Sargent v. Cooley

• Decision Date: 14 November 1902
• Docket Number: 6731
• Citation: 94 N.W. 576,12 N.D. 1
• Court: North Dakota Supreme Court

94 N.W. 576

12 N.D. 1

F. S. SARGENT, AS RECEIVER OF THE SECURITY TRUST COMPANY v. JOHN E. COOLEY AND MINNIE E. CLIFFORD

No. 6731

Supreme Court of North Dakota

November 14, 1902

[Copyrighted Material Omitted]

YOUNG C. J. MORGAN and COCHRANE, JJ., concur.

OPINION

YOUNG, C. J.

A petition for rehearing was granted in this case, and the same was fully argued at the first session of the March term. Counsel for defendant, in his petition for rehearing, in referring to the admissibility of parol evidence offered at the trial to defeat the mortgage, very properly concedes that "there is no question about the effect of the provisions of our Code (section 3517, Rev. Codes 1899), if it is to be held that the mortgage was delivered to the Security Trust Company for its use with any conditions attached." His contention is that the mortgage "was not delivered to the Security Trust Company to be used by them either absolutely or conditionally." Again he says: "We have contended all along, and what we contend now is, that this mortgage never was delivered to the Security Trust Company, in the ordinary meaning of the term 'delivered.'" Further, that "in this case there was no mortgage that was effective between the mortgagor and the mortgagee. The verbal agreement was simply as to the disposition to be made by the Security Trust Company of an instrument left in its hands, and in which it had no interest. There was no attempt to make an instrument which would be operative between the parties." The petition presents for determination the question whether the mortgage was delivered--a question which was not seriously considered in the original opinion, it being taken as a conceded fact that there was a delivery. As already stated, counsel for defendant concedes that if there was a delivery of the mortgage, within the meaning of section 3517, Rev. Codes 1899, it took effect freed from any oral conditions upon which the delivery was made, and that in that event the parol evidence offered to establish such conditions was inadmissible. His contention is that the mortgage was not delivered, and that the oral evidence objected to was admissible to establish the fact of nondelivery. That parol evidence is admissible to show that a written instrument was never delivered, and therefore never became effective, cannot be doubted; and such evidence is not open to the objection that it contradicts or varies the terms of the written instrument, for it does nothing of the kind, but merely goes to one element of the contract resting in parol, and essential to its existence as a contract, namely, the delivery. In this case we think the fact is conclusively established both by the pleadings and by the evidence that the mortgage was delivered. The complaint alleges a delivery, and the answer, in effect, admits it. In paragraph 2 of the defendant's third defense, he alleges that "the said mortgage was given to the Security Trust Company by this defendant * * * to enable it to sell * * * the note evidencing the indebtedness described in said mortgage, * * * and to enable the said trust company to make a true statement to the purchaser that the said note was secured by mortgage on real estate; * * * that, at the time of the making and delivery of the said mortgage, it was understood and agreed * * * that the said mortgage should be and was given for the sole purpose as set forth." After alleging that the mortgage was to be effective as security to the transferee of the note, he alleges that it was agreed that when the note should be returned to the Security Trust Company "the said mortgage should be delivered up to this defendant and canceled, * * * and that the defendant, under the terms of the said agreement, is now entitled to have the same delivered up to him and canceled." Briefly stated, the defendant alleges that he executed and delivered this mortgage to the mortgagee, who was engaged in negotiating real estate loans, so that the later might truly state and represent to a prospective purchaser of the note that it was in fact a secured note, and secured by the mortgage here in question. In our opinion, the defendant has alleged a complete delivery. He alleges that he gave the mortgage into the mortgagee's hands so that the latter might truly represent that the note was a secured note. Now, it is apparent that no such representation could truly have been made by the mortgagee unless the mortgage had been delivered for the purpose of becoming effective, and the note was in fact secured. Further, the mortgage was delivered to the mortgagee beyond his right to recall it, and no further act remained to be done by him to make it effective.

