Court Opinion

ID: 6735420
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:17:58.873383+00
Date Added: 2024-06-11T16:01:45.617743
License: Public Domain

on rehearing.
(April 28, 1903.)
Young, C. J.
A petition for rehearing was granted in this: case, and the same was fully argued at the first session of the March term. Counsel for defendant, in his petition for rehearing, in refering to the admissibility of parol evidence offered at the trial to defeat the mortgage, very properly concedes that “there is no question', about the effect of the provisions of our Code (section 3517, Rev. Codes 1.899), if it is to be held that the mortgage was delivered to-the Security Trust Company for its use with any -conditions attached.” His contention is that the mortgage “was not delivered to the Security Trust Company to be used by them either absolutely or conditionally.” Again he says: “We have contended all along, and what we contend now is, that this mortgage never was delivered to the Security Trust Company, in the ordinary meaning of the term ‘delivered.! ” Further, that “in this case there was no mortgage that was effective between the mortgagor and the mortgagee. The verbal agreement was simply as to the disposition to be made by the-Security Trust Company of an instrument left in its hands, and in. which it had no interest. There was no attempt to make an instrument which would be operative between the parties.” The petition, presents for determination the question whether the mortgage was. delivered — a question which was not seriously considered in the original opinion, it being taken as a conceded fact that there was a delivery. As already stated, counsel for defendant concedes that if there was a delivery of the mortgage, within the meaning of section 3517, Rev. Codes 1899, it took effect freed from any oral conditions: upon which the delivery was made, and that in that event the parolevidence offered to establish such conditions was inadmissible. His contention is that the mortgage was not delivered, and that the oral' evidence objected to was admissible to establish the fact of nondelivery. That parol evidence is admissible to show that a written instrument was never delivered, and therefore never became effective, cannot be doubted; and such evidence is not open to the objection that it contradicts or varies the terms of the written instrument, for it does nothing of the kind, but merely goes to one element of the contract *11resting in parol, and essential to its existence as a contract, namely, the delivery. In this case we think the fact is conclusively established? both by the pleadings and by the evidence that the mortgage was delivered. The complaint alleges a delivery, and the answer, in effect,, admits it. In paragraph 2 of the defendant’s third defense, he alleges that “the said mortgage was given to the Security Trust Company by this defendant * * * to enable it to sell * * * the-note evidencing the indebtedness described in said mortgage, * * * and to enable the said trust company to make a true statement: to the purchaser that the said note was secured by mortgage on real, estate; * * * that, at the time of the making and delivery of the-said mortgage, it was understood and agreed * * * that the said-mortgage should be and was given for the sole purpose as set forth.”' After alleging that the mortgage was to be effective as security to the transferee of the note, he alleges that it was agreed that when the note should be returned to the Security Trust Company “the said mortgage should be delivered up to this defendant and canceled, * * * and that the defendant, under the terms of the said agreement,, is now entitled to have the same delivered up to him and canceled.”' Briefly stated, the.defendant alleges that he executed and delivered this mortgage to the mortgagee, who was engaged in negotiating-real estate loans, so that the later might truly state and represent to a prospective purchaser of the note that it was in fact a secured note,, and secured by the mortgage here in question. In our opinion, the-defendant has alleged a complete delivery. He alleges that he gave the mortgage into the mortgagee’s hands so that the latter might truly represent that the note was a secured note. Now, it is apparent that no such representation could truly have been made by the mortgagee unless the mortgage had been delivered for the purpose-of becoming effective, and the note was in fact secured. Further,, the mortgage was delivered to the mortgagee beyond his right to recall it, and no further act remained to be done by him to make it effective.
