in Governeur Jr., to the extent of one fourteenth part’ ” Id. at 338 .

Because of the Clerk’s mistake, the Court held that the third party was only on notice of an encumbrance as to a fourteenth part interest instead of a four-tenths interest. Thus the risk was on the party filing the instrument. Frank v. Storer, 308 Md. 194 , 517 A.2d 1098 (1986) and Standard Finance Co. v. Little, 159 Md. 621 , 152 A. 264 (1930) are cases that on the surface might appear to support the position of the Receivers. But, Standard Finance was not a case of priorities between parties asserting interests in real property, but a claim by a party against a Clerk of Court, where the party had lost his priority because of mis-indexing.

The party in question was suing the Clerk for damages and, thus, its language as to burdens to correct mistakes in indexing as between parties was dicta. The Frank case was based ²³⁴ solely on the language of Standard Finance. In relying on the Standard Finance case in Frank , we stated that we were doing so, at least in part, because the Legislature had not changed the statute subsequent to our Standard Finance case. We were mistaken.

The Legislature had in fact changed the statute. At the time of Standard Finance, the statute as to recording included the phrase “and other instruments affecting the title,” but the provision in respect to indexing did not. Md. Code (1957, 1966 Repl.Vol.), Art. 17 § 50. At that time the indexing statute used the language “and other conveyances of record” instead of “instruments affecting title or instruments of record.” Md.Code (1957, 1966 Repl Vol.), Art. 17 § 54 (emphasis added).

Notices of lis pendens, although instruments, are not conveyances — they convey nothing. That older language in the indexing statute (“conveyances”) stayed the same through the 1966 Replacement Volume. By the time of the 1981 Replacement Volume, however, Article 17 section 54 had become § 3-302 “Indexes” of the Real Property Article. In the process of this re-enactment of the provisions relating to recording and indexes, the language of the section relating to indexes was changed, and as changed was consistent with the recording section.

It used “and other instrument” instead of “conveyances of record.” Md.Code (1974, 1981 Repl.Vol.), § 3-302(a) of the Real Property Article. Accordingly, when this Court in overruling the Court of Special Appeals decision in Frank v. Storer, 66 Md.App. 459 , 504 A.2d 1163 (1986) based its holding on the fact that the Legislature had not changed the statute in a relevant manner since the time of Standard Finance, albeit the Court was referring to an express allocation of risk, we simply were not correct. At the time of Standard Finance, only conveyances were required to be indexed, albeit instruments affecting title were required to be recorded. Today, instruments affecting title, including notices of lis pendens, are required to be recorded and indexed — the indexing provisions require that any instruments in the land records must be ²³⁵ indexed.

In that event, our recent Walker case clearly controls in spite of Frank and Standard Finance. Indexing mistakes should be at the risk of the person who had the ability to insure that the document was indexed correctly — the filer. We distinguished both Standard, Finance and Frank in Waicker and specifically noted they were not controlling there. Waicker, 357 Md. at 462 n. 9, 745 A.2d at 424 n. 9.

The Standard Finance and Frank cases were based on far different contexts and, as applicable here in a case between competing priorities, can not be read as overruling the specific prior holdings of Plaza, Corporation and Brydon . To the extent that Frank and Standard, Finance, conflict with the present case or with Waicker, they are overruled. We continue by offering a brief description of the process of examination of titles, i.e., the examination of land record instruments, which is a relatively laborious process that changed little during the first centuries following this nation’s founding. The importance of correct indexing being a necessary part of filing and recording of instruments affecting property — if the purpose of the document is to afford constructive notice — can only be understood, if one fully understands the nature of the title examination process.

