McCormack v. Kirtley
Decision Date | 29 March 1977 |
Docket Number | No. 12661,12661 |
Citation | 115 Ariz. 25,563 P.2d 280 |
Parties | Carliflo McCORMACK, dba Citadel Realty, Appellant, v. Tressie Lee KIRTLEY, Appellee. |
Court | Arizona Supreme Court |
Hill & Savoy by Cheryl K. Hendrix, Phoenix, for appellee.
This is an appeal by Carliflo McCormack from a judgment by the court sitting without a jury holding her and another, Bobbie Chargois, jointly and severally liable in the amount of $8,257.69, plus $1,000 in additional compensatory damages. Bobbie Chargois did not appeal.
We must consider the following issues on appeal:
1. Did the defendant McCormack have a contractual or legal obligation to retain the sums paid into the Citadel Realty Trust Account until the transfer of the liquor license was approved?
2. Did the plaintiff waive any possible duty imposed upon the defendant by withdrawing her application for transfer of the liquor license?
3. Was there sufficient evidence to support the trial court's conclusion that the defendant's conduct constituted fraud?
4. Was it equitable to hold the defendant McCormack responsible based on the facts of the instant case?
The facts giving rise to this appeal are as follows. On 11 February 1972, an agreement was entered into between Tressie Lee Kirtley, plaintiff in this action, and Bobbie Chargois, a codefendant, whereby Kirtley agreed to purchase and Chargois agreed to sell a Series No. 6 Spirituous Liquor License, all fixtures and equipment, and a 'free and clear position' in a bar known as 'The Plaid Cocktail Lounge.' The liquor license and the lounge were in the name of J. W. Patterson, Chargois' brother; however, Chargois asserted all rights of ownership in both.
The terms of the agreement were negotiated between Kirtley and Bobbie Chargois. Having reached an agreement, Chargois called Carliflo McCormack, a licensed real estate broker who specializes in selling liquor licenses and businesses. Kirtley and Chargois met with McCormack, and she prepared the agreement around which this controversy centers. On 12 February 1972, it was signed by Kirtley, Chargois, and McCormack.
The essential terms of the agreement provided that out of the total purchase price of $24,000, plus an additional amount for the inventory, $10,000 was to be paid into McCormack's Citadel Realty Trust Account within six days of the agreement; $450 had been paid in advance to meet a mortgage payment, and the remaining balance of $13,550 was to be paid into the trust account on or before 10 March 1972. In return for her services, McCormack was to be paid a fee of $300. McCormack also prepared the application to the State Department of Liquor Licenses and Control stating '(i)t was part of my fee to prepare her applications for the transfer.' The agreement provided that it was conditioned upon this transfer.
Pursuant to that agreement, Kirtley applied for a transfer of the liquor license and on 17 February gave McCormack a check for $10,000 payable to the Citadel Realty Trust Account. Kirtley took possession of the cocktail lounge on 2 March. On that same date, she paid Chargois $11,565 directly for her equity and inventory in the bar. Kirtley also paid an additional $2,700 into the Citadel Realty Trust Account to be applied toward the purchase of the bar.
Between 17 February and 23 March, McCormack wrote a number of checks on Kirtley operated the cocktail lounge between 2 March and 16 May 1972. During that time a dispute arose concerning a lease of equipment with the Watkins Cigarette Service which had been entered into by the previous owners. As a result, a suit was filed by Watkins naming Kirtley, Chargois, and J. W. Patterson as defendants. Notice of this lawsuit was served upon the liquor department and a representative of the department indicated that the license would not be transferred until the lawsuit was either settled or otherwise disposed of. In the early part of May, Kirtley was informed by J. W. Patterson that because of the Watkins lawsuit he was having difficulty in getting a federal farm loan approved. At Patterson's request, the plaintiff agreed to release him from any liability resulting from the lawsuit. On 11 May, Kirtley signed the release. It had been drafted by Patterson's attorney and not only released Patterson but also directed the withdrawal of Kirtley's application for transfer of the liquor license. On 16 May, Patterson advised Kirtley that she could no longer operate the bar because it would jeopardize his liquor license and that he would have to take over the bar immediately. An inventory was taken any Kirtley was paid $1,045 for the existing stock and $88 for bar change.
the trust account. These checks were to pay off the various mortgages, liens and taxes owed by or outstanding against the Plaid Cocktail Lounge. Included in these payments was a sum of $3,000 paid to McCormack herself to satisfy a lien which she held against the lounge and her $300 fee.
