Carter
v.
Turbeville

Not overruled or negatively treated on appealinfoCoverage
Court of Appeals of GeorgiaMay 26, 1954
90 Ga. App. 367 (Ga. Ct. App. 1954)
90 Ga. App. 36783 S.E.2d 72

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35182.

DECIDED MAY 26, 1954. REHEARING DENIED JULY 8, 1954.

Money had and received. Before Judge Heery. Savannah City Court. March 2, 1954.

Leon L. Polstein, Brannen, Clark Hester, for plaintiff in error.

Harry P. Anestos, contra.


The court erred in overruling the demurrer. The demurrer should have been sustained and the suit dismissed.

DECIDED MAY 26, 1954 — REHEARING DENIED JULY 8, 1954.


M. C. Turbeville, Jr. (whom we shall call the plaintiff), sued David S. Carter (whom we shall call the defendant), for $500, for "money had and received." The suit is based upon a contract. Omitting the description of the property, the contract provides: "The purchase price of said property shall be Fourteen Thousand and no/100 Dollars ($14,000.00) to be paid as follows: Terms: Cash. Title to the aforedescribed property is to be conveyed by seller to purchaser by general warranty deed. Taxes, rentals, insurance premiums and water rent are to be prorated as of the date of the consummation of this sale. Said property is sold subject to all valid restrictions of record, zoning ordinances affecting the same, existing rental contracts and incomplete paving contracts or assessments.

"The sale is to be consummated within forty-five (45) days from the date of the acceptance of this offer by seller or purchaser who last executes this contract, during which time purchaser shall have the opportunity of having the title examined; it being expressly understood and agreed between the parties hereto that time is of the essence of this contract. Should any legal defect be found in the title, seller shall be furnished with a written statement thereof within said period of forty-five (45) days from the effective date of this contract, and given a reasonable time thereafter within which to correct the same, however, in no event to exceed sixty days from the date of said notice of defect.

"Purchaser has paid to seller's agent, Five Hundred and no/100 Dollars ($500.00), as earnest money, to be applied as part payment on the purchase price of said property. If the sale is not consummated due to purchaser's default, the earnest money shall be applied to agent's commission hereunder and agent shall pay the balance, if any, to seller to be applied toward seller's damages caused by purchaser's default. In the event the sale is not consummated for reasons other than default of purchaser the earnest money is to be refunded to the purchaser.

"The agent in negotiating this contract has rendered a valuable service and seller agrees to pay agent's commission based upon total sales price as follows: Property within city limits, 5%; property outside city limits, 10% on first $2,500.00 plus 5% on excess. If sale is not consummated, due to default of purchaser, seller shall not be obligated to pay any commission, but purchaser shall pay said commission.

"The agent's commission as herein provided shall not be canceled or defeated in the event the seller and buyer should mutually agree to call off the sale and the earnest money paid hereunder shall be applied to the payment of said commission; the balance, if any, shall be refunded to the purchaser. In the event the amount of said deposit is insufficient to pay agent's commission as herein provided, seller and purchaser shall be jointly liable for the balance due the agent thereon.

"Should the aforesaid property be improved and such improvement be wholly destroyed by fire or other hazards before sale is consummated, the loss shall fall on the seller. If such loss is partial, then at the option of the purchaser, the seller shall repair or restore the premises to their former condition or the purchaser shall be allowed to deduct from the agreed purchase price the amount necessary to repair or restore the premises to the condition of same prior to the casualty. If the parties are unable to agree as to the amount necessary to repair or restore the property to its former condition, in the event of either a total or a partial loss, then each party shall name one appraiser and the two appraisers shall name an umpire, and the decision of the majority shall determine the amount to be deducted from the purchase price, which decision and award shall have the force and effect of a statutory award as provided by the law of Georgia.

"This contract constitutes the entire agreement between the parties, and shall be binding upon and inure to the benefit of the heirs, executors, administrators, and assigns of the respective parties hereto.

"The following special stipulations shall, if in conflict with the printed matter, control: Special Stipulations: The within sale is expressly contingent upon the purchaser's ability to secure a loan of $11,200 on the insured mortgage plan of the Federal Housing Administration on the subject property, which is to be repayable in twenty (20) years.

"This instrument shall be regarded as an offer by the seller or purchaser who first executes the same, to the other, and is open for acceptance by the other until noon, on the __________ day of September, 1952, by which time this contract must have been accepted and executed by both seller and purchaser and have been actually received by the agent.

