McPherson v. Barbour

BEAN, J. 1. It appears from the record that after the land was platted, the original vendees negotiated — 513 — sales of some of the lots to different parties. In regard to the lots that were sold on the installment plan, or on time, the appellants usually collected 10 per cent of the amount of the purchase price for such lots, and would prepare a deed for the same from P. M. McPherson ánd wife to the purchaser of the respective lot, stating the consideration to be paid and left the same at the First National Bank of Springfield, Oregon, for plaintiff and wife to execute; that upon notice thereof, either by one of the appellants or an officer of the bank, McPherson and wife duly executed and acknowledged such deed, and deposited the same in the First National Bank of Springfield as a fulfillment of the contract. The officer of the bank noted on the back of the original contract left with it as follows: “No payments in amount less than $500 to be indorsed hereon. Place credits in smaller amounts in McPherson escrow acct.” The bank proceeded to keep an account of the pay* ments made for lots sold by the appellants and deposited in the bank until such time as the same should amount to $500. After the sale of a few lots had been made by appellants, they prepared and had printed blanks for a so-called escrow agreement to the effect that the deed to the particular lot sold shall be held in escrow at the First National Bank of Springfield until the price of the lot with interest has been paid, and directing the bank to deliver the deed to the grantee when such payment is made; that upon failure to make payment the deed to be recalled and the amounts paid forfeited. After that when they sold a lot they obtained the signature of the purchaser of the same to the escrow agreement, properly filled out and inserted the name of P. M. McPherson therein, and left the same at the bank, and requested Mr. McPherson to — 514 — sign the agreement. This he failed to do as he states that he had already signed a contract for the sale of the land and the same was unnecessary; that it would complicate the matter. It is not contended by the appellants that the McPhersons failed to execute the deeds as requested, but that they failed to execute the escrow agreement which the vendees desired. This they contend was a breach of the contract. It appears from the testimony that after some consultation between the parties in regard to the matter, Mr. McPherson indicated that he would sign the escrow agreement if the appellants would indorse on the contract the following, a form of which was furnished them by McPherson: “For a valuable consideration, it is hereby mutually agreed by and between the parties to this contract, that the time for the completion and payment of the within contract, except as to the payment of the interest, be and the same is hereby extended two years and three months from the date of this contract, to correspond with the time of' sale.” The proposed stipulation was never indorsed on the land sale contract involved herein, but one of similar purport bearing the date of sale made was indorsed on the so-called escrow agreements and signed on behalf of appellants, leaving a blank for Mr. McPherson to sign when they were left in the bank. McPherson never signed any of the indorsements or any of the so-called escrow agreements. The bank received the different deeds executed by P. M. McPherson and his wife to the different purchasers together with the incomplete escrow agreement and placed the same in;an envelope. A sample of the indorsements made on the envelopes at the bank is as follows: — 515 — “Central Land Co. — A. L. Johnson. Escrow No. 747. Consideration $-. From Central Land Co., Party of the First Part, To A. L. Johnson, Party of the Second Part. Credit payts. to acct. McPherson Escrow #521.” It seems the appellants made sales of lots in the name of Central Land Company. The sole question raised in this case is: Lid McPherson fail to comply with the contract of sale, or was the execution of the different deeds of lots to purchasers and the placing the same in the hank to be delivered by it to the respective purchasers upon full payment of the purchase price, a full compliance with his contract? It should be borne in mind that it was stipulated between the parties to the contract that when the second parties, the appellants, should sell a lot or tract on time according to the stipulations of the contract the first parties “shall at the request of second parties make and execute good and sufficient deeds therefor.” This it is conceded was done. It was further stipulated thus: “Which deeds shall be placed in escrow in the First National Bank of Springfield, Oregon, to be delivered to the purchaser upon full payment therefor.” The definition of an “escrow” is given as follows: “An escrow is a written instrument which by its terms imports a legal obligation, and which is deposited by the grantor, promisor, or obligor, or his agent, with a stranger or third party, to be kept by the depositary until the performance of a condition or the happening óf a certain event, and then to be delivered over to the grantee, promisee, or obligee”: 10 R. C. L., § 2, p. 621. — 516 — See, also, 11 Am. & Eng. Ency. of Law (2 ed.), p. 333 et seq.; Davis v. Brigham, 56 Or. 41 (107 Pac. 961, Ann. Cas. 1912B, 1346); Tyler v. Kate, 29 Or. 515 (45 Pac. 800). Delivery as an escrow is defined as a delivery on some collateral condition which must be consistent with the contract, on the happening of which condition alone the contract is to take effect. No precise form of words is necessary to constitute an escrow. The term “escrow” need not be used, nor will the misuse of that term in designating an instrument necessarily make it an escrow. There can be no escrow unless the delivery of the instrument by the depositary to