Court Opinion

ID: 5327512
Source: CourtListenerOpinion
Date Created: 2022-01-08 04:58:18.930787+00
Date Added: 2024-06-11T08:29:24.214202
License: Public Domain

Finch, P. J. (dissenting).
The question here presented is one of law, namely, whether a binding escrow agreement arose out of the following facts: The terms of a contract of sale of certain realty having been agreed upon, and reduced to writing, one copy of the writing was signed by the vendor and handed to his attorney. The vendee then stated that everything was satisfactory in the contract, but he would like to have the contract looked over by his attorney before signing. On his behalf it was suggested that the copy signed by the vendor be left with his attorney “ in escrow,” to be exchanged the following Tuesday for copy signed by the vendee. To this suggestion the vendor acquiesced. Prior to the delivery by the vendee of copy signed by him, the vendor withdrew from his attorney the copy of the agreement bearing his signature, and destroyed the same. The vendee sued the vendor and his attorney to compel specific performance of both the alleged escrow agreement and contract of sale.
*356The writing signed by the vendor having been destroyed by him before delivery, the Statute of Frauds is a bar to an action upon the contract of sale unless the destruction of the writing was violative of some right of the vendee. Any such right must be found in the alleged escrow agreement.
Assuming that an escrow agreement may be implied from the aforesaid facts, it would not be a valid contract, because of the lack of the necessary element of consideration. The vendee had not satisfied the Statute of Frauds by affixing his signature to a copy of the agreement; nor had he delivered such a writing in escrow. The vendee, therefore, was under no legal obligation, for, as was said in Cagger v. Lansing (43 N. Y. 550): “ No one will contend that a contract for the sale of land, executed by the vendor, is binding upon the purchaser unless the contract is delivered to and accepted by the purchaser as a valid subsisting contract. A delivery in escrow cannot bind the purchaser, although he verbally promises to perform the condition. Until performance and acceptance by the purchaser, he is at liberty to abandon the contract.” What really happened was that until acceptance by the vendee there was an offer to make a contract or at the most a unilateral contract which may always be withdrawn or rescinded before the other side accepts. Until acceptance there was no obligation. No other consideration appears. Lacking consideration, the so-called escrow agreement failed to ripen into a contract, and the vendor had the right to withdraw at any time before the contemplated exchange of writing was effected.
In Mechanics’ National Bank v. Jones (76 App. Div. 534; affd., 175 N. Y. 518) Hiscook, J., in discussing the general principles which govern a deposit of documents in escrow, and writing for the court said: “ If the deposit is made under and upon conditions to be fulfilled by another and without original consideration, it is doubtless true that the person making the same may revoke his proposition at any time before the opposite party has complied with the conditions to be by him performed.”
Also there was here present no mutuality of obligation. The suit is in equity for specific performance. Assume, for example, that the plaintiff, after showing the contract to his lawyer, had declined to purchase. The defendant then would have had no redress. Hence, in addition to there being no consideration, there was also no mutuality of obligation.
It follows that the judgment appealed from should be reversed, with costs, and the complaint dismissed.
Towtstley, J., concurs.
Judgment affirmed, with costs.