In this respect, we refer not to the commercial operators of title houses, but to the primary examination of titles located in land records, upon which all purchasers and insurers basically rely. 14 A title examiner goes to the place where the land records and other applicable records repose. He or she develops a chain of title, i.e., a list of the people who have owned the ²³⁶ property for the last specified period of years. The property, or various fractional interests in it, may have been owned by one person or a hundred persons over that particular period of time. Then, during the periods in which each owner owned the property, or any portion of it or interest in it, the examiner must check to see whether during the period that particular owner owned the property, he or' she had sold or mortgaged his or her interest in it to someone other than the person above him in the chain of title (in essence selling or mortgaging the same property more than once) or whether during the period of time each particular owner owned the property any judgments were rendered against such respective owner or whether, during that period any suits were filed anywhere that might constitute lis pendens against the respective owner and to the property while that owner owned it.

As a practical matter it is impossible in a lifetime to examine every original document of every kind ever filed in the land and other records, which would be necessary if the buyer or lender is to be assured that the property is lien free and is owned by the person who is selling it, if the buyer or mortgage lender is required to be responsible for non-indexing or mis-indexing. Presume that an owner in 2000 had owned a subject property in Baltimore City for four years. In the year 1999-2000 there were 31,000 civil cases alone filed in that jurisdiction; in the year 1998-1999 there were 32,742 civil cases filed; in 1997-1998 there were 28,119 civil cases filed; and in 1996-1997 there were 26,877 civil cases filed in the Circuit Court of that jurisdiction. Altogether, during the period our seller owned the property there were 118,737 civil cases filed.

Additionally, the title examiner under such circumstances would have to examine all cases pending at the beginning of the respective period of time — in the example given there were an additional 107,920 civil cases pending in that jurisdiction at the beginning of 1996-1997. If mis-indexing were to be at the risk of the buyer or, as in the present case, at the risk of the banks who are the third-party mortgagees, the person examining the title would have to personally read all the papers filed ²³⁷ in those 226,658 cases in addition to federal lien dockets, tax records and the millions of other documents in the land records in order to insure that none of them constituted lis pendens against the property and to verify that nothing adversely affecting title occurred while the last owner (seller) held complete and clear title to the property. 15 Then, once that is accomplished (which is impossible in the first instance) the title examiner would have to do the same thing in respect to the period of time that each prior owner owned the property, millions of additional documents (usually for a period of at least 60 years at the time the writer was examining titles). Relying on indexing is the only thing that makes it possible for title attorneys to limit the examination of documents to those that are relevant, generally those cases and documents indexed in the grantor’s or debtor’s name. If indexing were to be eliminated, the marketability of titles would be seriously compromised and the entire system of property in this country might collapse.

The contrary position, i.e., indexing is not required, would result in millions of documents having to be reviewed to certify a clear title. It would be an impossible task. With indexing as a requirement of the process as provided for by statute, the title examiner needs to review only the documents reflected on the appropriate index entries under the respective owners, and prior owners’ names, to verify that the documents identified on the indexes do, or do not, affect title. It is still tedious but it can be, and regularly is, accomplished.

The most important public records relating to the examination of land titles are the indexes. Everything depends on indexing. Without indexing nothing works. The Legislature has recognized that importance by requiring indexing as a vital part of the recording of instruments affecting title to real property. ²³⁸ The court in Coco v. Ranalletta, 189 Misc.2d 535 , 733 N.Y.S.2d 849 (N.Y.Sup.Ct.2001) in determining that a name indexed with an additional letter did not provide constructive notice of the senior mortgagee’s lien, stated: “[Although the name Ranaletta and the name Ranalletta may appear and sound similar, there are actually 25 letters of the alphabet separating the two names.

If the alphabetical method of indexing, as provided in [the statute], were interpreted to include methods such as searching by use of the first several letters of a person’s last name or a phonetic search, uncertainty would be introduced into the recording and searching of land titles and liens. Such a system would depend, in part, upon the community standards for title examination, which has been held to be relevant only in an action brought against a recording officer or title examiner, but irrelevant on the question of constructive notice.” Id. at 540, 733 N.Y.S.2d at 853. In the case of Vicars v. Salyer, 111 Va. 307 , 68 S.E. 988, 989 (1910), the Supreme Court of Virginia early on observed that, although not explicitly stated in that state’s lis pendens statute, indexing was an integral part of the docketing of the lis pendens. Were it not a crucial component, the remedial aspects of the lis pendens statute would be thwarted: “Because of the hardship which frequently resulted from the enforcement of the rule, especially to bona fide purchasers, statutes have been passed in England and in many of the states of this country intended, as far as practicable, to remedy the mischiefs of the old law, or to lessen its hardships.

