*1 SHAHEEN, Kingery Eugene J. C. D. Bowman, Trustee of D'Velco Arthur
Manufacturing Employees' of Arizona Sharing Trust, Retirement Ar
Profit Appellants, Corporation, izona TITLE COM AMERICAN INSURANCE PANY, Corporation, a Florida
Appellee. No. 1 CA-CIV 3407. Court of Division Department B.
Oct. 1978. Rehearing Denied Nov. 1978. Review Denied Nov.
Renaud, Videan, Cook & P. A. J. Gor- Cook, Phoenix, don for appellants. *2 Fennemore, Udall, Craig, von Ammon & structions in the letter. The required first III, Phoenix, by J.
P. C. John O’Connor for American Title to take the $963.68 received appellee. each month under the land contracts and place account, in one $500 bank to be credit-
OPINION ed monthly to the interest JACOBSON, Presiding Judge. note, promissory place and the remainder in a second bank account “to accumulate to- appeal summary judg- This is an from $50,- ward the refund of the principal of in favor appellee ment entered of American 000.00 due payable [D’Velco], as at- Company Title Insurance in an action $50,000 tached note.” by appellants The second brought pro- to recover instruction by American Title’s alleged lost failure to vided for agreements substitution of under follow escrow instructions. Most of es- the mortgage any of the original 15 were stipulated by par- were sential facts paid off in by cash or forfeited default. undisputed. ties and Instruction three dealt with handling of escrow fees.
Appellants profit-shar- are trustees of a ing Manufacturing trust for D’Velco of Ari- $50,000 American Title disbursed the (D’Velco). early a zona salesman monthly Western and the payments under (West- Company Western Land for Sales agreements land sales began to be ern) Shaheen, approached Mr. one of the placed in the two bank accounts. After D’Velco, proposal with a trustees for months, approximately 6 payments the lot investment opportunity for trust. The stopped and the by contracts were forfeited essence of the transaction was that D’Velco default. No other contracts were substitut- $50,000 would lend to Western and receive by ed Western. D’Velco discovered that in return 12% interest on the loan. As only interest of Western in several of debt, evidence of the D’Velco would receive the lots by agreements covered was as $50,000 promissory security note. As for beneficiary second under two trusts. debt, mortgage D’Velco would receive a on Western’s interest as seller in 15 real D’Velco only discovered that the agreements. estate sales The debt was to of Western in several of the lots by covered repaid by payments buyers be from the agreements beneficiary as second parties the real estate sales contracts. Both under two Ultimately, trusts. D’Velco terms, agreed agreed to these and further learned mortgage its was worthless. accomplish through the transaction an Efforts to recover proved from Western escrow. fruitless. 6, 1973, Jones, February On Vince senior Appellants brought an action against escrow officer of American Title received Title, seeking American to recover their letter escrow instructions. As indicated by $50,000. The trial court granted summary letter, delivery enclosed for to Ameri- Title, judgment for ap- American and this (1) copies Agreements can Title were: of 15 peal resulted. covering certain lots in Sale parties $60,992.39 have framed a unpaid number of with a total balance of issues, phrased payable monthly ways. in various that was installments of Our re- $963.68; (2) original, unrecorded blan- view of the case us to leads consider three mortgage ket of Western’s interest as seller central issues: agreements, under the 15 by executed (1) Whether American Title was liable to Shaheen; $50,000 (3) Mr. Western and disbursing note, 7, 1973, promissory February dated Western in of an absence instruc- appellants, executed Western in favor of tion authorizing that disbursement. interest, annum per payable with 12% (2) Whether escrow instructions per beginning month the rate of on $500 8, 1973; (4) made disbursement conditional on appellants’ March check for recorda- $50,000. Title received mortgage. three in- tion of the blanket proceeds has (3) escrow instructions debtor received Whether on Ameri- made disbursement conditional loan. investigation
can
the state
Title’s
From the written material received
in the
estate covered
Western’s interest
agent,
say
we can
as a matter
its
agreements
assurance
implied
of law that the escrow
ade-
provided appellants
instruction, to
authority, and thus an
dis
*3
security.
quate
$50,000
burse the
delivered to it to Western.
is that
Appellants’
argument
first
since
becomes,
The
then
can
escrow
question
an
were silent as to
the escrow instructions
agent
following
impjied
liable
be
that
$50,-
appellants’
what
to be done with
was
A
related
closely
question
instruction?
was
agent
the
is liable for disburs-
escrow
presented
Corp.,
in Gordon v. D & GEscrow
sum,
anyone.
to
In our
ing
apparently
this
Cal.App.3d 616,
(1975),
Cal.Rptr.
