Court Opinion

ID: 3846640
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:21:08.579289+00
Date Added: 2024-06-11T07:40:45.006599
License: Public Domain

In my judgment, the majority opinion omits a vital fact, to wit, that the $26,000 certified check which was delivered by Mrs. Hodge, the purchaser, was made payable not to Mrs. Gehringer, the seller, but to the title company, the insurer of the title. With this fact present, the majority's conclusion rests upon an unsound premise, namely, that the seller "acquiesced in the variation of the contract" to demand the cash from the buyer. She did not acquiesce in the variation of the contract to demand from the buyer the cash. If the check was made payable to her and she accepted it from the buyer, there would then be a clear variation. But the title company, to which it was made payable, accepted it. It, as the insurer, acquiesced in the variation of the terms relating to the manner of payment. It could have demanded the cash, but instead relied on certification by the Franklin Trust Company of the Hodge check. When the settlement was concluded, the seller had a right to demand the cash from the title company, the party concluding the settlement, but she waived this in consideration of the receipt by her of the title company's own check. There is not a scintilla of evidence or even a hint that anybody else's check was ever offered to her, and the fact that the Hodge check was payable to the title company precludes a conclusion that this check could have been offered to the seller. How then could it have been said that she acquiesced in the payment by a check payable alone to the title company. She did all she was required to do to complete the agreement of sale. She delivered her deed to the title company at the request of the purchaser, for recording. She received from the same company her mortgage from the purchaser, for recording. She received the title company's check for the consummation of the agreement of sale. She had a right *Page 409 
to rely upon this check as the completion of the agreement. We so held in Gurdus v. Phila. Nat. Bank, 273 Pa. 110, 116 A. 672. It is true that the certified check payable to the title company was legally a "conditional payment," but not "a conditional payment accepted by the seller as part of the settlement," but a conditional payment accepted by the title company to which alone it was payable, for which it must seek its redress from its principal, who delivered the check to it.
To conclude that the title company was not estopped, because here there was no conduct upon the part of the title company, when it delivered its check to the seller, as part of the purchase price, to cause her "to believe in the existence of a state of facts," namely that the title company's perfectly valid check would be paid on demand, and thereby induce the seller relying thereon that the agreement of sale was fully consummated and that she need not now demand her cash, is unwarranted. Clearly from such facts the law will presume that the plaintiff delivered her deed in reliance on defendant's promise to pay.
I think this matter was correctly adjudicated by Judge BARNETT, specially presiding in the court below, when he said: "The defendant for the purposes of the settlement was the voluntary and compensated agent of both the plaintiff and her vendee, Mrs. Hodge. The delivery of the plaintiff's deed to it was a delivery to Mrs. Hodge. The delivery of Mrs. Hodge's mortgage to it was a delivery to the plaintiff. The larger part of the consideration for her deed was the sum of $26,000 which, by the provision of the agreement of sale, the plaintiff was entitled to receive in cash. If it had been so paid the plaintiff would not now be in court. It was not she, but thedefendant who waived the right to payment in money and acceptedinstead the Hodge checks [italics supplied]. . . . It was not the plaintiff, but the defendant, who, having accepted the checks in lieu of cash, failed to exchange them immediately for money. The *Page 410 
defendant must sustain the loss which it had the double opportunity to avoid but which it prevented the plaintiff from avoiding by handing her its own check upon itself, which the plaintiff accepted as money."
There is no question that appellee delivered the deed to her property to appellant as agent of the buyer, following the delivery to appellee of appellant's check. The deed had passed beyond her control. She could not have successfully demanded its return. Appellee could have gone to the bank on which the appellant's check was drawn, before the close of the banking hours on the day of settlement, and cashed it. Her title to the proceeds of that check would be incontestible. The delivery of the deed to appellant in exchange for appellant's check and undertaking to record and deliver the instruments of title that would give appellee a purchase-money mortgage on the land was a consideration satisfying all legal requirements. The entire transaction was closed when the parties left the place of settlement. No one was in a position to "back out." The deal was consummated. Suppose the appellant had been given cash instead of checks and had been robbed of the cash or had lost it immediately after leaving the settlement office, would anyone contend that thereby appellant acquired the right to stop payment on its check? Appellant in accepting the buyer's checks did not anticipate that they would prove to be uncollectible any more than it would have anticipated, in the supposed case, that it would be robbed of the cash delivered to it. But that was a chance it took and it alone should bear the consequences of the hazard. Mrs. Hodge, the purchaser of the property, had given the appellant a certified check for $26,600 drawn to appellant's order and another check, uncertified, for $39.44, also drawn to appellant's order. These two checks represented the total amount payable by the purchaser, as the balance of the purchase money, except for adjustments of taxes and insurance. It was the misfortune of appellant that it accepted from the buyer in *Page 411 
lieu of cash a large check, properly certified but nevertheless subject to the hazard (not uncommon in these unusual times) that the bank which had certified it might be closed before the check could be cashed. This happened within thirteen hours after the settlement. The appellee was in no way responsible for this fact. She had fully discharged her part of the bargain and had accepted appellant's check in payment of the property she had parted with. When appellant found that the certified check which it had accepted, was not paid by reason of the closing of the bank on which it was drawn, it stopped payment on its own check to the appellee. This it had neither a legal nor a moral right to do. It had taken Mrs. Hodge's checks in lieu of the cash it could have demanded. When it did not demand cash, it took the risk of the nonpayment of the checks.