One of the objects of the Legislature in enacting [the lis pendens statute] manifestly was to provide a means by which a person desiring to purchase land might by an examination of the deed books in the county where the land was situated ascertain whether or not there was pending a suit which might affect the title to the land. This object could not be accomplished by the mere leaving of the memorandum required with the clerk. An examination of the deed books would disclose nothing in regard to the pending suit, unless, as the section provides, that memoran ²³⁹ dum was spread upon or recorded in the deed book. As before stated, if indexing the lis pendens after it has been spread upon or recorded in the deed book is not an essential part of its docketing, then copying the memorandum in the deed book is not, for the language of the section cannot be mandatory as to the one and merely directory as to the other.” In an action to quiet title, Palamarg Realty Co. v. Rehac, 80 N.J. 446 , 404 A.2d 21 (1979), the New Jersey Supreme Court opined, in respect to the New Jersey Recording Act which compels the recording of all instruments affecting title, on the notice provided by a prior recorded deed: “The statutes have been consistently interpreted to mean that the subsequent purchaser will be bound only by those instruments which can be discovered by a ‘reasonable ’ search of the particular chain of title.

That is, a prospective purchaser need only search the records to discover conveyances or other significant acts of an owner from the date the deed into that person was recorded until the date he relinquishes record title.” Id. at 456 , 404 A.2d at 26 (emphasis added). 16 The holding of Palamarg Realty was invoked by the plaintiffs in Manchester Fund, Ltd. v. First American Title Ins. Co., 332 N.J.Super. 336 , 753 A.2d 740 (Law Div.1999), a case in which the United States sought civil forfeiture of a property purportedly purchased with money acquired through drug trafficking. The government filed a notice of lis pendens that was indexed in the county records under “United States of America” instead of under the last name of the property’s title holder (similar to the situation in the present case). Soon thereafter, the title owner ceased paying property taxes and ²⁴⁰ Manchester Fund purchased the tax lien on the property and sought title insurance from First American Title Insurance Company and another title company.

The title policy included a rider which disclaimed certain defects, liens or encumbrances on the title. Having learned of Manchester Fund’s summons and complaint for forfeiture of the right to redeem, the United States contacted Manchester Fund and informed it of its forfeiture claim, but the Fund failed to notify the title companies until after the government brought an action to divest Manchester Fund of title. The government cited its notice of lis pendens, which had not been discovered through the regular and customary title search process, in support of its effort to strip Manchester Fund of title. Observing that “the recorded, but the misindexed Notice of Lis Pendens, did not provide constructive notice of the adverse claim of the United States,” id. at 347 , 753 A.2d at 746 , the court held that consequently neither the title insurers nor Manchester Fund had the ability to discover the mis-indexed notice of lis pendens.

The court determined, however, that Manchester Fund must bear the loss because the policy was actually issued at a time when Manchester Fund had already been actually alerted to the government’s prior claim. In other words, it had actual notice. Most notably for purposes of the instant case, the Manchester Fund court stated, “A successful title search depends on the correct spelling and indexing of each owner and claimant in the chain of title.” Id. at 344 , 753 A.2d at 744 . Similarly, in Jones v. Parker, 107 N.J.Super. 235 , 258 A.2d 26 (App.Div.1969), an intermediate appellate court determined that a judgment mistakenly indexed under the name “Ace Parker” was sufficiently dissimilar from the name of “Asa Parker” so as to fail to constitute notice of a judgment against an Asa C. Parker.

