Tanner, John W.

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220 LAW JOURNAL - MARCH, 1937IV, par. I5; The Disregard of the Corporate Fiction, MauriceWormser (1929); 43 Harv. L. Rev. 1154. It becomes readily ap-parent from the foregoing discussion that one cannot answer the questionas to when the corporate entity will be disregarded in a particular case.Justice Cardozo in the Berkey case, supra, said, the whole subject is"still enveloped in the mists of metaphor". Each case must be decidedon its own facts and must be regarded as "sui generis." Industrial Re-search Corp. v. General Motors Corp., supra; 4 Minn. L. Rev. 219,227. See generally, Latty, Subsidiaries and Affiliated Corporations(1936); reviewed by Wormser in 31 III. L. Rev. 700 (I937).The rule in the principal case to the effect that the separate cor-porate entities of the parent and subsidiary corporations will not be dis-regarded, unless the subsidiary was formed for the purpose of prepetrat-ing a fraud, is both fair and practical if the court means to limit the ruleto the instrumentality concept of liability. "There is in many cases muchloose talk about 'ignoring the corporate fiction' and 'looking at thesubstance rather than the form.' But the corporate capacity is a legalfact, not a fiction." Ballantine, supra, at page 2o. However, if the Su-preme Court means to preclude liability on the basis of agency, it is un-fortunate. The doctrine of agency is equally applicable in parent-sub-sidiary relationships as it is in partnership or other personal relationships.It has been said that "problems of responsibility for fraud or for the actsof a corporation used as an agent are to be solved not by 'disregarding'the corporate personality, but by the application of the usual principles ofliability for the acts of other persons or for collusion with them." Ballan-tine, supra, at page 2o.SAM TOPOLOSKY.DEEDSBONA FIDE PURCHASER UNDER ESCRow DEEDThe plaintiff made a warranty deed, naming her daughter asgrantee. She intended to give it to her (plaintiff's) son, who was tohold it until her death, on which event it was to be given to grantee.The grantee's husband wrongfully got possession of the deed and hadit recorded. The grantee then obtained a loan from the Ohio ValleyBank, giving the latter her promissory notes. In making the loan thebank relied on her record title to the land, but it did not take a mort-gage. The defendant, in charge of liquidating the bank, procuredjudgment on the notes and levied execution against the property. TheNOTES AND COMMENTS 221plaintiff claimed title and asked that the conveyance be cancelled ofrecord. The Court of Common Pleas gave judgment for the plaintiff,which judgment was reversed by the Court of Appeals of Scioto County.The case went to the Supreme Court of Ohio on error. Judge Day,giving the opinion of the court, said that an escrow deed is depositedat the grantor's own risk; that if such a deed is wrongfully obtained bythe grantee, the conveyance is deemed valid and absolute as to innocentpurchasers for value from the grantee; that a person innocently extend-ing credit to the record owner in reliance on his apparent title occupiesthe position of an innocent purchaser for value; and that if such creditorreduces his claim to judgment during the debtor's record ownership,he acquires a valid judgment lien on the property. Judgment of theCourt of Appeals, was affirmed. Michlethwait v. Fulton, 129 Ohio St.488, 196 N.E. 166 (1935).It is well settled that as between grantor and grantee in an escrowsituation, the grantee has at best merely a conditional title prior to thesatisfaction of the condition. Many of the privileges and incidents ofownership remain in the grantor until the condition is satisfied. Tiffany,Real Property, 2nd Ed., i92O, Vol. II, p. 1771. A transferee fromthe grantee who is not a bona fide purchaser for value gets no bettertitle than the grantee had. Fiesthamel v. Campbell, 205 Pac. 25, 55Cal. App. 774 (1921); Otero v. City of Albuquerque, 22 N. M. 128(1916); Clevenger v. Moore, 126 Okla. 346 (1927); Berry v. An-derson, 22 Ind. 36 (1846). But the problem is complicated when thegrantee of an escrow deed conveys to an innocent purchaser for valuebefore satisfaction of the condition. Can such a purchaser take free fromthe condition? If so, is the mere fact that he is an innocent purchaserfor value sufficient to give him good tide as against the escrow grantoror is some element of fault on the part of that grantor also necessaryto support this result?The Ohio cases are not entirely uniform on these points. The caseof Ogden v. Ogden, 4 Ohio St. 182 (1854) holds that an innocentpurchaser gets no better title than that of the escrow- rantee. There isa suggestion in the opinion that if the escrow-grantor were negligent,the innocent purchaser would be protected. This leads to the conclusionthat an innocent purchaser from the grantee will not take free from thecondition unless there has been some negligence or other fault on thepart of the escrow-grantor. In the later case of Resor v. 0. & M.R. R. Co. et al., 17 Ohio St. 139 (1866) a judgment was given foran innocent mortgagee of an escrow-grantee as against the escrow-grantor