Foulkes v. Sengstacken

• Decision Date: 27 February 1917
• Citation: 83 Or. 118,163 P. 311
• Parties: FOULKES v. SENGSTACKEN ET AL.
• Court: Oregon Supreme Court

163 P. 311

83 Or. 118

FOULKES v. SENGSTACKEN ET AL.

Supreme Court of Oregon

February 27, 1917

In Banc.

Appeal from Circuit Court, Coos County; John S. Coke, Judge.

On petition for rehearing. Former opinion (158 P. 952) overruled, judgment reversed and remanded, with directions.

This is a suit to remove clouds cast upon a title by certain deeds. A rehearing was granted, and we have therefore had the advantage of two oral arguments and the benefit of additional briefs on the rehearing. The decree of the circuit court was for the defendants, and the plaintiff appealed. Elizabeth Williams was the owner of a tract of land consisting of mud flats, which were covered and uncovered by the flow and ebb of every tide. Under date of July 21, 1906, she signed a writing in the form of a warranty deed purporting to convey the land to Henry Sengstacken "for the consideration of the sum of fifteen hundred dollars," and she then delivered the instrument to John F. Hall. It will not be necessary at this time to notice some additional deeds mentioned in the pleadings. The defendants allege that the deed was placed in the hands of Hall as an escrow pursuant to an agreement between Elizabeth Williams and Henry Sengstacken. The agreement relied upon was oral, and there was no writing except the deed. John F. Hall had for some time acted as the attorney and business adviser for Elizabeth Williams, and in that capacity he conducted the negotiations for the sale of the land for her. It was agreed that Elizabeth Williams would sign a deed and place it in the hands of John F. Hall; that Sengstacken would pay $1,500 for the land, $500 to be paid upon delivery of the deed to Hall $500 with interest at the end of one year and the remaining $500 with interest in two years, and Hall would then deliver the deed to Sengstacken. Sengstacken testified that "at my request the deed was placed in escrow," and that "the deed was to be left with John F. Hall in escrow to be delivered to me when the balance of the payments were made." Hall says that:

"The deed was left with me to be held until he (Sengstacken) made the payments, the deferred payments--there was $1,000 to be paid--and I was to deliver the deed to him in two years upon the payment of this money."

Sengstacken paid the first installment of $500, and within a year paid an additional $250 to Elizabeth Williams, but did not pay the balance of the second installment when it became due. Hall testified that he told Elizabeth Williams of the default in the payment, and that she said:

" 'He is all right; let the deed lay there, and when he pays you you can turn it over to him.' She said 'If he don't pay it, the land is not worth much more than what I got anyhow,' and she instructed me to hold the deed, and deliver it whenever he paid it, but to extend the time", and, "As I said before, when he was behind, I spoke to her, and she told me to let the matter lay, and whenever he paid the amount to deliver the deeds to him."

Elizabeth Williams died on May 1, 1909, leaving a will which devises unto John M. Foulkes all the real estate of which the testatrix "may die seised." In July, 1911 Sengstacken paid $750, with interest, to Hall and received the deed.

D. E Hodge, of Marshfield, and W. T. Slater, of Portland (Stoll &amp Hodge, of Marshfield, on the brief), for appellant. Cassius R. Peck, of Marshfield (Peck & Peck, of Marshfield, on the brief), for respondents. HARRIS, J. (after stating the facts as above).

If Hall held the instrument solely as the attorney and representative of Elizabeth Williams, the transaction did not, in any event, amount to an escrow. Campbell v. Thomas, 42 Wis. 437, 24 Am. Rep. 427; Kopp v. Reiter, 146 Ill. 437, 34 N.E. 942, 22 L. R. A. 273, 37 Am. St. Rep. 156; Stanton v. Miller, 58 N.Y. 192; Peters v. Strauss (Tex. Civ. App.) 132 S.W. 956; Day v. Lacasse, 85 Me. 242, 27 A. 124; King v. Upper, 57 Wash. 130, 106 P. 612, 1135, 31 L. R. A. (N. S.) 606; 1 Devlin on Real Estate (3d Ed.) § 324.

While the evidence may afford some ground for the contention that the alleged deed was delivered to Hall simply as the agent of Elizabeth Williams, nevertheless we shall assume that all the parties contemplated that Hall was something more than the mere agent of Elizabeth Williams. The character of a transaction generally depends upon the intention of the parties, and, if possible, the intention should govern. While it is not essential that the parties use the word "escrow," yet when they do employ that term, it indicates more clearly than any other word the actual intention of the parties. Gaston v. Portland, 16 Or. 255, 260, 19 P. 127; Bronx Inv. Co. v. National Bank of Commerce, 47 Wash. 566, 92 P. 380; 10 R. C. L. 623; 16 Cyc. 565.

