Court Opinion

ID: 9578576
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:46:33.474344+00
Date Added: 2024-06-11T13:28:42.804193
License: Public Domain

BAKES, Justice,
concurring in part and dissenting in part:
I agree that the trial court erred in granting defendants McMurtreys’ motion for summary judgment on the issue of the McMurtreys’ liability to plaintiffs Suitts for the McMurtreys’ failure to accept the Suittses’ tender of the contract balance and interest while the McMurtreys’ appeal was pending. However, I do not believe that the sellers McMurtreys’ liability for damages for their alleged breach of the contract depends upon whether the district court judgment in the previous action between the parties was self executing or not, as the majority concludes.
The operation of the escrow contract was not stayed by the sellers McMurtreys’ appeal, whether the district court judgment was self executing or not. Because, as the appeal subsequently established, the Suittses were not in default under this contract, the buyers Suittses had a right to the es-crowed documents upon their tender of the contract balance plus interest as a result of the contractual obligations imposed upon the McMurtreys by the escrow documents. The taking of the appeal did not relieve the sellers of their contract obligation to deliver the escrow documents upon payment of the purchase price, and their refusal to deliver the documents because of the pending appeal was a gamble which they took at their own peril. As the decision on appeal subsequently established, they were wrong, and they should be liable to the buyers for any *562damage that their breach of the contract has caused.
However, I dissent from Part II of the majority opinion which reverses the district court’s summary judgment granted in favor of the defendant First Security Bank of Idaho.
The majority, in asserting that there are triable issues of fact concerning the exculpatory clause of the escrow agreement, states that the defendant bank’s failure to take certain affirmative actions upon being served with conflicting demands by the buyers and sellers, precludes the bank from asserting its right under the escrow agreement to suspend performance of its duties under the contract without liability to the parties. In my opinion the exculpatory clause authorized the defendant bank to suspend its performance of the escrow agreement while it awaited resolution of the pending litigation between the buyers and the sellers.
Conflicting demands had been made upon the escrowholder by the buyers Suittses and the sellers McMurtreys which entitled the escrowholder, in its discretion, to choose to refuse delivery of the escrow documents and to decline to receive further payments on the contract, without liability, until the conflict was resolved, either by agreement of the parties or through litigation. The provision of the escrow contract which gave the bank that right, and which ironically the majority of the Court has interpreted as requiring the bank to bring an interpleader action, reads as follows:
“You may at your option at any time without liability to anyone, withhold delivery of all said documents and property and decline to receive further payments hereunder until your rights, powers, and duties hereunder in any respect requested by you have been settled acceptably to yourselves by further written instructions of the undersigned or finally determined by judicial action.”
The majority concludes that the clause in question required the bank both to return to the buyers their tender of the outstanding contract price upon the sellers’ refusal to accept it1 and to immediately bring an interpleader action or similar affirmative action. Under' the majority’s analysis the bank’s failure to do either of these steps precluded it from protection from liability for non-performance of the escrow agreement.
Even the most casual reading of the foregoing exculpatory clause demonstrates that the majority has read into it something which is not there. The use of the word “may” has always been construed as discretionary. Leghorn v. Wieland, 289 So.2d 745 (Fla.Dist.Ct.App.1974); Brown v. Manufacturers Trust, 278 N.Y. 317, 16 N.E.2d 350 (1938); cf. Kerner v. Johnson, 99 Idaho 433, 583 P.2d 360 (1978) (statutory provision). And if that were not sufficient, the word “may” is followed with the phrase “at your option” which again emphasizes that the escrowholder has discretion in deciding to withhold delivery of the escrow documents until “your rights, powers and duties hereunder in any respect requested by you have been” (1) “settled acceptably to yourselves by further written instructions of the undersigned” or (2) “finally determined by judicial action.” I believe the escrowholder, under this contract provision, had the right, without taking any other action, to hold the transaction in status quo once it determined that the parties were in disagreement over their rights and obligations under the contract, particularly where the parties had already commenced two judicial actions to resolve that conflict. The majority’s holding in effect nullifies the first option in the paragraph because escrowholders will not now be able to maintain the existing status of the escrow arrangement and await a possible voluntary settlement of the parties’ differences for fear that one of the parties will accuse them of not having taken the necessary “affirmative steps” which the majority has now read into the contract *563provision. Escrowholders under the majority opinion will be forced to immediately return any unaccepted installment payments and then immediately file an inter-pleader action in order to avoid the liability which the majority opinion imposes. It will virtually eliminate the commendable practice of parties attempting to reach equitable solutions on their own. To require an escrowholder to initiate an interpleader action every time the parties to an escrow agreement indicate that they are having a disagreement, particularly when a judicial determination of the underlying conflict between the buyers and the sellers is already pending in the courts, will promote the very multiplicity of litigation and possibility of conflicting judgments in different courts which the interpleader action is designed to avoid. See, e. g., 7 Wright & Miller, Federal Practice & Procedure, § 1702 (1972).
The judicial and economic waste which will be promoted by adherence to the rule announced by the majority in Part II of its opinion today becomes plain when the facts of this case are examined. Here, a series of disputes arose between the buyers Suittses and the sellers McMurtreys over the legal description of the property they had agreed to purchase and over the extent of an easement the buyers may have acquired across land retained by the sellers. See Suitts v. McMurtrey, 97 Idaho 46, 546 P.2d 62 (1976). Further, the sellers alleged that the buyers were in default. Two separate actions were commenced by the Suittses against the McMurtreys as a result of these disagreements. The McMurtreys filed counterclaims against the Suittses seeking a declaration of default. These two actions were consolidated, tried before the district court, and then appealed. Pending the appeal, the escrowholder First Security Bank of Idaho, when tendered what the buyers alleged was the balance due under the contract while faced with a demand for return of the documents by the sellers, determined that it would hold the escrow in status quo until the appeal finally determined the respective rights and duties of the buyers and sellers under the escrow agreement. The majority holds that the escrowholder, by both refusing to retender the payment which the sellers refused, and by failing to initiate another action to litigate the very same issues which were the basis of the actions then pending between the buyers and sellers, is not protected by the escrow exculpatory clause which allows the escrowholder to suspend performance pending resolution of any disputes over the rights and duties of the parties to the agreement. The exculpatory clause in the escrow agreement should not be interpreted, or perhaps more accurately, revised by this Court to require the initiation of a third action involving the same parties and raising the same issues as in the two pending actions merely to trigger the exculpatory language in the escrow agreement.
The expense of such an interpleader action would by law have to be borne by the buyers and sellers, who are already burdened by the costs of the two actions previously commenced. The escrow agreement provides that:
“The undersigned agree to pay to you [the escrowholder] as compensation for your services, hereunder an initial fee ., an annual fee . ., and an additional fee of one tenth of one percent of all funds received by you hereunder, together with all actual and necessary expenses and liabilities you may incur hereunder, for all of which you are granted a first lien on all of the above described property and documents and all funds coming into your hand hereunder ..” (Emphasis added.)
I.C. § 5-321 governs statutory interpleader actions and provides in part:
“[T]he court may, in its discretion, award such [interpleader] party his costs and reasonable attorney fees from the amount in dispute which has been deposited with the court.”
The possibly conflicting judgments that the multiple actions might reach may well incur even more legal action and expense, also to be borne by the buyers and sellers.
It is apparent that if the bank had filed an interpleader action as the majority now *564says that it had an affirmative duty to do, the delay in the delivery of the escrowed documents to the plaintiff buyers would have been even more extended than it was. 1.C. § 5-321 provides that upon the filing of the interpleader action 2 the party filing the action “shall deliver the property . to the clerk of the court or to such custodian as the court may direct” and the inter-pleading party is then discharged. Thereafter the buyer and the seller would continue the litigation in that interpleader action to judgment, which judgment could then itself be appealed. It is difficult to understand how starting all over again in a separate interpleader action would result in a more expedited disposition of the dispute between the buyer and the seller than the original two actions which had already been concluded at the trial level and were then pending on appeal. The mere filing of the interpleader action would not have resolved the dispute between the buyer and the seller. It would merely have resulted in the documents being transferred from the possession of the defendant bank to the clerk of the court as required by I.C. § 5-321. The Suittses would still not have received their documents until the interpleader action was concluded. Thus, the procedure which the majority of this Court says the escrow agreement “mandates” would avail the parties nothing, at a tremendous economic cost to everyone.
In my opinion, the escrow agreement exculpatory clause precludes liability of the defendant First Security Bank of Idaho in this case where the buyers and the sellers had, at the time the bank suspended its performance of the escrow contract, already sought a judicial determination of their rights and duties under the escrow agreement. A resolution of the disputes between the buyers and sellers in that case would have resolved the problem. To require the defendant bank to initiate an independent interpleader action merely to assure that the exculpatory language in the escrow contract is operative is to require the parties to the escrow agreement to incur needless legal expense and to promote an unnecessary waste of judicial resources. I would affirm the summary judgment granted in favor of the defendant First Security Bank of Idaho.