The majority opinion contains the following statement: "We have, then, conditional payment accepted by the seller, as part of the settlement. 'Furthermore, in the absence of circumstances indicating a contrary intention, a cashier's check accepted from a debtor is not an absolute but merely a conditional payment, defeasible upon nonpayment or dishonor':Gerrard v. Tradesmen's Bank, 318 Pa. 100, 103, 177 A. 760. See also Phila. v. Stewart, 195 Pa. 309, 314, 45 A. 1056."
The above statement is wholly inapplicable as affecting appellee's rights here. She was the seller. She accepted not
conditionally, but absolutely, appellant's check. She is not trying to recall her deed because appellant stopped payment of its check. She fully carried out her part of the deal by parting with her property and demands that appellant make good on its check, which she accepted in payment for her property. The title company's check was not rejected by the payee (the vendor of the property) for failure of consideration on the part of the maker of the check or for anything else, and therefore the principle cited in the majority opinion has no applicability. The facts here are "just the other *Page 412 
way around" from a state of facts which would make the above principle applicable. An examination of the two cases cited in the above excerpt from the majority opinion discloses that they have no application whatever to such a state of facts as we have here. There is no "conditional payment" in this case. A case of conditional payment arises where one parts with real or personal property and accepts another's check for it. If A sells his property to B and accepts B's check in payment and B's check is dishonored, there is in fact a fraud perpetrated on A, and A can demand his property back. But in the instant case the seller of the property perpetrated no fraud on the title company. She delivered her property and took the company's check in good faith. All she demands is that the company make good on its check. It is no fault of hers that the checks which the title company took from the buyer proved to be uncollectible. That unfortunate fact gives the title company a right of action against the maker of that check, not against Mrs. Gehringer, who parted with her property on the faith of the goodness of the title company's check.
What I think is a basic error in appellant's position (and in the majority opinion) is the assumption that when the title company delivered its check to Mrs. Gehringer, it annexed a condition to it. There was certainly no such expressed
condition, and such a condition could easily have been expressed. The title company could have exacted from Mrs. Gehringer a pledge that she would not cash its check until the Hodge check had cleared. It did nothing of the kind. It could have withheld its check to the seller until the buyer's check had cleared. It did not choose to do so. There is nothing in the agreement and stipulation of facts indicating anything "conditional" about appellant's check to Mrs. Gehringer. When the parties left the settlement office, the transaction was closed. The appellant had the buyer's checks, and also Mrs. Gehringer's deed for delivery to the buyer and Mrs. Gehringer had appellant's check. *Page 413 
When the buyer's checks proved to be uncollectible, the title company and not Mrs. Gehringer should bear the loss. The company could have demanded cash from the buyer, but it did not. It could have protected itself in various ways, but it failed to do so. Its misplaced faith in a third person's check (i. e., a mere piece of paper of no intrinsic value) resulted in a loss. Who should bear that loss? Certainly not the appellee. She did nothing to cause it. She was not relying on the buyer's checks but on the appellant's check, when she parted with her property. She had made no representations to the appellant in respect to the buyer's checks. The appellant dealt with "its eyes open." It should have protected itselfabsolutely, as it could have done, not merely relatively by taking a certified check. Ordinarily certified checks are good, but they are not necessarily good. This one proved not to be good.
To visit this loss on appellant and not on appellee, I do not think it necessary even to invoke the principle (as did the court below) that when one of two innocent persons must suffer loss for the default of a third person, the loss should fall on the one whose act facilitated the loss, or, as it is sometimes expressed, "made the loss possible." (See Fifth Street B.  L.Assn. v. Kornfeld, 315 Pa. 406, 414, 172 A. 703.) Appellee breached no duty in this transaction. No act or omission on her part was the cause of the loss which must be borne by someone. Appellant's failure to demand the cash it was entitled to demand and secure, and its reliance on the buyer's check in lieu of cash, made this loss possible. Appellant then should bear the loss. The above principle justifies the conclusion reached by the court below, but even if there was no such principle in the law, the same conclusion ought to be reached on the facts. The seller parted with her property in reliance on appellant's check. Appellant should make that check good. It should not be permitted to impose the loss arising from its misplaced trust in the buyer's checks, on one who accepted its
check *Page 414 
in complete trustfulness and parted with valuable property because of that trustfulness. To permit this is to give judicial sanction (so at least it appears to me) to the doctrine that "two wrongs make a right."
I would affirm the decree of the court below.