Barr v. Snyder, No. 40676.

• Court: United States State Supreme Court of Missouri
• Writing for the Court: Bohling
• Citation: 219 S.W.2d 305
• Parties: NELLIE E. BARR, Appellant, v. WILLIAM D. SNYDER, M. BENTLEY, KANSAS CITY TITLE INSURANCE COMPANY, a Corporation, PAWNEE INVESTMENT COMPANY, a Corporation, SNYDER REALTY COMPANY, a Corporation, Respondents.
• Decision Date: 11 April 1949
• Docket Number: No. 40676.

219 S.W.2d 305 NELLIE E. BARR, Appellant,
v.
WILLIAM D. SNYDER, M. BENTLEY, KANSAS CITY TITLE INSURANCE COMPANY, a Corporation, PAWNEE INVESTMENT COMPANY, a Corporation, SNYDER REALTY COMPANY, a Corporation, Respondents. No. 40676. Supreme Court of Missouri. Division Two, April 11, 1949.

Appeal from Jackson Circuit Court. — Hon. Ben Terte, Judge.

AFFIRMED.

C.W. Prince, Wm Dennis Bush and F. Richard Weber for appellant.

(1) An escrow agent is a trustee for both parties and must perform his duties strictly in accordance with the conditions of the deposit. Morris v. Davis, 334 Mo. 411, 66 S.W. (2d) 883; 30 C.J.S., p. 1203, sec. 8; Mantel v. Landau, 130 N.J. Eq. 194, 34 Atl. (2d) 638 (3). (2) An escrow agent is absolutely bound by the terms and conditions of the deposit which it has assumed to perform, and is liable in damages for failure to deliver the escrow to the party entitled thereto. 19 Am. Jur., sec. 17, p. 435; Byrd v. Webb City Bank, 245 Mo. 277, 149 S.W. 31; Note 95 A.L.R., p. 293. (3) Where the escrow agent is sued for damages resulting to a party from the fraudulent conspiracy of escrow agent with the other party to the escrow the guilty agent cannot avoid answering the suit and defeat plaintiff's right to a trial by jury by merely filing a "Bill of Interpleader." Bill of interpleader does not lie in such case because plaintiff's suit is a conclusive fact showing that plaintiff claims no interest in the alleged escrow, but has a personal claim for damages against the escrow agent. Rauch v. Dearborn Bank, 223 Ill. 507, 79 N.E. 273; Ross Const. Co. v. Chiles, 344 Mo. 1084, 130 S.W. (2d) 524; City of St. Charles v. Wabash Ry. Co., 65 S.W. (2d) 655. (4) And because defendants in the interpleader do not claim the same thing, one having sued in tort. Met. Life Ins. Co. v. Brown, 186 S.W. 1155; Rauch v. Dearborn Bank, 223 Ill. 537, 79 N.E. 272, 11 L.R.A. 545; 30 Am. Jur., Sec. 8, p. 219. (5) And because the escrow agent has incurred a personal liability to one of the parties. Klaber v. Maryland Cas. Co., 69 Fed. (2d) 934; 4 Pomeroy's Equity Jur. (5th Ed.), sec. 1326, p. 913; Hartsook v. Chrisman, 90 S.W. 116; Wm. A. Ross Const. Co. v. Chiles, 344 Mo. 1084, 130 S.W. (2d) 524; National Lumber Co. v. Bank, 49 S.W. (2d) 223. (6) And because the escrow agent is not absolutely disinterested. Bell Storage Co. v. Harrison, 180 S.E. 320, 164 Va. 278; 30 Am. Jur., sec. 10, p. 220; Ross Const. Co. v. Chiles, 344 Mo. 1084, 130 S.W. (2d) 524. (7) And because the escrow agent is charged as a wrongdoer until he clears himself before a jury and a wrongdoer cannot have interpleader. 30 Am. Jur., sec. 13, p. 223; 91 Am. St. Rep. 605. (8) And because the escrow agent is a trespasser, and a trespasser cannot have interpleader. Sewanee Fuel Co. v. Leonard, 139 Tenn. 648, 202 S.W. 928, L.R.A. 1918D, 1170; Stephenson v. Burdette, 48 S.E. 846. (9) The escrow agent was not entitled to a "Bill of Interpleader" as there was never any doubt as to appellant's right to the deed and title policy. She had performed every condition of her contract. Hyer v. Boyd, 133 S.W. (2d) 1036; United Rys. Co. v. O'Conner, 132 S.W. 262, 153 Mo. App. 128; Meredith v. Meredith, 148 S.W. (2d) 611. (10) On the face of the proceedings the Title Company could not maintain a "Bill of Interpleader" because the amount of its liability to plaintiff was in dispute and was a jury question. Sec. 847.98, R.S. 1939; Sec. 22, Art. I, Constitution of Mo. 1945; Pope v. Mo. Pac. Ry. Co., 175 S.W. 955; Glasner v. Weisberg, 43 Mo. App. 214. (11) The pretense that "M. Bentley" was the owner and seller of the apartment building and contents was a sham and a fraud and it operated to burden appellant with the hazard of ferreting out the facts essential to making a binding mutuality. This was a fraud known to all parties, including the Title Company, and colored the whole transaction. Houts v. Hellman, 228 Mo. 655, 128 S.W. 1001. (12) Plaintiff's motion to dismiss the Bill of Interpleader filed by the defendant Title Company should have been sustained because it appeared on the face of the proceedings that said interpleader had been sued by the plaintiff for damages on an independent liability incurred by said Title Company with reference to the transaction involved in said interpleader. Met. Life Ins. Co. v. Brown, 186 S.W. 115; National Lumber Co. v. Bank, 49 S.W. (2d) 223; Pope v. Mo. Pac. Ry. Co., 175 S.W. 955.

