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.
By a legal fiction an instrument which has been deposited in escrow may relate back upon the performance of the conditions of delivery to the time of the delivery in escrow, and for some purposes, take effect from such time.1 This doctrine is generally invoked where the obligor has died before the conditions of the escrow have been complied with. A mere agency would be revoked by such death, but by the theory given, the law treats the instrument delivered in escrow as valid, notwithstanding the death of the obligor. Deeds2 and bank-checks3 held in escrow may thus take effect upon delivery after the obligor's death. Whether a deed can be delivered in escrow upon a condition which by its terms cannot be performed until after the grantor's death, so that upon performance of the condition the deed will relate back to the original delivery is a question upon which there is a conflict of authority. If a deed is placed in the hands of a third person, to be delivered on grantor's death, provided that after grantor's death grantee performs some condition precedent, it has been held that such delivery is not a valid delivery in escrow.4 On the other hand a deed deposited with a third person and delivered in accordance with conditions imposed by the grantor's will has been held to relate back, no third person's rights being injured thereby.5 Like other legal fictions, however, the fiction of relation will not be extended to cases not intended by the fiction originally. Thus, where the rights of third persons will be prejudiced by such relation, the relation will not exist as to them. Thus, A made a deed of gift to his son B, and delivered it in escrow to X, to be delivered to B on A's death. It was held that such delivery was ineffective as against subsequent creditors of A who had extended credit to him, relying upon his apparent ownership of such property.6 The doctrine of relation will not be invoked where it is contrary to the apparent intention of the parties. Thus, where a deed has been delivered in escrow, and before the conditions of the escrow were complied with, a building upon the land which belonged to a third person, of which fact the grantee had notice, was purchased by the grantee to prevent the owner from removing the same, it was held that upon performance of the conditions of the delivery, the deed did not relate back to the time of the delivery in escrow, in order to hold the grantor for the value of such building upon his covenants of warranty.7 Thus where a deed has been delivered in escrow under an agreement that the grantee is to desist from all further defense to a particular suit, and that in case a certain judgment is affirmed, the deed is to be delivered to the grantee, the deed will not, upon performance of such condition, relate back to the time of its original delivery for the purpose of defeating the judgment in question, which, besides the title to the land conveyed by such deed, operated as an adjudication as between the grantor and the grantee, as to their rights. For the purpose of determining their rights the deed will be treated as taking effect only from the time of the performance of the conditions of the delivery; that is, from the affirmance of the judgment.8 If a grantor has delivered a deed in escrow and at the time of his death the conditions of the escrow have not been performed, it has been held that the legal title thereto descends to the heirs and devisees of such grantor subject to be divested by the performance of the conditions of the delivery.9
1 So with deeds, White Star, etc., Co. v. Moragne, 91 Ala. 610; 8 So. 867; Cormeau v. Geis, 73 Cal. 176; 2 Am. St. Rep. 785; 14 Pac. 580; Davis v. Clark, 58 Kan. 100; 48 Pac. 563; notes, Couch v. Meeker, 2 Conn. 302; 7 Am. Dec. 274; Taylor v. Thomas, 13 Kan. 217. "A note placed in escrow takes effect the instant the conditions of the escrow are performed, even though the depositaiy has not formally-delivered it to the payee." Syllahus of Taylor v. Thomas. 13 Kan. 217; quoted Davis v. Clark, 58 Kan. 100, 106; 48 Pac. 563.
2 So with bonds, Jackson, etc., Co. v. Pearson, 60 Fed. 113.
1 Perryman's Case, 5 Co. 84a; Bostwick v. McEvoy, 62 Cal. 496; Peck v. Goodwin, Kirby (Conn.) 64; Price v. R. R., 34 Ill. 13; Wallace v. Harris. 32 Mich. 380; Rug-gles v. Lawson, 13 Johns. (N. Y.) 285; 7 Am. Dec. 375; Shirely v. Ayers, 14 Ohio 307; 45 Am. Dec. 546; Gammon v. Bunnell, 22 Utah 421; 64 Pac. 958.
2Schuur v. Rodenback, 133 Cal. 85; 65 Pac. 298; Trask v. Trask, 90 la. 318; 48 Am. St. Rep. 446; 57 N. W. 841; Davis v. Clark, 58 Kan. 100; 48 Pac. 563; Brown v. Stutson, 100 Mich. 574; 43 Am. St. Rep. 462; 59 N. W. 238; Tharald-son v. Everts, 87 Minn. 168; sub nomine Thoraldsen v. Hatch, 91 N. W. 467; Lindley v. Groff, 37 Minn. 338; 34 N. W. 26; White v. Pollock. 117 Mo. 467; 38 Am. St. Rep. 671;
22 S. W. 1077; Rosseau v. Bleau, 131 N. Y. 177; 27 Am. St. Rep. 578; 30 N. E. 52.
3 Whitehouse v. Whitehouse, 90 Me. 468; 60 Am. St. Rep. 278; 38 Atl. 374.
4Taft v. Taft, 59 Mich. 185; 60 Am. Rep. 291; 26 N. W. 426.
5 Dettmer v. Behrens, 106 la. 585; 68 Am. St. Rep. 326; 76 N. W. 853.
6Rathmell v. Shirey, 60 O. S. 187; 53 N. E. 1098.