The case shows a delivery of the mortgage, accompanied by oral* conditions; and, both under the common law and under our statute-(section 3517), such oral conditions were extinguished by the delivery, and the delivery became absolute. Section 3517, Rev. Codes-. 1899, provides that “a grant cannot be delivered to the grantee conditionally. Delivery to him or his agent as such is necessarily absolute ; and the instrument takes effect thereupon discharged of any? *12condition on which the delivery was .made.” This section was formulated by the Field code commission, and embraces the doctrine laid down in Worrall v. Munn, 5 N. Y. 229, 55 Am. Dec. 330, and Braman v. Bingham, 26 N. Y. 483. In Worrall v. Munn it appears that one Prall had, by'a contract under seal, agreed to convey to Noah -Worrall certain lands. Prall resisted an action for the specific performance of the contract upon the ground "that “the-agreement was delivered (by his agent) upon the express condition that it should be subject to the sanction of Prall, and was therefore not binding on him unless he subsequently approved and ratified it. Prall expressly refused to ratify the agreement.. The delivery of the agreement to Henry Worrall (Noah -Worrall’s agent) was not an absolute delivery, in law.” The court, in considering-the question, as to whether the. agreement was delivered absolutely or conditionally, stated that “the law puts that question at rest. Here, according to the evidence of Warner and Nixen, the delivery of the agreement was directly to the agent of Noah Worrall, and that is equivalent to a personal delivery to Worrall himself.. The agreement was in a perfect condition. It was signed and sealed by Prall. It was delivered on condition - that it be subsequently approved by Prall. This was a delivery as an escrow. Such a deliver)' can only be made to a stranger.. It cannot be made to the party. If made to the party, no matter what may be-the form of the words, the .delivery- is absolute, and the deed takes effect presently, as the deed of the grantor,discharged of the conditions upon, which the delivery was made; and, where such a delivery is made, parol evidence of the conditions, being contrary to the terms of the deed, is inadmissible. Here the intent of Warner was to deliver the agreement to the appellant as an escrow. Tt was not handed to Henry Worrall as an unexecuted and imperfect paper. There was no direction to him to retain it, and not to deliver it to the appellant, until it was ratified by Prall. It was not left in his hands for a temporary purpose, and to be returned in case Prall did not assent to it; but it was delivered to Henry Worrall, as the agent of the appellant, as an executed and perfect instrument, on condition that Prall 'subsequently assented to it. Such a delivery was in law, an absolute delivery. Ward v. Lewis, 4 Pick. 520; Fairbanks v. Metcalf, 8 Mass. 238; Gilbert v. Insurance Co., 23 Wend. 45, (35 Am. Dec. 543) ; Clark v. Gifford, 10 Wend. 313.”
In Braman v. Bingham the question involved the effect of the delivery of a deed to the grantee. Upon the question of the admissibil*13ity of parol evidence to defeat the deed, the court said: “The questions in regard to the delivery of the deed were properly overruled.. The question, ‘Was the deed delivered to-take effect?’ addressed to. the party who signed the deed, I am inclined to think was objectionable, without reference to the circumstances under which the inquiry was made, as calling for a. legal conclusion, or for the intention of the-party, aside from what was said and done. The other question, ‘Was. the deed ever delivered?’ would undoubtedly be proper where a dedelivery in fact was the matter in dispute. But here the defendant’s, answer admitted the delivery in fact, and the question in controversy was as to the intention of the parties, or the legal effect of such delivery. The only competent evidence bearing upon that question was what was said and done at the time. This the court decided to admit. The questions addressed to the witness, under the circumstances, called for his opinion as to the legal effect of the conceded, actual delivery. That was a question to be decided- by the court after all the facts attending the delivery should be proved.” Again the court said in the same case: “A fatal objection to the third division of the answer, as a defense, is that it shows that the deed was. delivered to the grantee, ,to be held by him in escrow. It is well set-* tied that such a delivery vests the title in the grantee, although it may be contrary to the intention of the parties. Lawton v. Sager, 11 Barb. 349; Worrall v. Munn, 5 N. Y. 229 (55 Am. Dec. 330) ; Gilbert v. N. A. Fire Ins. Co., 23 Wend. 45, (35 Am. Dec. 453). * * * It has been held in one case that a deed may be delivered to the grantee for the purpose of transmission to a third person, to be held by him in escrow until the happening of some event when it should take effect as a conveyance, and that such delivery would not be absolute. Gilbert v. N. A. Fire Ins. Co., 23 Wend. 43, (35 Am. Dec. 543). In that case the grantee