Gehringer v. Real Estate-Land Title & Trust Co.

Opinion by Mr. Justice Linn, Defendant appeals from a decree of specific performance in a suit brought to require certain things to be done pursuant' to contracts alleged to have been made by plaintiff, defendant and Helen Penrose Hodge. The facts have been agreed to. It is immaterial, in the view that we must take of the transaction, that Mrs. Hodge, the buyer, was not made a party to the proceeding. By writing, July 10, 1931, plaintiff agreed to sell to Mrs. Hodge for $40,000, certain real estate, $4,000 payable in cash (which was paid) on that day, $26,000 cash at final settlement, “the balance . . . to be represented by a purchase money first mortgage.” A real estate broker, representing Mrs. Hodge, applied to defendant for a policy of title insurance against encumbrances. Later the same broker, representing plaintiff, applied to *403 defendant for mortgage insurance in $10,000 against encumbrances and also “arranged with tbe defendant for settlement to be held between tbe plaintiff ...” and Mrs. Hodge, October 5, 1931, at 11 a. m. At tbe time specified, both buyer and seller met at defendant’s office for settlement “together with the duly authorized settlement officer of the defendant.” An account was stated showing that “with certain adjustments for taxes and insurance, and that after deduction of defendant’s proper charges and a commission to [the real estate broker] the plaintiff was entitled to the sum of $26,-237.12” out of a total balance of $36,639.44 payable, of which $10,000 was to remain secured by first mortgage. The seller produced a deed for the premises; the buyer produced the mortgage for $10,000. Though the contract required a payment of $26,000 in cash, Mrs. Hodge did not produce cash; instead, she offered a check drawn on the Franklin Trust Company by her husband, which he had had certified. In addition, and to complete the payment required to make the adjustments, to pay the broker’s commission and defendant’s insurance charges, Mrs. Hodge offered another check for $39.44 on the same bank also drawn by her husband. At this point, what was the situation? Both buyer and seller had separately applied to defendant for title insurance and, pursuant to the applications, defendant was prepared to issue its policies; in other words, to accept the proposals severally made to it by buyer and seller. The calculations had been made and approved showing the sums payable and to whom. Though bound to supply $26,000 cash, Mrs. Hodge came unprepared to do so and tendered the checks, prima facie, conditional payment. The seller might have rejected them and insisted on the cash which Mrs. Hodge had agreed to pay at that moment; instead, she acquiesced in Mrs. Hodge’s variation of the contract. Defendant was not a party to the contract of sale and, as respects the purchase price, had no obligation except to distribute it in the medium *404 in which it was tendered by the buyer and accepted by the seller, and in amount as they should direct. There is no finding (and on the record none could be supported) that the checks were received as absolute payment. We have, then, conditional payment accepted by the seller, as part of the settlement. “Furthermore, in the absence of circumstances indicating a contrary intention, a cashier’s check accepted from a debtor is not an absolute but merely a conditional payment, defeasible upon nonpayment or dishonor”: Gerrard v. Tradesmen’s Bank, 318 Pa. 100, 103, 177 A. 760. See, also, Phila. v. Stewart, 195 Pa. 309, 314, 45 A. 1056. 1 The deed and the mortgage have also been produced and placed in the defendant’s custody for purpose of delivery and recording, common practice in such settlements, a step taken by a title insurance company preparatory to issuing its policy of title insurance. 2 Conditional payment having been made and acquiesced in by the seller, the adjustments having been calculated, the settlement sheet showing the account having been agreed to and the title papers having been produced, it remained for the defendant to distribute what had been paid, as stated, to those shown by the settlement sheet to be entitled. But, as conditional payment only had been made, its distribution by defendant, in that respect acting for both buyer and seller, must necessarily also have been conditional, contingent on the parties making good what one had offered and the other *405 had received instead of cash. 3 Accordingly defendant’s clerk drew and delivered to plaintiff a check or order on itself payable to plaintiff in the snm of $26,237.12 (made up as stated above). This check specified on its face that it was a “settlement check”; it contained the number identifying it with the particular settlement involved and specified that it was “Payable through the Philadelphia Clearing House. 