Lieb v. Webster

• Decision Date: 05 March 1948
• Docket Number: 30370.
• Citation: 30 Wn.2d 43,190 P.2d 701
• Parties: LIEB et ux. v. WEBSTER (KNUTZEN et ux., Interveners).
• Court: Washington Supreme Court

190 P.2d 701

30 Wn.2d 43

LIEB et ux. v. WEBSTER (KNUTZEN et ux., Interveners).

No. 30370.

Supreme Court of Washington

March 5, 1948

Department 1

Action by Vincent T. Lieb and wife against Caryl v. Webster, doing business as Webster Agency, Realtors, involving incidence of loss resulting from escrow agent absconding with escrow fund wherein Robert J. Knutzen and wife intervened. From a judgment in favor of interveners, plaintiffs appeal.

Judgment affirmed.

Appeal from Superior Court, King County; Howard M. Findley, Judge.

Lee Olwell, of Seattle, for appellants.

Wright & Wright, of Seattle, for respondents.

HILL Justice.

The facts in this case are undisputed and are for the most part stipulated. The appellants were in possession of a piece of residential property which they had agreed to purchase from the respondents. The closing of the transaction was being handled through Caryl V. Webster, doing business as Webster Agency, Realtors, as escrow agent. He will hereafter be referred to as Webster.

The appellants deposited in escrow with Webster, on January 16 1947, $5,358.20, which, together with $650 previously deposited, made a total of $6,008.20. This was the total amount which the appellants were required to pay for the property, over and above an existing mortgage of $6,346.74. The appellants' escrow instructions to Webster were to disburse the funds delivered to him on the following conditions: (a) He was to procure and record conveyance to the appellants; (b) he was to procure assignment to the appellants of FHA reserves in the sum of $104.94; and (c) he was to

'* * * procure policy of title insurance in the sum of $ 05r in the usual form, containing in addition to usual printed exceptions the following liens and encumbrances:

'1. Conditions, restrictions or reservations as may be contained in the plat or Federal or State patent.

'2. Matters attaching by, thru or under the grantee. Existing mortgage in the sum of $6,346.74 now in effect upon the above described premises which grantee assumes and agrees to pay according to the terms and conditions thereof.'

The respondents deposited in escrow with Webster, on the same date, their statutory warrantly deed to the appellants and the assignment of the FHA reserves in the sum of $104.94, which Webster was directed to deliver to the appellants '* * * upon payment or delivery to you [Webster] for my account of Six Thousand Eight and 20/100 Dollars ($6008.20).'

On February 7, 1947, Before the transaction was closed, Webster absconded with the escrow funds.

Both parties are agreed that the loss must fall upon the persons who could have recovered the money from Webster at the time he absconded; in other words, upon the persons as whose agent he was at that time holding the money.

It is apparent that Webster held the money as agent for the appellants when the escrow became effective on January 16, 1947. The question for determination is when, if ever, he ceased to hold it as the appellants' agent and took possession of it as the agent for the respondents. The appellants contend that all the conditions which they attached to the disbursement of the funds had been fulfilled prior to the date that Webster absconded, and that, consequently, Webster was holding the funds for the respondents at that time.

While Webster never recorded the deed to the appellants, the argument in the briefs and Before this court has centered around the question of whether Webster ever procured or came into possession of the policy of title insurance. The appellants never received such a policy. There is no direct evidence that Webster ever received it. H. F. Hulet, credit manager of the title insurance company, testified as follows on direct examination:

'Q. Mr. Hulet, when was the title insurance policy sent out? A. The title insurance policy was mailed to the Webster Agency February 5th, 1947.'

On cross-examination, he testified:

'Q. Did the post office ever return to you the title insurance policy that was mailed out on February 5th? Did it ever come back? A. Not to my knowledge.'

From this testimony, the appellants urge that there arises a presumption that the policy of title insurance reached its destination prior to the time that Webster absconded and was received by him. The appellants rely upon the presumption as we have stated it in the case of Avgerinion v. First Guaranty Bank, 142 Wash. 73, 252 P. 535, 537, from which they quote the following:

'It is said further that there is no competent proof that the instrument was ever received by the Greek Bank. But the presumption is that the government mails proceed in due course, and that a letter duly addressed to a person, with the postage thereon fully paid, is received by the person to whom it is addressed. This presumption has the force of evidence, and is sufficient to justify a finding that such is the fact, in the absence of anything to the contrary.

"The rule is well settled that if a letter properly directed is proved to have been either put into the postoffice or delivered to the postman, it is presumed, from the known course of business in the postoffice department, that it reached its destination at the regular time, and was received by the person to whom it was addressed.' Rosenthal v. Walker, 111 U.S. 185, 4 S.Ct. 382, 28 L.Ed. 395.'

It is apparent that this presumption of the receipt of a letter cannot arise in the absence of proof of its proper mailing, and our question narrows down to a consideration of the character and sufficiency of the evidence presented to establish the mailing of the title insurance policy. The appellants contend that Mr. Hulet's statement that 'The title insurance policy was mailed to the Webster Agency February 5th, 1947,' is sufficient evidence to show that the title insurance policy was mailed. Our cases do not support that contention. In Avgerinion v. First Guaranty Bank, supra, on the question of whether a certain instrument was mailed to a bank in Greece, we discussed the evidence as follows:

'* * * The evidence in this respect is the testimony of the person who performed the service for the respondent. This person testified that, after the respondent received the instrument from the appellant, it was brought to him by the respondent, with the request that he write a letter to the Greek bank instructing the bank to place the amount thereof to the credit of the respondent; that he did write such a letter, and although the language in which it was framed was his own, wrote it as a letter from the respondent, which the respondent personally signed. He testified that the letter with the instrument was enclosed in an envelope directed to the bank; that the postage thereon was fully paid, and that the letter was mailed; that he saw the instrument prior to its mailing, and saw it subsequent to its return to the respondent; and that prior to its mailing, it bore none of the indorsements above noted, while after its return it did bear them. * * *'

In Farrow v. Department of Labor & Industries, 179 Wash. 453, 38 P.2d 240, 241, we recognized the rule that, when an office handles such a large volume of business that no one could be expected to remember any particular notice or letter, proof of mailing may be made by showing (a) an office custom with respect to mailing and (b) compliance with the custom in the specific instance. We there said:

'There can be no question that, if the department had produced a witness who had testified to the deposit in the United States mail on September 9th of the notice, sealed, stamped, and properly addressed, the presumption would be effective and raise an issue of fact to be determined from all the evidence on this issue. But that is not the proof presented in this case. The department sought to prove the fact of mailing by office custom. Obviously, in an office handling as much correspondence as does the Department of Labor and Industries, no one can remember the fact of mailing any particular...