Orloff v. Metropolitan Trust Co.

California Supreme Court Feb 24, 1941 No. L. A. 17607Published

Before: Edmonds

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Holding. The court held that the plaintiff failed to state a cause of action because the underlying escrow agreement was rescinded before the plaintiff could enforce it, the conspiracy claim lacked an allegation of actual damage, and the escrow holder never became a trustee. Furthermore, the court found the common count barred by the statute of limitations and determined that the request for declaratory relief was improper as it sought only to review past acts.

Issues

Whether a third-party beneficiary can enforce an escrow agreement after it has been rescinded by the parties.
Whether the complaint sufficiently alleged damage to support a cause of action for civil conspiracy.
Whether an escrow holder becomes a trustee before the conditions of the escrow are fulfilled.
Whether a complaint for declaratory relief is appropriate when all complained-of acts have already concluded.

Disposition. affirmed

Quotations verified verbatim against the opinion

“As the cause of action is for the damage suffered, and not the mere conspiracy, the complaint must state facts which show that a civil wrong was done resulting in damage.”

“an escrow holder does not become a trustee of the property deposited with him until the conditions of the escrow have been fulfilled.”

EDMONDS, J.

An order sustaining general demurrers to a third amended complaint was followed by the judgment of dismissal from which this appeal is prosecuted against

[486]

Metropolitan Trust Company, P. T. Libby, Sam Weiss and Edward Flam.

The complaint as amended purports to set forth five causes of action. The first count alleges facts which, the appellant declares, state a cause of action as to respondents Metropolitan Trust Company and Libby, its escrow officer, for breach of an escrow agreement between the trust company, as escrow holder, with the defendants Grossfeld, Margulis, Garrison and Bio Brewing Company, Inc. The remaining counts attempt, respectively, to state causes of action for civil conspiracy, for money received in trust for appellant, for money had and received, and for declaratory relief.

The first cause of action alleges: In 1935, Garrison agreed with Grossfeld, Margulis and the brewing company to purchase all of the capital stock of the latter for approximately $40,000, to be paid through an escrow with the trust company. Under the escrow instructions of Garrison to carry out this purpose, he agreed to deposit $5,000 when certain stock certificates and other papers, specifically described, were delivered to him. He also agreed to deposit $2,500 every three months thereafter. From these sums the escrow holder was directed to pay, in a specified order, the claims of creditors of the brewing company.

These creditors were classified in six groups. The claims of the first five groups were stated as amounting, in the aggregate, to a sum in excess of $18,000. The instructions provided that after the amounts due these creditors were paid, the balance, if any, deposited by Garrison was to be divided

pro rata

to Margulis, Grossfeld and Leo Schinagel, the appellant’s assignor. The amounts of the claims of these three were stated as $3,041, $4,985, and $2,500, respectively.

The escrow holder was given notice of the Schinagel assignment after Garrison paid $5,000 to it, and before he deposited further sums totaling $5,375. These amounts were paid to creditors of the brewing company in accordance with the escrow instructions.

Orloff v. Metropolitan Trust Co.

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EDMONDS, J.

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