Appendix — Cocke v. James Stewart Co.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1975

No. @5-556 !

FRANCIS M. COCKE, Petitioner,

Vv.

JAMES STEWART COMPANY, et al, Respondents.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI

(Six Volumes)

RICHARD L. THOMPSON

132 South Central Ave.

Suite 7

Phoenix, Arizona 85004

(602) 254-7331

Counsel for Petitioner

VOLUME IV

Pages 281 - 394

281

a loots

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an

Arizona corporation;

M. SETH HORNE and

MAURINE E. HORNE, his

wife,

No. C-222472

Plaintiffs,

Vs.

F. M. COCKE'S

REQUEST FOR FIND-

INGS OF FACT

AND CONCLUSIONS

FRANCIS M. COCKE, a

divorced man; and JOAN

H. COCKE, a divorced

woman,

OF LAW

Defendants,

Vs.

Filed:

TRANSAMERICA TITLE IN- —* 17,

SURANCE COMPANY OF

ARIZONA, an Arizona

corporation,

Additional Defendant

on Counterclaim.

mee ee ee ee ee ee ee ee eee ee ee eee ee ee

As provided by 16 ARS Rule of Pro-

cedure 52(a), defendant Francis M. Cocke

hereby requests that the Court find the

facts specially and state separately its

conclusion of law thereon and direct the

entry of the appropriate judgment, all in

writing, on the answers to the questions

set forth below, such answers being neces-

sary to the proper determination of the

period of time during which the damages

Claimed by plaintiff Buyers, for delay

in their planned development claimed by

) on

a - ven ee eee et —

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282

Buyers to have been wholly caused by F. M.

Cocke, could have accrued.

1. As a matter of fact and law,

whether the Minute Order of 9-23-71 con-

stituted approval of plaintiff Buyers'

proposed Amendment to their original Com-

plaint attached to their Motion for Leave

To Amend, filed August 11, 1971 which pro-

posed Amendment incorporated by reference

paragraphs I through VII and alsothe de-

mand for judgment contained in the origin-

al Complaint, and in addition sought puni-

tive damages from both defendants on an

allegation of constructive fraud.

2. Inasmuch as Buyers in their origi-

nal Complaint demanded judgment:

6. For reasonable damages for the

failure of Defendants to close said

Escrow as agreed and to convey said

real property to M. Seth Horne and

Maurine D. Horne, (emphasis added)

a. As a matter of fact and law,

whether defendants can be compelled to

instruct the trustee Bank to deliver into

escrow its deed conveying the trust half-

interest in Parcel 1 to M. Seth Horne and

Maurine D. Horne, where the Bank's deed to

such half-interest to James Stewart Com-

pany was delivered and accepted into es-

crow in October, 1968, without objection

by Buyers or escrow agent, long before

the purported nomination of the Hornes,

and in view of the delivery into escrow

by Buyers of an unsigned warranty deed to

half-interest in Parcel 1 for signing by

James Stewart Company during March, 1969,

so ratifying the acceptance of the deed

to the Company.

283

b. As a matter of fact and law,

whether defendant F. M. Cocke can be com-

pelled to deliver into escrow his deed

conveying his half-interest in Parcel l

to the Hornes, where his warranty deed

conveying such half-interest to James

Stewart Company was delivered and accepted

into escrow in January, 1969 (Kavanaugh

Deposition, page 21, line 14, to page 23,

line 1), without objection by Buyers or

escrow agent, long before he was notified

of the purported nomination, and in view

of the delivery into escrow by Buyers of

the unsigned warranty deed from James

Stewart Company mentioned in "a" just

above;

c. As a matter of fact and law,

and as affecting the claimed delay, wheth-

er F. M. Cocke was under any duty to

recognize the purported nomination of the

Hornes unless and until the $40,000 note

and mortgage made out in favor of and

held by James Stewart Company, or the ex-

tra $20,000 represented by such note and

mortgage, was delivered into escrow, in

view of the well settled rule that where

a party to a contract is himself in de-

fault, he cannot compel performance by

another party.

3. In paragraph 1 of Buyers' demand

for judgment, Buyers demand that the es-

crow be ordered closed, and also demand

that defendants, purportedly to end the

Claimed delay, cause Tranamerica to

issue its title insurance policies to

the Hornes (not to James Stewart Company) ,

all in accordance with the agreement and

escrow instructions.

a. In connection with Buyers'

demand that the escrow be ordered closed,

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as a matter of fact and law and as ma-

terial to Buyers' claim of delay by F. M.

Cocke, whether the closing of the escrow by

cancellation in accordance with the escrow

instructions, if so closed, constituted

Closing in accordance with the consolidated

agreement and escrow instructions, as de-

manded by Buyers, in view of the well

settled rule that where a contract contains

provisions for its cancellation, the con-

tract controls. 17 Am Jur 2d 969, Contracts

Section 495.

b. Since Buyers have here ad-

mitted that it is the duty of the escrow

agent, not the defendants, to close the

escrow, and so deliver the deeds and title

policies to Buyers, as a matter of fact

and law whether Buyers' remedy for delay

Claimed to be caused by F. M. Cocke was

an action against the escrow agent, in

which Sellers could be properly joined,

not an action against Sellers, in view

of the well settled rule to that effect

stated in 28 Am Jur 2d 5l, Escrow, Section

39, and in 30A CJS 1014, Escrows, Sections

15, 16.

c. As far as the title insurance

policies are concerned, in connection

with the claimed delay by F. M. Cocke, as

a matter of law whether paragraph 24

leaves it entirely up to Transamerica, not

to the defendants, whether or not it will

issue such policies.

d. As a matter of fact and law,

affecting the delay claimed to be caused

wholly by F. M. Cocke, whether Trans-

america's objection (Kavanaugh Deposition,

p. 22) to the inclusion of the small

triangle in F. M. Cocke's deed to Parcel

2, delivered into escrow in January, 1969,

285

on Transamerica's claim that F. M. Cocke's

title to the triangle was divested by a

neighbor's quit-claim deed to the State,

was a valid objection, where the neighbor

neither had nor asserted (McCarthy Depo-

sition, pp. 23-26) any claim thereto, and

where the State claimed no right thereto

based on such quit-claim (Court Records,

Condemnation Case No. 183278).

e. As a matter of fact and law,

whether Transamerica's unwillingness to

issue its title policy on Parcel 2 as des-

cribed in F. M. Cocke's deed to James

Stewart Company (alleged and so admitted

by Buyers in paragraph V of their Answer

to F. M. Cocke's original Counterclaim)

(see also Kavanaugh Deposition, page 7,

line 24, and page 22) cancelled the es-

crow, instead of delaying close of same

as desired by Buyers, under the mandatory

and self-executing provisions of the fine

print instruction paragraph 24, in view

of the well settled rule that where a

contract contains provisions for its

cancellation, the contract controls. 17

Am Jur 2d 969, Contracts, Section 495.

4. On February 27, 1970, Trans-

america asserted that it was at that time

unable or unwilling to follow the Horne's

escrow instructions, contained in their

letter dated March 5, 1969, directing

close of the escrow with payment of the

trust land proceeds to Joan H. Cocke

contrary to the trustee Bank's instructions

(Kavanaugh Deposition, examination by

escrow agent's attorney, page 42, line 16,

through page 44, line 22), so reversing,

despite trial and appellate court rulings

that Joan H. Cocke was entitled to the

trust land proceeds, the position taken

by the escrow agent in the escrow

a wees

286

officer's letter of March 10, 1969

stating that Buyer had done everything re-

quired of him to close the escrow.

In view of this reversal of position

by the escrow agent, and inasmuch as

neither the Buyers in making their claim

for damages suffered by reason of claimed

delay by F. M. Cocke in the closing of the

escrow, nor the Court in its Minute Order

of December 8, 1970 granting Buyers'

Motion for Summary Judgment, have speci-

fied the particular date which marked the

beginning of the time period of such

Claimed delay:

a. As a matter of fact and law

whether Buyers are entitled to damages

from F. M. Cocke for the period March 5,

1969 through February 27, 1970 on Buyers'

contention that they were in full com-

pliance throughout this period with res-

pect to:

(1) Buyers' check, note and

mortgage enclosed in the Horne letter pur-

portedly representing the balance due on

the trust land but all made out in favor

of Joan H. Cocke;

(2) Buyers' note and mortgage

purportedly representing the balance due

on the trust half-interest in Parcel 1

but which were $32,000 deficient, since

the Hornes' letter demanded recording of

the deeds and mortgages BEFORE payment of

the $32,000 due January 2, 1969;

(3) Buyers' note and mortgage

purportedly representing the balance due

on F. M. Cocke's half-interest in Parcel

1 but which were $32,000 deficient, since

the Hornes' letter demanded recording of

)

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the deeds and mortgages BEFORE payment of

the $32,000 due January 2, 1969.

(4) Buyers' demand in the Horne

letter for warranty deeds to Parcels 1A

and 2A, not retracted during the period

March 5, 1969 through February 27, 1970

(Kavanaugh Deposition, pp. 19, 25-29, 31,

32).

(5) Buyers' failure to deliver

into escrow the $40,000 note and mortgage,

Or substitute funds in the amount of the

extra $20,000 represented by same.

b. As a matter of fact and law

affecting the claimed delay, whether

Buyers' willingness and ability, as

claimed in Buyers' Pretrial Memorandum,

to comply with the consolidated contract

at any time subsequent to the filing of

F. M. Cocke's notice of cancellation on

March 5, 1969, the same date as on the

Horne letter, was or is material to any

failure on the part of the Buyers to com-

ply, in view of the well settled rule

that there is no doctrine or substantial

compliance of escrow agreements, that

compliance must be full and to the letter,

or else it constitutes merely noncom-

pliance, and that the ability to perform

is immaterial. 28 Am Jur 2d 3l, Escrow,

Section 21; 30A CJS 999, Escrows, Section

10.

c. As a matter of fact and law

affecting the claimed delay, whether the

escrow was cancelled under instruction

paragraphs 16-23, at the end of the 13-

day period following F. M. Cocke's filing

of his notice of intention to cancel, by

non-compliance by Buyers as set forth

above under "4a".

Baa ee Pe

TG ate RE ASS: li a AA Sa eal th tS a ste ne

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288

d. As a matter of fact and law

affecting the claim of delay wholly by

F. M. Cocke, whether F. M. Cocke's pro-

posed Agreement on Distribution of Funds,

Mortgages, Releases and Commissions, which

he executed and delivered into escrow in

January, 1969, as proposed joint instruc-

tions by F. M. Cocke and Joan H. Cocke as

to the disposition of the trust land pro-

ceeds, was in accordance with the trustee

Bank's instructions to the escrow agent,

and in accordance with the letter of in-

structions of October 10, 1968 to the

trustee Bank signed by F. M. Cocke and

Joan H. Cocke, and in accordance with

their subsequent agreement that Parcel 1

would be valued at $500 per acre above

the average price to be received but that

the broker's commission on same would be

computed at the average price.

e. As a matter of fact and law

affecting the claim of delay wholly by

F. M. Cocke, whether F. M. Cocke's pro-

posed Agreement on Distribution of Funds,

Mortgages, Releases and Commissions was

repudiated by Joan H. Cocke by her letter

of instructions to the escrow agent dated

February 26, 1969, was repudiated by

Buyers by their making out in favor of

Joan H. Cocke the check, note and mort-

gage purportedly representing the balance

due on the trust half-interest in Parcel

1, and was repudiated by the escrow

agent until February 27, 1970 by the

escrow officer's letter of March 10,

1969 approving such payment to Joan H.

Cocke, and is still repudiated by the

escrow agent by the approval in such

letter of the recording of the deeds and

mortgages BEFORE the payment of the two

$32,000 payments, which mortgages ref-

lected the balance due AFTER such payment.