on a theory of estoppel. The court applied an estoppel on the22a LAW JOURNAL - MARCH, 1937grounds that the escrow-grantee had been put in possession of thepremises as well as given the deed. In a similar situation an estoppel wasapplied and an innocent purchaser held to have good title in Schurtz v.Colvin, 55 Ohio St. 274 (1896). In this case it was said that an inno-cent purchaser for value from a fraudulent grantee is always protectedin his title as against the wronged grantor. Here, also, the escrow-grantee had been let into possession of the land. In the Micklethwaitcase the escrow-grantee was in joint occupancy with her grantor-bothresiding in the same house. The court regarded the grantor as havingbeen negligent, but by dictum asserted that the purchaser would be pro-tected regardless of that fact.The broad statements in the Schurtz and Micklethwait cases areto the effect that the use of the escrow device, without any other cir-cumstances, is sufficient to estop the grantor from denying delivery asagainst a bona fide purchaser for value from the escrow-grantee whohad obtained possession of the deed before satisfaction of the condition.This is inconsistent with the decision in the Ogden case and it is abroader proposition than was necessary to support the decision in eitherthe Schurtz or the Micklethwait case. It is significant that in the Ogdencase the grantee did not have possession or occupancy of the premises.In both the Schurtz and Resor cases the grantee was put in possessionof the premises and in the Micklethwait case the grantee occupied thepremises jointly with the grantor. This difference in fact might justifythe difference in result between the Ogden and the other three cases.In most jurisdictions, possession of the premises by an escrow-granteeis an important factor in the protection of an innocent purchaser fromsuch a grantee. Tiffany, Real Property, 2nd. Ed., 1920, Vol 2, p.1771. On this approach the holdings in the Schurtz and Resor casesare not necessarily inconsistent with the Ogden case.In the Micklethwait case the problem was complicated by the jointoccupancy of the grantor and grantee. It would seem that the grantor'spresence on the premises might have been regarded as notice of thegrantor's rights, to the extent of placing the purchaser under a dutyto make inquiry as to the existence of any rights in the grantor. In theabsence of a diligent inquiry, the purchaser should not have acquiredrights superior to those of the grantor, and the court should have heldfor the grantor as in the Ogden case. Even if the occupancy of thegrantee in the Micklethwait case is stressed to the point of invokingthe estoppel doctrine which was applicable in the Resor and Schurtzcases it should not be supposed that an innocent purchaser from anescrow grantee is always to be protected. The Ogden case might stillbe followed in a situation where the escrow-grantee was not permittedto occupy the premises.Although some question might be raised as to whether a judgmentcreditor is a bona fide purchaser, he has been treated as such in Rath-mell v. Shirey, 6o Ohio St. 187 (1899), and in Crooks v. Crooks,34 Ohio St. 61o (1878).JOHN W. TANNER.EQUITYJURISDICTION OF EQUITY TO RELIEVE ONE CONVICTED OF ACRIME ON PERJURED TESTIMONY WHERE STATUTE OFLIMITATIONS BARS LEGAL RELIEFThe plaintiff was convicted on perjured testimony of the crime ofassault to rape. Ohio Gen. Code. Sec. 13449-2 provides that a motionfor a new trial on newly discovered evidence must be filed within 12odays following the rendering of the verdict. This statute had run whenthe plaintiff discovered new facts showing that his conviction was onperjured testimony. Relief was sought in equity to vacate the judgmentand to secure a new trial. A demurrer to the bill was overruled andjudgment entered for the plaintiff. Error was prosecuted to the Court ofAppeals and the ruling of the trial court reversed. To grant the reliefprayed for would be overruling the expressed intent of the legislature,and 'while one maxim of equity recites that it will not suffer a wrongto be without a remedy, another states that equity follows the law."State v. Vaughn, 21 Ohio L. Abst. 585 (1936).The court had a hard problem before it but not one entirely dis-similar from that which equity was faced with in working out thedoctrine of part performance to remove the bar of the Statute ofFrauds, Butcher v. Stapely, I Vein. 363 (1685). Probably the firstcase advancing fraud as the rationale of this doctrine was Mullet v. Half-pcnny, Prec. Ch. 404 (1699). Equity from that time on has given re-lief in certain types of cases notwithstanding the expressed legislativeintent, and in this state even applies the equity doctrine to law cases.liVlbur v. Paine, I Ohio 251 (1824), O'Hara v. O'Hara, i6 OhioC.C. 367, 9 Ohio C.D. 293 (1898), Hodges v. Ettinger, 127 OhioState 460.Similarly, the problem of the Statute of Limitation arose early incquity, and the general rule was laid down that equity follows theNOTES AND COMMENTS 223

Bona Fide Purchaser Under Escrow Deed

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Bona Fide Purchaser Under Escrow Deed

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