Opinion ID: 1745392
Heading Depth: 1
Heading Rank: 3

Heading: The documents taken together require Wilburn & Steele to make the escrow payments for the benefit of Baker.

Text: Construing the multiple documents together, it is clear that Wilburn & Steele were obligated to make their payments to Jurisch into the Bank escrow account, and Baker, as a party to the agreement, was entitled to enforce that obligation. The Jurisch/Wilburn & Steele contract provides that the Bank as escrow agent shall receive all payments regarding the agreement and make application of payments which were due under the terms and conditions of the Jurisch/Baker contract. The effect of that provision is that all payments Wilburn & Steele made under their obligation to Jurisch were to go into that escrow account. The letter of transmittal establishing that escrow account must be consulted to determine how the payments made into that account were to be dispersed. Both copies of the letter of transmittal submitted at trial contained statements: Credit all payments directly to Jurisch-Baker escrow account. The trial court determined this language was added after the original typing of the letter and Wilburn & Steele had no knowledge that this language had been inserted into the letter. Even if the trial court's determination was correct, the emphasis or weight placed thereon was excessive because the contracts required the escrow accounts. Considering that the copy of the letter of transmittal coming from Steele's file contained the same instruction to credit payments to the Jurisch/Baker account, and given the conduct of the parties with regard to the disbursement of the proceeds in accordance therewith, we conclude that the document, as part of the contract, must be interpreted and its unambiguous terms given effect. The court did not do this because it failed to determine what was to be done with the proceeds paid into the account. The Jurisch/Wilburn & Steele account ledger card, which gave general instructions for administering the account, directed that proceeds of the account were to go to the Jurisch/Baker escrow account. The Jurisch/Baker account ledger card stated that the documents for this escrow are held in [Jurisch/Wilburn & Steele] escrow. Although these statements are not entitled to the same weight as provisions within the contracts themselves, they indicate the connection between the two accounts, and support the same conclusion. Wilburn & Steele's argument that the escrow accounts were established simply for the convenience of the parties makes no sense when one considers that Jurisch owed Wilburn & Steele more money than Wilburn & Steele owed Jurisch. Why would Wilburn & Steele agree to make payments of $468 per month to an escrow account for Jurisch/Baker's benefit when Jurisch owed Wilburn & Steele $720 per month? The only reasonable conclusion is that the escrow accounts were established for Baker's benefit to get him to release his interest in the business. That the escrow accounts were mandatory is also supported in part by the Jurisch/Wilburn & Steele contract requirement that Jurisch pledge all of his stock, when Wilburn & Steele were not so required. The explanation for this inconsistency is that Baker was to benefit by Wilburn & Steele's payments rather than Jurisch, so there was no reason to protect Jurisch with a pledge of Wilburn & Steele's stock. We also conclude that the proceeds of the escrow account were to be paid to the Jurisch/Baker escrow account because of the effect given to the letter of transmittal by the parties themselves. The construction given by the parties themselves to the contract as shown by their acts, if reasonable, will be accorded great weight and usually will be adopted by the court. Huffman v. Shevlin, 76 S.D. 84, 89, 72 N.W.2d 852, 855 (1955); see also Davis by Davis v. Outboard Marine Corp., 415 N.W.2d 719, 723 (Minn.Ct.App.1987). For nearly three years, the parties to this transaction gave effect to their agreement by having the payments Wilburn & Steele owed to Jurisch be paid into the Jurisch/Wilburn & Steele escrow account, which transferred the funds to the Jurisch/Baker escrow account, which in turn transferred the funds to Baker's savings account. Indeed, Wilburn & Steele's attorney testified at trial: Baker's funds came from the contract of sale from Jurisch to Wilburn and Steele and all the parties agreed to distribute the funds that way in the escrow. Despite Wilburn & Steele's argument that the escrow arrangement was for convenience only and not mandatory, their evidence fails to compel a different interpretation of the escrow account instructions. In this context, it is important to note again that Baker expressly released his security interest in the business. He did not, expressly or impliedly, release his rights to the escrow payments. To the contrary, it appears that he released his security interest in the business in consideration of the escrow payments. In fact, Baker insisted on his right to the escrow payments at all times. We conclude that the contract entered into on November 14, 1979, by Baker, Jurisch, Wilburn & Steele required that the payments Wilburn & Steele owed to Jurisch be paid into the Bank escrow account, which was obligated to transfer the funds to the Jurisch/Baker escrow account, which, in turn, was to transfer the funds to Baker's savings account. As a party to this contract, Baker is entitled to enforce this agreement. [3] Reversed. WUEST, C.J., and MORGAN and MILLER, JJ., concur. HENDERSON, J., dissents.