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f. As a matter of fact and law

affecting Buyers' claim of delay in their

proposed development, wholly caused by

F. M. Cocke, whether under the consolidated

contract the two $32,000 payments were the

Only payments entitling Buyers to releases,

and whether the Hornes' letter of instruc-

tions to the escrow agent specified that

such payment and therefore the releases,

and Buyers' development, must await the

delivery into escrow by Sellers of war-

ranty deeds to Parcels 1A and 2A, to

which Sellers have never had title, and

must await the recording of the deeds and

mortgages at a time when such mortgages

totalled $64,000 less than the balance

due.

Respectfully submitted this

17th day of January, 1972.

JOHNSON SHELLEY ROBERTS & RIGGS

By /s/ L. Alton Riggs, Jr.

L. Alton Riggs, Jr.

Attorneys for Defendant

F. M. Cocke

48 North Macdonald Street

Mesa, Arizona 85201

290

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an Arizona corporation;

M. SETH HORNE and MAURINE E. HORNE, his

wife; vs. FRANCIS M. COCKE, a divorced

man; and JOAN H. COCKE, a divorced woman

C-222472

BUYERS' AMENDMENT TO COMPLAINT FOR SPECIFIC

PERFORMANCE OF REAL ESTATE CONTRACT AND

DAMAGES

Filed: January 27, 1972

For Amendment to the Complaint filed

herein, Plaintiffs allege:

Count II

I

Plaintiffs incorporate herein by

reference, the same as if herein set forth

in full, the allegations contained in

Paragraphs I through VII of the Complaint

filed in this cause, and as if such alle-

gations had been re-allegeiand averred

here in full.

Il

At the time said real estate contract

and escrow instructions were entered into,

defendants were informed by plaintiffs

that they were acquiring said property

for the purposes of development and that

plaintiffs intended to construct, and

still intend to construct, approximately

1,250 apartment units on such property,

a shopping center on approximately 10

acres of said property and develop the

291

balance for industrial purposes.

e+ ae

In anticipation of the conveyance of

said property by defendants, plaintiffs

incurred expenses for plans and designs

incident to the proposed development of

the subject property, which plans and de-

Signs, due to the delay caused by defen-

ants' failure to convey the subject prop-

erty to plaintiffs, are no longer usable

in connection with the development of the

property, all to the damage of plaintiffs.

The exact amount of such damages is

as yet undetermined, but proof thereof

will be offered at the trial of this

cause.

IV

Since the aforesaid contract and es-

crow instructions were entered into by

plaintiffs and defendants, costs of con-

struction have increased and continue to

increase, and plaintiffs' development costs

of the subject property will increase,

which increase is caused by defendants'

failure to convey the subject property to

plaintiffs, all to the damage of plain-

tiffs. The exact amount of such in-

creased costs, which increased costs are

continuing, is as yet undetermined and

unknown to plaintiffs, but proof thereof

will be offered at the trial of this cause.

V

Since the aforesaid contract and

escrow instructions were entered into by

Plaintiffs and the Defendants, costs of

construction and mortgage money has

292

increased over the rate that was avail-

able to plaintiffs at the time the afore-

said contract and escrow instructions

were entered into, the additional cost of

such financing being caused by defendants'

failure to convey the subject property to

plaintiffs, all to the damage of plain-

tiffs. The exact amount of such increased

costs, which are continuing, is as yet

undetermined and unknown to plaintiffs,

but proof thereof will be offered at the

trial of this cause.

VI

The defendants' failure to convey the

subject property has delayed its develop-

ment by plaintiffs, and as a consequence

thereof, plaintiffs have incurred loss of

rents and profits which would have been

Serived TiGN Back property from the tine

of its development to the present. Since

entering into the aforesaid contract,

other property surrounding the subject

property has been developed in the same

manner as contemplated by plaintiffs and,

therefore, the future rents and profits

which can be realized by plaintiffs have

been reduced by defendants' failure to

convey the subject property to plaintiffs.

The exact amount of the loss of past rents

and profits, as well as those expected in

the future, which are continuing, is as

yet unknown to plaintiffs but proof there-

of will be offered at the trial of this

cause.

Vil

Plaintiffs paid the amounts alleged

in the original Complaint filed herein and

incurred and paid the additional costs as

alleged in this Count II, by reason of

293

the entering into the aforesaid contract

and escrow instructions, and the defen-

dants' promise that title to the subject

property would be conveyed to them. Due

to the failure of defendants to convey

title to plaintiffs in accordance with

the aforesaid contract and escrow in-

structions plaintiffs have lost the use

of their money so incurred and paid, and

are entitled to interest thereon. The

exact amount of such damages is as yet

unknown to plaintiffs, and such damages

are continuing, but proof thereof will be

offered at the trial of this cause.

VIII

Plaintiffs have employed attorneys

to institute this cause of action and

that cause of action as alleged in the

original Complaint filed herein. The

necessity Of such action on the part of

the plaintiffs was occasioned by the

defendants' failure to convey the subject

real estate in accordance with the terms

of the aforesaid contract and escrow in-

structions. The exact amount of such

damages is unknown to plaintiffs as yet,

and such costs are continuing, but proof

thereof shall be offered at the trial of

this cause.

IX

In the alternative, defendants have

retained possession of the subject property

by reason of their failure to comply with

the terms of the aforesaid contract. Such

action on the part of defendants was wrong-

ful and to the loss and damage of the

plaintiffs to the extent of the uses,

profits and fair rental value derived from

the subject property. The exact amount

294

of such loss and damage is unknown to the

plaintiffs as of this time, and is con-

tinuing, but proof thereof shall be made

at the trial of this cause.

WHEREFORE, plaintiffs demand, in

addition to the demand for judgment set

forth in the original complaint, which is

hereby incorporated herein by reference,

judgment against the defendants for

damages to the plaintiffs as follows:

1. Damages for expenses incurred by

plaintiffs for plans and designs for the

development of the subject property in the

amount to be determined from the evidence

at the trial of this cause;

2. Damages for the increase in con-

struction costs for the development of

the subject property in an amount to be

determined from the evidence at the trial

of this cause;

3. Damages for the increased costs

of interim construction and mortgage

money in connection with the development

of the subject property in an amount to

be determined from the evidence at the

trial of this cause;

4. Damages for the loss of past and

future rents and profits to plaintiffs by

reason of defendants' delay in conveying

the subject property in an amount to be

determined from the evidence at the trial

of this cause;

5. Damages for loss of the use of

monies invested in the subject property in

an amount to be determined from the evi-

dence at the trial of this cause;

295

6. Damages for expenses incurred by

plaintiffs in enforcing the terms of the

aforesaid contract and escrow instructions

in an amount to be determined from the

evidence at the trial of this cause;

7. %In the alternative, damages for

the uses, profits and fair rental value of

the subject property in an amount to be

determined from the evidence at the trial

of this cause;

8. For the costs of this action and

such other and further relief as to the

Court seems just and proper in the premis-

es.

Dated at Phoenix, Arizona, this 27th

day of January, 1972.

RANDOLPH, KELLY & CORBIN

By /s/ Hubert E. Kelly

Hubert E. Kelly

2300 lst Federal Savings Bldg.

3003 N. Central Avenue

Phoenix, Arizona 85012

Attorneys for Plaintiffs

serait.

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an Arizona corporation;

M. SETH HORNE and MAURINE D. HORNE, his

wife; vs. FRANCIS M. COCKE, a divorced

man; and JOAN H. COCKE, a divorced woman

C-222472

F. M. COCKE'S MOTION TO STRIKE BUYERS'

AMENDMENT TO COMPLAINT; MOTION TO DISMISS

BUYERS' ORIGINAL COMPLAINT AND ALL AMEND-

MENTS; AND MOTION FOR JUDGMENT ON THE

PLEADINGS

Filed: February 7, 1972

Defendant F. M. Cocke moves the

Court to strike plaintiff Buyers’ Amend-

ment to Complaint, filed January 27, 1972,

to dismiss Buyers' original complaint

filed in April, 1969, and all amendments

filed thereafter, and for judgment on the

pleadings on his counterclaim against

Buyers, upon the following grounds.

MOTION TO STRIKE AMENDMENT

OF JANUARY 27, 1972

Plaintiff Buyers’ proposed Amend-

ment filed January 27, 1972, does not

conform to the Court's leave to amend

granted by the Minute Orders of September

15 and 23, 1971. The minute orders denied

leave to amend as to damages as far as

Joan H. Cocke is concerned. Buyers’ pro-

posed Amendment demands judgment as

follows:

"WHEREFORE, plaintiffs demand, in

addition to the demand for judgment set

forth in the original complaint, which

297

is hereby incorporated herein by reference,

judgment against the defendants for damages

to the plaintiffs as follows:. ..

On the face of the record it is mani-

fest that Buyers' Amendment should be

stricken, unless the Minute Orders of

September 15 and 23, 1971 are amended.

This defendant is entitled before the trial

on damages to a ruling on whether or not

he is to be the sole party with obli-

gations under the consolidated real es-

tate and escrow agreement at such trial,

in the event it be held as now scheduled.

MOTION TO DISMISS

Clearly, this Court was and is without

jurisdiction over the subject matter of

Buyers' complaint, in its original form

and as sought to be amended, since no

court has the power to grant the relief

demanded by Buyers. Buyers demand

specific performance of the consolidated

real estate agreement and escrow agree-

ment with Transamerica without joining

Transamerica. 16 ARS, Rules of Civil

Procedure 12(b)1l, 6 and 7, as amended and

12(i) 2 and 3, as amended.

I.

JURISDICTION OF THE COURT

A preliminary question is one of

jurisdiction.

State of Minnesota v. Hitchcock, 185

U.S. 373, 46 L.ed 954, 22 S. Ct. 650,

states the rule that:

A preliminary question is one of

jurisdiction. It is true counsel

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for defendants did not raise the

question, and evidently both

parties desire that the court

should ignore it and dispose

of the case on the merits. But

the silence of counsel does not

waive the question, nor would

the express consent of the

parties give to this court a

jurisdiction which was not

warranted by the Constitution

and laws. It is the duty of every

court of its own motion to inquire

into the matter, irrespective of the

wishes of the parties, and be care-

ful that it exercises no powers save

those conferred by law.

By jurisdiction over the subject

matter is meant the nature of the cause

of action and of the relief sought; and

this is conferred by the sovereign

authority which organizes the court, and

is to be sought for in the general nature

of its powers, or in authority specially

conferred. Cooper v. Reynolds, 10 Wall

(U.S.) 308, 316; 19 L.ed 931.

The following cases are material

here as showing fundamental doctrines as

enunciated by the Arizona Supreme Court.

State trial court judges have for many

years been charged with knowledge of

these fundamentals.

No court may acquire complete >

jurisdiction to hear and determine

any cause until it has obtained

through due process, prescribed by

law, jurisdiction over both sub-

ject matter and the parties, and

the power to render the particular

judgment that was rendered.

299

Schuster v. Schuster (1953) 75 Ariz.

20, 251 P.2d 631; Van Ness v. Superior

Court of State in and for Maricopa

County (1950) 69 Ariz. 362, 213 P.2a

899; Wall v. Superior Court of

Yavapai County (1939) 53 Ariz. 344,

89 P.2d 624.

The first duty of any court is to

determine whether it has jurisdiction

in the premises, and in so deter-

mining it is acting judiciously.

State v. Phelps (1948) 67 Ariz. 215,

193 P.2d 921.

Jurisdiction of the subject matter

cannot be waived, as by all par-

ties' acquiescence in the proceed-

ings had, and the question of the

court's jurisdiction over the sub-

ject matter may be raised at any time,

as On appeal for the first time.

In re Baxter's Estate (1921) 22

Ariz. 91, 194 P. 333.

A judgment is void on its face and

is subject to collateral attack

unless court has jurisdiction of

the subject matter, of the persons

involved in the litigation, and

to render the particular jud nt

given. Hallford v. Yndustriet

Commission (1945) 63 Ariz. 40,

159 P.2d 305; Latham v. McC lenny

(1930) 36 Ariz. 337, 285 P. 684.

