Tutt v. Smith

• Decision Date: 25 June 1925
• Docket Number: No. 36328.,36328.
• Citation: 204 N.W. 294,201 Iowa 107
• Parties: TUTT v. SMITH ET AL.
• Court: Iowa Supreme Court

201 Iowa 107

204 N.W. 294

TUTT

v.SMITH ET AL.

No. 36328.

Supreme Court of Iowa.

June 25, 1925.

Appeal from District Court, Lee County; H. F. Wagner, Judge.

Action to quiet title to real property. The facts will be found stated in the opinion. From a decree for the defendants, the plaintiff appeals. Reversed.

Superseding former opinion in 200 N. W. 187.Rendlen & White, of Hannibal, Mo., and E. W. McManus, of Keokuk, for appellant.

Boyd & McKinley, of Keokuk, for appellees.

VERMILION, J.

Certain material facts are not in dispute. It thus appears that prior to January 22, 1921, Mary E. Webb, who for convenience will be alone referred to as the appellee, was the owner of the property in question, situated in the city of Keokuk. On that date she and her husband, Robert L. Webb, executed a warranty deed of the property to W. E. Herst. This deed was executed in pursuance of a contract whereby the Webbs were to exchange the Keokuk property for land in Missouri, and it was put in the hands of Cyrus Evans to be given to one Pen Brace, to be by Brace delivered to Herst when the latter complied with the terms of the contract. The deed was recorded in Lee county on February 16, 1921. The contract between the Webbs and Herst was never carried out by Herst, but as to how or when the deed came into the latter's possession and was recorded is not shown by the record. On February 28, 1921, W. E. Herst and wife by warranty deed conveyed the Keokuk property to the appellant, Hattie E. Tutt, in consideration of the conveyance by her to Herst of a farm in Missouri. This deed was recorded March 14, 1921. In this transaction appellant was represented by one True as her agent, and neither appellant nor True had any actual notice of the circumstances under which Herst had acquired his apparent title to the Keokuk property, or of any claim of Mary E. Webb, Herst's grantor, that Herst was not the owner of the property. The Webbs, however, were in the actual possession of the Keokuk property at all times.

On March 17, 1921, appellee Mary E. Webb commenced an action against Herst to set aside her deed to him, and to quiet her title to the Keokuk property. The appellant, Hattie E. Tutt, intervened in that action, setting up the conveyance from Herst to her, alleging that she had no knowledge or means of knowledge, nor any information to put her on inquiry as to the matters set up in the petition, and claiming to be the owner of the property, and asking that her title be quieted. The plaintiff in that action moved to strike the petition of intervention upon the ground, variously stated, that the rights of the intervener were not involved in, and would not be affected or prejudiced by, any adjudication between the plaintiff and defendant therein, and because the petition of intervention was filed too late and was not properly verified. This motion was sustained generally. The intervener did not plead over or appeal from the ruling. The cause proceeded to trial as between the plaintiff and defendant therein, resulting in a decree for the plaintiff, the appellee here, canceling and setting aside the deed from the Webbs to Herst, and quieting the title to the property in Mary E. Webb.

Three primary and determinative questions are presented by the appeal: (1) That there was no delivery of the deed from appellee to Herst, and hence no deed, and that Herst acquired no title thereunder, and none passed to appellant, even though she was a purchaser for value without notice of appellee's claim. (2) That, the appellee being in possession of the premises at the time appellant took the conveyance from Herst, appellant was affected with constructive notice of appellee's claim and title. (3) That appellant was bound by the adjudication between appellee and Herst.

[1][2] I. There is involved in the delivery of a deed, not only the passing of the instrument, but the intent to make it effectual. Hogueland v. Arts, 113 Iowa, 635, 85 N. W. 818. There is a presumption of delivery from the recording of the deed, which can only be overcome by clear and satisfactory evidence. Burch v. Nicholson, 157 Iowa, 502, 137 N. W. 1069.

