Hammack v. Coffelt Land Title Inc.

• Decision Date: 06 September 2011
• Docket Number: No. WD 72477.,WD 72477.
• Citation: 348 S.W.3d 75
• Parties: Thomas R. HAMMACK, as an Individual and as Co–Trustee by and on Behalf of the Beneficiaries of the Hammack Family Farm Trust, Appellant,v.COFFELT LAND TITLE, INC., Respondent.
• Court: Missouri Court of Appeals

348 S.W.3d 75

Thomas R. HAMMACK, as an Individual and as Co–Trustee by and on Behalf of the Beneficiaries of the Hammack Family Farm Trust, Appellant,

v.COFFELT LAND TITLE, INC., Respondent.

No. WD 72477.

Missouri Court of Appeals, Western District.

Sept. 6, 2011.

Charles E. Weedman, Jr., Harrisonville, MO, for Appellant.Nicholas P. Hillyard, Kansas City, MO, for Respondent.Before JAMES EDWARD WELSH, P.J., JAMES M. SMART, JR., and JOSEPH M. ELLIS, JJ.JAMES EDWARD WELSH, Presiding Judge.

Thomas R. Hammack ¹ sued Coffelt Land Title, Inc., for negligence and breach of contract, over its handling of a deed and money received from the sale of certain farm property. The circuit court, after a bench trial, entered judgment in favor of Coffelt Land Title. Thomas Hammack appeals. He asserts that the circuit court erred in finding that the December 3, 1998 general warranty deed executed by Thomas Hammack and his wife and his brother, H. Stanley Hammack, and Stanley's wife was effective to transfer title to the purchasers of the farm property. In particular, he contends that, because the general warranty deed was not delivered into escrow to Coffelt Land Title, the relation back doctrine is not applicable. Further, he claims that, even if the contract was controlling as an escrow agreement, the terms of the contract were not fulfilled. We disagree and affirm the circuit court's judgment.

On February 7, 1997, Stanley Hammack and his wife, Jeannette Hammack, executed a revocable, inter vivos trust denominated the “Stan Hammack Family Revocable Trust Dated 02/07/97” (Family Trust). One of the assets not included in the Family Trust was Stanley Hammack's undivided one-half interest in a 1,040 acre family farm. The other undivided one-half interest in the farm belonged to Stanley Hammack's brother, Thomas Hammack. The Family Trust stated that, in the event Stanley Hammack preceded his wife in death, Stanley Hammack's one-half interest in the 1,040 acre family farm would be conveyed to Hammack Family Farm Trust (Farm Trust) by beneficiary deed upon his death.² Also, on February 7, 1997, Stanley and Jeannette Hammack executed a beneficiary deed conveying title in Stanley Hammack's one half interest in the farm to the Family Trust upon Stanley Hammack's death.

The Family Trust further provided that, after Stanley Hammack's death, Jeannette Hammack and Thomas Hammack would act as co-trustees of the Farm Trust. According to the Family Trust, income from the Farm Trust was to be paid to Jeannette Hammack during her life, and, upon her death, income from the Farm Trust was to be paid to Thomas Hammack for his remaining life. Then, upon Thomas Hammack's death, the Farm Trust would terminate, and the property would be divided among the children of Thomas Hammack. The Family Trust also stated that the Farm Trust could not be amended or revoked and that the assets could not be withdrawn after the death or incapacity of Stanley Hammack.

On December 3, 1998, Stanley and Jeannette Hammack and Thomas Hammack, and his wife, Janet, executed a contract to sell the 1,040 acre family farm to P. David Perkins and David D. Davenport. On that same day, Stanley, Jeannette, Thomas, and Janet Hammack executed in their individual capacities a General Warranty Deed transferring the title of the family farm to Perkins and Davenport. The General Warranty Deed was signed by the parties at Coffelt Land Title's Harrisonville office. Thomas Hammack acknowledged that he was not actively involved in the sale of the family farm and that his brother, Stanley Hammack, handled everything. He stated that he never discussed an escrow with Coffelt Land Title or with his brother. Thomas Hammack said that on December 3, 1998, he was “in and out” of Coffelt Land Title's office to sign the documents for the sale of the farm.

The contract for sale provided that the down payment would be held in escrow and that the deed would be delivered to the purchasers at closing. It further provided that the $390,000 purchase price would be payable in the form of a $10,000 down payment to be held in escrow with Coffelt Land Title and that the balance of $380,000 would be paid in cash upon closing. The contract called for closing the last five days of 1998 or within the first five days of 1999 at Coffelt Land Title's office “or at such other time and place as the parties may mutually agree.” However, the second five was crossed out and “15” was handwritten in and initialed next to it. Further, the contract provided that at closing “the warranty deed shall be delivered and the payment of the purchase price in accordance with the terms [of the contract] shall be completed.”