(emphasis added)

al 4 SS ee eee en i Ren Etta OS

Buyers' Complaint incorporated as an

exhibit a copy of the consolidated real

estate and escrow agreement of October 9,

1968 with Transamerica. A copy is

attached hereto. The face of the complaint,

therefore, made it clear to all who read

bork Kat

(S88 Cea rtd cade BRL con ele a Died 2. ei:

;

300

it that the proposed sale and purchase

was to be consummated, or was to fail, in

accordance with the applicable provisions

of the escrow agreement. Further, an ex-

amination of the fine print paragraphs

16-25 (enlarged) will reveal that the

powers granted to the escrow agent, and

the duties imposed upon it, by Buyer and

Seller, actually made Transamerica the

dominant party to the consolidated contract

in the determination thereunder of whether

Such consummation or such failure was to

be the final result. Paragraphs 16-23

of the fine print escrow instructions, in

the event of noncompliance with the escrow

instructions 5 either Seller or Buyer

during the specified 13-day cancellation

period, command cancellation of the escrow

instructions and other contracts, and

their retention, and authorize Trans-

america to return documents such as deeds.

Paragraph 24 commands Transamerica to

return or retain the documents in the

event of Transamerica's own inability or

unwillingness to comply with the escrow

instructions, or its own unwillingness to

issue its title policy.

It is elemental that a party to a

contract cannot come into court, as did

Buyers, seeking the enforcement of Only

its claimed rights under selected pro-

visions of the contract, without regard

to its obligations, and the rights and

Obligations of the other parties, under

the other provisions also incorporated

into its pleading, since such relief is

beyond the power or jurisdiction of the

court to grant. Clearly, neither Buyers

nor the court had any more power to de-

lete the cancellation provisions from

the escrow instructions portion of the

consolidated contract than to add Parcels

Pa IL ABB asatl aiden 6. ihe

301

1A and 2A to the real estate portion.

Likewise, neither had any more power to

reduce the price per acre in the real es-

tate portion, so that F. M. Cocke's deeds

to Parcel 2 and his half-interest in

Parcel 1 could be properly recorded sub-

ject to mortgages to be Simultaneously re-

corded for $52,000 less than the amount

due, than to rewrite the trustee Bank's

escrow instructions to specify control of

the trust land proceeds by Joan H. Cocke

instead of Joan H. Cocke and F. M. Cocke

jointly.

As pointed out in a unanimous de-

cision by the Supreme Court, Sitting en

banc, in Goodman v. Newzona Investment

Co. (1967) 101 Ariz. 470, 421 P.2da 318:

It is not within the province or

power of the court to alter, revise,

modify, extend, rewrite or remake

an agreement. Its duty is confined

to the construction or inter-

pretation of the one which the

parties have made for themselves.

Graham County Electric Coop., Inc.

v. Town of Safford, 95 Ariz. 174,

383 P.2d 162 Where the intent of

the parties is expressed in clear

and unambiguous language, there is

no need or room for construction or

interpretation and a court may not

resort thereto. Neale v. Hinch-

cliffe, 21 Ariz. 452, 189 P. 1116.

And quoting McCall v. Carlson, 63 Nev.

390, 172 P.2d 171, 187-188:

Our equitable powers do not extend

so far as to permit us to disregard

fundamental principles of the law

of contracts, or arbitrarily to

force upon parties contractural

302

obligations, terms or conditions,

which they have not voluntarily

assumed. In this regard, equity res-

pects and upholds the fundamental

right of the individual to complete

freedom to contract or decline to

: do so, as he conceives to be for

his best interest, so long as his

contract is not illegal or against

public policy. In this respect, and

many Others, equity follows the law.

7 mn dears a

Sen

And citing Man. Finance Co. v. McKey, 294

U.S. 442, 55 S. Ct. 444, 79 L.ed 982; Cox

Vv. Freeman, 204 Okl. 138, 227 P.2a 670,

28 ALR 2d 1230:

It is the rule in equity that a valid

contract must be given full force

and effect even though the contract

is unwise or improvident or its

enforcement is harsh.

oat Pe bh ahh EE has En elle Niehof 4 SAWP, GM iad hits

Manifestly, the Goodman v. Newzona

decision is in complete accord with the

prohibition against impairment of contract

obligations by state courts contained in

Article 1, Section 10, of the United States

Constitution and in the due process and

equal protection clause of the Fourteenth

Amendment.

In 21 CJS, Courts, Section 120, cus

relies on McKnett v. St. Louis and San

Francisco Railway Co., 292 U.S. 230, 54

S. Ct. 690, 78 L.ed 1227, reversing 149

So. 822, 227 Ala. 349, for this well

settled doctrine:

The power of a State to determine

the limits of jurisdiction of its

courts an e character of the

controversies which sha e heard

is, Of Course, subject to the

5

«

3

2

“

2

a

303

restrictions imposed by the Federal

Constitution. (emphasis added)

The Alabama Supreme Court had held

that:

The question whether the (Alabama)

circuit court had jurisdiction is to

be determine by the Constitution and

laws of this state creating the courts

and defining and limiting their juris-

diction. There is no restriction of

the Federal Constitution upon the

power of a state to Tetermine the

limits of the jurisdiction of its

courts, except that the state must

Give to the citizen of other states

the same rights that it accords to

its own citizens. (emphasis added)

In Evans v. Hallas (1946) 64 Ariz. 142,

167 P.2d 94, the Arizona Court pointed out

that neither the legislative, the executive,

nor the judicial departments have the power

to deprive a person of a right granted by

the Arizona Constitution. Since that con-

stitution adopts the Federal Constitution

as the supreme law of the land, it is of

course clear that a state court is com-

pletely without the power, or jurisdiction,

to deprive a person of the rights or immun-

ities granted by the Federal Constitution.

One of these is the right to enforce con-

tract obligations, without impairment by

the judicial department.

16 Am Jur 2d 643, Constitutional Law,

quotes Scott v. McNeal, 154 U.S. 34, 38

L.ed 896, 14 S.ct. 1108:

The prohibitions of the Fourteenth

Amendment, against depriving any per-

son of life, liberty or property with-

304

Out due process of law or denying the

equal protection of the laws, extend

to all acts of the state, whether

through its legislative, its executive,

or its judicial authorities.

In Section 491, Am Jur 2d points out

that the inhibitions of the Fourteenth

Amendment include all the departments of

state government, including not only the

political, but also the judicial, and

quotes Shelley v. Kraemer, 334 U.S. l, 92

L.ed 1161, 68 S. Ct. 836, 3 ALR 2d 441:

The action of state courts and of jud-

icial officers in their official cap-

acities, even though taken for the en-

forcement of private agreements, is

state action within the meaning of the

equal protection clause.

(emphasis added)

An obligation owing under a contract

is property, and equal protection of the

laws obviously protects against judicial

enforcement of contract obligations against

less than all parties mutually bound.

Speaking of the due process clause of

the Fourteenth Amendment, Am Jur 2d states

in Section 554:

The object of the constitutional

guaranty of due process of law is to

preserve personal and property rights

against the arbitrary action of public

officials. The guaranty is violated

whenever any person, by virtue of

public position under the federal or

state government, deprives another of

any right protected by that amendment.

305

As stated by 21 CJS, Courts, the author-

ity to hear the case at all is what makes up

jurisdiction (Section 26), and the subject

matter of a suit means the nature of the

cause of action, and the relief sought

(Section 35b).

It is pointed out in 49 CJS, Judgments,

Section 19a, 19c, and 19d, that a court can-

not render a valid judgment unless it has

jurisdiction over the subject matter of the

litigation or the cause of action, and jur-

isdiction to, render judgment for the par-

ticular remedy or Ets sought, citing:

Varnes v. White, 40 Ariz. 427, 12 P.2d

870; Wall v. Superior Court of Yavapai

County, 53 Ariz. 344, 89 P.2d 624; Hill v.

Favour, 52 Ariz. 561, 84 P.2d 575; Arizona

Land & Stock Co. v. Markus, 37 Ariz. 530,

296 P. 251; Western Land & Cattle Co. v.

National Bank of Arizona at Phoenix, 29

Ariz. 51, 239 P. 299.

It is crystal clear from the face of

Buyers’ complaint and the face of the con-

solidated real estate and escrow agreement

sought to be enforced, and incorporated

into the complaint as an exhibit, that

Buyers' cause of action was a claimed right

to relief by performance of less than all

the mutually binding provisions by less

than all the parties mutually bound, and

therefore crystal clear that the cause of

action was a claimed right to relief by im-

pairment of contract obligations and by

denial of due process and equal protection

of the laws.

It must be concluded, therefore, that

the trial court had and has no jurisdiction

over the subject matter of Buyers' complaint

and no authority to proceed on the complaint

at all, except to dismiss it.

* 7 +

306

The following three cases may help to

clear up some of the apparent confusion in

connection with the term "indispensable

party."

In Connally v. Great Basin Insurance

Co. (1967) 6 Ariz. App. 280, 431 P.2d 921,

the. court said:

Traditionally, parties have been divided

into categories of "proper," "necessary,"

and "indispensable." See Oglesby v.

Chandler, 37 Ariz. 1, 288 P. 1034 (1930)

and Clarke, Code Pleading (2d ed. 1947),

pp. 358-362, 365-367, 380-386. It app-

ears to be the law of this jurisdiction

that the failure to join an "“indispens-

able" party is a jurisdictional defect

and deprives the court of the power to

adjudicate as between the parties al-

ready joined. Siler v. Superior Court,

83 Ariz. 49, 316 P.2d 296 (1957); and

see Gorsuch v. Fireman's Fund Insurance

Co., 360 F.2d 23 (9th Cir. 1966).

In Gorsuch, the 9th Circuit Court of

Appeals said:

We recently had occasion to deal with

the problem of indispensable parties

in Lewis v. Lewis, 9 Cir., 358 F2d 495,

decided on March 14, 1966. We there

noted and applied the governing princi-

ples as stated in State of Washington

v. United States, 9 Cir., 87 F.2d 421,

427-428. Applying the same principles

here we hold that Doig is an indispens-

able party to the determination of the

rights and obligations involved in the

Suit now before us. (emphasis added)

and in State of Washington v. United States

(1936), the 9th Circuit said:

307

In cases where there is error in non-

joinder of parties, either necessary

or indispensable, the courts have fallen

into common error by designating the

error as "jurisdictional." The defect

is not, properly speaking, a jurisdict-

ional one as shown by the following

quotation from Shields v. Barrow, supra.,

17 How. 130, 141, 15 L.ed 158: "As is

observed by this court, in Mallow v.

Hinde, 12 Wheat. (193) 198 (6 L.ed 599),

when speaking of a case where an indis-

pensable party was not before the court,

‘we do not put this case upon the ground

of jurisdiction, but upon a much broader

ground, waiGh Bust eqs ly apply to all

courts OF eqs whatever may be their

oJ

structure as urisdiction; we put it

on the ground that no court can eat

cate directly mn a person's right,

without the par being either actually

or constructively before the court.’

See, also, Barney V. Baltimore, supra.,

6 Wall. 280, 285, 18 L.ed 825; State

of California v. Southern Pac. Co.,

Supra., 157 U.S. 229, 250, 15 S. Ct.

591, 39 L.ed 683; Minnesota v. Northern

Securities Co., supra., 184 U.S. 199,

236, 22 S. Ct. 308, 46 L.ed 499; Bogart

v. Southern Pac. Co., supra., 228 U.S.

137, 146, 33 S. Ct. 497, 57 L.ed 768.

It is abundantly clear that whether

one of the parties to a valid contract be

called "necessary" or "indispensable," no

court can enforce either his rights against

the other parties or his obligations owed

to them, unless he is joined in the action.

Since no court can rewrite the contract

so as to delete any of its provisions, but

must enforce the entire ccntract, in the

absence of any party mutually bound, in

favor of whom or against whom any mutual

308

right or obligation must be enforced, the

court cannot proceed at all.