"Executed in the Witness the hand and seal Presence of: of the undersigned: s/ M. Beall ___________ s/ Michael C. Turbeville, Jr. ______ (L.S.) (Signature) Purchaser ______________________ ____________________________________ (L.S.) Notary Public (Print name in which Purchaser title desired) Lynes Realty Company _______________ Realtor: Member Savannah Real Estate Board, Agents. "The above proposition is hereby accepted this 30 day of September, 1952. Executed in the Witness the hand and seal Presence of of the undersigned: s/ M. Beall ____________ s/ David S. Carter _________________ (L.S.) Seller ________________________ ____________________________________ (L.S.) Notary Public. Seller Lynes Realty Company ____________________ Realtor: Member Savannah Real Estate Board, Agents." The defendant filed a general demurrer to the petition. The City Court of Savannah entered an order overruling the demurrer. Error is assigned on this judgment.

GARDNER, P. J.

1. (a) In unambiguous contracts, the rights and liabilities of the parties are matters of law for the court to determine upon a construction of the instrument. This construction is to determine the intentions of the parties. Code § 20-704 (4) reads: "The construction which will uphold a contract in whole and in every part is to be preferred, and the whole contract should be looked to in arriving at the construction of any part." The contract before us is a sales contract with the plaintiff as the purchaser and the defendant as the seller and Lynes Realty Company as an independent third party to the contract. With reference to the $500 earnest money, Lynes Realty Company was an escrow agent. In Fulton Land Co. v. Armor Insulating Co., 192 Ga. 526 ( 15 S.E.2d 848), the Supreme Court said: "In order to create a valid and binding escrow, it is necessary that there be an actual contract between the parties at interest, a proper subject matter, and an absolute deposit of an instrument with a depositary acting for the parties, by which it passes beyond the control of the depositor to withdraw the deposit on the performance or happening of the agreed conditions of the escrow." It will be observed from reading the document signed by the plaintiff and the defendant that it was not a completed transaction.

At the time the document was signed, it was conditional and contingent upon several things. It was an agreement to sell by the defendant and to purchase by the plaintiff, upon several contingent conditions, as will appear upon the instrument itself. According to the petition, the conditions of the agreement were never met. It is clear that the money was paid to Lynes Realty Company in its own right as escrow agent — a party in whom both the seller and the purchaser placed their confidence. The money was paid to Lynes Realty Company on condition and with specific instructions for the disbursement of the money. For this company to dispose of the fund in any manner other than as prescribed would have been a breach of trust, and the party aggrieved could sue Lynes Realty Company on its statutory bond as provided by law. The Supreme Court in Wellborn v. Weaver, 17 Ga. 267, 275, said: "In every case of an escrow there is a contract and privity between the grantor and grantee. The person to whom the deed is delivered is, by mutual agreement, constituted the agent of both parties."

See, in this connection, 19 Am. Jur. 430, sec. 13, as follows: "In a broad sense, every depositary of an escrow is the agent of both parties. For the purpose of making delivery upon the performance of the conditions, he is no less the agent of the grantee than the agent of the grantor. He is empowered to aid neither, being merely the conduit used in the transaction for convenience and safety. He may, therefore, be looked upon as a special agent of both parties, with powers limited only to those stipulated in the escrow agreement. Strictly, however, the depositary is not an agent at all, but rather the trustee of an express trust with duties to perform for each of the parties, which duties neither can forbid without the consent of the other. When the depositary knows the terms of the agreement so that he may understand his duties, he acts by virtue of his own powers, and not as agent of anybody. To call him the agent of the parties leads to confusion. It is better to treat him, in accordance with his capacity, as a third party to whom the principal parties to the contract have intrusted certain authority by the escrow agreement. He must look to that intrusted authority for his powers and duties."

It is apparent that Lynes Realty Company was the escrow agent of both parties with respect to the deposit of $500. If under the terms of the agreement the plaintiff is entitled to receive back the earnest money deposited, the remedy is against Lynes Realty Company and not against the defendant, who never received the money.

(b) We have heretofore mentioned the fact that the instrument before us created an escrow agency. To construe the instrument before us to the effect that the instrument regarding the escrow money amounted to a payment to the defendant, the contract would have to be construed as establishing Lynes Realty Company as the full and exclusive agent of the defendant. We would also have to construe the instrument as including authority of Lynes Realty Company to receive payment on behalf of the defendant. The document before us, under its terms, will bear no such conclusion.

(c) The payment of earnest money to Lynes Realty Company is not, under the terms of this contract, equivalent in law to payment to the defendant seller. In this connection, see Kenny v. Walden, 28 Ga. App. 810, 811 ( 113 S.E. 61), and Stiles v. Edwards, 79 Ga. App. 353, 359 ( 53 S.E.2d 697).

(d) An action of assumpsit for money had and received is founded upon equitable principles, and the pleadings must allege and the proof must show that the money or its equivalent was actually received by the defendant or his agent. See King v. Forman, 71 Ga. App. 75 ( 30 S.E.2d 214). The proof did not show in the instant case that the defendant received the money.

The court erred in overruling the demurrer. The demurrer should have been sustained and the suit dismissed.

Judgment reversed. Townsend and Carlisle, JJ., concur.