The court observed that in that state (as is the case in Maryland) a trial court “judgment becomes a lien upon real estate from the time of the actual entry of such judgment on the minutes or records of the court” and noted that case law had interpreted New Jersey’s judgment recording statute to “[hold] that unless the judgment is entered ²⁴¹ against the same name, both the Christian or first name and surname, as that in which the record title stands, it does not constitute notice to a subsequent purchaser or encumbrancer and is not a lien on the real estate.” Id. at 240 , 258 A.2d at 29 . The court then clarified its determination: “In reality, a judgment against Ace Parker could be against anybody named Parker and the searcher would have no way of knowing what that first name might be. The cases recognize that slight variations in names, which do not have the capacity to mislead, will not vitiate the judgment creditor’s lien. Thus, the abbreviation Edw. for Edward would be sufficient to give constructive notice as to the identity of the judgment debtor.

So too, the entry of a judgment against A. Parker might be sufficient to alert a searcher who was running down the name Asa Parker. But, where there [are] dissimilar names, no obligation is imposed on the title searcher to go behind what the record judgment shows on its face, particularly where the last name being searched is a common name like Jones, Smith or Parker.” Id. at 241 , 258 A.2d at 30 . See also Venetsky v. West Essex Bldg. Supply Co., 28 N.J.Super. 178, 187 , 100 A.2d 291, 295 (App.Div.1953) (stating that “a judgment must be properly docketed [in an index] by the correct Christian name and surname of the judgment debtor” to constitute notice to subsequent bona fide purchasers or encumbrancers).

In Federal National Mortgage Ass’n v. Levine-Rodriguez, 153 Misc.2d 8 , 579 N.Y.S.2d 975 (N.Y.Sup.Ct.1991), a'case closely on point with the case sub judice, and a case which addressed an improperly indexed earlier mortgage, a New York supreme court examined that state’s “tortured and evolving” case law in respect to the indexing of real property instruments, which theretofore had “placed New York among those states which hold that the filer of the mortgage instrument need not stand by or later investigate to see if the document was properly recorded, since delivery of the document to the recorder is itself sufficient.” Id. at 11 , 579 N.Y.S.2d at 978 . A 1924 amendment to New York’s real property recording statute had altered the law so that an ²⁴² “ ‘error in indexing prevented] the record from constituting constructive notice of the filed instrument,’ ” id. at 15 , 579 N.Y.Süd at 980, and the change prompted the Federal National Mortgage Ass’n court to query the wisdom of distinguishing between non-indexing and mis-indexing. That court observed that the indexing requirement should “be viewed as mandatory and nonfeasance is to be equated with misfeasance since negligence is negligence whether the act be of omission or by commission, active or passive.” Id. at 17 n. 2, 579 N.Y.S.2d at 981 n. 2. The Federal National Mortgage Ass’n court rejected the notion that the mere delivery of a deed for filing was sufficient and held that, in the absence of misfeasance or malfeasance, “the harm, if any, in cases of this kind vis-á-vis competing mortgagees must be borne by the party who presents the instrument for recording for, as it has been noted, that is the one party who can readily ascertain if the instrument was properly indexed as part of recording.” Id. at 16 , 579 N.Y.S.2d at 980 .

A commentary, cited by the Federal National Mortgage Ass’n court, supports that case’s outcome: “ ‘A cogent reason underlying the rule which places upon the grantee of a deed or other instrument the responsibility for seeing that the record made of the instrument is accurate is that one who files a paper for recording always has it in his power to examine the records and satisfy himself that his paper has been duly and accurately recorded, while it is impossible for a prospective purchaser or creditor to anticipate and inquire about and ascertain the innumerable forms which the negligence or mistakes of the [recording] officer may assume.’ ” Id. at 11 , 579 N.Y.S.2d at 977 -78 (citing 66 Am.Jur.2d, Records & Recording Laws, § 130, p. 421). In a pair of 1936 Pennsylvania cases, the supreme court of that state opined on the importance of indexing. In re Tourison’s Estate, 321 Pa. 299 , 184