Obviously, parties subject to joinder

over whom the court has no jurisdiction

merely because not named, and whose absence

leaves the court without power to grant the

relief sought, and so without jurisdiction

over the subject matter, qualify as parties

indispensable under Rule 19.

II

EFFECTS OF LACK OF JURISDICTION

OVER SUBJECT MATTER

It is pointed out in 21 CJS, Courts,

Sections 113-119, and cases cited, that

the judge of a court is bound to make a

preliminary examination of the court's

jurisdiction over the subject matter,

particularly where such lack of jurisdic-

tion appears on the face of the complaint,

as here; that where the court is without

jurisdiction the acts of the court or the

judge are a mere nullity and void, not

voidable, and the court is without power

to allow an amendment which would confer

jurisdiction.

Since the court itself is without power

to act without jurisdiction over the sub-

ject matter, it is clear that any such act

is the act of the judge, not the court.

This is borne out in 46 Am Jur 2d, Judges,

Sections 75-81, and cited cases, which

state the rule that where there is no

jurisdiction over the subject SPO the

exercise of any authorit B the

a usurpation, and the judge, not = ee

is li e.

This rule, that it is only the judge

308a

and not the court that has proceeded with-

out court jurisdiction over the subject

matter, is the basis for the further rule

(21 CJS, Courts, Sections 108-112) that a

lack of such jurisdiction is not waived by

answer, general demurrer, failing to demur,

failing to object to, or otherwise raise

the question of jurisdiction, going to

trial on the merits, moving for a new trial,

appealing, or partially complying with the

judgment. Moreover, jurisdiction over the

subject matter cannot be based on estoppel

or waiver, and lack of it may be objected

to in any manner and at any stage of the

proceedings, even on appeal.

In Old Wayne Mutual Life Assn. v. Mc-

Donough, 204 U.S. 8, 51 L.ed 345, 27 S. Ct.

236, the court pointed out, quoting Scott -

v. McNeal, 154 U.S. 34, 46; 38 L.ed 896,

901; 14 S. Ct. 1108, that:

No judgment of a court is due process

of law, if rendered without juris-

diction in the court, or without notice

to the party.

and went on to say:

No state can, by any tribunal or rep-

resentative, render nugatory a provi-

sion of the supreme law.

Such is the settled doctrine of this

court. In the leading case of Thomp-

son v. Whitman, 18 Wall. 457, 468,

21 L.ed 897, 901, the whole question

was fully examined in the light of the

authorities. Mr. Justice Bradley,

speaking for the court and delivering

its unanimous judgment, stated the con-

clusion to be clear that the jurisdic-

tion of a court rendering judgment in

309

one state may be questioned in a coll-

ateral proceeding in another state,

notwithstanding the averments in the

record of the judgment itself. The

court, among other things, said that

if it be once conceded that "the val-

idity of a judgment may be attacked

collaterally by evidence showing that

the court had no jurisdiction, it is

not perceived how any allegation

contained in the record itself, however

strongly made, can affect the right

so to question it. The ve object

of the evidence is to tavatidete the

paper aS a record. If that can be

successfully done no statements con-

tained therein have any force. If

any such statements could be used to

prevent inguiry, a slight form of words

might always be adopted so as effect-

ually to nullify the right of such in-

quiry. Recitals of this kind must be

regarded like asseverations of good

faith in a deed, which avail nothing

if the instrument is shown to be fraud-

ulent." This decision was in harmony

with previous decisions. Chief Justice

Marshall had long before observed in

Rose v. Himely, 4 Cranch, 241, 269,

2 L.ed 608, 617, that, upon principle,

the operation of every judgment must

depend on the power ot the court to

render that 72 ament. In Williamson

v. Berry, OW. , 540, 12 L.ed

1170, 1189, it was said to be well

settled that the jurisdiction of any

court exercising authority over a sub-

ject “may be inguired into in every

cther court when the roceedings in

the former are relied upon and brought

before the latter by a party claimin

the benefit of such proceedings,” an

that the rule prevails whether "decree

310

or judgment has been given in a court

of admiralty, chancery, ecclesiatical

court, Or court of common law, or

whether the point ruled has arisen

under the laws of nations, the prac-

tice in chancery, or the municiple

laws of states." (emphasis added)

Objections to the jurisdiction of the

court below, when they go to the subject

matter of the controversy and not to the

form merely of its presentation or to the

character of the relief prayed, may be

taken at any time. They are not waived

because they were not made in the lower

court. Mississippi & Rum River Boom Co.

v. Patterson, 98 U.S. 403, 25 L.ed 206.

In Earle v. McVeigh, 91 U.S. 503, 23

L.ed 398, the court said:

Want of jurisdiction is a matter that

may always be set up against a judg-

ment when sought to be enforced, or

where any benefit is claimed under

the judgment, since want of jurisdic-

tion makes the judgment utterly void

and unavailable for any purpose.

In Clark v. Arizona Mut. Savings &

Loan Assn. (D.C. 1914) 217 F. 640, affirmed

220 F. 1, 135 C.C.A. 577, certiorari denied

35 S. Ct. 791, 238 U.S. 628, 59 L.ed 1496,

the court said:

Although a court has jurisdiction of

the subject matter and of the parties,

its power to render a valid judgment

is limited by the nature of the suit

and the issues made by the pleadings,

and if it transcends such mits its

judgment is void. (emphasis added)

311

In Parker v. Uchida (1912) 14 Ariz. 57,

125 P. 715, the court said:

AS a general rule defects in the court's

jurisdiction over the subject matter of

an action cannot be cured.

In Morris v. Gilmer, 129 U.S. 315, 32

L.ed 690, 9 S. Ct. 289, the court pointed

out:

But if the record discloses a contro-

versy of which the court cannot prop-

erly take cognizance, its duty is to

proceed no further and to dismiss the

Suit; and its failure or refusal to do

what, under the law applicable to the

facts proved, it ought to do, is an

error which this court, upon its own

motion, will correct, when the case

is brought here for review. The rule

is inflexible and without exception,

as was said, upon full consideration,

in Mansfield, C. & L. M. R. Co. v.

Swan, 111 U.S. 379, 382 (28:462, 463)

"which requires this court, of its own

motion, to deny its own jurisdiction,

and, in the exercise of its appellate

power, that of all other Courts of the

United States, in all cases where such

jurisdiction does not affirmatively

appear in the record on which, in the

exercise of that power, it is called

to act. On every writ of error or

appeal, the first and fundamental quest-

ion is that of jurisdiction, first, of

this court, and then of the court from

which the record comes. This question

the court is bound to ask and answer

for himself, even when not otherwise

Suggested, and without respect to the

relations of the parties to it."

In Ronan v. First National Bank of

Arizona (1962) 90 Ariz. 341, 367 P.2da 950,

the court, sitting en banc, unanimously

concurred in an opinion written by Justice

Lockwood holding that the judgment of the

trial court was void ab initio in the ab-

sence without notice of one of the bene-

ficiaries of a trust contract. The case

concerned four minor children who, the

court held, were not properly brought be-

fore the court. The court said, quoting

Sleeper v. Killion, 166 Iowa 205, 214, 147

N.W. 314, 317 (1914), a case in which the

Parents were served on behalf of the minors

in accordance with the Statute but the

minors were named only in the petition:

All these cases. .. (holding such

Service void) are predicated on the

thought that no one can be deprived

Of life, liberty, or property with-

Out due process of law; that notice

is essential to due process of law;

that in the citat.on, summons, or

process of any kind requiring a

person to appear in a court of record,

to answer to a charge made against

him, he must have notice of the pro-

ceedings.

and the Arizona Court said:

The minors are contingent beneficiar-

ies under the trust, and the instru-

ment provides that they are to receive

the corpus upon the trust's termina-

tion. They are indispensable parties

in any determination of the disposi-

tion of the trust funds, which would

inevitably affect their rights there-

under. Thus a decision in accordance

with C. B.'s wishes of necessity dim-

313

inishes the corpus in which the minors

have an interest, and no jud t can

be rendered. . .without injuriously

affecting the rights of others not

brought into action. Therefore the

minors were indispensable parties to

the suit.

For the foregoing reasons we hold the

judgment below was void ab initio, and

is therefore set aside. (emphasis added)

The Arizona Court's decision is in com-

plete accord with the federal cases cited

and quoted above, particularly with Shields

v. Barrow, 17 How. 130, 141, 15 L.ed 158,

quoted by the 9th Circuit in State of Wash-

ington v. United States (page 9 above).

In Pacific National Insurance Co. v.

Transport Insurance Co. (8th Cir., 1965),

341 F. 2d 514, states the rule as follows:

The threshold question is whether

jurisdiction exists. Appellant stren-

uously asserts that there was no juris-

diction in the district court, and that

we must therefore vacate the

and remand with directions to dismiss.

Jurisdiction was not challenged in the

district court, in fact all parties

proceeded as though the court had power

to act. However, as suggested by app-

ellant, jurisdiction may not be con-

ferred by consent and lack of juris-

diction of the subject matter cannot

be waived by the parties or ignored

by the court; if jurisdiction is lack-

ing the trial court should on its own

motion decline to proceed and if the

case is tried where jurisdiction is

lacking, the jurisdiction of the app-

ellate court on review is limited to

314

correcting the error of the trial court

in entertaining the action. These prin-

ciples are fundamental and were recog-

nized and applied by us in the récent

case of Rock Island Millwork Co., v.

Hedges~-Gough Lumber Co., 337 F.2d 24,

26-27 (8 Cir. 1964).

Rule of Civil Procedure 12 (i), 16 ARS,

page 41 of the 1971-72 Pocket Part, includes,

in accordance with the above cases:

(3) Whenever it appears by suggestion

of the parties or otherwise ther the

S jurisdiction o

court la the subject

matter, the court shall dismiss the

action. (emphasis added)

III

JURSIDICTION OVER CONTRACTUAL RIGHTS

AND OBLIGATIONS

The early case of Mallow v. Hinde, 12

Wheat (193) 198, 6 L.ed 599, cited and

quoted in Shields v. Barrow by the 9th Cir-

cuit, in State of Washington v. United

States (page 9 above), goes in simple lang-

a uage to the very root of the issue in the

present case, which is the power of the

trial court to adjudicate the rights and

obligations of all the parties mutually

bound by amultiparty contract without all

of them before the court. In that case,

as here, executory agreements were before

the court, but without all the parties

thereto whose right would have to be deter-

mined. The court said:

This is an appeal from the decree of

the Circuit Court for the district of

Ohio, dismissing generally, with costs,

315

the bill of the appellants, who were

plaintiffs in that court. ’

The suit was a contest for land in the

district set apart on the northwest

Side of the Ohio, for the satisfaction

of the bounty lands due to the officers

and soldiers of the Virginia line, or

continental establishment, in the rev-

Oluntionary war.

Ne*ther Taylor, the trustee, nor the

céstuis que trust, with whom the com-

plainants allege Langham contracted

for the land, are made defendants, they

being out of the limits of the juris-

diction of the court.

For the a llees it is insisted, that

the proper parties are not before the

court, SO as to enable the court to

decree upon the merits of the conflict-

ing Claims. And we are all of that

Opinion. . . .They claim that survey,

not by any assignment, or other instru-

ment, investing them with a legal right

to it, but by executory agreements,

the validity and obligation of which

€ parties to em have a right to

contest.

We cannot try their validity, and de-

cide upon their efficacy, by affirm-

ing they confer upon the appellants

an equitable right, without manifest

prejudice to the rights of those not

before the court. The complainants

can derive no claim in equity to the

Survey, under, or through Langham's

executory contracts with the Beards,

unless these contracts be such as

Ought to be decreed against them

316

Specifically by a court of equity.

How can a court of equity decide

that these contracts ought to be

specifically Secret, Without hear-

ng the parties to them? Such a

proceeding would be contrary to all

the rules which govern courts of

equity, and against the principles

of natural justice.