had deposited the deed with the third person in pursuance of the arrangement, the condition had not been performed, and the grantee made no claim under the deed.. The case-presented merely the question whether the grantor still - retained an insurable interest in the premises described in the deed, the-nominal grantee testifying to the terms in which the deed was delivered to him. Limited to its peculiar circumstances, no fault can be found with the decision; but if the grantee had retained the deed claiming that its delivery to him was absolute, and, in a contest between him and the grantor, parol proof of a conditional delivery had been offered, I think the result would have been different. If I am wrong *14in this conclusion, the case discloses an avenue for the overthrow of titles by parol proof which was supposed to be closed by the rule to which it would seem to form an exception. The reason given for the rule excluding parol evidence of a conditional delivery to the grantee applies to all cases where the delivery is designed to give effect to the deed in any event, without the further act of the grantor. ‘When the words are contrary to the act, which is the delivery, the words are of none effect.’ Co. Litt. 36a. ‘Because, then, a bare averment, without any writing, would make void every deed.’ Cro. Eliz. 884. ‘If I seal my deed and deliver it to the party himself, to whom it is made, as an escrow, upon certain conditions, etc., in this case let the form of the words be what it will, the delivery is absolute, and the deed shall take effect as his deed presently.’ Shep. Touch. 59; Whyddon’s Case, Cro. Eliz. 520; Cruise, Dig. tit. 33, ‘Deeds,’ c. 2, section 80 If a delivery to the grantee can be made subject to one parol condition, I see no ground of principle which can exclude any parol condition. The deed having been delivered to the grantee, I think the parol evidence that the delivery was conditional was properly excluded.”
The cases just referred to have been followed in New York, and represent the settled rule in that state. In Lawton v. Sager, 11 Barb. 349, the court, in considering the question as to whether a deed was delivered absolutely or conditionally, said: “A deed can only be delivered as an escrow to a third person. If it be intended that it shall not take effect until some subsequent condition shall be performed, or some subsequent event shall happen, such condition must be inserted in the deed itself, or else it must not be delivered to . the igrantee. Whether a deed has been delivered or not is a question of fact, upon which, from the very nature of the case, parol evidence is admissible. But whether a deed, when delivered, shall take effect absolutely, or only upon the performance of some condition not expressed therein, cannot be determined by parol evidence. To allow a deed absolute upon its face to be avoided by such evidence would be a dangerous violation of a cardinal rule of evidence. Gilbert v. The North American Fire Insurance Company, 23 Wend. 43, (35 Am. Dec. 543) ; Ward v. Lewis, 4 Pick. 518; 4 Kent’s Com. 454; Jackson v. Catlin, 2 Johns. 248, (3 Am. Dec. 415), per Platt, arguendo. The deed in this case, being absolute upon its face, and having been delivered to the grantee himself, took effect at once. It could not have been delivered to take effect upon the happening of a future *15contingency, for this would be inconsistent with the terms of the instrument itself. Without regard, therefore, to any understanding which may have existed between the parties at the time the deed was delivered, it must be held to be an absolute conveyance, operative from that time.” In Blewett v. Boorum et al., 142 N. Y. 357, 37 N. E. 119, 40 Am. St. Rep. 600, Peckham, J., speaking for the court, said: “The rule in this state regarding deeds conveying real estate, or an interest therein, or agreements for the sale thereof, is that a delivery cannot be made to the grantee or other party thereto conditionally, or, as is said in escrow, and when delivered to a party the delivery operates at once, and the condition is unavailable. Gilbert v. The North American Fire Insurance Co., 23 Wend. 43, (35 Am. Dec. 543) ; Worrall v. Munn, 5 N. Y. 229, (55 Am. Dec. 330) ; Braman v. Bingham, 26 N. Y. 483; Wallace v. Berdell, 97 N. Y. 13, 25. Whether there is any sound basis for a distinction between cases relating to real estate and other kinds of written instruments, it is not now important to inquire, for the rule that instruments of the former character cannot be conditionally delivered to a party is too firmly established in this state to be overruled or even questioned. In the case in 23 Wend, supra, Bronson, J., says it is one of the cases in which the law fails to give effect to the honest intention of the parties, for the reason that they have not adopted the proper legal means of accomplishing their object.” Wallace v. Berdell et al., 97 N. Y. 13, is to the same effect. As already stated, the doctrine of the two cases first cited is the statutory law of this state (section 3517, Rev. Codes 1899), and is controlling in this case.
