## Facts

- In 1958, William C. and Ula May Alden, and Mickey E. and Joyce E. Keffer executed a $4,550 promissory note payable to August and Mabel Manke.
- The note was secured by a deed of trust on Nevada real property naming Pioneer Title Insurance Company (Pioneer) as trustee.
- The note and deed of trust were deposited with Pioneer with instructions to (1) collect the $4,550 from the makers, (2) disburse the proceeds to the payee named in the note, and (3) reconvey the property upon full payment.
- After August Manke died, Mabel Manke claimed the instruments had been lost and assigned her interest in the note and deed of trust to Julio Giorgi.
- Giorgi recorded the assignment and notified the Aldens and the Keffers of the assignment.
- Giorgi did not give Pioneer actual notice that the assignment had occurred, even though Pioneer was identified as trustee in the deed of trust.
- Pioneer later collected the $4,550 from the makers, disbursed the funds to Mabel Manke as the payee named in the note, and executed a reconveyance releasing the deed of trust.
- When Giorgi later attempted to collect on the note, he learned the note had been paid and the security released; he sued Mabel and Pioneer for the amount due.
- The trial court entered judgment for Giorgi against Mabel for $4,550 but refused to hold Pioneer liable; Giorgi appealed only as to Pioneer.

## Issues

1. Whether recording an assignment of a deed of trust gave Pioneer constructive notice under NRS 106.210, requiring Pioneer to pay the assignee rather than the payee named in the note.
2. Whether, when Pioneer held a negotiable promissory note for collection under escrow instructions, negotiable-instrument rules allowed Pioneer to disburse to the named payee and reconvey absent actual notice of an assignment.

## Decision

- The Nevada Supreme Court affirmed the judgment in favor of Pioneer.
- The court held that the law of negotiable instruments governed Pioneer’s payment and disbursement duties as holder of the note.
- The court rejected Giorgi’s claim that recordation of the assignment charged Pioneer with constructive notice under NRS 106.210 for purposes of disbursement and reconveyance.
- Because Pioneer lacked actual notice of the assignment and acted according to the note and the escrow instructions, Pioneer was not liable to Giorgi.

## Legal Principles

- When a promissory note is negotiable and is held for collection, payment and discharge questions are governed by negotiable-instrument law, even though the note is secured by a deed of trust.
- A holder or collection agent acting under instructions may disburse to the payee identified on the face of the negotiable note unless it has actual notice that the right to payment has been assigned or otherwise transferred.
- Recording an assignment under NRS 106.210 functions as notice to later purchasers or encumbrancers of real property; it does not, by itself, impose on an escrow holder/trustee a duty to search the public records before paying out collected funds.
- An assignee who fails to obtain the instrument and fails to notify the party holding the instrument and controlling disbursement bears the risk that payment will be made to the apparent payee and the security released.

## Conclusion

Pioneer was not responsible for Giorgi’s loss because it held the negotiable note for collection, had instructions to pay the named payee and reconvey upon payment, and had no actual notice of Giorgi’s recorded assignment; recording alone did not bind Pioneer under NRS 106.210, leaving Giorgi’s remedy against his assignor rather than the escrow holder/trustee.


Giorgi v. Pioneer Title Insurance Co., 454 P.2d 104 (1969)