In this case, the complainants have

no rights separable from, and inde-

pendent of, the rights of persons

not made parties. The rights of

those not before the court lie at

the very foundation of the claim of

right by the plaintiffs, and a final

decision cannot be made between the

parties litigant without directly

affecting and prejudicing the rights

of others not made parties.

We do not put this case upon the

ground of jurisdiction, but upon a

much broader ground, which must

equally apply to all courts of equity,

whatever may be their structure as to

jurisdiction. We put it on the ground

that no court can adjudicate direct

upon a person's right, without the

eing ei

art er actually or construc-

tively before the court. emphasis

added)

Mallow v. Hinde is startlingly close

to being on all fours with the present

case, except that in that case some of the

parties to the agreements were not made

parties to the suit because they were out

of the territorial limits of the jurisdic-

tion of the court. Here, all the parties

to the consolidated real estate and escrow

agreement were and are subject to joinder,

317

but some were simply not named.

Perhaps the best way to illustrate the

futility of attempting to make a final de-

termination of the rights and obligations

of all the parties to the executory agree-

ment in this present case, without joinder

of all such parties, is to point out the

predicament in which the various parties

to the agreement would be left by the pro-

posed piecemeal adjudication, in addition

to the abuse of process inherent therein.

It is not disputed that on March 5,

1969, immediately following the unsuccess-

ful attempt by Buyers and the escrow officer

to obtain F. M. Cocke's signature to the

Warranty deed which included Parcel 2A and

a half-interest in Parcel 1A, F. M. Cocke

filed a notice of intention to cancel upon

failure of Buyers to comply with the escrow

instructions within the 13-day period, as

provided by paragraphs 16-23 and 25 of the

fine print escrow instructions.

And it is not disputed that the Buyers'

letter, dated March 5, 1969, of instructions

to Transamerica as escrow agent, received

by it on March 7, 1969, directed it to:

ITEM I. Close the escrow with payment

of about $120,000 in trust land proceeds

to be made to life tenant Joan H. Cocke,

contrary to the trustee Bank's escrow in-

structions accompanying the delivery of its

deed into escrow in October, 1968.

ITEM 2. Close the escrow and record

the trustee Bank's warranty deed to Buyers,

Subject to a mortgage to be simultaneously

recorded for $32,000 less than the balance

due.

318

ITEM 3. Close the escrow and record

FP. M. Cocke's warranty deeds to Buyers,

subject to mortgages to be simultaneously

recorded for $52,000 less than the balance

due.

ITEM 4. Close the escrow and record

warranty deeds to Parcels 1A and 2A to

Buyers. These parcels are long narrow

strips of land which contain a large drain-

age canal, abutting the south boundary

lines of Parcels 1 and 2. Neither the

trustee Bank nor F. M. Cocke has ever ex-

ecuted any deeds to Parcels 1A or 2A,

either quit-claim or Warranty, since

neither had title. Such parcels were for

that reason specifically excluded from the

land agreed to be sold, and were not the

subject of any contract.

ITEM 5. Accomplish Items 1 through 4

before turning over to Sellers the two per-

sonal checks for $32,000 each, delivered

into escrow by means of Buyers' letter, as

the annual payment which entitled Buyers

to their first releases, which as provided

they had chosen to take in Parcel l.

In a second letter to the escrow agent

dated March 26, 1969, Buyers affirmed the

position taken by them in their letter of

instruction to the escrow agent dated March

5, 1969.

ITEM 1

The trustee Bank's instructions to the

escrow agent provided for joint control of

the principal proceeds of the proposed sale

by F. M. Cocke and Joan H. Cocke, in acc-

Ordance with the trust agreement. However,

Buyers made out their check, note and mort-

gage, purportedly representing the balance

319

due on the trust land, in favor of Joan

H. Cocke. This was approved by Transamerica

on March 10, 1969, but it reversed its pos-

ition on February 27, 1970, taking the pos-

ition it could not use the Bank's deed, be-

cause payment of the proceeds to Joan H.

Cocke violated the Bank's instructions.

Neither Transamerica, the trustee Bank,

nor any of the three trust remaindermen

were named in Buyers' Complaint, and the

trial judge's Minute Order of December 8,

1970 granted summary judgment in favor of

Buyers against only F. M. Cocke, not against

Joan H. Cocke. Further litigation will

therefore be necessary to determine whether

or not:

(1) a court can rewrite the trust

agreement or the trustee Bank's escrow

instructions, as held in Cocke v. Cocke

(September, 1970) 13 Ariz. App. 57, 474

P.2d 64;

(2) if not, whether or not Trans-

america can continue to refuse to deliver

the Bank's deed to Buyers, with title

policy;

(3) if not, since it is well settled

that if the deed is delivered in violation

of the Bank's escrow instructions it will

vest no title in grantee, and also well

settled that the remaindermen can follow

either the land or the proceeds to recover

their losses, and if they retake the land,

whether or not Transamerica can refuse to

refund to Buyers, under the title policy,

the $124,000 caused to be paid to Joan H.

Cocke;

(4) if not, whether or not Trans-

america can recover its loss of the $124,000

320

from any person connected with the case,

and

(5) if the answer to (2) is yes,

whether the three remaindermen can recover

from trustee Transamerica or the trustee

Bank or any Other person connected with

the case any trust principal funds paid

to Joan H. Cocke because of lack of in-

terest income on trust property proceeds,

with punitive damages, or any trust prin-

cipal funds taken by Joan H. Cocke by

garnishment under Cocke v. Cocke.

Clearly, Transamerica overlooked until

February 27, 1970, and Buyers and this Court

continue to disregard, the undisputed fact

that when Joan H. Cocke signed the consol-

idated agreement on October 9, 1968, she

agreed to sell only the interest she then

had in the trust land: the lifetime bene-

ficial interest entitling her to the income

from the trust half-interest in the part-

icular piece of land designated as Parcel l.

Under settled doctrines of trust law she

could have insisted on this particular

income if she had not agreed to the sale

by signing, at the same time as F. M. Cocke.

On October 9, 1968, the legal title to

the trust half-interest in Parcel 1 remain-

ed indisputably in the trustee Bank and the

equitable title in the three remaindermen

daughters. These facts were made known

to all parties to the escrow agreement be-

fore any papers were signed. It was the

trustee Bank, not Joan H. Cocke, which

executed the deed to the trust half-interest

in Parcel 1, on joint instructions from

F. M. Cocke and Joan H. Cocke, as required

by the trust agreement. It was the trustee

Bank, not Joan H. Cocke, which placed the

condition on the sale of the trust land,

accompanying the delivery of its deed into

321

escrow, that the proceeds were to be

jointly controlled by Joan K. Cocke and

F. M. Cocke, as was the land itself. And

it is the trustee Bank, not Joan H. Cocke,

whose presence would be necessary in any

determination that such condition as to

the proceeds is to be rewritten. The pre-

sence of all three of the remaindermen

daughters would also be necessary, if such

condition can be rewritten at all.

=

ITEM 2

The approval by Transamerica on March

10, 1969, of the proposed simultaneous re-

cording of the trustee Bank's deed and of

the mortgage for $32,000 less than the bal-

ance due, not yet retracted, and the app-

roval thereof by the trial judge, implicit

in his judgment in favor of Transamerica

On its counterclaim and in his minute or-

der in favor of Buyers on their complaint,

will require further litigation:

(1) to overturn the fundamental and

well settled doctrines of Higgins v.

Kittleson (1965) 1 Ariz. App. 244, 401

P.2d 412, and cases cited, with respect

to the rewriting of escrow instructions

by an escrow agent;

(2) to overturn the fundamental and

well settled doctrines of Goodman v. New-

zona, quoted above at page 5, with respect

to the rewriting of contracts by a court;

and

(3) to overturn the fundamental and

well settled doctrines of Mallow v. Hinde,

quoted above at pages 15-17, with respect

to the absence of the trustee Bank and

the rewriting of its escrow instructions

to Transamerica.

322

ITEM 3

The approval by Transamerica on March

10, 1969, of the proposed simultaneous re-

cording of F. M. Cocke's deeds and of the

mortgages for $52,000 less than the balance

due, not yet retracted, and the approval

thereof by the trial judge, implicit in

his judgment and minute order in favor of

Transamerica on its counterclaim and Buyers

on their complaint, as in Item 2, will

require further litigation:

(1) to overturn Higgins v. Kittleson

and Goodman v. Newzona with respect to the

rewriting of real estate contracts and es-

crow instructions by an escrow agent or by

a court, as in Item 2.

ITEM 4

The approval by Transamerica On March

10, 1969, of the escrow officer's attempt

on March 5, 1969 to secure, and of Buyers'

demand for, warranty deeds to Parcels 1A

and 2A, not part of any contract, and the

approval thereof by the trial judge, impli-

cit in his judgment and minute Order in

favor of Transamerica on its counterclaim

and Buyers on their complaint, as in Item

2, will require further litigation:

(1) to overturn Higgins v. Kittleson

and Goodman v. Newzona with respect to the

rewriting of real estate contracts and

escrow instructions by an escrow agent or

by a court, and overturn Roehm v. Horst,

178 U.S. 1, 20 S. Ct. 780, 44 L.ed 953,

and Equitable Trust Co. of New York v.

Denver and R. G. R. Co. v. Western Pac.

R. Co. (1917) 244 F.2d 485, affirmed ccc,

2d (1918) 250 F 327, cert. den. (1918) 246

323

U. S. 672, 62 L.ed 932, 38 S. ct. 432, with

respect to repudiation of contracts by

making new demands. In the Equitable Trust

Case, Hand, Distict Judge, said:

To say that you will not pa as bound

unless the promisee make some concess+

sion in his ri hts, is to say that you

Will not pay as you have promised at all.

That 1s repudiation wi Out even pre-

tense of justification. When the de-

fault followed, it took its character

from this precedin declaration, and

gave the sbiigss hs right to treat

the contract at an end and to sue.

(emphasis added)

(2) to compel F. M. Cocke and the

trustee Bank to execute valid warranty

deeds to Parcels 1A and 2A, which parcels

were not part of any contract and to which

neither F. M. Cocke nor the trustee Bank

has ever had title.

ITEM 5

Although Buyers' Complaint, on which

summary judgment by Minute Order of Dec-

ember 8, 1970 was granted, did not name

Transamerica, it demanded that the Court

order Transamerica to deliver the releases,

admittedly a prerequisite to development,

to Buyers upon payment of the sums entitl-

ing Buyers thereto, as provided in the agree-

ment. As specified in Buyers' letter of

instructions, the two $32,000 payments,

One to Joan H. Cocke and one to F. M. Cocke,

which would entitle Buyers to their first

releases of mortgage, on about 8 acres in

Parcel 1, had to await Items de 22 32 and

4. In addition to the required procurement

of the warranty deeds to Parcels 1A and

2A from F. M. Cocke and the trustee Bank,

324

for which no precedent exists in law, the

payments for the delivery of the releases

to Buyers had to await the recording of

the trustee Bank's deed to the trust half-

interest in Parcel 1. But Transamerica is

no longer willing to record this deed be-

cause the proposed payment of the proceeds

to Joan H. Cocke violates the trustee

Bank's instructions. Even if Transamerica

were to reassume its earlier position

and decide to record such deed, and issue

its title policy, the settled doctrines of

Higgins v. Kittleson, and cases cited, supra,

would prevent title from vesting in grantee,

and the trust remaindermen would have little

trouble in retaking the land.

In addition to the above two prereg-

uisites to any development by Buyers, which

were imposed by Buyers themselves in their

letter of escrow instructions dated March

5, 1969, the recording of the Bank's deed

is a prerequisite required by law: since

the trust interest in Parcel 1 is an un-

divided half-interest, no valid releases

of mortgage on the 8 acres in Parcel l

can be delivered to Buyers by Transamerica

until after the recording of the Bank's

deed.