the grantee or obligee is conditioned upon the performance of some act, or the happening of some event. The condition upon which an instrument is delivered in escrow need not, however, be expressed in writing, but may rest in parol, or be partly in writing and in part oral: 10 R. C. L., § 5, p. 623. Citing Couch v. Meeker, 2 Conn. 302 (7 Am. Dec. 274); Taft v. Taft, 59 Mich. 185 (26 N. W. 426, 60 Am. Rep. 291); Manning v. Foster, 49 Wash. 541 (96 Pac. 233, 126 Am. St. Rep. 876, 16 Ann. Cas. 95, 18 L. R. A. (N. S.) 331, and note); Bowker v. Burdekin, 11 Mees. & W. 128 (12 L. J. Exch. 329, 8 E. R. C. 598); notes, 130 Am. St. Rep. 913, 950, 10 L. R. A. 470); Fulton v. Priddy, 123 Mich. 298 (82 N. W. 65, 81 Am. St. Rep. 201); Campbell v. Thomas, 42 Wis. 437 (24, Am. Rep. 427; note, 1 Am. St. Rep. 114). To constitute an escrow it is essential, not only that the grantor and grantee are at one as to the conditions under which the deposit is to be made, but that such conditions should be communicated to the depositary. And it is equally essential that the grantee or obligee is aware of every circumstance in connection with the conditions likely in any way to affect the liability — 517 — under it: Note, 130 Am. St. Rep. 933; "Where the possession of the depositary is subject to the control of the depositor, an instrument cannot be said to be delivered, and it is not an escrow. While the depositor’s right of possession may return if the specified event does not happen, or the conditions imposed are not performed, yet to constitute an instrument an escrow it is essential that the deposit of it should be in the meantime irrevocable; that is, that when the instrument is placed in the hands of the depositary, it should be intended to pass beyond the control of the depositor, and that he should actually part with all present or temporary right of possession and control over it. In case the deposit is made in furtherance of a contract between the parties, the contract must be so nearly complete that it remains only for the grantee or obligee or another person to perform the required condition, or for the event to happen, to have the instrument take effect according to its import: 10 R. C. L., § 8, p. 626. It appears from the contract above quoted that the conditions upon which the deeds to lots that might be sold "by the appellants should be deposited in the First National Bank of Springfield were all contained in that contract for the direction of the parties, except the price to be paid for each of the various lots. Such price in every case disclosed by the record was mentioned in the deed which was deposited in the bank. It appears that the depositary was fully informed as to the conditions, one of the triplicate contracts being left with the bank for its guidance in the matter. We therefore conclude that the deposit of the several deeds which the McPhersons were requested to execute and which they executed and deposited in the bank under the circumstances detailed in this case was a full compliance on their part, to place such deeds in — 518 — escrow in the hank; that they did not fail to comply with the contract in this respect; that all the conditions upon which the deeds were delivered in escrow by McPherson did not necessarily have to be expressed in writing. He was not required to use the word “escrow” when he deposited the deeds in the bank. The deeds were complete in every respect, and were deposited with the bank pursuant to the sale contract. The vendors thereby relinquished all dominion over them. The condition of delivery to the grantee named therein was specified and understood by the depositary. In so far as shown by the record, such arrangement was understood by, and satisfactory to, the different lot purchasers. The contract provided that the vendees, A. C. Barbour et al., should sell the lots after the tract was platted, and not the McPhersons. That instrument authorized the vendees to make such sales. It was not absolutely necessary for McPherson and wife to sign additional agreements. Something is said in the argument in regard to the time given to some of the lot purchasers to pay for the lots, thereby extending the time beyond the period of four years for the full payment for the tract according to the terms of the contract of sale involved herein. But it appears that Mr. McPherson was willing that the time for payment for such contract should be extended. This is shown by the indorsement which he proposed to have indorsed on the contract, so.there is no real controversy between the parties in regard to the time allowed the different lot purchasers. The plaintiffs by the execution of the deeds with knowledge of the time of payment sanctioned such agreement, and this matter need not be further considered. It is admitted that, the appellants were in default in their payments; they had sold and apparently could sell — 519 — only comparatively a few lots. While there may have been some misunderstanding as to the rights and duties of the parties to the contract of sale, the claim of the appellants savors of an attempt to place the vendors in default in order to obtain a return of the partial payments they had made for the real property. Five persons who purchased lots of appellants upon the installment plan and had each only partially paid for the lots so purchased were made defendants in this suit. The decree of the trial court allowed such defendants to complete the payments for their respective lots and receive their deeds therefor. No appeal was taken from that part of the decree. Provision was also made for the appellants to complete payment for the real property within one year from the date of the decree. After a careful examination and consideration of the record, and the question submitted, we affirm the decree of the lower court. Affirmed. McBride, C. J., and Johns and Bennett, JJ., concur.