Harry L. Jacobs and Robert J. Coleman for respondents, William D. Snyder, M. Bentley, Pawnee Investment Company, and Snyder Realty Company.

(1) In many cases jurisdiction depends on the ascertainment of facts involving the merits and these facts may be investigated in a preliminary inquiry. Louisville Trust Co. v. Comingor, 184 U.S. 18, 46 L. Ed. 413, 416; 8 C.J.S. 1105, 1108, Sec. 342. (2) If the claim as to the fact is merely colorable and unsubstantial then the Court may disregard it and proceed to exercise its further jurisdiction. Harrison v. Chamberlin, 271 U.S. 191, 70 L. Ed. 897. (3) The mere assertion of a claimed fact is not sufficient to defeat jurisdiction or to deprive the Court of its right to enter upon an inquiry to determine whether the claim is real and substantial or merely colorable. Harrison v. Chamberlin, 271 U.S. 191, 70 L. Ed. 897. (4) A claim is merely colorable when it is so unsubstantial and insufficient either in law or fact as to be plainly without color of merit and a mere pretense. Harrison v. Chamberlin, 271 U.S. 191, 70 L. Ed. 897. (5) The above principles apply to interpleader cases. 33 C.J. 461, sec. 52; Novinger Bank v. St. Louis Union Trust Co., 196 Mo. App. 335, 189 S.W. 826; 33 C.J. 432, sec. 16; Cross v. Wyoming Valley Beef Co., 57 Pa. Super 351. (6) Evidence conclusively showed that a controversy existed when escrow was opened and that the escrowee was notified by each party not to deliver except in accordance with such party's directions. Escrowee under such circumstances is not bound to make delivery at its peril but may protect itself by interpleader. 33 C.J. 433, sec. 17; 48 C.J.S. 53, sec. 14; Smith v. Grand Lodge A.O.U.W., 124 Mo. App. 181, 101 S.W. 662; Concordia Fire Ins. Co. v. Alexander, 50 S.W. (2d) 687; John A. Moore & Co. v. McConkey, 203 S.W. (2d) 512; Sec. 18, Laws 1943, p. 361. (7) All of the essential elements of an interpleader or a bill in the nature of an interpleader are present, (a) disinterested stakeholder, (b) res in possession of stakeholder, (c) controversy between parties as to duty of escrowee. A conflict as to an escrowee's duty in respect to a thing in its possession is a legal basis for interpleader. 4 Pomeroy's Equity Jurisprudence (5th Ed.), p. 906, sec. 1323; 33 C.J., p. 419, sec. 2; W.A. Ross Const. Co. v. Chiles, 344 Mo. 1084, 130 S.W. (2d) 524; Sec. 18, Laws 1943, p. 361.