On January 24, 1972, Transamerica

expressed before the Court of Appeals its

unwillingness to close the escrow, and

issue its title policies to Buyers in

accordance with their new demands, not-

withstanding Cocke v. Cocke and the trial

judge's minute order granting Buyers'

motion for summary judgment on their com-

Plaint. Transamerica mentioned to the

Court of Appeals, as an amount it could

lose by closing the escrow at this time,

about a half-million dollars, thereby

EEE

325

evidencing misgivings, at least, concern-

ing the recording of deeds and issuance of

title policies on F. M. Cocke's Parcel 2

and his half-interest in Parcel 1, as well

as On the trust half-interest in Parcel l.

So far, Transamerica has made no dir-

ect statement, asithas with respect to

the trustee Bank's deed, that it is now

unwilling to use F. M. Cocke's two deeds

because Buyers' new demands also violate

the escrow instructions, agreed to by all

parties, of the depositor of such deeds.

This much, however, is clear: On

January 24, 1970, Transamerica was not

willing to close the escrow in accordance

with Buyers' new escrow instructions, and

insure title against actions by F. M.

Cocke and the remaindermen to retake the

land, for about a half-million dollars,

(1) on any theory that such closing would

not violate the escrow instructions agreed

to by all parties, (2) on any theory that

Cocke v. Cocke and the trail judge's

minute order granting Summary judgment in

favor of Buyers on their complaint over-

turned Higgins v. Kittleson, and cases

cited, Goodman v. Newzona, and Mallow Vv.

Hinde, supra, or (3) on any theory that

Transamerica would be able to recover

its losses by first finding and then

collecting the half million dollars from

among the persons responsible for the

loss.

Manifestly, Transamerica is still

maintaining the position held by it

Since March 19, 1969: it remains unwilling

to comply with the escrow instructions,

either the instructions agreed to by all

parties, or Buyers' new escrow instructions

_

326

contained in their letter dated March 5,

1969. Transamerica therefore has remained,

at its own risk, unwilling since March 19,

1969 to comply with the fine print instruc-

tion paragraph 24, which as agreed to by

all parties commands return of the deeds

deposited by the trustee Bank and F. M.

Cocke in the event the escrow agent is un-

willing to comply with the escrow instruc-

tions, or Transamerica is unwilling to

issue its title policies.

IV.

THE SCHEDULED TRIAL ON DAMAGES

The trial now scheduled for February

23, 1972, has been limited by minute

order to determination of the amount of

damages claimed by Buyers in their Com-

plaint to be due them for delay in their

planned development, claimed by Buyers

to have been caused solely by F. M. Cocke.

However, Since the Court was and is

without jurisdiction to proceed at all on

Buyers' Complaint, except to dismiss it,

the trial, to be held by the judge, will

constitute merely additional abuse of

process, for which the judge, not the

Court, will be liable. CJS, Am Jur 2d,

and Arizona and United States Supreme

Court cases, Supra.

ARS, Section 13-81ll, provides:

A public officer or person pre-

tending to be a public officer,

who, under pretense or color of

any process or other legal author-

ity, arrests or detains a person

against his will, or seizes or

327

levies upon property, or dis-

possesses a person of iands or

tenements, without a legal

process or other lawful author-

ity therefor, is guilty of a

misdemeanor.

ARS, Section 44-1211, 2 and 3 (a),

provide:

A person is guilty of a misdemean-

or who:

2. Is a party to any bond, action

or judgment, or execution, contract

or conveyance had, made or contrived

with intent to deceive and defraud

others, or to defeat, hinder or

delay creditors or others of their

just debts, damages or demands.

3. Is a party as provided in

paragraph 1 or paragraph 2 of this

section, and

(a) At any time wittingly and

willingly puts in, uses, avows,

maintains, justifies or defends

such transaction as true, and had

or made in good faith, ...

See also 1 Am Jur 2d, Abuse of Process,

Sections 13, 18, 19, 25, 26; Monroe v.

Pape, 306 U. S. 167, 81S. Ct. 473, 5 L.

ed 492.

Further, as related above under III,

Jurisdiction Over Contractural Rights and

Obligations, Transamerica is evidently

well aware that it is not bound by the

ruling of Cocke v. Cocke that Joan H.

Cocke is entitled to the trust land

328

proceeds, since neither trustee Transameri-

ca, nor the trustee Bank, nor the trust re-

maindermen, were before the court in that

case. Likewise, it is not bound by the

trial judge's ruling in favor of Buyers on

their demand that the Court order Trans-

america to deliver the releases of mortgage

to Buyers, since Buyers did not name Trans-

america as a defendant. Clearly, Trans-

america's unwillingness to close the escrow

in accordance with Buyers' new instructions,

and to insure Buyers’ titles for about a

half million dollars, was not prevented by

Cocke v. Cocke, nor can it be cured by

final judgment in favor of Buyers on their

Complaint. Until Goodman v. Newzona, supra,

is overturned, even a new action by Buyers

against Transamerica could not rewrite

paragraph 24 so as to take away the option

therein granted by Buyer and Seller to

the escrow agent to refuse at will (for

any reason other than cancellation under

16-23) to comply with the escrow instruc-

tions, or the right of Transamerica to re-

fuse at will to issue its title policies,

the only condition attached to the exer-

cise of either option being the mandatory

return of the deeds deposited into escrow

by the trustee Bank and F. M. Cocke.

Of course, it is not known at this

time, at least by this defendant, whether

Or not Transamerica has reversed its posi-

tion again since January 24, 1972 on close-

ing the escrow in accordance with Buyers'

new instructions. However, it should not

be overlooked that as of February 23, 1972,

the damages claimed by F. M. Cocke, for

himself and the remaindermen, for delay

in return of the deeds, will still be

less than one-fifth of the half million

dollars Transamerica admitted it could

FY

329

lose by such closing.

Even if Transamerica has again so

changed its position, this defendant has

as yet received no notice that the escrow

has actually been closed since January 24,

1972, in accordance with Buyers’ new escrow

instructions, along with the necessary re-

cording of the deeds and mortgages and the

issuance of the policies insuring the titles

in Buyers. Since even Buyers could scarcely

claim as a matter of business practice, and

even the trial judge could scarcely rule

as a matter of law, that Buyers were en-

titled to begin their development on any

part of Parcel 1 or 2 before they took

possession of such part under title, not

to mention the problems of the releases of

mortgage, it appears that the date of any

actual recording of the deeds and mortgages

by the escrow agent, subsequent to January

24, 1972, and thus the beginning of any

period of time during which it was possible

for F. M. Cocke to cause delay in Buyers'

development, must await the testimony of

the escrow officer on February 23, 1970,

in the event the trial be held as scheduled.

The relief demanded by Buyers' Com-

plaint was clearly performance of less than

all the mutually binding provisions of the

consolidated real estate agreement and

escrow agreement with Transamerica, with-

out joining Transamerica. The cases and

authorities cited and quoted above show

that the Court therefore had and has no

jurisdiction over the subject matter of

such Complaint, and no authority to

proceed on such Complaint at all, except

to dismiss it. F. M. Cocke's Motion to

Dismiss Buyers' Complaint and all

|

330 |

amendments should therefore be granted,

as required by Rule of Civil Procedure

12 (i), 3.

In Industrial Commission v. Superior

Court of Pima County (1967) 5 Ariz. App.

100, 423 P.2d 375, Rehearing denied,

Reviewdenied, the court said:

Affirmative defeiises may be

raised and determined on a

moxcion to dismiss where the

facts constituting the defense

appear on the face of the com-

plaint. Ross v. Ross, 96 Ariz.

249, 393 P.2d 933 (1964); Gins-

burg v. Black, 192 F.2d 823 (7th

Cir. 1951), cert. denied 343 U.S.

934, 72 S. Ct. 770, 96 L.ed. 1342,

rehearing denied 343 U.S. 958,

72 S. Ct. 1050, 96 L.ed. 1358

(1952).

x* * *

MOTION FOR JUDGMENT ON THE PLEADINGS

Clearly, the Court has no choice,

under Rule of Civil Procedure 12 (i),

3, but to dismiss Buyers' Complaint.

Further, it is not disputed (1) that

F. M. Cocke's 13-day notice of intent to

cancel was filed in accordance with para-

graphs 16-23 of the escrow instructions,

(2) that Buyers failed within the 13-day

period to comply with the escrow instruc-

tions agreed to by all parties, so can-

celling the escrow and requiring the

return of the deeds deposited by F. M.

Cocke and the trustee Bank. Still further,

it is not disputed (3) that Transamerica

| |

331

Clearly expressed its unwillingness to

issue its title policy on F. M. Cocke's

Parcel 2 in March, 1969, expressed its

unwillingness to issue its title policy

on the trust half-interest in Parcel l

on February 27, 1970, and on January 24,

1972 expressed its unwillingness to issue

its title policies on Parcels 1 and 2, so

requiring under paragraph 24 the return

by the escrow agent of the deeds deposited

by F. M. Cocke and the trustee Bank,

because of such unwillingness to issue

the title policies. But it is not dis-

puted that (4) the escrow agent has re-

mained unwilling to return F. M. Cocke's

deeds since March, 1969, unwilling since

at least February, 1970, to return the

trustee Bank's deed, and unwilling since

January 24, 1972, to return all of such

deeds, again requiring under paragraph

24 the return by the escrow agent of the

deeds deposited by F. M. Cocke and the

trustee Bank, because of such unwilling-

ness to follow the escrow instructions in

paragraph 24, which were also agreed to

by all parties.

It should not be forgotten that Buyers'

Complaint alleged that F. M. Cocke wrong-

fully refused to execute partial releases

of mortgages, and also that F. M. Cocke

refused to execute the deed required to

be executed by him. However, it is now

admitted that F. M. Cocke's deeds were

delivered into escrow at least a month

before Buyers delivered the twenty-five

releases, and that F. M. Cocke executed

the releases immediately upon notice that

they had been delivered to escrow, on

March 5, 1969.

Pursuant to Rule of Civil Procedure

332

92 (c), defendant F. M. Cocke therefore

moves the court for judgment on the plead-

ing on his counterclaim against Buyers.

Respectfully submitted this

7th day of February, 1972,

JOHNSON SHELLEY ROBERTS & RIGGS

By _L. Alton Riggs, Jr.

L. Alton Riggs, Jr.

Attorneys for defendant

F. M. Cocke

48 North Macdonald Street

Mesa, Arizona 85201

333

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an Arizona corporation;

M. SETH HORNE and MAURINE E. HORNE, his

wife; vs. FRANCIS M. COCKE, a divorced

man; and JOAN H. COCKE, a divorced woman

C-222472

F. M. COCKE'S ANSWER TO BUYERS' AMENDED

COMPLAINT

Filed: February 22, 1972

By way of Answer to plaintiff Buyers'

Amended Complaint for Specific Perfor-

mance of the real estate contract and

escrow instructions to Transamerica, F.

M. Cocke admits, denies and alleges as

follows:

Count II

I

F. M. Cocke's original Answer and

Counterclaim against Buyers, filed June

23, 1969, which counterclaim Buyers

answered on Jure 30, 1969, is incorporated

herein by this reference. The real es-

tate contract between Sellers and Buyers,

and the escrow agreement with Trans-

america, were consolidated into a single

multi-party contract by a provision in

each, thereby making Sellers' agreement

to sell, and Buyers’ agreement to buy,

subject to all the terms and conditions

of the escrow agreement with Transamerica,

including the cancellation provisions,

paragraphs 16-25. Paragraph 24 actually

made Transamerica the dominant party to

334

the contract, since Buyers, as well as

Sellers, thereby gave Transamerica the

right to put an end to the consolidated

contract without consulting either Buyer

or Seller. Under paragraph 24 Trans-

america had and has the right to in effect

cancel the entire contract at will by (1)

simply refusing as escrow agent (for any

reason other than cancellation under para-

graphs 16-23) to comply further with the

escrow instructions, or (2) simply re-

fusing as title insurer to issue its

title policies.

Il

Answering paragraph II, admits that

at the time said consolidated contract

was entered into Buyers mentioned apart-

ments, but denies that this defendant

was informed of a planned shopping center

or of industrial development except for

a buffer strip along 52nd Street. Alleges

this defendant has received no notice

from this City of Tempe that the property

has been zoned other than single family

residence, denies the remaining allega-

tions of paragraph II.

