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.
It is occasionally provided in contracts, unless the approval of the attorney of one of the parties in favor of the validity of the transaction is obtained, the transaction shall be void.1 Provisions of this sort are found in contracts for the purchase of land,2 in contracts for making advances on the security of land,3 and in contracts for the purchase of bonds.4 Full effect is given to such provisions, and it is generally held that if the attorney is acting in good faith his decision is final.5 It has, however, been held that a contract to the plaintiff in error. They had not been issued when this agreement was entered into. It was a most reasonable and prudent thing for proposing purchasers to stipulate for some security against the invalidity of such bonds before being required to receive and pay for them. . . . The plain meaning of this contract was: (1) That plaintiffs in error were to furnish certified copies of the proceedings under which these bonds were issued. (2) Defendants in error were to fairly and honestly submit this record, when furnished, to the judgment of the counsel selected by them. (3) The counsel thus selected must not capriciously and arbitrarily reject the bonds, but on the record, honestly and fairly give his judgment, as to their legality. . . . The buyers employed counsel, a gentleman particularly skilled in the matter of the validity of municipal bonds, and submitted this evidence to him and procured his opinion. . . . The question of the validity of the bonds was to be settled by the opinion of a third person, whose furnish a "first-class" title, to be passed upon by vendee's attorney, is performed by furnishing a good marketable title without regard to the actual satisfaction of the attorney.6
12 Hebert v. Dewey, 191 Mass. 403, 77 N. E. 822.
13 Coplew v. Durand, 153 Cal. 278, 16 L. R. A. (N.S.) 791, 95 Pac. 38.
14 Coplew v. Durand, 153 Cal. 278, 16 L. R. A. (N.S.) 791, 95 Pac. 38.
15 O'Brien v. New York, 139 N. Y. 643; 35 N. E. 323.
16 Hebert v. Dewey, 191 Mass. 403, 77 N. E. 822; Jenkins v. American Surety Co., 45 Wash. 573, 88 Pac. 1112.
17 Jenkins v. American Surety Co., 45 Wash. 573, 88 Pac. 1112.
18 Jenkins v. American Surety Co., 45 Wash. 573, 88 Pac. 1112.
1 England. Williams v. Edwards, 2 Sim. 78.
United States. Michigan Stone & Supply Co. v. Harris, 81 Fed. 928.
California. Church v. Shanklin, 95 Cal. 620, 17 L. R. A. 207, 30 Pac. 789.
Massachusetts. Gilson v. Cambridge Savings Bank, 180 Mans. 444, 62 N. E. 728; Glidden v. Massachusetts Hospital Life Ins. Co., 187 Mass. 538, 73 X. E. 538.
North Carolina. Webb v. School District, 143 N. Car. 299, 55 S. E. 719.
2 Williams v. Edwards, 2 Sim. 78; Church v. Shanklin, 95 Cal. 626, 17 L. R. A. 207, 30 Pac. 789.
As to the merger of such provision in the deed, see, Read v Loftus, 82 Kan. 485, 108 Pac. 850 [sub nomine, Loftus v. Read, 31 L. R. A. (N.S.) 4571.
3 Gilson v. Cambridge Savings Bank, 180 Mass. 444, 62 N. E. 728; Glidden v. Massachusetts Hospital Life Ins. Co., 187 Mass. 538, 73 N. E. 538.
4 Michigan Stone & Supply Co. v. Harris, 81 Fed. 928; Webb v. School District, 143 N. Car. 209, 55 S. E. 719.
• England. Williams v. Edwards, 2 Sim. 78.
United States. Michigan Stone & Supply Co. v. Harris, 81 Fed. 928.
California. Church v. Shanklin, 95 Cal. 626, 17 L. R. A. 207, 30 Pac. 789.
Massachusetts. Glidden v. Massachusetts Hospital Life Ids. Co., 187 Mass. 538, 73 N. E. 538.
North Carolina. Webb v. School District, 143 N. Car. 209, 55 S. E. 710.
"The subject-matter of this contract was the negotiable bonds to be issued for street improvements to be made under a contract between the citv and judgment was to be a legal opinion based upon the law and facts touching these bonds. Neither party would be concluded by an opinion rendered arbitrarily and without the honest intent of deciding fairly and rationally. The contract seems to come fairly within the principle applicable to contracts under which settlements between parties are made dependent upon the certificate of some third person. The rule in such cases as that, in the absence of fraud, or such gross misconduct as would necessarily imply bad faith, or the failure to exercise an honest judgment, the action of such third person should conclude the parties." Michigan Stone & Supply Co. v. Harris, 81 Fed. 928 [quoted in Webb v. School District, 143 N. Car. 209, 55 S. E. 719].
"The application signed by the plaintiff in this case contained this language: "That the title to the above mentioned real estate is to be examined and the papers prepared by one of the solicitors of the bank; and that such title will not be considered satisfactory, if the estate is held subject to any conditions or restrictions. The expense of examining the title, whether finally accepted or rejected, is to be borne by the undersigned, etc.' Here is a plain implication that the title must be satisfactory to the solicitor of the bank, and that it may be accepted or rejected by him, according to his opinion in regard to its validity. We think the reasonable interpretation of this language, in the connection in which it is used, is that the title must be such as the solicitor of the bank, acting in good faith in the exercise of his judgment, deems good. By way of special explanation it is said that it will not be considered satisfactory if the estate is held subject to any conditions or restrictions. In view of the purpose of the application and the relations of the parties, it would not be reasonable to suppose that the bank was to accept the title and make the loan, if, in the opinion of its solicitor, there were such defects or uncertainties in it as would expose the holder to a risk of loss from an outside claimant. In this case the record shows an outstanding tax title whose validity could not be determined without resorting to oral testimony. Furthermore, the release of a mortgage incumbrance was by a deed which purported to be executed by an attorney of the mortgagee, while there was nothing to show that any power of attorney had been acknowledged and recorded as required by the Pub. Sts., c. 120, Sec. 14. Gen. Sts., c. 89, Sec. 29. We consider the solicitor's report that the title was not satisfactory for the reasons shown by the record, a sufficient justification of the defendant's refusal to make the loan." Gilson v. Cambridge Savings Bank, 180 Mass. 444, 62 N. E. 728. 6 Vought v. Williams, 120 N. Y. 263,