Edwards v. Stewart Title & Trust of Phoenix, Inc.

753 P.2d 1187, 156 Ariz. 531, 5 Ariz. Adv. Rep. 59, 1988 Ariz. App. LEXIS 73
CourtCourt of Appeals of Arizona
DecidedMarch 31, 1988
DocketNo. 2 CA-CV 88-0087
StatusPublished
Cited by1 cases

This text of 753 P.2d 1187 (Edwards v. Stewart Title & Trust of Phoenix, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Edwards v. Stewart Title & Trust of Phoenix, Inc., 753 P.2d 1187, 156 Ariz. 531, 5 Ariz. Adv. Rep. 59, 1988 Ariz. App. LEXIS 73 (Ark. Ct. App. 1988).

Opinion

OPINION

ROLL, Judge.

Defendant / appellant / cross - appellee Stewart Title and Trust of Phoenix, Inc. (Stewart Title) appeals from a judgment entered in favor of plaintiff/appellee/cross-appellant Mary Elizabeth Edwards (Edwards) in connection with a complaint filed by Edwards against Stewart Title alleging breach of contract in connection with Stewart Title’s failure to follow escrow instructions. For the reasons set forth below, we affirm as modified.

FACTS

On February 10, 1981, Mary Elizabeth Edwards and her husband Donald Edwards agreed to sell a Glendale home to Frank Farmer. Farmer signed a note secured by a deed of trust, by the terms of which he agreed to pay $50,500 for the residence in monthly installments of $300 with interest at the rate of 7 percent per annum. The parties also agreed that if Farmer died [533]*533before he completed the payments, the residence would revert to the Edwards.

The Edwards and Farmer engaged Stewart Title as escrow agent. Escrow officer Art Robinson prepared a worksheet summarizing the terms of the agreement. These terms were furnished by the parties. The worksheet contained the handwritten notation:

In the event of the death of Buyer prior to payment in full of note to Seller, this property is to revert to Sellers or in the event of their death, to their daughter, Dorinda Carole Edwards.

Robinson agreed to prepare the documents for the transaction.

On February 11, 1981, the Edwards and Farmer signed the documents prepared by Robinson, including the escrow instructions and the warranty deed. The escrow instructions contained all of the terms of the transaction, including the typed clause:

NOTE: In the event of the death of the Buyer prior to payment in full of the Note and Deed of Trust to Seller, the Buyer directs that this property is to revert to the Sellers or in the event of their death, to their daughter, Dorinda Carole Edwards.

The warranty deed, however, made no mention of the Edwards’ reversionary interest in the property. Accordingly, no document reflecting the reverter was recorded by Stewart Title.

The escrow instructions also included the following terms:

SELLER AND BUYER:
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2. Will deliver to Escrow Agent all documents, pay to Escrow Agent all sums and do or cause to be done all other things necessary, in the sole judgment of Escrow Agent, to enable it to comply herewith and to enable any title insurance policy provided for herein to be issued.
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13. Direct that when these instructions have been complied with and Stewart Title Guaranty Company is willing to issue its title insurance policy, as hereinafter provided, and when Escrow Agent’s charges have been paid, it shall file for record in the appropriate public office all necessary documents required to be filed or recorded, instruct- . ing the County Recorder’s Office to mail any documents recorded therein to the parties entitléd thereto at the address given herein, at which time Escrow Agent shall disburse all funds paid to it hereunder, as provided herein. (Emphasis added.)

In July 1983, Farmer sold the property to Charles Brown. Because the 1981 warranty deed recorded by Stewart Title made no reference to the reverter, Brown had no notice of that provision and was a bona fide purchaser for value. A.R.S. § 33-411(A).

On August 12, 1983, Farmer died. Thereafter, Mary Edwards collected a total of $11,000 on the note. During this period of time, Donald Edwards died.

In October 1983, Edwards’ appraiser concluded that the fair market value of the property was $55,500. When the residence did not revert to Mary Edwards upon Farmer’s death, she unsuccessfully attempted to resolve the matter with Stewart Title. Edwards subsequently commenced litigation.

PROCEDURAL HISTORY

On April 10, 1985, Mary Elizabeth Edwards sued Stewart Title, alleging breach of contract, breach of fiduciary relationship, and unauthorized practice of law. The trial court dismissed the allegations of breach of fiduciary relationship and unauthorized practice of law based on the applicable statutes of limitations. •

Following a trial to the court, judgment was entered in favor of Edwards on the breach of contract count. The trial court awarded Edwards . $55,500 less an $11,000 set-off, which represented the total paid to Edwards between August 1983, when the house would have reverted to Edwards, until the judgment of October 15, 1986. The trial court also awarded Edwards $10,-000 in attorneys’ fees.

[534]*534ISSUES ON APPEAL

On appeal, Stewart Title argues that (1) it did not breach its contract with Edwards when it failed to record the reverter, (2) the trial court erred in awarding the damages to Edwards since Edwards retains the note on the property purchased by Brown, and (3) the trial court erred in awarding Edwards damages due her husband’s estate.

Edwards cross-appeals, alleging that (1) she was entitled to prejudgment interest on the sum awarded, and (2) the trial court should not have granted Stewart Title’s motion in limine preventing the introduction of evidence in support of punitive damages.

STEWART TITLE’S APPEAL

Stewart Title’s Failure to Record the Reverter

If a judgment can be sustained on any theory framed by the pleadings and supported by the evidence, we must affirm. Coronado Company, Inc. v. Jacome’s Department Store, 129 Ariz. 137, 139, 629 P.2d 553, 555 (App.1981). An escrow agent’s duty is to act in strict accordance with the terms of the escrow agreement. Maganas v. Northroup, 135 Ariz. 573, 576, 663 P.2d 565, 571 (1983).

The trial court concluded that the escrow instructions directing a reversion in the event Farmer died before full payment of the note would have conveyed an estate in fee simple determinable, which is legal and enforceable in Arizona. City of Tempe v. Baseball Facilities, Inc., 23 Ariz.App. 557, 560, 534 P.2d 1056, 1059 (1975). However, the warranty deed recorded by the escrow agent conveyed an estate in fee simple. A.R.S. § 33-411(A) provides:

No instrument affecting real property is valid against subsequent purchasers for valuable consideration without notice, unless recorded as provided by law in the office of the county recorder of the county in which the property is located.

Failure to record the reversionary interest, in light of A.R.S. § 33-411(A), resulted in the loss of the Edwards’ reversionary interest. This loss is particularly significant because the $300 monthly payments required of Farmer were barely sufficient to cover interest on the loan.

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Bluebook (online)
753 P.2d 1187, 156 Ariz. 531, 5 Ariz. Adv. Rep. 59, 1988 Ariz. App. LEXIS 73, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edwards-v-stewart-title-trust-of-phoenix-inc-arizctapp-1988.