No written escrow agreement was prepared or executed by the parties. David Coffelt, Chairman of Coffelt Land Title, testified that his company generally used escrow agreements but that it did not in this case because the closing was based on the terms of the agreement.³ When the contract and general warranty deed were signed by the parties, the documents were left with Coffelt Land Title, and Coffelt Land Title placed the items in a closing/escrow file.

On December 6, 1998, Stanley Hammack died.

On January 11, 1999, after Stanley Hammack's death, Coffelt Land Title received two checks, dated December 5, 1998, totaling $10,000 from Perkins and Davenport. On February 1, 1999, Thomas and Janet Hammack attended the closing at Coffelt Land Title's office.⁴ At that time, they signed a general warranty deed conveying a one-half interest in the farm to Perkins and Davenport. Jeannette Hammack also executed a trustee's deed conveying an undivided one-half interest in the 1,040 acre farm to Perkins and Davenport. It was these deeds, rather than the general warranty deed executed on December 3, 1998,⁵ which Coffelt Land Title used at the time of closing. A settlement statement was also signed by Thomas Hammack, Janet Hammack and Jeannette Hammack at the closing. Perkins and Davenport tendered payment of $380,000, and the sale of the farm was closed. Coffelt Land Title issued a check from the proceeds of the sale to Jeannette Hammack for $176,725.69 and a check to Thomas and Janet Hammack in that same amount.

At the time of the closing, Thomas Hammack was unaware of any trusts or a beneficiary deed set up and executed by Stanley Hammack and Jeannette Hammack to transfer their interest in the farm to a trust. However, approximately two weeks after closing, Thomas Hammack became aware of the trusts, the beneficiary deed, and his role as co-trustee of one of the trusts when he received a telephone call from Jeannette Hammack. The beneficiary deed, which attempted to convey Stanley Hammack and Jeannette Hammack's interest in the farm to the Family Trust upon Stanley Hammack's death, had been recorded in February 1997.

After learning of the beneficiary deed and the trusts, Thomas Hammack made a demand upon Coffelt Land Title regarding the disbursement of the sale proceeds. He also made a demand upon Jeannette Hammack to return her portion of the sale proceeds to Thomas Hammack and herself, as co-trustees of the Farm Trust. Coffelt Land Titled refused the demand. Jeannette Hammack did not return the money, but she has not been sued.

Thereafter, on January 12, 2004, Thomas Hammack, individually and on behalf of himself and the other beneficiaries of the Farm Trust filed a two count Petition for Damages in the circuit court against Coffelt Land Title. He filed an amended petition on May 4, 2009. In Count I, Thomas Hammack asserted a claim based on negligence, alleging that Coffelt Land Title had breached its duty of care, and, in count II, Thomas Hammack alleged that Coffelt Land Title breached the terms of a contract. Both counts were premised on the assertion that Coffelt Land Title issued a check to Jeannette Hammack in her personal capacity instead of as trustee for the Farm Trust when the real estate transaction closed.⁶

On November 4 and 5, 2009, the circuit court held a bench trial. On March 1, 2010, the circuit court entered judgment in favor of Coffelt Land Title. The circuit court found that the circumstances and conduct of the parties supported a finding that the general warranty deed of December 3, 1998, was placed in escrow. According to the circuit court, the circumstances demonstrated an intent by the grantors to unconditionally turn over the warranty deed upon the buyers' performance of paying the amounts due at closing. The circuit court found that the warranty deed executed on December 3, 1998, was delivered to Coffelt Land Title for delivery to the purchasers upon performance of the conditions of the contract. Therefore, the circuit court concluded that, under the relation-back doctrine, the transfer would be deemed to have occurred on the date of the original delivery of the deed to Coffelt Land Title, December 3, 1998, even though the deed remained in the custody of Coffelt Land Title until its recording in 2007. The court further found that an escrow agent owes a fiduciary duty to the parties for whom he holds property. According to the circuit court, Coffelt Land Title was not holding property for the Family Trust or the Farm Trust and owed no duty to the trusts. Consequently, the court entered judgment in favor of Coffelt Land Title and against Thomas Hammack. Thomas Hammack appeals.

Review of this judge tried case is governed by Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We will affirm the circuit court's judgment unless it is unsupported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Id.

In his only point on appeal, Thomas Hammack asserts that the circuit court erred in finding that the December 3, 1998 general warranty deed was effective to transfer title to the purchasers of the farm property. In particular, he contends that, because the general warranty deed was not delivered into escrow to Coffelt Land...