Moore v. Moye , 122 Ark. 548 ( 1916 )

McCulloch, C. J.

Appellants owned lands in Dallas County, Arkansas, and entered into an oral agreement for the exchange of those lands with appellees for certain lots in Malvern, Arkansas. Each of the respective owners executed their deeds of 'Conveyance pursuant to said agreement and delivered the same to H. L. McDonald, the cashier of one of the banks in Malvern, to await the completion of abstracts of title. Appellants furnished an abstract of title and subsequently applied to McDonald for delivery of the deed executed by appellees, and pursuant to said request McDonald delivered the deed to appellants and the same was placed on record.

This is an action instituted by appellees against appellants in the chancery court of Hot Spring County to cancel said deed as a cloud on the title, it being alleged in the complaint that the deed was delivered without the consent of appellees and upon the false representation made iby appellants to McDonald to the effect that appellees had consented to deliver the deed. Appellants answered, alleging that the deeds had been delivered in escrow to McDonald for delivery to the respective grantees' as soon as abstracts were furnished showing merchantable title to the land, which abstract had been furnished by appellants, and that the deed had been delivered to them by McDonald pursuant to the agreement with appellees. On trial of the issue the chancellor found in favor of the appellees and entered a decree cancelling the deed.

There is a substantial controversy between the parties as to the effect of the delivery of the deeds to McDonald. The contention of appellants is that the deeds were delivered in escrow, conditioned only on the furnishing of an abstract showing a merchantable title. On the other hand, it is the contention of appellees that the deeds were placed in the hands of Mr. McDonald merely to await the furnishing of a satisfactory abstract, but that each party was to have the privilege of determining whether the abstracts were satisfactory, and that the deeds were not to he delivered except upon the consent of each party. The chancellor determined this issue in favor of appellees, and we are unable to say that the testimony preponderates against that finding.

Each one of the appellees testified as to the terms-of the trade, stating positively that McDonald was not to deliver the deeds to appellants until they consented thereto. In this statement they are corroborated by the testimony of others. Mr. McDonald was introduced as a witness, but his recollection does not seem to be entirely -clear as to the details of the transaction, though his testimony rather tends to support the contention of appellees that he was not to deliver the deed until appellees gave him directions to do so. He stated that he held the deed until it was represented to him that appellees had consented. Mr. Moore, one of the appellants who applied to McDonald to deliver the deed, stated that he did so after having a telephone conversation in which he understood that W. H. Moye, one of the appellees, had consented to the delivery. The fact that he found it necessary to obtain the consent of appellees Before applying for delivery of the deed tends in -some degree to support the view that he was conscious of the necessity of 'Obtaining such permission, and that that was in accordance with the terms of the trade. Mr. Moore testified positively that the deeds were delivered to McDonald solely on condition that there was to be a delivery to the respective parties when abstracts of title were passed, showing merchantable title, but the preponderance of the testimony seems to be against him on that issue. At any rate, we are not able to say that the finding of the chancellor on that issue was against the preponderance of the testimony.

Now, if the deed was not in fact delivered in escrow, •but was to be held by McDonald subject to the further direction of the appellees, which was never obtained, and delivery was made without such consent, then it was wrongful and appellees were entitled to have the deed cancelled as a cloud on the title. The contract rested entirely in parol, and unless there was a delivery of the deed in escrow, there was nothing to bind the parties and they could not be bound by a wrongful delivery of the deed. The deposit of a deed with a third party for delivery must be irrevocable in order to constitute it an escrow, and if it is subject to the order of the party it has no binding effect. Masters v. Clark, 89 Ark. 191.

In that case, Judge Battle, speaking for the court, said: “In this case the instruments were not deposited to be delivered on the happening of a certain event or the performance of a condition, but to be delivered on the joint order of the grantor and grantee. They were still within their power to cancel or modify; they had not received any permanent force, but were still within the control of the parties. They were not escrows.”

It follows, therefore, that appellees were not bound by the delivery of the deed without their consent, and that they are entitled to have it cancelled as a cloud on their title.

Decree affirmed.