Dempwolf v. Bill

Opinion by Mr. Justice Elkin, The plaintiff stands on his record title, the documentary evidence of which introduced at the trial made out a prima facie case in his favor. After an exhaustive examination of all the — 167 — questions raised by this appeal, we are of opinion that no testimony produced at the trial, or offered and refused, was sufficient in law to overcome the prima facie case made out by the plaintiff. The theory upon which the learned counsel for appellant bases his contention is that the terms and conditions of the option or agreement with Jackson under which the deed was held in escrow, had not been complied with before it was delivered by the Union Trust Company, the depositary, to Murphey, the grantee, and by reason of the alleged failure to comply with the terms and conditions precedent to the delivery of the deed no valid title passed. The first seven assignments allege error in the learned trial judge refusing to admit testimony offered by defendant, relating to and bearing upon matters connected with the promotion, organization and financing of the Eastern Milling & Export Company. The general purpose of these offers was to show such a violation of the conditions upon which the deed was held in escrow as to be a fraud on the rights of appellant by reason of which no title passed. Whether in a suit between appellant and Jackson, or between appellant and the Eastern Milling & Export Company, this testimony should be admitted for any purpose, it is not necessary to consider and determine, but as between the parties to this litigation, under the admitted and undisputed facts, it is clearly incompetent for the purpose of affecting the validity of plaintiff’s title. It appears from the uncontroverted evidence in the case that appellant executed a deed for the milling property in dispute, and deposited it with the Union Trust Company of Philadelphia in escrow, under the terms and conditions of the agreement with Jackson ; that said deed was to be delivered by the depositar}' to the grantee therein named when the consideration agreed upon, in money and stocks, had been deposited with said trust company and the other conditions had been complied with; that on April 5, 1901, appellant was notified that the Eastern Milling & Export Company had exercised the option to purchase the property; that the amount of money and stocks agreed upon as a consideration therefor had been received by and deposited with said trust company; that a mortgage had been placed on said property to secure a temporary loan; that he should transfer his insurance to the mort — 168 — gagee; and that he would be expected to enter into a lease under the terms of which he should operate the mill for a period of sixty days as lessee. A few days after receiving this notice he executed a lease whereby he covenanted to operate the mill for a period of sixty days as lessee, and surrender the same on five days’ notice thereafter. Some delay in closing up the transaction was occasioned on account of the failure to deliver a deed for a railroad siding, which it was alleged should be included in the conveyance. The deed for the siding was delivered May 31, and subsequently the Union Trust Company forwarded the money and stocks deposited with it to appellant as consideration for the transfer under the terms of the agreement by which the deed was held in escrow. On June 20, he acknowledged in writing the receipt of $6,250 and 375 shares of the preferred and 375 shares of the common stock of the Eastern Milling & Export Company, which he accepted as consideration in full for his mill property. Before and after the receipt of the cash payment and stocks, appellant asserted at different times and to different persons that he was in possession of the property as a tenant under the lease. As late as July 5, after the organization meeting of the Eastern Milling Export Company, he acknowledged ■ his liability for rent due the company as its tenant, and asked that it be charged to him as a set-off in the settlement to be made ’ on account of the company taking over certain personal property belonging to him. On the same day he deposited the stock held by him in a pool with other stockholders of the company, but withdrew it a few days later. On the other hand, it cannot be doubted that the grantee and his assigns treated the delivery of the deed as an absolute transfer of the property on and after April 5, 1901. On that day Murphey, the grantee, acting under the direction of the Eastern Milling & Export Company, executed a mortgage on the milling property, the title to which is in dispute in this suit, to secure a temporary loan of money. The appellant had notice of the execution of this mortgage because he was notified to transfer the insurance to the mortgagee. On July 1, a general mortgage covering all the constituent properties of the new corporation, including the property of the appellant, was executed and recorded. This mortgage secured a bond — 169 — issue in a large sum of money. Tlie corporation defaulted in the payment of interest on