122
opinion,
argument
simplistic
this
and
is, may
agent
that
be
escrow
liable for
the realities
the transaction
overlooks
of
to
failing
carry
implied
out
instructions?
principals.
between
Here there is no
the
Gordon,
In
the sellers of real property, a
that when
contention
Mr. Shaheen deliv-
wife,
up
husband
set
an escrow to
$50,000
agent,
the
to the
did
ered
escrow
he
payment
buyer
receive
from
parcel
of a
of
this
be
to
money
not intend
to
disbursed
property.
property
sold was held
expected
Western. He does contend he
the
in the name of
wife
the
as her sole and
to
agent
protect
position
escrow
his
separate property, although both
hus
the
expectation we
disbursement—an
deal
signed
band and wife
the escrow instruc
fact,
later in this decision. In
Mr. Shaheen
tions as “sellers.” In the language of the
testified that once the trust started receiv-
court,
escrow instructions
the
in
case
“[t]he
sale,
ing
from
he
monies
the contract of
at bench did
expressly
not
state that
the
agent
believed
in fact
escrow
that
the
paid
sellers were to be
for selling
prop
the
$50,000 Western,
disbursed the
to
and that
erty.”
subsequent
Matrimonial difficulties
objection
he made no
to this disbursement
ly arose between
husband
the
and wife and
specific
on the
of lack of a
basis
instruction.
upon instructions from the wife’s attorney,
Moreover, this escrow was
in
established
agent
the
paid
proceeds of the
to
the
order for the trust to loan Western
sale to the wife alone. The husband sued
very
that it is now contended should
agent,
and the escrow
end,
not have been loaned. To this
on the
of
specific
defended
basis
lack of a
parties (there is no contention that the es-
as
instruction
to disbursement
proceeds
of
negotiations
crow
was
involved in
sale, arguing
of
since
that
the wife was the
leading
or
of
preparation
to
record,
title holder of
it
justified
was
in
instructions)
to
instructed the
paying proceeds
to
wife alone. The
receive
from
sale
payments
the contracts of
California Court
rejected
of
this
place those payments
separate
in two
that,
argument, holding
is clear to us
accounts;
“[i]t
one
payment
for the
to D’Velco
that,
absent
instructions to the con
“to
monthly
and one
accumulate
trary,
an escrow
must disburse to
$50,-
principal
toward the refund of the
the proceeds
sellers
of the sale.” Gor
payable
000 due and
to D’Velcoof Arizona
don,
Plan,
supra,
at
Employees’
Sharing
Cal.Rptr.
Profit
at-
at
as
Important
tached note.”
to the rationale of the court was
that
a duty
such
becomes an implied in
note,
The attached
delivered to the es-
agent. Moreover,
struction to the escrow
agent, provided
monthly
crow
in-
“sellers”
this context must be ascertained
be
payments
terest
were to made to D’Vel-
themselves;
from escrow
commencing
8,1973, approximate-
co
March
case,
both the husband and wife were
ly
setting
one
following
up
month
“sellers.” The
went
court
on to hold that
escrow. The
in-
collection
since the escrow
(which
terest
loan
was
disbursed to the wife
on the
received with-
alone,
D’Velco)
objection by
implied
out
it breached the
assumes that
consummated,
is,
proceeds
loan has
to
pay
sellers,
been
to the
stating:
rely
principle
that defend-
crows
irrelevant,
included title insurance is
“[W]e
simply
ant escrow company
failed to
since this belief was never
to
communicated
which,
carry out
impliedly
its instructions
Certainly
Title.