4 By taking the checks and making the conditional distribution, defendant of course impliedly agreed to make timely presentation of the checks and, it is agreed, that in this respect defendant omitted no duty. 5 Plaintiff does not suggest that defendant, by any guaranty, made absolute what would otherwise have been conditional. Her position is that defendant should be held liable on the ground that she would not have given up her deed if she had not received defendant’s check; that the consideration for defendant’s promise to pay the amount due her by the buyer was the detriment incurred by her waiver of the right to receive cash and the manual delivery of her deed to defendant. Even if we should disregard the effect of the conditional payment by Mrs. Hodge, plaintiff’s position would be without support ; the agreement contains no statement of fact that the alleged detriments were incurred in reliance on defendant’s promise to pay; without such agreement her contention must fail. On the other hand, the only consideration which defendant received was Mrs. Hodge’s two checks; as this consideration failed, defendant was discharged. *406 We come, then, to the remainder of the transaction. On the same day on which the buyer’s checks were received, defendant put them in course of collection; when presented to the drawee bank next morning, it was found that, on the preceding midnight, the bank had been taken over, as insolvent, by the secretary of banking. Defendant then stopped payment on its distribution check, and immediately advised both buyer and seller that, on the dishonor of Mr. Hodge’s checks, “in reliance on the collection of which our settlement check was issued to” plaintiff, there had been failure of consideration, in consequence of which defendant had stopped payment of its check to plaintiff, that defendant had not recorded the deed and the purchase-money mortgage, and that it would not issue the insurance policies, or record the papers, unless the buyer made good the amount payable. It is obvious from the statement of the facts, considered either from the viewpoint of defendant or of plaintiff, that the consideration failed and that defendant was excused from further performance until the parties supplied it with something to distribute. The learned court below was of opinion that (1) defendant was estopped and (2) in any event, as we understand it, defendant had no right to stop payment of the settlement check. (1) There is no ground for estoppel. In Fedas v. Ins. Co. of Pa., 300 Pa. 555, 560, 151 A. 285, it was said: “An estoppel exists where one by his words or conduct causes another to believe in the existence of a state of facts, inducing reliance thereon in some act of mutual concern, and the inducing person wishes to assert, prejudicially, facts in opposition to those first held out to be true, on which action was taken.” Defendant did nothing that could mislead buyer or seller; the record would not support a holding that it did. Possession of the premises had not changed. The deed and mortgage were deposited with defendant for specified purposes and, on *407 failure of the consideration, remained as deposited, subject, as respects defendant, to the order of the parties to the sale. Buyer and seller were present and were parties to the conditional payment; it was their settlement; they created and were familiar with all the attending circumstances in the light of which they dealt. (2) The record furnishes no support for the position that defendant could not stop payment; the settlement check remained in the hands of the payee to whom it was issued in distribution “on the faith that the certified check delivered to them by the vendee would be paid.” The consideration for which it was issued failed, in circumstances, as has been stated, which discharged defendant. 6 For the reasons stated above we must reject appellee’s contention that appellant’s settlement check “represented a sale of the appellant’s own credit to appellee, the consideration for which was appellee’s delivery of her deed.” The facts do not support it; the parties have not agreed that appellant’s checks were taken as absolute payment; nor is there anything to support the view that the consideration for taking them as absolute payment was “appellee’s delivery of her deed.” Among the facts agreed to is that, at the settlement, plaintiff delivered her deed to defendant “for recording and delivery to” the buyer who “delivered to the defendant [her] . . . mortgage . . . for recording and delivery to the plaintiff”; both those so-called deliveries were necessarily made to defendant in the course of the parties’ settlement, whereby each party, for purposes of title insurance, constituted defendant her agent to make, not manual, but legal delivery (cf. Eaton v. New York Life Ins. Co., 315 Pa. 68, 80, 172 A. 121). There is no evidence or agreement that plaintiff delivered her deed in reliance on defendant’s promise to pay. *408 The decree is reversed and the record is remitted with instructions to dismiss the bill at appellee’s costs. Footnotes [1] As Mr. Hodge, the drawer, procured the certification of the cheek, he was not discharged. See annotations to section 188 (Act of May 16, 1901, P. L. 194, 56 PS section 476) in Brannan: Negotiable Instruments Law (5th ed.), page 1061. [2] The 6th paragraph of the agreement of facts states that at the settlement “Plaintiff then delivered to defendant her deed to the premises in quesion for recording and delivery to the- said Helen Penrose Hodge, and at the same time the said Helen Penrose Hodge delivered to the defendant the $10,000 purchase-money mortgage before referred to for recording and delivery to the plaintiff.” [3] Tbe court in banc found that defendant’s clerk “delivered to tbe plaintiff tbe defendant’s check drawn on the faith that tbe certified check delivered to them by tbe vendee would be paid.” [4] This condition gave opportunity to stop payment if tbe purchaser’s cheeks were dishonored on presentation. [5] Tbe court found that “defendant was not negligent in attempting to collect tbe checks given it by tbe vendee.” [6] See Kinder v. Fisher’s Nat. Bank, 93 Ind. App. 213, 177 N. E. 904.