The evidence makes it clear that the parties intended for Hall to hold the writing as an escrow, for they always spoke of it as an escrow; all the circumstances indicate that they regarded it as an escrow; the defendants expressly pleaded that it was an escrow; and hence there can be no room for the contention that the instrument should be treated as a mortgage. The agreement and the delivery to Hall either created an escrow or it amounted to nothing. If the circumstances did not produce an escrow, they did not give rise to a mortgage. We shall therefore assume that Elizabeth Williams and Henry Sengstacken orally agreed that the former would make a deed and deliver it to Hall, who was to hold the instrument as a disinterested depositary, and then deliver it to Sengstacken if the latter paid $500 at once, $500 with interest at the end of one year, and $500 with interest at the end of two years; that the deed was delivered to Hall pursuant to the oral agreement; and that Sengstacken made the initial payment and paid $250 on the second installment, but failed to pay the remainder of the purchase price when it became due. We shall also assume that the time for payment was extended with the consent of Elizabeth Williams. Scott v. Hubbard, 67 Or. 498, 506, 135 P. 653. The ultimate question for decision on these assumed facts is whether the death of Elizabeth Williams revoked the authority of Hall to deliver the deed. The defendants argue that when Sengstacken paid the remainder of the purchase price and received the conveyance he became vested with the title even though Elizabeth Williams had been dead about two years. The plaintiff contends that the authority of Hall terminated with the death of Elizabeth Williams, and that therefore all subsequent acts done by Hall were void.

If it be assumed that the oral agreement to sell the land was valid, then it necessarily follows that the agreement to sell and the delivery of the deed to Hall created an escrow, for the reason that every element essential for the creation of an escrow can be found. A written instrument, importing a legal obligation, was deposited by the grantor with a third party to be kept by the depositary until the grantee paid a stipulated sum, and then to be delivered over to the grantee. 10 R. C. L. 621; 16 Cyc. 561; 11 A. & E. Enc. of Law (2d Ed.) 333.

Until the expiration of the time allowed to the grantee for the performance of the condition the deed is beyond the control of the grantor, and unless the grantee consents, the deed cannot be recalled by the grantor until the grantee defaults. Strictly speaking, the depositary is not the agent of the grantor, nor is he the agent of the grantee, but he is rather the trustee of an express trust. A consummated escrow involves two deliveries: (1) To the depositary; and (2) to the grantee.

The general rule is that the instrument deposited does not become a deed and operate to convey title until the second delivery, or, perhaps, more accurately speaking, until the performance of the condition. Flanagan v. Great Cent. Land Co., 45 Or. 335, 340, 77 P. 485; May v. Emerson, 52 Or. 262, 96 P. 454, 1065, 16 Ann. Cas. 1129; Wheelwright v. Wheelwright, 2 Mass. 447, 3 Am. Dec. 66; Fitch v. Bunch, 30 Cal. 208; 1 Devlin on Real Estate (3d Ed.) § 328. If, however, the grantor becomes incapacitated between the first delivery and the time fixed for the performance of the condition, then a fiction is resorted to in order to prevent injustice by making the instrument the deed of the grantor from the first delivery. The law requires that the delivery shall be the act of the grantor, and since his death would revoke the authority of the depositary and the intention of the parties would be defeated if a second delivery was required to vest the title, the law will from necessity consider that the second relates back to the first delivery and the instrument is deemed to be the deed of the grantor from the first delivery. Campbell v. Thomas, 42 Wis. 437, 24 Am. Rep. 427; Clark v. Campbell, 23 Utah, 569, 65 P. 498, 54 L. R. A. 508, 90 Am. St. Rep. 716; Flanagan v. Great Cent. Land Co., 45 Or. 335, 341, 77 P. 485; Jackson v. Jackson, 67 Or. 44, 135 P. 201, Ann. Cas. 1915C, 373; May v. Emerson, 52 Or. 265, 96 P. 454, 1065, 16 Ann. Cas. 1129; Bronx Inv. Co. v. National Bank of Commerce, 47 Wash. 566, 92 P. 380; Wellborn v. Weaver, 17 Ga. 267, 63 Am. Dec. 235; Stanton v. Miller, 58 N.Y. 192; 10 R. C. L. 267; 1 Devlin on Real Estate (3d Ed.) 328.

Before proceeding with the discussion it is proper to call attention to a certain class of cases which, though relied upon by the defendants, must not be permitted to enter into our calculations. A person may sign a deed and deliver it to a third party with directions to deliver it to the grantee upon the death of the grantor, and, even though there is neither a contract nor any consideration, the instrument will operate to convey title if the grantor at the time of delivery parted with control and dominion over the writing, on the...