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 delivery of an instrument to a third person to hold free from control of the obligor, and free from the control of the obligee, until the happening of a certain event, and then to deliver such instrument, on the happening of such event, to the obligee, is a delivery in escrow.1 Thus a delivery of a deed to one who agreed to deliver to the grantee on the grantor's death, and who placed the deed in his own box in a safety vault, amounts to a delivery in escrow.2 So, where grantor executed a deed and grantee executed a lease back to grantor for life, and the two parties deposited both instruments in a bank, with an indorsement that they should be delivered to the grantor or, upon the grantor's death, to the grantee, is a valid delivery.3 If grantor delivers a deed to the officer who takes the acknowledgment, with instructions to deliver to the grantee under certain contingencies, this is a valid delivery in escrow.4 So, where grantor delivered deeds to a third person with instructions, "Take these papers and keep them until I am gone, and give them to the ones that they belong to," a delivery in escrow exists.5 It is not necessary to the validity of the delivery of a deed in escrow that the grantee should know of its existence when it is so delivered. If he learns of it, and accepts the deed subsequently, the original delivery is a valid delivery in escrow.6
11 Oliver v. Ins. Co., 97 Va. 134; 33 S. E. 536.
12 Nutting v. Ins. Co., 98 Wis. 26; 73 N. W. 432.
1 Beloit, etc., Ry. v. Palmer, 19 Wis. 594.
2Haeg v. Haeg, 53 Minn. 33; 55 N. W. 1114.
3 Martin v. Flaharty, 13 Mont. 96; 40 Am. St. Rep. 415; 19
L. R. A. 242; 32 Pac. 287.
4 Appleman v. Appleman, 140 Mo. 309; 62 Am. St. Rep. 732; 41 S. W. 794; Brown v. Westfield, 47 Neb. 399; 53 Am. St. Rep. 532; 66 N. W. 439.
5 Shea v. Murphy, 164 Ill. 614; 56 Am. St. Rep. 215; 45 N. E. 1021.
6 Clark v. Clark, 183 Ill. 448; 75 Am. St. Rep. 115; 56 N. E. 82.
A depositary in escrow is relieved from liability on delivering the instrument deposited with him in escrow, in accordance with the agreement made between the parties to the depositary.7 On the one hand, he is not bound by agreements between the parties to the instrument not disclosed to him.8 On the other hand, other instructions given him by one of the parties can not alter his duty to deliver in accordance with the terms of the deposit.9 A delivery of a mortgage in escrow, to be delivered on the joint request of the two parties, does not give the mortgagee a right to its delivery until such joint request is made.10 But where the parties agree to make a joint request for delivery upon the performance of certain conditions, and delivery is then to be made, an arbitrary refusal to one party to consent to the delivery does not defeat the rights of the other party.11 Under an agreement with B, A placed notes in the hands of X to be delivered to B when called for. This was held to be a sufficient delivery.12