the bonds, and the mortgage was foreclosed by a decree of the United States circuit court, under which the property in dispute, and all other properties covered by the mortgage, were sold and conveyed to the plaintiff who brought this action in ejectment. It is thus apparent that the appellant, the new consolidated milling company, and all other parties in interest, treated the delivery of the deed by the trust company to Murphey, April 5, 1901, as an absolute transfer of the property. Against this array of concrete facts it is of no avail to assert abstract principles of law wherein it is held that a deed takes effect only from the time of its delivery; or, where a deed is placed in the hands of a third person as an escrow, the grantee is only entitled to a delivery upon a strict compliance with the conditions precedent to such delivery; or, that if the depositary delivers the deed without authority from the grantor, or if the grantee obtains possession of it fraudulently, without performing the conditions, the deed is void ; or, that where the future deli very of a deed depends upon the payment of money, or the performance of some other condition, and the grantee obtains possession of the deed without performing the condition, he acquires but a voidable title. These are recognized and settled principles of law, and will not be questioned by anyone familiar with the rules of property, but it would do violence to every rule of construction to hold them applicable to the facts of tlie case at bar. The appellant does not deny that he received the full consideration for his property as provided in the agreement with Jackson, to wit: the cash in hand and stocks, but contends that the stocks are depreciated in value because of the failure to comply with certain other conditions of the agreement, and that it was the duty of the depositary to see that all the terms and conditions of said agreement were carried out before the delivery of the deed. The position is not tenable under the facts of the present case. Such a rule would impose a higher standard of legal requirement on the agent than on the principal. It will not be seriously contended that in this respect the Union Trust Company can be required to exercise greater care and diligence in the enforcement of the conditions of the — 170 — escrow than the appellant, who, with Jackson, constituted the trust company depositary for the receipt of the consideration and delivery of the deed. When the appellant, who was as familiar with the facts connected with the organization of the new milling company as the common agent, the depositary, accepted the money and stocks in full consideration for his property, and thereafter acquiesced in the mortgage of said property as a security to third parties and bondholders, who had advanced their money for the uses and purposes of the new corporation, he cannot now be heard to say that the depositary had been unfaithful in not enforcing the alleged conditions of escrow precedent to the delivery of the deed. If a title may he avoided under such circumstances, no purchaser is safe. The learned court below was clearly right in the construction placed upon the escrow agreement. The rule is that where words can be construed either as a condition, reservation or covenant, the latter construction is favored : Methodist Church v. Old Columbia Public Ground Co., 103 Pa. 608; In re Sellers M. E. Church, 139 Pa. 61. A purchaser for value has a right to act on the faith that a deed has been signed, sealed, acknowledged and delivered as it purports to be, and the presumption is that it has been so executed and delivered by proper parties: Blight v. Schenck, 10 Pa. 285. A mortgagee is regarded in law as a purchaser for value : Logan v. Eva, 144 Pa. 312. In the view we take of the case it is not important to consider the question of notice at the foreclosure sale raised by the eighth assignment of error. The appellant had executed a conveyance of his property and had received the consideration agreed to be paid him, and the delivery of the deed under the circumstances was binding upon him. Having parted with the title to his property, and the rights of third parties having intervened, it was immaterial what notice he gave at the sale. The ninth and tenth assignments, for reasons hereinbefore stated, are without merit. The agreement with Jackson may have been an improvident one; the plan for the combination and operation of the smaller milling properties in a large operating company may have been unwise and unprofitable, like many other promising enterprises floated for speculative purposes, but the matters complained of — 171 — must be raised, if at all, in a proper proceeding between the parties, and cannot be set up as a defense for the purpose of avoiding a deed solemnly executed and duly recorded. This opinion was not handed down with others in cases heard at the same time for the reason that it was originally assigned to our late Brother, Mr. Justice Dean, and after his death it was reassigned too late to hand down with others in June. Judgment affirmed.