Subsequently, Chargois met with Kirtley and stated that she would pay $100 a month in an attempt to reimburse the plaintiff. On 1 June, Kirtley received $100 from Chargois, however, no other payments were made.
In August 1972, Kirtley filed this action against Chargois and McCormack dba Citadel Realty. Trial was held before the Honorable Kenneth Chatwin, Judge of the Superior Court of Maricopa County, on 2 April 1974. Findings of fact and conclusions of law were made by the trial court.
On appeal, McCormack raises five questions for our consideration. The first two, namely, (1) 'Can one who is not a party to an agreement be held liable in damages when she has fully complied with her instructions?' and (2) 'Did the Appellant, McCORMACK, have a duty to withhold disbursement of the funds when there was no provision instructing her to do so in the agreement?,' relate to an interpretation of the agreement which we have combined in issue number one concerning the duty of McCormack under the agreement. The third question, 'Did the Appellant, CARLIFLO McCORMACK, have a duty to make restitution when the contract was fully performed on the one side and the Buyer waived any possible protection of Paragraph 5 of the Agreement and demand was never made on Appellant, CARLIFLO McCORMACK, for any restitution?' is covered by issue number two. Question number four presented by McCormack that 'The evidence presented did not satisfy the essential nine (9) elements required to prove an action in misrepresentation.' is contained in our issue number three. Defendant's question number five is our issue number four as restated.
The central question presented by this appeal is whether McCormack dba Citadel Realty was under a duty either imposed by the agreement or otherwise not to disburse the funds placed in the Citadel Realty Trust Account until after the transfer of the liquor license. In answering this question it should be kept in mind that the Rules of Civil Procedure provide that '(f)indings of fact shall not be set aside unless clearly erroneous * * *.' Rule 52(a), Rules of Civil Procedure, 16 A.R.S. The Court of Appeals has stated:
'In reviewing findings of fact on appeal, we are required to accept them as true unless they are clearly erroneous or unsupported by any credible evidence in the record. We are not, however, bound by the trial court's conclusions of law and we may draw our own conclusions of law from facts which are supported by the evidence and found by the trial court. Owen v. Mecham, 9 Ariz.App. 529, 454 P.2d 577 (1969).
(citations omitted) We further must view the record in a light most Bevins v. Dickson Electronics Corporation, 16 Ariz.App. 105, 107, 491 P.2d 494, 496 (1971).
In support of her position, McCormack advances two arguments. First, that she was merely a stakeholder, not a party to the agreement between Kirtley and Chargois and therefore not bound by its terms, and second, that the agreement itself did not require her to refrain from disbursing the funds until after the transfer had been approved. As to both contentions we do not agree.
Under the language of the agreement and the facts surrounding its execution, we are convinced that it was not only a contract between Kirtley as buyer and Chargois as seller, but constituted in addition an escrow agreement whereby McCormack agreed to act as escrow agent for both parties. We have said that:
'A good definition of the generic term 'escrow' is this: an escrow is a written instrument which by its terms imports a legal obligation, and which is deposited with a third party, to be kept by the depository until the performance of the prescribed condition or the happening of a certain event, and then to be delivered over to the grantee, promisee, or obligee.' Young v. Bishop, 88 Ariz. 140, 146, 353 P.2d 1017, 1021 (1960).
The fact that the parties to an agreement do not label the deposit of the funds a deposit in escrow does not preclude us from concluding that that was their intention. In Feighner v. Clarke, 2 Ariz.App. 286, 408 P.2d 219 (1965), vacated on other grounds, 101 Ariz. 334, 419 P.2d 513 (1966), pursuant to an 'agreement of employment' a check was deposited with the attorney for one of the parties. Although the agreement did not so specify, the court held that the deposit constituted an escrow. In reaching that conclusion the court said:
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