The case shows a delivery of the mortgage, accompanied by oral conditions; and, both under the common law and under our statute (section 3517), such oral conditions were extinguished by the delivery, and the delivery became absolute. Section 3517, Rev. Codes 1899, provides that "a grant cannot be delivered to the grantee conditionally. Delivery to him or his agent as such is necessarily absolute; and the instrument takes effect thereupon discharged of any condition on which the delivery was made." This section was formulated by the Field code commission, and embraces the doctrine laid down in Worrall v. Munn, 5 N.Y. 229, 55 Am. Dec. 330, and Braman v. Bingham, 26 N.Y. 483. In Worrall v. Munn it appears that one Prall had, by a contract under seal, agreed to convey to Noah Worrall certain lands. Prall resisted an action for the specific performance of the contract upon the ground that "the agreement was delivered (by his agent) upon the express condition that it should be subject to the sanction of Prall, and was therefore not binding on him unless he subsequently approved and ratified it. Prall expressly refused to ratify the agreement. The delivery of the agreement to Henry Worrall (Noah Worrall's agent) was not an absolute delivery, in law." The court, in considering the question, as to whether the agreement was delivered absolutely or conditionally, stated that "the law puts that question at rest. Here, according to the evidence of Warner and Nixen, the delivery of the agreement was directly to the agent of Noah Worrall, and that is equivalent to a personal delivery to Worrall himself. The agreement was in a perfect condition. It was signed and sealed by Prall. It was delivered on condition that it be subsequently approved by Prall. This was a delivery as an escrow. Such a delivery can only be made to a stranger. It cannot be made to the party. If made to the party, no matter what may be the form of the words, the delivery is absolute, and the deed takes effect presently, as the deed of the grantor, discharged of the conditions upon which the delivery was made; and, where such a delivery is made, parol evidence of the conditions, being contrary to the terms of the deed, is inadmissible. Here the intent of Warner was to deliver the agreement to the appellant as an escrow. It was not handed to Henry Worrall as an unexecuted and imperfect paper. There was no direction to him to retain it, and not to deliver it to the appellant, until it was ratified by Prall. It was not left in his hands for a temporary purpose, and to be returned in case Prall did not assent to it; but it was delivered to Henry Worrall, as the agent of the appellant, as an executed and perfect instrument, on condition that Prall subsequently assented to it. Such a delivery was in law, an absolute delivery. Ward v. Lewis, 21 Mass. 518, 4 Pick. 518 at 520; Fairbanks v. Metcalf, 8 Mass. 230 at 238; Gilbert v. Insurance Co., 23 Wend. 45, (35 Am. Dec. 543); Clark v. Gifford, 10 Wend. 313."

In Braman v. Bingham the question involved the effect of the delivery of a deed to the grantee. Upon the question of the admissibility of parol evidence to defeat the deed, the court said: "The questions in regard to the delivery of the deed were properly overruled. The question, 'Was the deed delivered to take effect?' addressed to the party who signed the deed, I am inclined to think was objectionable, without reference to the circumstances under which the inquiry was made, as calling for a legal conclusion, or for the intention of the party aside from what was said and done. The other question, 'Was the deed ever delivered?' would undoubtedly be proper where a de-delivery in fact was the matter in dispute. But here the defendant's answer admitted the delivery in fact, and the question in controversy was as to the intention of the parties, or the legal effect of such delivery. The only competent evidence bearing upon that question was what was said and done at the time. This the court decided to admit. The questions addressed to the witness, under the circumstances, called for his opinion as to the legal effect of the conceded actual delivery. That was a question to be decided by the court after all the facts attending the delivery should be proved." Again the court said in the same case: "A fatal objection to the third division of the answer, as a defense, is that it shows that the deed was delivered to the grantee, to be held by him in escrow. It is well settled that such a delivery vests the title in the grantee, although it may be contrary to the intention of the parties. Lawton v. Sager, 11 Barb. 349; Worrall v. Munn, 5 N.Y. 229 (55 Am. Dec. 330); Gilbert v. N. A. Fire Ins. Co., 23 Wend. 45, (35 Am. Dec. 453). * * * It has been held in one case that a deed may be delivered to the grantee for the purpose of transmission to a third person, to be held by him in escrow until the happening of some event when it should take effect as a conveyance, and that such...