Court: Missouri Court of Appeals; September 6, 2011; Missouri; State Appellate Court
Thomas R. Hammack, as co-trustee of the Hammack Family Farm Trust, filed a lawsuit against Coffelt Land Title, Inc. for negligence and breach of contract regarding the handling of a deed and funds from the sale of a family farm. The circuit court ruled in favor of Coffelt Land Title, prompting Hammack to appeal. He contended that a December 3, 1998 general warranty deed, executed by him, his brother Stanley, and their wives, was ineffective in transferring title because it was not delivered into escrow. Hammack also argued that even if the contract served as an escrow agreement, its terms were not met.
The background includes the establishment of a revocable trust by Stanley Hammack on February 7, 1997, which specified that his one-half interest in the farm would be conveyed to the Hammack Family Farm Trust via a beneficiary deed upon his death. The trust outlined that income would be distributed to Stanley's wife Jeannette during her lifetime, followed by Thomas Hammack after her death, with the property ultimately divided among Thomas's children after his death.
On the sale date, December 3, 1998, all parties signed a contract for the sale of the 1,040 acre farm and a general warranty deed transferring title to the purchasers, P. David Perkins and David D. Davenport. Thomas admitted to limited involvement in the sale process and stated he did not discuss escrow arrangements with Coffelt Land Title or his brother. The sale contract included provisions for an escrow arrangement for the down payment and specified payment terms totaling $390,000. The court affirmed its judgment, rejecting Hammack’s claims regarding the deed's effectiveness and the alleged failure to fulfill contract terms.
The contract stipulated that closing was to occur within the last five days of 1998 or the first five days of 1999 at Coffelt Land Title's office, with a handwritten change to extend this period to 15 days. No formal escrow agreement was established, as Coffelt Land Title typically relied on the terms of the contract for closing. Following the signing of the contract and warranty deed, these documents were retained by Coffelt Land Title. Stanley Hammack passed away on December 6, 1998, and on January 11, 1999, Coffelt Land Title received $10,000 from Perkins and Davenport. On February 1, 1999, Thomas and Janet Hammack attended the closing and signed a general warranty deed and trustee's deed, which transferred a one-half interest in the farm to Perkins and Davenport, rather than using the earlier warranty deed. A settlement statement was signed, and payment of $380,000 completed the sale. Coffelt Land Title issued checks for $176,725.69 each to both Jeannette Hammack and Thomas and Janet Hammack. Thomas was initially unaware of any trusts or beneficiary deeds related to the farm until he was informed by Jeannette Hammack shortly after closing. The beneficiary deed, which aimed to transfer interests in the farm to the Family Trust upon Stanley's death, had been recorded in February 1997. Following this revelation, Thomas demanded the return of the sale proceeds, but Coffelt Land Title and Jeannette Hammack refused. On January 12, 2004, Thomas Hammack filed a two-count Petition for Damages against Coffelt Land Title, alleging negligence and breach of contract, claiming they improperly issued a check to Jeannette in her personal capacity instead of as trustee. After a bench trial, the circuit court ruled on March 1, 2010, in favor of Coffelt Land Title, determining that the general warranty deed was effectively placed in escrow, reflecting the grantors' intention to transfer the deed upon payment by the buyers.
The circuit court determined that the warranty deed dated December 3, 1998, was delivered to Coffelt Land Title for subsequent delivery to the purchasers upon fulfilling contract conditions. The court applied the relation-back doctrine, concluding that the transfer occurred on December 3, 1998, despite the deed being held by Coffelt Land Title until its 2007 recording. It ruled that Coffelt Land Title, as an escrow agent, did not owe a fiduciary duty to the Family Trust or Farm Trust, leading to a judgment in favor of Coffelt Land Title against Thomas Hammack, who is appealing. Hammack contends that the deed's effectiveness to transfer title was erroneous since it was not delivered into escrow and that the contract's terms were unmet. He claims that, following Stanley Hammack's death on December 6, 1998, the beneficiary deed recorded in 1997 vested the title in the Farm Trust via the Family Trust. The court maintained that for a deed to transfer land ownership, it must be delivered, with the intent of the grantor being crucial in determining delivery. A deed delivered to a third party can constitute valid delivery if there is no retention of control by the grantor. The court noted that a conditional delivery, or delivery "in escrow," requires performance of a condition for the deed to take effect. The escrow agent is viewed as a trustee with specific duties rather than an agent for either party.
Missouri courts recognize that escrow agreements can be established through oral contracts, as demonstrated in State Resources Corporation v. Lawyers Title Insurance Corporation and Boatmen's National Bank of St. Louis v. Dandy. In this case, David Coffelt served as the escrow agent, holding a general warranty deed executed on December 3, 1998, in escrow without a written agreement, since the closing was governed by the contract terms. The Hammacks signed a sale contract stipulating that a $10,000 down payment would be held in escrow and the deed delivered at closing. They relinquished control over the warranty deed, intending for it to be delivered to the purchasers after fulfilling the contract conditions. The court concluded that the deed was effectively placed in escrow with Coffelt Land Title, with the transfer relating back to December 3, 1998, despite Stanley Hammack's death before the deed was recorded. The lack of a written escrow agreement did not alter the validity of the transaction.
A deed's effective delivery remains valid despite being recorded post-grantor's death, serving only as notice to non-parties. A beneficiary under a beneficiary deed holds no property rights before the owner's death, allowing for revocation or modification of the deed during the owner's lifetime. The beneficiary deed executed by Stanley and Jeannette Hammack on February 7, 1997, was terminated on December 3, 1998, when they and Thomas and Janet Hammack transferred title via a general warranty deed held in escrow before Stanley's death. The conditional delivery of this deed meant that the beneficiary deed would not automatically transfer Stanley’s interest to the Farm Trust upon his death, as it would have under normal circumstances. Although Thomas Hammack argued that the December 3 deed was abandoned because new deeds were executed after Stanley's death for the property sale, he overlooked that the property title had already been transferred on December 3, thus leaving nothing to convey on February 1, 1999. The circuit court's judgment affirming this transfer is upheld.
The Family Trust intended for Stanley Hammack to transfer property to the Farm Trust via a beneficiary deed, but the property would first pass to the Family Trust. The evidence is viewed favorably towards the judgment in judge-tried cases. Thomas Hammack testified that the closing date was flexible, and he had no issues with the February closing date. A general warranty deed recorded on July 18, 2007, was dated December 3, 1998. Thomas Hammack's motion for summary judgment was granted, leading to a judgment of $176,726.50 against Coffelt Land Title, which both parties subsequently appealed. The appellate court reversed the summary judgment, citing unresolved factual disputes regarding Coffelt Land Title's duties to Thomas Hammack and potential breaches of those duties. Thomas Hammack argued that contractual conditions regarding the closing date and down payment were not met. However, he acknowledged that the down payment was made and the closing took place, diminishing the relevance of his complaints. He attempted to reference the Seibel case, where buyers failed to meet contractual conditions, resulting in a deed losing its validity. The court found this inapplicable, as the buyers in the current case completed the transaction. Section 461.025.2 clarifies that alternative conveyancing methods are legally permissible and that a deed's validity is not negated by delayed recording post-owner death.