$145
not expressly,
proceeds
called
fee
received
American Title did not indi-
paid
Gordon, supra,
be
to the sellers.”
cate that American
was expected
Title
Cal.Rptr.
at 154.
render
beyond
some service
col-
simple
lection escrow. American Title
applicable
We believe that rationale to be
was under
transaction,
parties
here.
In
obligation
voluntarily
this
all
intend-
no
disclose infor-
ed that
debtor Western was to receive
mation
Amtitle regarding
held
the ex-
-proceeds
escrow. Under
tent of Western’s interest. See Lee v. Title
here,
implied
there was an
facts
instruction
Insurance & Trust
264 Cal.App.2d
to the escrow
out
carry
that intent.
Cal.Rptr.
addition,
Ameri-
liability
No
attaches
can Title
not obligated
the escrow to
following
implied
instruction.
assure
that the
offered
*4
adequate security.
reality,
appellants
the D’Velco trustees are not
If
desired
information,
complaining
agent
that
dis-
that
they should have consult-
Western,
they
the funds to
rather
bursed
a lawyer.
ed
See
Bank
National
of Wash-
contending
that
such disbursement
Investors,
ington
Equity
886,
v.
81 Wash.2d
should not have been made without
the
(1973).
Appeals in
v. D
Escrow Corpo-
Gordon
& G
30A
See also
Escrows
§
C.J.S.
ration,
Cal.App.3d 616,
Cal.Rptr.
Schomisch,
Leasing
Laurentide
Co.
(1975).
(1969);
382 Mich.
I because Allen v. Allen Title 77 N.M. below, precedents, clear Arizona described
indicate that an escrow
is not entitled
summary judgment
for the
compa-
title
assume,
basis
“implied
of nebulous
ny
reversed,
in Buffington was
and this
authority,”
he may
disburse funds
Buffington
Court ruled that
stated
when the escrow
do not
ex-
cause of action
against
title
Rather,
pressly authorize
action.
un-
since an escrow
who wrongfully for-
law, an
der Arizona
faced
a buyer’s
feits out
may
be liable for
ambiguous
with unclear or
damages
buyer.
suffered
Our Court
required
supplemental
to obtain
instruc-
*5
questions
also
held
valid
re-
of fact
proceeding beyond
tions before
the written mained, such as
company
whether
title
authority
original
of the
instructions.
aAs
fiduciary
its
duty
Buffing-
breached
result, the minimum that this Court should
ton,
damages,
any,
and his
precluding
genuine
now hold is that there are
issues of
summary judgment.
concerning
agent’s authority,
fact
Burr,
In
421,
Union Title Co. v.
102 Ariz.
summary
judgment
was therefore
423,
433,
(1967),
Supreme
432 P.2d
435
our
inappropriate
extent.
upholding
Court in
refusal
of the title
In
v.
Buffington
Title Insurance Co. of
pay
a commission
a spe-
out of
Minnesota,
97, 99-100,
Ariz.App.
fund, said,
26
546
duty
cial
“Union’s
as an
366,
(1976), Judge Ogg
P.2d
368-9
of our
comply
was to
strictly
the terms of the
summarized the
Court
duties
an escrow
agreement.”
compli-
Union’s strict
following
in
language:
precluded
ance with its
liability
instructions
for its refusal
to disburse. See also Malta
well
law is
in this state
settled
v.
Co.,
116,
Phoenix Title & Trust
76 Ariz.
an escrow
acts
fiduciary capac
in a
(1953).
510
deposited in escrow.”
equal
a sum
to that
1322
P.2d
586
235,
TRANSPORTATION,
Id. at
crow without not where the escrow instructions did sent authorize the disbursement. cases, clear that these it is light law does not allow an Arizona authority to disburse funds imply principal. his Since $50,000, provide did not for disbursal *6 obligated to obtain acting. the consent minimum, genuine there are issues At a agent’s authori- concerning the escrow fact issue, and, summary judg- ty as to and I would reverse improper ment was issue. for trial on this remand the case re- issues must be The second and third and, consequently, appellee’s favor solved majority opinion regard- I concur ing these two issues.