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WILLIAMS v. NORTHSIDE REALTY ASSOCIATES, INC. et al.
42874.
Money had and received. Fulton Civil Court. Before Judge Wright.
DEEN, Judge.
Where the petition was brought on a breach of contract of sale by a real estate brokerage firm for failing to turn over to the seller the overage of earnest money paid in after deduction of real estate commissions, and the proof showed that the defendants had never received any money, but had only a check which was to be held until sufficient funds were deposited in the proposed buyer's account to cover it, and that no such funds were ever deposited, a judgment in favor of the defendants was proper.
Williams filed suit in the Civil Court of Fulton County against the defendant real estate brokers on an attached contract of sale signed by the plaintiff as seller, by the purchaser Sanders and by the defendants, alleging that the defendants collected from Sanders $5,000 as earnest money; that thereafter Sanders refused to go through with the sale; that plaintiffs thereupon demanded payment to them of $1,250, being their part of the earnest money, which defendants refused. The contract contained the usual provision that in the event the purchaser should refuse to consummate the transaction the broker would apply the earnest money deposited by the purchaser to the payment of its real estate commissions and turn the balance over to the seller as liquidated damages. It also recited that the broker acknowledged receipt of "$5,000 (check) as earnest money, which earnest money is to be applied as part payment of purchase price of said property at the time sale is consummated."
Upon the trial of the case it appeared that at the time Sanders gave the broker the check he stated that he would have to get his wife to place the funds in the bank, upon which the broker agreed to hold the check until he was informed that it would clear. The plaintiff was not informed that it would clear. The plaintiff was not informed of this fact. Later the couple had marital difficulties, and the money was never deposited in the bank to cover the check. The judge trying the case without a jury found in favor of the defendants, and error is enumerated thereon.
Georgia is among the states which hold that money or an instrument evidencing indebtedness may be the subject of an escrow, and that a real estate broker under these circumstances is an escrow agent. Carter v. Turbeville, 90 Ga. App. 367 (83 SE2d 72); McGinley v. Chappas, 91 Ga. App. 418 (1) (85 SE2d 791). As such, he is the agent of both parties, and no liability attached from his failure to do anything not required by the express terms of the escrow or the intention and agreement of the parties. 30A CJS 992, Escrows, 8. While the defendants, had they in fact received $5,000 as alleged in the petition, would have been directly liable to the plaintiff for the overage after deducting the real estate commission, and while the purchaser, if his refusal to go through with the transaction was wrongful, would be liable upon the check (G. V. Corp. v. Bob Todd Realty Co., 102 Ga. App. 190 (115 SE2d 611)), no breach of contract is shown by the brokers to the seller in failing to make an attempt to convert the check into cash, especially since all the parties were informed that the earnest money was paid in the form of a check (this appears on the face of the sale contract) and no instructions were given to the brokers, acting in their capacity of a depository, to assure by certification or otherwise that it would be good at the time of the closing of the sale contract. In Rianda v. San Benito Title Guarantee Co., 35 Cal. 2d 170 (217 P2d 25), an action for damages allegedly arising from the negligence of the defendant is failing to present for payment a check delivered to it in connection with a real estate escrow transaction, it was held that no breach of duty was shown, among other reasons, because the escrow agreement "does not require anyone to cash checks received from the buyer." However, whether the brokers as escrow agents were guilty of negligence toward the seller, either by failure to communicate terms under which the check was received or otherwise, is immaterial here. The action as drawn is for breach of an agreement to turn over to the seller funds received by the defendants in trust for it upon the happening of certain contingencies. The proof shows that no funds were ever received by the defendants, and that the plaintiff was in fact notified that the earnest money was in the form of a check. An action for breach of contract cannot be converted into one in tort based on a failure to exercise due care in protecting the deposit. See Code 3-113; Houze v. Blackwell, 20 Ga. App. 438 (93 SE 16). Under these circumstances the trial court properly entered up judgment in favor of the defendants.
Judgment affirmed. Jordan, J. J., and Quillian, J., concur.
Alex Crumbley, for appellees.
Johnson & Hayes, Herbert Johnson, for appellant.
ARGUED JUNE 8, 1967 -- DECIDED SEPTEMBER 5, 1967.
Friday May 22 19:47 EDT


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