[3] It must, of course, be conceded, and, indeed, has been so adjudicated in the former suit, that there was not delivery of the deed as between appellee and Herst. But, without now considering the effect of that adjudication upon appellant, the fact that, as between appellee and Herst, there was no delivery, is not the end of the controversy as between appellee and the appellant, Herst's grantee, if she must be said to be a purchaser for value and without notice. The doctrine is generally stated that, where an instrument held as an escrow is delivered by the depositary to the grantee without performance of the conditions upon which it was to be delivered, no title passes, and a subsequent purchaser from the grantee without notice and for a valuable consideration acquires no title, and will not be protected. Haven v. Kramer, 41 Iowa, 382; 21 Corpus Juris, 885. The rule has been strictly applied where the deed was surreptitiously and fraudulently obtained from the depositary without his consent by the grantee, and it has been said that a deed so obtained will no more pass title to the grantee than if it were a forgery, and will not transfer title to a subsequent purchaser without notice. Jackson v. Lynn, 94 Iowa, 151, 62 N. W. 704, 58 Am. St. Rep. 386.

This court has, however, long recognized the rule that, where a deed is placed in the hands of an agent of the grantor, to be delivered only on the performance by the grantee of some condition, or to be deposited with another as an escrow to be so delivered, and through the fraud of such agent the deed is delivered to the grantee, a purchaser for value and without notice from the grantee will be protected, upon the familiar doctrine that, as between two parties, both of whom have been wronged, the one least at fault will be protected. And this is true, although as between the original grantor and grantee there was no delivery. In Creveling v. Banta, 138 Iowa, 47, 115 N. W. 598, we said:

“There must be a delivery, to become effective as between the parties to the instrument, and this does not happen when such is not the intention of either party. Plainly enough, when Banta received these deeds, with the agreement to deposit them with the bank in escrow, and they were left with him for that purpose, there was no intention that this should constitute a delivery to him. He rather must be held to have taken them as agent, and his breach of trust in their retention cannot alone be held to confer on him the rights of grantee. As between Banta and the Crevelings we have no trouble in determining that there was neither a delivery of the deeds in blank nor express authority to fill in the blanks. But the authority to do so upon the delivery of the conveyances in Kansas is clearly to be implied. They were to remain in escrow until the happening of that event, and then, though not so said in as many words, to be turned over to Banta, as is manifest from the circumstances of the transaction. In other words, the grantors placed these instruments in Banta's possession, and thereby armed him with the means of deceiving those with whom he might deal in reliance on his apparent ownership of the land. As against innocent purchasers for value, Creveling cannot be heard to complain of the conditions under which he acquired the deed, for as between two parties, both of whom have been wronged, the one least at fault will be protected. On this ground, and to guard titles, parol evidence is not admissible, against third persons dealing with the land for value and without notice, to prove conditions on which the intended grantee acquired possession of the deed.”

See, also, Owen v. Perry, 25 Iowa, 412, 96 Am. Dec. 49; Clark v. Allen, 34 Iowa, 190; Haven v. Kramer, supra; Swartz v. Ballou, 47 Iowa, 190, 29 Am. Rep. 470;McCleery v. Wakefield, 76 Iowa, 529, 41 N. W. 210, 2 L. R. A. 529; Way v. Council (May v. Council) 76 Iowa, 741, 39 N. W. 879.

[4][5] It is not shown that there was any agreement between appellee and Herst, or Evans, the latter's agent in making the trade, that the deed was to be deposited as an escrow. A deposit by one party alone, without the agreement of all parties to the instrument, will not constitute the instrument an escrow. Taylor County v. King, 73 Iowa, 153, 34 N. W. 774, 5 Am. St. Rep. 666; 21 Corpus Juris, 870. The only testimony on the subject comes from the husband of appellee, who appears to have been acting for her, and from Evans, who was acting for Herst. Webb testified he gave the deed to Evans, “to take down there and put up until they could comply with their part of the contract and furnish a deed for the land they were going to deed me. Evans took the deed from me with that understanding. * * * I gave the deed to Evans to take down to Pen Brace to hold until the deeds were made.” Evans testified: “Mr. Webb gave it [the deed] to me and asked me to deliver it to Brace.” So far as appears from this record, Evans was but the agent of appellee to deliver the deed to Brace, and the latter, if he ever received the deed, was but the agent of appellee to hold the deed until Herst had complied with his contract, and then to deliver to him. The contract between appellee and Herst is not in evidence. A written instruction to Brace, signed by Robert L. Webb only, and dated February 14, 1921, confirms this view. Brace is thereby instructed not to deliver the deed until authorized so to do by Webb...