. There is a dispute in the summary judgment record on the factual issue of whether or not the bank attempted to return the final payment to the plaintiffs Suittses. The bank claims that it did. The Suittses deny that claim. That issue must be resolved at trial.

. The majority opinion assumes that the bank had an absolute right to file an interpleader action. However, I.C. § 5-321 specifically provides that an interpleader action may only be filed in the discretion of the court in which the action is filed. Unless we are now prepared to interpret the language “in its discretion” in I.C. § 5-321 to mean that the trial court is mandated to permit the filing of such an interpleader action, as we have interpreted the same language in the escrow agreement involved in this case, then it is not at all clear that the bank in this case would have been permitted to file the interpleader action as the majority of the Court interprets the escrow agreement to require. Recognizing that such an interpleader action would have raised the identical issues which had already been litigated once in the district court and which were then on appeal, and recognizing that it would have resulted in substantial additional costs to the parties, the district court could have concluded, in the exercise of its discretion, that such an interpleader action was unnecessary, and denied the escrowholder’s action to interplead the buyer and seller and deposit the escrow documents with the clerk of the court. It is difficult to understand how liability can be imposed upon an escrowholder for failure to file an interpleader action, which under the escrow agreement it clearly had the discretion either to do or not to do, with a court, which under I.C. § 5-321 clearly had the discretion to accept or not to accept.