Iil

Answering paragraph III, admits that

Buyers, in connection with their long

delayed releases must have incurred ex-

pense in connection with their planned

use of the land, as did Sellers in their

planned use of the money, but has no

knowledge of Buyers' plans other than

their descriptions of the release parcels.

Alleges that any development by Buyers

must await their new plans, if their

earlier ones are no longer usable. Denies

+ om Ne

335

that this defendant promised to convey

title to Buyers except upon the terms

and conditions contained in the conso-

lidated contract. Denies the remaining

allegations of paragraph III.

IV

Answering paragraph IV admits that

since the aforesaid consolidated contract

was entered into costs of construction

and many other things, including re-

placement of farm land, have increased

and probably will continue to increase,

if quoted in United States dollars.

Denies that Buyers are able to predict

the exact amount of future inflation.

Denies that this defendant promised to

convey title to Buyers except upon the

terms and conditions contained in the

consolidated contract. Denies the re-

maining allegations of paragraph IV.

Vv

Answering paragraph V, admits that

for many months since the aforesaid con-

solidated contract was entered into in-

terest rates remained at a high level,

but alleges that Buyers did not offer to

raise the interest to be paid to Sellers

under such consolidated contract. Denies

the remaining allegations of paragraph V.

vi

Answering paragraph VI, denies that

any delay at all in Buyers’ planned

development, after this defendant received

notice on March 5, 1969 that their release

parcel descriptions had finally been de-

livered into escrow, has been caused by

7%

336

act or failure to act of this defendant

except as provided for in said consoli-

dated contract and thereby approved in

advance by Buyers. Denies that Buyers

will be able to prove at the trial the

exact amount of past and future rents

and profits now unknown to Buyers, as

they have alleged. As an affirmative

defense this defendant alleges that the

attempt by Buyers and the escrow officer

to secure on March 5, 1969, this defend-

ant's signature on the warranty deed to

Parcel 2A and a half-interest in Parcel

1A, which parcels Buyers and the escrow

officer well knew were not part of any

contract and to which parcels Buyers and

the escrow officer well knew this defend-

ant did not have title, which attempt

was ratified and confirmed by Buyers'

written demand for warranty deeds to such

Parcels contained in their letter of

escrow instructions dated March 5, 1969,

was for the purpose of delaying the es-

crow, to forestall the accrual of interest

on the balance due at about $85,00 per

day. Alleges that by such attempt and

demand, not yet retracted, Buyers re-

pudiated the consolidated contract.

Denies the remaining allegations of para-

graph VI.

Vil

Denies that plaintiff Buyers have

paid, or have agreed since March 5, 1969

to pay, the amounts provided in the con-

solidated contract to be paid by Buyers.

Denies that this defendant promised to

convey title to Buyers except upon the

terms and conditions contained in the

consolidated contract. Denies that

Buyers' alleged additonal costs and loss

337

of use of money was or is due to any

failure of this defendant to comply with

the escrow instructions approved by all

parties to the consolidated contract.

Denies the remaining allegations of para-

graph VII.

VIII

Answering paragraph VIII admits plain-

tiffs have employed attorneys, but denies

that such employment was necessary or was

occasioned by any failure of this defend-

ant to comply with the terms and condi-

tions of the consolidated contract.

Denies the remaining allegations of para-

graph VIII.

Ix

Answering paragraph IX, admits, as

alleged, that Buyers have never taken

possession of the subject property. Al-

leges that Buyers' failure to take pos-

session has been and now is still occa-

sioned by the continuing unwillingness of

Transamerica to close the escrow and de-

liver the deeds and title policies to

Buyers in accordance with Buyers' new

demands, which were not part of any con-

tract. Denies the remaining allegations

of paragraph Ix.

That by way of affirmative defense,

this defendant alleges as follows:

No longer ago than January 24, 1972,

Transamerica expressed to the Court of

Appeals its continued unwillingness to

(a) close the escrow by cancelling the

consolidated contract in compliance with

the escrow instructions agreed to by all

-*%

338

parties, or to (b) close the escrow and

deliver the deeds and its title policies

to Buyers in compliance with Buyers new

escrow instructions contained in their

letter to the escrow agent dated March 5,

1969.

That on January 24, 1972, then, Trans-

america had not yet delivered, and remain-

ed unwilling to deliver, the deeds and

title policies to Buyers upon the terms

and conditions specified by Buyers in

their new set of escrow instructions.

Obviously, there has been no delay due

to “failure to convey" in accordance with

the consolidated real estate contract

and escrow instructions on the part of

this defendant. That the delay, if any,

repeatedly alleged by Buyers in their

amendment as caused by "defendants'

failure to convey", has been delay caused

by Transamerica's failure to close the

escrow and deliver the deeds and title

policies to Buyers in accordance with

Buyers' new demands. That it is Trans-

america, not this defendant, which as

escrow agent now holds the deeds in

escrow, and which as title insurer is un-

willing to insure title in Buyers, since

unwilling to risk about a half million

dollars on such title insurance on Buyers'

theory that to close the escrow in accor-

dance with their new escrow instructions

would not violate the escrow instructions

earlier agreed to by all the parties.

It has been this unwillingness on the

part of Transamerica to deliver the deeds

and title policies to Buyers, not any act

or failure to act of this defendant, that

has kept the agreement in the executory

stage, since Buyers have never been able

fs

339

to take legal possession of the subject

property under valid deed and insured

title. Unless and until Buyers have taken

legal possession, any attempt at construc-

tion would, of course, constitute merely

trespass.

X

That as affirmative defense this de-

fendant further alleges:

Buyers' Original Complaint alleged

that F. M. Cocke wrongfully refused to

execute partial releases of mortgages,

and also that F. M. Cocke refused to

execute the deed required to be executed

by him. However, it is now admitted that

F. M. Cocke's deeds were delivered into

escrow at least a month before Buyers

delivered the twenty-five releases, and

that F. M. Cocke executed the releases

immediately upon notice that they had

been delivered to escrow, on March 5, 1969.

That pursuant to Rule 15b of the Rules

of Civil Procedure, the plaintiffs' com-

plaint should have been amended to con-

form to the above undisputed evidence.

XI

That as a further affirmative defense

this defendant points out that Trans-

america Title Insurance Company has never

been joined as a defendant in plantiffs'

action for specific performance and con-

sequently this Court has no jurisdiction

over the subject matter of plaintiffs'

complaint.

f\

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Respectfully submitted this

22nd day of February, 1972,

JOHNSON SHELLEY ROBERTS & RIGGS

By L. Alton Riggs, Jr.

L. Alton Riggs, Jr.

Attorneys for defendant

F. M. Cocke

48 North Macdonald Street

Mesa, Arizona 85201

f%

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341

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an

Arizona corporation;

M. SETH HORNE and

MAURINE E. HORNE, his

wife, No. C-222472

Plaintiffs,

F. M. COCKE'S

vs. REQUEST FOR

FINDINGS OF

FRANCIS M. COCKE, a FACT AND

divorced man; and JOAN CONCLUSIONS OF

H. COCKE, a divorced LAW

woman,

Filed:

Defendants, February 23,

vn. 1972

TRANSAMERICA TITLE IN-

SURANCE COMPANY OF

ARIZONA, an Arizona

corporation,

Additional Defendant

on Counterclaim.

de ee de de ee ee ee ee ee ee ee ee ee ee ee a a

As provided by 16 ARS Rule of Pro-

cedure 52(a), defendant Francis M. Cocke

hereby requests that the Court find the

facts specially and state separately its

conclusion of law thereon and direct the

entry of the appropriate judgment, all

in writing, on the answers to the ques-

tions set forth below, such answers being

necessary to the proper determination of

the period of time during which the

damages claimed by plaintiff Buyers, for

delay in their planned development

claimed by Buyers to have been wholly

%

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342

caused by F. M. Cocke, could have accrued.

This request is an addition to F. M.

Cocke's Request for Findings of Fact and

Conclusion of Law filed January 17, 1972,

and will therefore begin with number "5".

5. As a matter of fact and law,

whether or not F. M. Cocke promised to

convey title to Buyers except upon the

terms and conditions contained in the con-

solidated real estate contract and escrow

agreement with Transamerica and in the

trustee Bank's instructions, and if so,

by what instrument, and the date thereof.

6. As a matter of fact and law,

whether or not the attempt on March 5,

1969 by Buyers and the escrow officer to

secure F. M. Cocke's signature on the deed

which included Parcels 2A and a half-

interest in Parcel 1A was in accordance

with the consolidated contract or any

other contract.

7. As a matter of fact and law,

whether or not under the consolidated

contract F. M. Cocke was bound to secure

the zoning for the various uses proposed

by Buyers, and whether or not construc-

tion of apartments, shopping center and

industrial buildings could begin without

a change in the zoning of the subject

property.

As a matter of fact, if Buyers’

earlier plans for development are no

longer usable, as alleged by Buyers,

whether or not any development by Buyers

must await their new plans.

8. As a matter of fact and law,

whether Transamerica or F. M. Cocke was,

under the consolidated real estate

-\

_,

343

contract, and escrow agreement, the

escrow agent and title insurer chosen by

Seller and Buyer, and, if Transamerica,

whether or not it was charged with the

duty of the safekeeping and delivery, or

redelivery or return, of the deeds de-

livered into escrow by the trustee bank

and F. M. Cocke, all in accordance with

the terms and conditions expressed in the

consolidated contract of October 9, 1968

and with the terms and conditions ex-

pressed in the letter of instructions from

the trustee Bank accompanying the delivery

into escrow of its deed about October 25,

1969.

9. As a matter of fact and law,

whether or not by paragraph 24 of the

printed escrow form Buyers as well as

Sellers gave Transamerica the right as

escrow agent to put an end to the entire

consolidated contract without consulting

either Buyers or Sellers by (1) simply re-

fusing as escrow agent (for any reason

other than cancellation under paragraphs

16-23) to comply with the escrow instruc-

tions, or (2) simply refusing as title

insurer to issue its title policy.

19. As a matter of fact and law,

whether or not Transamerica was on

January 24, 1972 and February 22, 1972

willing to close the escrow and deliver

the deeds and title policies to Buyers

in accordance with Buyers' new set of

escrow instructions contained in their

letter dated March 5, 1969.

ll. As a matter of fact and law, the

specific act or failure to act of F. M.

Cocke, if any, which caused the claimed

delay in Buyers’ development, and the

date thereof, and whether or not such

act or failure to act was in accordance

#%

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344

with the consolidated contract and the

trustee Bank's escrow instructions and

therefore approved in advance by Buyers.

12. As a matter of fact and law, the

specific provision of the consolidated

contract or of the trustee Bank's escrow

instructions which provided for or

approved items (1), (2), (3), (4), and

(5) of 4a above, as required by Buyers'

letter of escrow instructions dated March

5, 1969.

13. As a matter of fact and law,

whether or not Buyers were legally in a

position to begin construction before

taking legal possession of the subject

property under valid deed and insured

title.

Respectfully submitted this 23rd

day of February, 1972.

JOHNSON SHELLEY ROBERTS & RIGGS

By /s/ L. Alton Riggs, Jr.

L. Alton Riggs, Jr.

Atturneys for defendant

F. M. Cocke

48 North Macdonald Street

Mesa, Arizona 85201

g%

s

345

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an

Arizona corporation;

M. SETH HORNE and

MAURINE E. HORNE, his

corporation,

Additional Defendant

on Counterclaim.

