Court Opinion

ID: 9533602
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:33:03.816616+00
Date Added: 2024-06-11T13:29:05.854397
License: Public Domain

*275Mackenzie, J.
(dissenting). I respectfully dissent.
The majority concludes that the parties’ real estate escrow agreement gave rise to a duty owed by defendant bank to plaintiff land contract purchasers to convey the property to plaintiffs once the sellers’ mortgage balance exceeded plaintiffs’ land contract balance and that a fact question exists as to whether breach of this duty constituted negligence. On these facts, I cannot agree that the bank owed plaintiffs such a duty to convey. The majority finds a duty owed to plaintiffs by noting that the escrow agreement incorporated by reference plaintiffs’ and defendant sellers’ land contract and then relies on the provisions of paragraph 3(b) of the land contract. Paragraph 3(b) provides that
[I]f the title of Seller is evidenced by land contract or now or hereafter encumbered by mortgage, Seller shall meet the payments of principal and interest thereon as they mature and produce evidence thereof to Purchaser on demand. . . . When the amount owing hereon is reduced to that owing upon such . . . mortgage^] ... a conveyance shall be made in the form above provided with a covenant by the grantee to assume and pay the same.
Thus, when the land contract balance equalled the amount of the seller’s mortgage, a deed with the buyer’s covenant to assume and pay the mortgage should have been delivered.
In this case, the buyer’s land contract balance equalled the seller’s mortgage balance once the buyers made their $30,000 payment on May 1, 1983, approximately IVi months before the execution of the June 17, 1983, escrow agreement. Clearly, under the language of paragraph 3(b), the right to a conveyance pursuant to that paragraph *276arose on or about May 1. Since the escrow agreement had not yet come into existence at that time, I fail to see how it could create a duty in the bank to effectuate such a conveyance.
The majority seems to suggest that, upon execution of the escrow agreement, the bank owed a duty to plaintiffs, in essence, to remind them of their right under paragraph 3(b) to an immediate conveyance rather than postponing receipt of a deed per the escrow arrangement. I know of no authority for the proposition that an escrow agent must advise the parties whether their decision to escrow has been providently made. Moreover, such a notion elevates the escrow agent from an entity "instructed by sellers to deliver the Warranty Deed to purchasers . . . when the sellers have provided the escrow agent with a receipt . . . ,” as agreed by the parties, to the role of conservator for plaintiffs. Escrows are governed by contract law principles. The escrow agreement in this case does not impose a duty upon the escrow agent to verify the parties’ compliance with the land contract; that is a matter for the parties to the land contract. I agree with the majority that plaintiffs were, on these facts, entitled to a paragraph 3(b) conveyance. I cannot agree, however, that on these facts the bank, as escrow agent, had a duty to effectuate that conveyance.
Nor can I agree that there exists a genuine issue of fact as to whether plaintiffs were third-party beneficiaries of the collection agreement between the sellers and defendant bank and thus able to assert a breach of that agreement when the bank did not apply against the sellers’ mortgage the entire May 1 payment of $30,000.
MCL 600.1405; MSA 27A.1405 provides in relevant part:
*277Any person for whose benefit a promise is made by way of contract, as hereinafter defined, has the same right to enforce said promise that he would have had if the said promise had been made directly to him as the promisee.
(1) A promise shall be construed to have been made for the benefit of a person whenever the promisor of said promise has undertaken to give or to do or refrain from doing something directly to or for said person.
Here, there is nothing in the record that the bank’s agreement to act as defendant sellers’ collection agent constituted a promise to do something directly to or for plaintiff buyers. Indeed, it would appear that the collection agreement between the bank and the sellers was strictly for the sellers’ convenience; any benefit plaintiffs may have received from the arrangement was indirect at best.
Moreover, even if plaintiffs could assert their status as third-party beneficiaries under the collection agreement, there was uncontroverted evidence that the terms of the collection agreement were that the bank would collect the land contract payments, deduct defendants’ $393.18 mortgage payment from each land contract payment, and then forward the remaining balance of the land contract payment to the sellers. In light of this evidence, it is clear that the bank did not breach the collection agreement by applying $393.18 of plaintiffs’ $30,000 May 1 land contract payment toward the sellers’ mortgage and then forwarding the balance to them. To suggest that the bank may have had a duty, much less the authority, to decide for the sellers how they might spend the remainder of the May 1 land contract payment simply does not comport with the evidence before the trial court.
*278Plaintiffs and the majority in this case would absolve the parties to the land contract of all responsibility for complying with its terms and place that responsibility with defendant bank. I simply cannot agree. As of May 1, plaintiff buyers had the right to a conveyance under the land contract subject to the assumption of sellers’ mortgage, but neglected to exercise that right. The bank cannot justifiably be held responsible after the fact for that neglect. Defendant sellers had the duty to pay off their mortgage. The bank should not be held responsible for their decision not to do so. Accordingly, I would affirm the decision of the trial court to grant summary disposition in favor of defendant bank.