/Procedural Posture
Procedural Posture

Procedural Posture

Appellants sought relief from the judgment of the Superior Court of Riverside County (California), and argued that the evidence failed to establish liability on a forged note under ratification or estoppel pursuant to Cal. Com. Code § 3404, and the right to indemnification based on the negligence of the escrow company and a notary.

California Business Lawyer & Corporate Lawyer, Inc. understands CACI 406


Defendant agreed to loan money to plaintiff corporation, consummated by a promissory note made through an escrow agent. The note executed by appellant’s corporate president and three principal shareholders was secured with stock, and notarized affidavits were deposited with the escrow agent as evidence of stock ownership. After an adjudication finding liability on an unpaid balance and no findings for negligence of the escrow agent, appellants claimed the escrow agent and notary were liable for indemnification based on negligent and fraudulent notarization of the forged affidavit, and no liability for the forged signature. The court held that the forged signature was a ratified basis of acquiescence, retention of benefits, and that estoppel was applicable because appellant knew of the forgery, received the benefits derived from the forgery, and neglected its duty to disclose the forgery. The evidence was sufficient to support both the finding of ratification and estoppel under Cal. Com. Code § 3404.


The court reversed because the trial court erred in its failure to determine whether indemnification was viable as to the escrow company, notary, and surety, and whether or not the negligence, if any, was a proximate cause of injury to appellants.