08-04-09 NEW JERSEY LAWYERS' FUND FOR CLIENT PROTECTION V.
STEWART TITLE GUARANTY CO.
A-2622-07T1
Consistent with the Court's holding in Sears Mortgage Corp.
v. Rose, 134 N.J. 326 (1993), we hold a title insurance company
liable to its insureds for the defalcation of the closing
attorney, because the carrier's written notice disclaiming any
agency relationship between the attorney and the carrier was
sent only to the wayward attorney, and not to the insureds.
We further hold the carrier vicariously liable for the
attorney's defalcation, even though the theft of clients' funds
occurred before the creation of an agency relationship. The
harm caused by the attorney to his clients cannot be isolated to
any discrete act. Here, the chain of defalcation continued long
after the agency relationship was created.
Chase Smith assistant editor
