This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
The view referred to, that a contract is necessary to a conditional delivery, has no considerations of policy or convenience in its favor, and its necessary result is considerably to detract from the practical utility of the doctrine of conditional delivery. Apart from the fact that it involves a misapprehension of the nature of conditional delivery, the following additional objections thereto may be suggested. In the first place, the doctrine of conditional delivery is not peculiar to conveyances of land, but is recognized also in connection with contracts under seal and also bills and notes. If there can be no conditional delivery of a conveyance in the absence of a contract of sale, that is, a contract to execute a conveyance, it would seem a reasonable inference that there can be no conditional delivery of a contract under seal or a promissory note unless there is a contract to execute such an instrument. There is no more reason for requiring an auxiliary contract in the one case than in the others. Yet it has never been suggested, so far as the writer is informed, that there can be a conditional delivery of a contract under seal or a promissory note, only when there is a legally valid contract to execute the contract or note. Furthermore, a valid conditional delivery may occur in connection with transactions not involving a sale, in the case of a gift, for instance. There can obviously be no contract of sale in such case to support the validity of the delivery,02 yet if a contract of sale is necessary to support a con-ditional delivery in the one case, how can such a delivery be valid without a contract of sale in the other? Another consideration adverse to the view referred to lies in the fact that, while the doctrine of delivery in escrow was recognized in the common-law courts at least as early as the first half of the fifteenth century,63 a purely executory contract, not under seal, was not there enforceable at that time.64 That being the case, the requirement of an extraneous contract in order to make the delivery in escrow effective would, in the fifteenth or sixteenth centuries, have necessitated a contract under seal, and it seems hardly probable that such a delivery of an obligation or conveyance under seal was always accompanied by another obligation under seal calling for its execution. The subject of delivery in escrow is treated with considerable fullness in at least two of the earlier books,65 and there is not the slightest suggestion in either as to the necessity of such an auxiliary contract. It is, to say the least, somewhat extraordinary that an integral element in a doctrine dating from the commencement of the fifteenth
59. See particularly Campbell v. Thomas, 42 Wis. 437, 24 Am. Rep. 427, for an assertion to this effect.
60. Ante, this section, note 35.
61. This is well stated in an editorial note in 15 Mich. Law Rev. 579, by Professor R. W. Aigler. See also article by the same writer, 16 Id. 569.
62. This is recognized in Holland v. Mccarthy, 173 Cal. 597, 160 Pac. 1069, where it is accordingly stated that though a contract is necessary in other cases of conditional delivery, it is not necessary when it is made in pursuance of a gift.
63. See Y. B. 13 Hen. 4. 8; Y. B. 8 Hen. 6, 26; Y. B. 10 Hen.
64. Ames, History of Assumpsit, 2 Harv. Law Rev. 1, 53, reprinted in Lectures on Legal History, 129, 149; 3 Holdsworth, Hist. Eng. Law 336-349; Pollock, Contracts (8th Ed.) 14S.
65. Perkins, Conveyancing, Sec.Sec. 138, 144; Sheppard's Touchstone, 58, 59.
Century should have remained to be discovered by a California court in the latter half of the nineteenth.
In addition to the cases above referred to which assert that existence of a contract of sale is necessary in order that a conveyance may be delivered in escrow, there are to be found judicial suggestions to the effect that the "deposit in escrow," that is, the physical transfer of the instrument by the grantor or obligor to a third person, to hold until satisfaction of the condition, must be in pursuance of a contract between the parties.66 Thus it has been said in one case that the making of a deed in escrow presupposes a contract pursuant to which the deposit is made,67 and in another that there must be a contract which prevents the grantor from recalling the deed.68 The idea that, in the absence of a contract, the grantor can recall the deed is, as before remarked, without any support in principle, and there is, it is submitted, no more necessity of a contract in regard to its custody when the delivery is conditional than when it is unconditional.
- Satisfaction of condition. Properly considered, conditional delivery, or delivery in escrow, is the same as any other delivery, except that it is subject to the satisfaction of a condition. After the condition has been satisfied, there is an operative conveyance69 which is to be regarded as having been delivered at the time of its conditional delivery, for the obvious reason that it was then, and then only, that it was delivered, though the ownership cannot be regarded as having passed until it actually did pass, that is, until the satisfaction of the condition. The grantor in effect says, at the time of handing the instrument to the intended custodian, "I now deliver this as my deed provided such a thing is done or occurs." That the delivery of the instrument and the passing of the ownership thus occur at different times is, it is conceived, the solution of the somewhat vague statements in the books, that, on the satisfaction of the condition, the deed will relate back to the time of delivery in order to uphold the deed, or to do justice, or to cany out the intention of the parties,70 and it will serve to explain most of the decisions in this regard. The analogy may be suggested of an executory limitation contained in a conveyance inter vivos, which does not vest an estate until satisfaction of the condition precedent, but which, when the condition is satisfied, takes effect regardless of events or transactions which may have taken place since the time of the delivery of the conveyance. Accordingly, the fact that the grantor dies,71 or becomes incapitated,72 between the time of the delivery of the instrument and the satisfaction of the condition, does not affect the validity of the instrument as a conveyance. And likewise, if the grantee dies during such interval of time, the possibility of ownership vests in his heir.73 So the instrument is to be regarded as having been delivered at the time of the conditional delivery, as against an intermediate purchaser from the grantor, and is entitled to priority, unless such purchaser is a bona fide purchaser for value, and as such protected against a conveyance prior in time.74 And as against a creditor of the grantor in favor of whom a lien accrues by attachment or judgment intermediate the delivery and the satisfaction of the condition, the grantee takes priority,75 unless such creditor is, by the recording law of the particular jurisdiction, entitled to the protection accorded a bona fide purchaser.76 On the other hand, since the title does not