Parrillo v. Siravo

• Decision Date: 11 January 1967
• Docket Number: No. 3296,3296
• Citation: 225 A.2d 515,101 R.I. 524
• Parties: Dora PARRILLO v. Nicola SIRAVO. Equity
• Court: Rhode Island Supreme Court

Page 515

225 A.2d 515

101 R.I. 524

Dora PARRILLO v. Nicola SIRAVO.

Equity No. 3296.

Supreme Court of Rhode Island.

Jan. 11, 1967.

[101 R.I. 533] Grande & Grande, Corinne P. Grande, Providence, for complainant.

A. Anthony Susi, Providence, for respondent.

OPINION

JOSLIN, Justice.

This is a bill in equity to cancel a promissory note and mortgage on certain real estate owned by the complainant and located in the city of Granston, or in the alternative to enjoin the transfer or other disposition of said note and mortgage or the foreclosure of the mortgage. After a hearing before a justice of the superior court on bill, answer and proof, a decree was entered declaring the note and mortgage null and void and of no legal effect. The cause is before us on the respondent's appeal from the decree.

From the record it appears that in 1960 respondent owned an improved parcel of real estate located on West Shore Road in Warwick. It was leased to a tenant who used the large frame wooden building located on the premises for the conduct of a nightclub or tavern, known as Casey's Tavern, under a class B liquor license. When the tenant dies early in 1960 the liquor license as well as the tavern's furniture, fixtures and equipment were offered for sale by his estate and at about the same time respondent's real estate was put on the market and listed with a broker. The complainant's nephew, Carlo J. Parrillo, became interested and he offered $20,000 for the real estate and an additional sum for the license and personal property. Those offers were tentatively accepted by the broker subject, however, to the twofold condition that the approval of the owners be obtained and that both transactions be subject to a transfer of the liquor license. A deposit of $1,000 was given and the broker, who apparently was authorized to solicit customers for the estate's personalty as well as for respondent's realty, gave a receipt ¹ which included a description of the property to be sold and spelled out the conditions upon which the sales were predicated.

These proposals were in due course accepted by the sellers and the real estate closing took place on July 5, 1960. On that day respondent executed and delivered a warranty deed of the real estate and in payment therefor received two interest-bearing notes. One was for $16,000 and the other for $4,000. Carlo was the maker of the larger and it was secured by a purchase money mortgage on the premises conveyed. The other was complainant's note. It was payable one year from date and was secured by a mortgage on complainant's residence located in the city of Cranston. The complainant's note and mortgage were absolute and unconditional on their faces, and were delivered to respondent's attorney who, in due course, recorded the mortgage.

Soon after the closing it became apparent that approval for a transfer of the liquor license could not be obtained. What then transpired between Carlo and respondent, although the subject of extensive testimony, is not pertinent here except to note generally that respondent, even though aware that the liquor license could not be transferred, refused to restore the status quoand in August 1961 foreclosed the purchase money mortgage. Several months thereafter complainant, who then was in default on her obligations no payments of either principal or interest having been made, was notified by respondent that foreclosure proceedings against her property would be commenced unless the interest on her note was paid. Thereupon, instead of acceding to that demand, she consulted counsel and these proceedings were commenced.

On this record the trial justice found as a fact that 'the mortgage was subject to the liquor license and that she granted the mortgage on that condition.' Predicated on that finding and on the failure of the stipulated condition to occur he held that the note and mortgage were null and void. The respondent attacks that legal conclusion and thereby poses the question of whether parol is available to establish that a note and mortgage, absolute and unconditional on their faces, may be conditionally delivered.

The parties approach the problem as if the sole consideration were whether the understanding that the instruments were subject to a transfer of the liquor license was a precedent or a subsequent condition. In the resolution of that issue we have no difficulty. The trial justice found that complainant intended her obligations to take effect only if a future event occurred, namely, the approval for a transfer of the liquor license.

There is ample basis for that finding in the oral testimony as well as in the written receipt. The respondent obviously recognizes that basis because he does not challenge the finding notwithstanding that his possession of the mortgage deed was at least prima facie evidence of a valid delivery. Lambert v. Lambert, 77 R.I. 463, 468, 77 A.2d 325. The recital in the receipt that the offers to purchase were 'subject to the transfering of said License' clearly connotes that the instruments required to effectuate the buy-and-sell agreements depended for their validity on future approval being obtained for a transfer of the liquor license. See F. W. Berk & Co. v. Derecktor, 301 N.Y. 110, 92 N.E.2d 914. Once the trial justice read the terms of that receipt into the instruments executed by complainant he was free to find, as he did, that at the closing on July 5, 1960 she in effect said: 'This delivery of my note and mortgage is conditioned upon my nephew obtaining a transfer of the liquor license.' The effective date of these instruments, notwithstanding their present delivery, was postponed pending the taking place of a subsequent occurrenct. They did not upon that delivery become presently existing valid obligations which the happening of some future event might either modify or nullify. The law recognizes the former; it rejects the latter. Supreme Woodworking Co. v. Zuckerberg, 82 R.I. 247, 252, 107 A.2d 287; Allen v. Marciano, 79 R.I. 98, 84 A.2d 425; Sweet v. Stevens, 7 R.I. 375.

Our problem, however, involves more than whether the condition was precedent or subsequent. We have before us not only a negotiable instrument but a conveyance which the law previously required to be under seal, and the authorities are by no means in agreement that a conditional delivery of such an instrument, at least where made directly to the grantee, is entitled to recognition.

While from early times parol evidence has been allowed to show that the taking effect of instruments such as promissory notes, or contracts of sale, was intended by the parties to be conditioned upon the performance of some future act or the happening of some subsequent occurrence, Lopato v. Hayman, 43 R.I. 271, 111 A. 529; Sweet v. Stevens, allen v. Marciano, supra, such evidence at common law was not permitted where the instrument was a conveyance requiring a seal.

The relaxation of that strict rule in situations where the deed has been manually transferred in escrow to a third party for eventual handing to the grantee has not been extended, however, except in a few states, to instances where the transfer, instead of being in escrow, has been directly to the grantee. In such a case a majority of the courts have said that a deed absolute on its fact cannot be conditionally deposited in escrow with a grantee. As a consequence they have ignored the grantor's specific intention, they have disregarded the condition he imposed, and they have held that the delivery is absolute. The justification for that result rests on the theory that to permit parol would open the door wide to fraud and fabrication. Medusa Portland Cement Co. v. Lamantina, 353 Pa. 53, 44 A.2d 244; Sweeney v. Sweeney, 126 Conn. 391, 11 A.2d 806.

This refusal to allow evidence that a grantor intended his manual transfer of a deed directly to a grantee to be on condition, Professor Wigmore characterizes as a modern-day relic of primitive formalism. It hangs over, he says, from the real property concept of livery of seisin where without a transfer of a piece of sod or some other symbol signifying a transfer of the land itself there could be no passage of title. 9 Wigmore, Evidence (3d ed.) §§ 2405, 2408. See also 4 Tiffany, Real Property (3d ed.) § 1049, p. 226; Tiffany, Conditional Delivery of Deeds, 14 Colum.L.Rev. 389; and Ballantine, Delivery in Escrow and the Parol...