This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
A written instrument is delivered in escrow when it is delivered by the obligor to a third person, to be held by such third person until some contingency occurs, or some condition is complied with, upon the performance of which condition it is to be delivered to the obligee and to become of full force and effect.1 If a written instrument is in the possession of a person other than grantor or grantee, the question whether this is a delivery in escrow or not, turns on the question of the relation of such holder to the parties to the instrument and the agreement under which he received it. If the obligor has parted with control over the instrument, except in case of the non-happening of the contingency or condition upon which it is to take effect, and the obligee has no rights thereunder until the happening of such contingency or condition, the instrument is delivered in escrow.2 Thus, A delivered a deed which contained a clause providing that the holder should deliver it to the grantee upon the death of the grantor, or should re-deliver it to the grantor at her request. The grantee subsequently obtained such deed and erased the clause providing for re-delivery to grantor. The deed was then put in the custody of the original depositary. This was held to be a valid delivery in escrow.3 A deed has been held to be delivered in escrow where the grantor reserved the right to recall it, but never in fact attempted to exercise such right.4 It is not necessary that the terms under which a deed is deposited in escrow should be expressed in writing.5 If an instrument is placed in the hands of a third person for delivery to the vendee, on performance by him of a certain condition of sale, it has been held that this amounts to a delivery in escrow.6 If, however, the person with whom the instrument is' deposited is simply holding, subject to the obligor's instructions, but not under any agreement made with the obligee, or conferring rights upon him, such delivery is not in escrow.7 If a grantor deposits a deed with a third person, and subsequently recalls the deed and destroys it, and there is nothing to show the terms upon which such deposit was made, this can not be assumed to be such a delivery in escrow as to confer any right to the grantee.8 A delivery of a deed together with a will, to the grantor's sister-in-law, with the instructions to deliver them to the one who should settle grantor's estate, is not a delivery in escrow, especially where grantor subsequently takes such package of papers back, and places it in her desk, though with instructions to the sister-in-law to take the papers in case the grantor should become sick.9 A deed delivered to a third person, with instructions to deliver to the grantee in case the grantor died of the illness with which she was then suffering, but otherwise to be returned to the grantor, is not a delivery in escrow.10 If any future agreement must be made between the obligor and obligee, before the written instrument in the hands of a third person can be delivered, no delivery in escrow exists.11 Thus, where deeds were deposited with a third person to be delivered, each in exchange for the other, if, after examination of title, everything was found "all right and perfected,"12 or drafts which had been accepted were de-
1 Davis v. Clark, 58 Kan. 100; 48 Pac. 563. See to the same effect, Mudd v. Green (Ky.), 12 S. W. 139. "An escrow ex vi termini is a deed delivered to some third person to he by him delivered to the grantee upon performance of some precedent condition by the grantee or another or the happening of some event." Duncan v. Pope, 47 Ga. 445, 451.
2Shults v. Shults, 159 Ill. 654; 50 Am. St. Rep. 188; 43 N. E. 800.
3 Fulton v. Priddy, 123 Mich. 298; 81 Am. St. Rep. 201; 82 N. W. 65.
4Lippold v. Lippold, 112 la. 134; 84 Am. St. Rep. 331; 83 N. W. 809.
5 Tharaldson v. Everts, 87 Minn. 168; sub nom., Thoraldsen v. Hatch, 91 N. W. 467.
6Hillhouse v. Pratt, 74 Conn. 113: 49 Atl. 905.
8Shnlts v. Shults. 159 Ill. 654; 50 Am. St. Rep. 188; 43 N. E. 800.
9 Osborne v. Eslinger, 155 lnd.
351; 80 Am. St. Rep. 240; 58 N. E. 439.
10 Williams v. Daubner, 103 Wis, 521; 74 Am. St. Rep. 902; 79 N. W. 748.
11 Miller v. Sears, 91 Cal. 282; 25 Am. St. Rep. 176; 27 Pac. 589.
12 Miller v. Sears, 91 Cal. 282; 25 Am. St. Rep. 176; 27 Pac. 589. However a deed delivered to a third person to hold " till we got proper posited to be delivered if the acceptor approved the merchandise against which such drafts were drawn,13 it is not a delivery in escrow. A executed to B a note to take up a note of A's which B had held, but which had been mislaid. The note was placed in the hands of X, with instructions to X to deliver the note to B when B produced A's former note; and if such note could not be found, then X was to deliver the note when B had given sufficient indemnity, to be agreed upon thereafter between himself and A. A died before B had found the note, or before A and B had agreed upon the amount of the indemnity to be given. This was held not to be a delivery in escrow, but X's agency was held to terminate on A's death.14