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Daily Development for Thursday, February 7, 2002
By: Patrick A.
Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu
DEEDS; ESCROW: Landowners' gratuituous deposit of deed into
escrow with instructions to deliver deed to grantee upon death of the survivor
of grantors was not the creation of a binding trust or an actual delivery, and
escrow could be revoked by such informal act as landowner executing a will
transferring the property to another, even without notice to escrow company.
Albrecht v. Brais, 754 Ill. N.E.2d (Ill.App. 3 Dist. 2001).
Brais, executor of the estate of Harry Emhouser, moved for
probate of Emhouser's will, but excluded from the probate certain property that
Brais claimed Emhouser had deeded to her.
The deed had been delivered to Brais by Courthouse Title Company after
Emhouser's death. Brais had no
knowledge of it prior to that time, and there was no consideration given for
the deed.
Emhouser's will devised the property covered by the deed to
certain churches. The Churches
challenged the exclusion of the property from probate.
Brais received the deed because in 1982, Harry and his
wife, joint owners, had executed an
escrow agreement and a quit claim deed which they delivered to Courthouse Title
Service. The escrow agreement provided
that the deed would be held by Courthouse in favor of Brais, upon certain
conditions, including: (1) The deed
would not be recorded by Courthouse; (2) Emhousers reserved right to revoke the
escrow agreement prior to death of survivor of parties; and (3) Courthouse
could not deliver deed to Brais until both Emhousers had died.
After his wife died, however, Harry executed the will
bequeathing the farmland to the Churches.
When Harry died, Courthouse, apparently unaware of the will, delivered
the deed to Brais.
The trial court ruled that the farmland was part of the
estate, apparently ruling that the agreement had created a trust, but that
Harry's will had revoked the trust.
Brais argued on appeal that since the trust stated specifically it was
revocable only during the Emhouser's lives, it could not be revoked by will.
On appeal: Held: Affirmed.
The appeals court held that the agreement in this case was an escrow
agreement and not a trust. The escrow
was not a trust, but a simple escrow. A
trustee holds legal title to property for the welfare of the beneficiary, but
an escrow agent is not vested with title to the property even when entrusted
with possession. Here, since the escrow
company did not have legal title to the property it was not a trustee. Title
remained in the Emhousers, and they retained the right to revoke the deed at
any time.
The court concluded that it was not necessary for the
agreement to provide that a will would revoke the agreement. In cases of delivery of a deed in escrow to
a third person, the controlling question is whether the grantor reserved the
right to recall or revoke his action.
Here, the Emhousers provided in the escrow agreement that the agreement
could be revoked prior to their death.
Therefore, the deed was not properly delivered and could not effectively
convey the property to Brais. The
farmland became party of Harry's estate to be disposed of by his will.
Comment: What the editor finds of interest here is the fact
that the revocation of the escrow was so informal and vague. Did Harry realize what he was doing? Wouldn't the normal procedure have been to
notify the escrow company?
Despite these problems, the will sets forth unequivocally that it was Harry's intent that the property pass to the churches at his death, and this was Harry's last statement on the matter. Consequently, although bizarre, the case is correct.
Readers are urged to respond, comment, and
argue with the daily development or the editor's comments about it.
Items in the Daily Development section
generally are extracted from the Quarterly Report on Developments in Real
Estate Law, published by the ABA Section on Real Property, Probate & Trust
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