This section contains the nature of the case and procedural background.

Goldberg misused his position as an attorney in arranging the placement of two mortgages on the same property. He falsely represented to each mortgagee that its mortgage was a first lien. Goldberg secured a subordination of the Raben first mortgage of $12,000 and falsely certified to Equity (P) that he had canceled Valley's second mortgage of $40,000 to get a $48,000 mortgage from Equity. A year later Goldberg obtained a $54,000 mortgage loan from Spencer. Goldberg disclosed to Spencer only the Valley mortgage and satisfied it out of the proceeds of the Spencer loan. He concealed the Equity and Raben mortgages. When the truth came out, Chicago Title paid Spencer under its policy, took an assignment of the Spencer mortgage and purchased the Raben mortgage. Record priorities were as follows: Equity, Chicago (Raben) and Chicago (Spencer). The present dispute is between Equity (P) and Chicago (D). The trial judge declined to apply the doctrine of subrogation by equitable assignment because, as he viewed it, there is no equitable reason to give Spencer an advantage over Equity since each was identically defrauded by Goldberg into believing its junior mortgage was first. The trial judge concluded that Equity (P) was first. Chicago (D) appealed.

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