Counsel for defendant, in support of his contention that evidence of the conditions attending the delivery of the mortgage was admissible, relies upon the case of Burke v. Dulaney, 153 U. S. 228, 14 Sup. Ct. 816, 38 L. Ed. 698, which lays down the rule that “the effect of the delivery and the extent of thje operation of an instrument such as a promissory note may be limited as between the original parties thereto by the conditions on which delivery is made.” This case does not sustain counsel’s contention. In the first place, the decision is not based upon a statutory provision like ours, but rests entirely upon the common law; and, in the second place, the instrument in question in that case did not relate to real estate. It was a promissory note. And the decision does not purport to announce $ rule as to the effect of the delivery of instruments relating to real estate, but does relate wholly to the rule which obtains in reference *16to the delivery of unsealed instruments, or instruments not affecting' real estate. As to such instruments, the common-law rule undoubtedly is (and this is true in New York also) that conditions attending-their delivery may be shown by parol evidence. The cases cited in the opinion above referred to will be found to be of this class. The earlier cases, in determining whether a delivery in fact might be shown to have been conditional, made the test depend upon whether the instrument belonged to the class known as sealed, or unsealed. The later cases rest the distinction upon the subject patter of the instrument, and in Blewitt v. Boorum, supra, Peckham, J., after reviewing the English and American authorities, confines the rule-which requires the exclusion of parol evidence of the conditional delivery of written instruments “to deeds or writings conveying or relating to the conveyance of real estate, or some interest therein.”' And that was the rule adopted by the Legislature of this state. Section 3517, supra. The common-law rule undoubtedly was that “an instrument not under seal may be delivered upon conditions, the observance of which as between the parties is essential to its validity,, and the annexing of such conditions to the delivery is not an oral contradiction of the written obligation.” Bookstaver et al. v. Jayne, 60 N. Y. 146; Jamestown Business College Association v. Allen, 173 N. Y. 302, 64 N. E. 956, and cases cited. This rule, however, does-not aid defendant in this case, for we are dealing with an instrument-affecting real estate, which, even under the rule of the common-law,, (ignoring the statute), could not be delivered with conditions attached.
Counsel for defendant also contends that the conditions attending-the delivery of the mortgage, and upon which he relies to defeat its-enforcement, do not rest in parol, but that they were in writing. There is testimony to the effect that George B. Clifford, the western-manager of the Security Trust Company, wrote a letter from Nashua, N. H., addressed to the Security Trust Company, or J. E. Clifford, assistant treasurer, at Grand Forks, requesting the latter to-procure the mortgage in question. The letter in question was not produced, and secondary evidence as to its contents was received,, over plaintiff’s objection. The testimony shows that the letter was-one of instruction to the Security Trust Company’s officers at Grand Forks to procure the execution and delivery of the mortgage substantially upon the conditions pleaded by the defendant in his answer. The contention “that the written instrument consisted o£ *17two parts — one, the instrument in form of a mortgage; the other, the written instrument in the form of a letter” — cannot be sustained. Conceding, merely for the purpose of this opinion, that sufficient foundation was 'laid for the admission of secondary evidence of its contents, we are agreed that this letter is in no sense a part of the mortgage. It was not addressed to the defendant, and contained no promises to the defendant directly. It was merely a letter of instructions to the local officers of the mortgagee, authorizing them to procure the mortgage upon the conditions named. The promises which, they were authorized to make were made to the defendant orally,, and in no sense can it be said that the mortgagor executed and delivered to the defendant a writing embracing the provisions upon which, he now relies to defeat the mortgage. The letter of instructions may have been sufficient to have authorized the local officers of the mortgagee to execute a writing embracing such conditions, but they did not do so. The defendant was content to accept their oral promises as to the use to which they would put the mortgage executed and delivered by him. The Legislature of this - state deemed it -wise to-withhold the right to rely upon such conditions where the iiistrument which would be defeated relates to real estate, and there had been, a delivery in fact.
The conclusions in the original opinion will be adhered to.
Morgan and Cochrane, JJ., concur.