Arthur N. Adams and Arthur N. Adams, Jr., for respondent, Kansas City Title Insurance Company.

(1) The remedy of interpleader was available to this respondent under Section 18, Laws of Missouri, 1943, page 353 (Sec. 847.18, Mo. Revised Statutes, Annotated), because it was placed in such a position that the claims of the respective parties to the contract were such that respondent was or could be exposed to double liability, and because under the contract of sale and purchase respectively the respondent had a reasonable bona fide doubt as to which one of the rival claimants was legally entitled to performance of his respective claims. Sec. 18, Laws 1943, p. 353; John A. Moore & Co. v. McConkey, 203 S.W. (2d) 512; Morris v. Davis, 334 Mo. 411, 66 S.W. (2d) 883. (2) The separate hearing and trial upon the issues raised by respondent's equitable cross bill or counterclaim by way of interpleader was in accord with the new Code of Civil Procedure and the rules of this court, as well as the well recognized practice previously prevailing. Sec. 97, Laws of Missouri, 1943, p. 384; Sec. 897.97, Mo. R.S.A. Supreme Court Rule 3.29. (3) Filing of an equitable counterclaim asking affirmative equitable relief converted the whole case into an equity proceeding. Vol. 25, Washington University Law Quarterly, pp. 67, 72; Reinker v. Wesche, 117 S.W. (2d) 334; Hughes v. Community Bank of Dawn, 336 Mo. 305, 78 S.W. (2d) 98; Reynolds v. Stepanek, 339 Mo. 804, 99 S.W. (2d) 65; John A. Moore & Co. v. McConkey, 203 S.W. (2d) 512.

BOHLING, C.

Interpleader, the outgrowth of a contract for the sale and purchase of real estate for $13,750. Nellie E. Barr, the purchaser, instituted an action in conversion for $20,000 actual and $20,000 punitive damages against William D. Snyder, the owner, M. Bentley, the contracting seller, Kansas City Title Insurance Company, a corporation, the escrow agent, Pawnee Investment Company, a corporation, the record title holder and controlled by Snyder, and Snyder Realty Company, a corporation, also controlled by Snyder. The Kansas City Title Insurance Company hereinafter designated Title Company, joined with its answer to Mrs. Barr's action in tort, a bill of interpleader by way of cross-claim or cross-bill. The court sustained this plea and discharged the Title Company. Mrs. Barr appeals, contending that the escrow agent may not maintain a bill of interpleader.

It is stated in behalf of Mrs. Barr that an escrow agent is a trustee for both parties

219 S.W.2d 306

and is bound by the conditions of the deposit;¹ that an equitable interpleader may not successfully be interposed because she has elected to pursue the remedy of an action at law in conversion for damages in lieu of her rights in the escrow;² that the defendants to the interplea do not claim the same thing;³ that the escrow agent incurred an independent personal liability to her;⁴ that the escrow agent was not absolutely disinterested;⁵ was a wrongdoer;⁶ a trespasser liable in tort.⁷ This calls for some detail of the facts.

A certain six-apartment building in Kansas City, Missouri, was listed by Snyder for sale with Triplett Bros. real...