Opinion ID: 2259466
Heading Depth: 1
Heading Rank: 2

Heading: Escrow

Text: [¶ 10] Johnson also claims that Andrews assumed a personal obligation as an escrow agent when he received Johnson's deposit from Lewis. Johnson argues that, as an escrow agent, Andrews is personally liable for any breach of fiduciary duty in handling the escrow funds. [¶ 11] According to the terms of the contract for sale of real estate, EPU purported to hold Johnson's deposit in escrow as his escrow agent. [5] However, the court found as a factual matter that the parties failed to create an escrow agreement because they did not intend to do so, despite the contractual language. [¶ 12] An escrow is a written instrument, imparting a legal obligation, that one party to a transaction ( i.e., grantor, promisor, or obligor) deposits with a third party, the escrow agent, for the escrow agent to hold until the performance of a condition or occurrence of an event, and then to deliver to the other party to the transaction (i.e., grantee, promisee, or obligee). See Progressive Iron Works Realty Corp. v. Eastern Milling Co., 155 Me. 16, 19-20, 150 A.2d 760, 762 (1959); Black's Law Dictionary 641 (4th ed.1951). The creation of an escrow agreement consists of four elements: (1) an agreement regarding the subject matter and delivery of the deposit or instrument; (2) an escrow agent; (3) delivery of the funds or instrument to the escrow agent, conditioned upon the performance of an act or occurrence of an event; and (4) relinquishment by the grantor or depositor. See, e.g., Press v. Marvalan Industries, Inc., 422 F.Supp. 346, 349 n.  (S.D.N.Y.1976). [¶ 13] Whether an instrument that one party deposits with a third person is an escrow, rather than a completely executed instrument, depends on the intent of the parties, and is generally a question of fact for the factfinder. See Progressive Iron Works Realty Corp., 155 Me. at 20, 150 A.2d at 762. We will not disturb the trial court's factual findings unless they are clearly erroneous. See VanVoorhees v. Dodge, 679 A.2d 1077, 1080 (Me.1996). The court's factual findings are clearly erroneous when the record lacks competent evidence to support them. See id. [¶ 14] The party who asserts the existence of an escrow has the burden of proving its existence by a preponderance of the evidence. See, e.g., Vellaringattu v. Caso, 144 Misc.2d 519, 544 N.Y.S.2d 455, 457 (1989). No particular form of words is necessary to constitute an escrow. See, e.g., Kunick v. Trout, 85 N.W.2d 438, 445 (N.D. 1957). The use of the term escrow is a factor for courts to consider in determining the intent of the parties. See, e.g., Lechner v. Halling, 35 Wash.2d 903, 216 P.2d 179, 185 (1950). However, although such use is the clearest indication of the parties' intent, it does not necessarily create an escrow. Id. [¶ 15] The court based its finding that the parties did not intend for Andrews to hold the deposit in escrow on the fact that Johnson clearly delivered the earnest money deposit to EPU[,] and Andrews, acting as [EPU's] agent, deposited the money in [EPU's] account. Since a party generally cannot deposit escrow funds with the agent of an obligor or obligee, the court interpreted the failure of the parties to designate a third party escrow agent as a manifestation of intent that Johnson's check was not an escrow instrument. See Progressive Iron Works Realty Corp., 155 Me. at 19-20, 150 A.2d at 762. Although the agent of an obligor or obligee may become an escrow agent if acting in an individual capacity and where it would not be antagonistic to the principal's interest, the record contains evidence to support the finding that Andrews was not acting in an individual capacity. See id. In light of the requirements for creating an escrow, the record contains evidence to support the court's finding that the parties did not actually intend for Andrews to become an escrow agent. See VanVoorhees, 679 A.2d at 1080. Therefore, we will not disturb the court's factual finding that the parties failed to create an escrow agreement. The entry is: Judgment vacated. Remanded for proceedings consistent with this opinion.