Opinion ID: 1272278
Heading Depth: 1
Heading Rank: 6

Heading: Appeal: Pinnacle Account 31101 Was an Escrow Account, and Pinnacle Was Bound by the Duties of an Escrow Account Depositary.

Text: Pinnacle claims on appeal that the district court erred in concluding that the bank account in question was an escrow account. We reject this claim. Pinnacle argues that Account 31101 was not an escrow account and that TC Properties was allowed to transfer funds from the account. Pinnacle claims that the terms of the account do not satisfy the definition of an escrow account. Pinnacle notes that the account was not titled as an escrow account but instead was called a single-payer account. Pinnacle suggests that the proper characterization of the account created a genuine issue of material fact which precluded summary judgment. This court has previously stated that `an escrow . . . is properly defined as a written instrument, which by its terms imports a legal [duty that a deposit is] to be kept by the depositary until the performance of a condition or the happening of a certain event and then to be delivered over to take effect. . . .' Pike v. Triska, 165 Neb. 104, 119, 84 N.W.2d 311, 321 (1957). See, similarly, In re ANR Advance Transp. Co., Inc., 247 B.R. 771 (E.D.Wis.2000); 28 Am.Jur.2d Escrow § 1 (2000); Black's Law Dictionary 20 (9th ed.2009) (defining escrow account). It is well settled that [n]o precise form of words is necessary to create an escrow. The term `escrow' need not be used. 28 Am.Jur.2d, supra, § 6 at 8-9. We agree with the district court that as a matter of law, the account at issue in this case was an escrow account. Although Account 31101 was not titled as an escrow account, given the addendum, it possessed all of the hallmarks of an escrow, including that Pinnacle was required to hold the money deposited in the account until the happening of the identified condition, which in this case was the receipt of a draw authorization form signed by the specified persons, at which time the money could be transferred solely to BSB. Therefore, the district court properly determined that Account 31101 was an escrow account. With respect to the duties of a depositary of an escrow, our jurisprudence establishes: Where a [party] assumes to and does act as the depositary in escrow, [it] is absolutely bound by the terms and conditions of the deposit and charged with a strict execution of the duties voluntarily assumed. [It] is held to strict compliance with the terms of the escrow agreement. If [it] violates instructions or acts negligently, [it] is ordinarily liable for any loss occasioned by [its] breach of duty. Katleman v. U.S. Communities, Inc., 197 Neb. 443, 447, 249 N.W.2d 898, 901 (1977). See, also, A.G.A. Inc. v. First Nat. Bank, 239 Neb. 74, 474 N.W.2d 655 (1991). Because we have concluded that Pinnacle Account 31101 was an escrow account, Pinnacle was required to strictly comply with the terms of the addendum, including the requirement that payments be made solely to BSB and not without a draw authorization form signed by TC Properties and T Capital Partners representatives. By allowing TC Properties to transfer significant sums into another account, Pinnacle violated these terms and is liable for the loss suffered by BSB. Pinnacle devotes considerable argument on appeal to the effect that BSB is precluded from recovering losses attributable to the lack of sufficient funds in Account 31101, because BSB did not submit a properly endorsed draw authorization form for the requested sums prior to filing suit. Under the controlling documents, in the ordinary course, the draw authorization form would include the signature of a TC Properties representative. However, because TC Properties was in the process of improperly diminishing the funds in the account, we believe it is neither logical nor required that BSB have attempted in vain to obtain the signature of the very entity that was in the course of improperly transferring the funds out of Account 31101 as a condition precedent to BSB's recovery of the funds taken. The law does not require a party to perform a useless act. See Bank of Papillion v. Nguyen, 252 Neb. 926, 567 N.W.2d 166 (1997). In sum, because Account 31101 was an escrow account, and because Pinnacle did not comply with the terms and conditions of the agreement governing the account, we affirm the district court's decision that there were no genuine issues of material fact whether Pinnacle was liable for the losses BSB suffered as a result of TC Properties' improperly removing funds from the account. Our resolution of these assignments of error effectively resolves Pinnacle's assigned error claiming that the district court erred when it denied Pinnacle's request to raise at the trial what Pinnacle described as an issue of contract interpretation. In its pretrial conference memorandum, which was submitted after the entry of summary judgment, Pinnacle stated that there existed an issue of law as to whether the construction contract require[d] that TC Properties and [T] Capital [Partners] fund Pinnacle Bank Checking Account [31101] for both the original contract amount and change orders. BSB objected to Pinnacle's raising this issue at this late stage in the proceedings. The district court directed the parties to brief the matter. After briefing, the court entered an order denying Pinnacle's request to raise the issue of contract interpretation. The district court reasoned that because the court had entered summary judgment on the contractual status of the parties, this issue had been implicitly resolved and the only issue remaining for trial was the amount BSB was owed for the riprap. We agree with the district court's reasoning and conclusion on this issue. The additional contract interpretation issue raised by Pinnacle goes to the issue of Pinnacle's liability under the controlling agreements and the law. The partial summary judgment order entered by the district court resolved the issue of Pinnacle's liability, and the only issue remaining was the amount of damages owed BSB for the riprap. Therefore, the issue of contract interpretation raised by Pinnacle in the pretrial memorandum had been resolved and was not relevant to the trial. The court properly disallowed the issue to be raised at trial.