)

)

)

)

wife, )

) No. C=-222472

Plaintiffs, )

)

—_ . F. M. COCKE'S

FRANCIS M. COCKE, a ) nna Fon

divorced man; and JOAN )

H. COCKE, a divorced ) ADOTS TONAL

. FINDINGS OF

ee ; FACT AND

Defendants, ) a OF

vs. )

)

TRANSAMERICA TITLE IN- ) Filed:

SURANCE COMPANY OF ) February 28,

ARIZONA, an Arizona ) 1972

)

)

)

)

)

As provided by 16 ARS Rule of Pro-

cedure 52(a), defendant Francis M. Cocke

hereby requests that the Court find the

facts specially and state separately its

conclusion of law thereon and direct the

entry of the appropriate judgment, all in

writing, on the answers to the questions

set forth below, such answers being neces-

sary to the proper determination of the

period of time during which the damages

claimed by plaintiff Buyers, for delay

in their planned development claimed by

e%

346

Buyers to have been wholly caused by F. M.

Cocke, could have accrued. This request

is an addition to F. M. Cocke's Request for

Additional FIndings of Fact and Conclusions

of Law filed February 23, 1972, and will

therefore begin with number "14."

14. As a matter of fact and law,

whether (1) Transamerica, as escrow agent

and therefore a trustee, (2) the trustee

First National Bank of Arizona, or (3)

the trust remaindermen, not being before

the court in Cocke vs. Cocke, are bound

by any part of the decision therein made.

15. As a matter of fact and law,

whether (1) Transamerica, as escrow agent

and therefore as trustee, (2) the trustee

First National Bank of Arizona, or (3) the

three trust remaindermen are bound by the

trial judge's ruling in favor of Buyers

on their complaint for specific perform-

ance of the consolidated contract, and

subject to further orders of the trial

judge in connection with such ruling.

Respectfully submitted this 28th

day of February, 1972.

JOHNSON SHELLEY ROBERTS & RIGGS

By /s/ L. Alton Riggs, Jr.

L. Alton Riggs, Jr.

Attorneys for defendant

F. M. Cocke

48 North Macdonald Street

Mesa, Arizona 85201

-

347

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an Arizona corporation,

M. SETH HORNE and MAURINE E. HORNE, his

wife; vs. FRANCIS M. COCKE, a divorced

man; and JOAN H. COCKE, a divorced woman

C-222472

DEFENDANT F. M. COCKE'S REJOINDER TO

PLAINTIFFS' REPLY OF JULY 26, 1972,

and

DEFENDANT F. M. COCKE'S OBJECTIONS TO

AMENDED PROPOSED FINDINGS OF FACT,

CONCLUSIONS OF LAW, AND SECOND AMENDED

JUDGMENT LODGED JULY 26, 1972.

Filed: August l, 1972

REJOINDER TO PLAINTIFF BUYERS'

REPLY OF JULY 26, 1972

Ae

In their Reply Plaintiff Buyers

state that with their Second Amended Judg-

ment and Amended Findings of Fact "all

complaints of substance made by Defendant

F. M. Cocke are dispelled," but the

accuracy of such statement is not con-

ceded by F. M. Cocke.

Buyers themselves also state that in

F. M. Cocke's objections to Plaintiffs'

Amended Judgment he sought to raise old

arguments which time and again have been

conceded and have been rejected by the

Court. Since it is beyond the province

or power of the Court to rewrite the

actual agreement entered into by the

parties, specific performance of which

was granted December 8, 1970, or re-

write Buyers' letters of March 5 and

#*

348

March 26, 1969, or rewrite several of the

Rules of Civil Procedure, as proposed by

Buyers, the Amended Judgment and the

Second Amended Judgment are beyond the

province or power of the Court, for the

reasons set forth in F. M. Cocke's Ob-

jections I through VII to such proposed

Judgments. Both of the Amended Judgments

are based on an impliedly alleged but

nonexistent agreement by Sellers "to con-

vey" regardless of Buyers' admitted

failure to perform as agreed.

It should not be overlooked that

none of plaintiff Buyers’ papers filed

July 26, 1972, were verified.

DEFENDANT F. M. COCKE'S OBJECTIONS

TO AMENDED PROPOSED FINDINGS OF

FACT, CONCLUSIONS OF LAW, AND FORM

OF SECOND AMENDED JUDGMENT LODGED

JULY 26, 1972

Inasmuch as plaintiff Buyers’ Amend-

ed Proposed Findings of Fact and Conclu-

sions of Law as separately filed (except

for Findings Nos. 9, 10, 11 and 14) are

incorporated into their proposed Second

Amended Judgment, defendant F. M. Cocke's

objections to all such Findings and Con-

clusions are incorporated into the follow-

ing objections to the form of such pro-

posed Judgment lodged July 26, 1972. In

Findings of Fact Nos. 9, 10, ll, and 14,

the words “perform the agreement for the

purchase and sale and," which are in-

cluded in the Amended Judgment arm in

the Second Amended Judgment, are omitted

in the Amended Proposed Findings separate-

ly filed.

THE PROPOSED SECOND AMENDED JUDGMENT

IS IN CONFLICT WITH THE COURT'S

i\

349

MINUTE ORDER GRANTING SPECIFIC

PERFORMANCE

A first and fundamental objection to

the proposed Judgment is that it is in

violent conflict with the Court's Minute

Order of December 8, 1970, granting

specific performance of the consolidated

real estate and escrow agreement, a copy

of which was attached by plaintiff Buyers

to their original Complaint as a part

thereof. It is obvious, as pointed out in

the following subparagraph No. l, that

Buyers are now attempting to establish

that the consolidated real estate and

escrow agreement entered into by Sellers,

Buyers, and Transamerica, for the sale

and purchase of the land, included a pro-

vision that Sellers were to convey the

land to Buyers regardless of the admitted

failure of Buyers to comply with the terms

of the agreement. However, Buyers’ new

position is clearly untenable, since there

is no way to read such a provision into

the agreement. A copy of the actual agree-

ment entered into, the specific per-

formance of which was sought by Buyers

and granted by the Court, is attached

hereto as Exhibit A.

1. The proposed Second Amended

Judgment refers in Findings of Fact Nos.

9, 10, 11, and 14, and in Conclusion of

Law No. 2, to F. M. Cocke's failure or

refusal “to convey”.

But where is the provision, express

or implied, by which either of the Sellers

agreed "to convey" any land at all to

Buyers except upon performance by Buyers

of their obligations?

The answer to this question is that

there was and is no such provision, and

-*

350

that the actual agreement entered into,

which was the agreement the specific per-

formance of which was granted by the

Court, required of Sellers only that they

deliver their deeds into escrow, which

they did long before Buyers saw fit to

even partially comply by delivering their

release description into escrow for

Sellers' signatures.

The first paragraph of the prelimi-

nary agreement specifies:

THIS AGREEMENT made and entered into

this 9th day of October, 1968, be-

tween JAMES STEWART COMPANY, Buyer,

and JOAN H. COCKE and FRANCIS M.

COCKE, Sellers, and together with

that certain Escrow Agreement No.

02013111-7 entered into with Trans-

america Title Insurance Company,

Signed by the same parties, a copy

of which is attached hereto and by

reference made a part hereof, con-

stitutes the full agreement between

the parties for the purchase and

sale of approximately 124 acres of

land, being that part of the SE

1/4 of Section 20, Township l

North Range 4 East, G&SRB&M, ly-

ing north of the right-of-way of

the Jenkins Ditch, Except a par-

cel of 3-5 acres containing

certain improvements of the

Seller Francis M. Cocke situated

at the northeast corner of the

property, north of the George

Ditch.

Schedule A, attached to the escrow

agreement, or escrow instructions,

as a part thereof, includes:

g*

351

These instructions and that certain

Sales Agreement entered into

October 9, 1968, between Buyer and

Sellers constitute a binding agree-

ment between Buyer and Seller for

purchase and sale of the property

described under the terms set forth

herein.

Paragraphs 1 and 7 of the fine print

escrow instructions specify that:

SELLER:

1. Will deliver to Escrow Agent a

deed of the property from Seller to

Buyer to be held by Escrow Agent

until the terms hereof have been

performed, at which time it shall

deliver said deed to Buyer.

SELLER AND BUYER:

7. Direct Escrow Agent to comply

herewith within the time limits pro-

vided herein for compliance, or as

soon thereafter as possible unless

a demand for cancellation has been

made on Escrow Agent as herein

provided.

It is clear from the above pro-

visions (1) that the proposed sale and

purchase was subject to its consummation

under the terms of the escrow agreement,

(2) that Sellers were bound only to

deliver their deeds into escrow, and (3)

that delivery thereof was to be made by

the escrow agent to Buyers upon actual

performance them (not merely expres-

sions of willingness to perform) of the

terms of the escrow agreement. It is

well settled that expressions by a party

to an escrow agreement of willingness

and ability to comply with the escrow

#%

352

instructions are immaterial to the ques-

tion of actual compliance. 28 Am Jur 2d

13, Escrow, Sections 21, 22, 24. The

ability of a party to perform the escrow

agreement cannot, without actual full per-

formance, amount to compliance. 30A CJS,

Escrows, Sections 10(a) and 10(b), and

cases cited.

Under the heading CANCELLATION, fine

print paragraphs 16-22 include:

CANCELLATION:

16. If either party elects to can-

cel these instructions because of

the failure of the other party to

comply with any of the terms hereof

within the time limits provided

herein, said party so electing to

cancel shall deliver to Escrow

Agent a written notice to the other

party and Escrow Agent demanding

that said other party comply with

the terms hereof within thirteen

days from the receipt of said notice

by Escrow Agent or that these in-

structions shall thereupon become

cancelled.

17. When such written notice is

delivered to Escrow Agent by the

party so electing to cancel, Es-

crow Agent shall within three days

thereafter send a copy of said

notice to the other party in the

manner provided herein for the

mailing of Notice of Demands or

Declarations.

18. In the event said other party

shall fail within said thirteen-

day period to comply with all of the

terms hereof, these instructions

-%

353

shall become cancelled and Escrow

Agent is thereupon authorized;

19. First: To pay to the party

electing to cancel, any earnest money

deposited hereunder by said other

party, after deducting any charges;

20. Second: To pay to said other

party, any other money deposited here-

under by said other party, after de-

ducting any charges remaining unpaid;

21. Third: To pay to the party

electing to cancel, any money de-

posited by said party, after de-

ducting any charges remaining un-

paid:

22. Fourth: To return all documents

deposited hereunder to the party who

delivered the same except documents

executed by both Seller and Buyer,

which shall be marked "cancelled"

and retained in the files of the

Escrow Agent. (emphasis added)

It is not disputed that on March 5,

1969 F. M. Cocke filed his 13-day notice

of election to cancel upon the continued

failure of Buyers to comply, as provided

for by paragraphs 16-22. Nor is it dis-

puted that Buyers have never complied.

Under the heading CANCELLATION, fine

print paragraph 24 specifies:

CANCELLATION :

24. If Escrow Agent is unable or

unwilling to comply with these in-

structions for any reason other

than cancellation as hereinbefore

provided, or if Transamerica Title

f%

354

Insurance Company is unwilling to

issue any title insurance policy pro-

vided for herein, Escrow Agent is

directed to pay the charges payable

by Buyer from any money deposited

hereunder by Buyer, paying the balance

then remaining to Buyer, and to pay

the charges payable by Seller from

any money deposited hereunder by

Seller, paying the balance then re-

maining to Seller, and all documents

executed by one party only on deposit

with Escrow Agent shall be returned

to the parties who executed said

documents.

Mutually executed instruments shall

be retained by Escrow Agent.

Upon Transamerica's unwillingness to

issue its title policies, which unwilling-

ness has been exhibited by it for nearly

three years, and was specifically admitt-

ed before the Court of Appeals, the es-

crow was clearly cancelled, as agreed to

in advance by Buyers, under the self-

executing and mandatory language of fine

print paragraph 24.

It is well settled that where a con-

tract states grounds upon which a perty

May rescind or cancel it, the contract

cortrols as to such grounds.

17 Am Jur 2d 969, Contracts, Section 495.

Under the heading DEFINITIONS, fine

print paragraph 43 specifies:

DEFINITIONS:

43. "Close of Escrow" shall mean

the date of the policy of title

insurance to be issued herein.

This paracraph makes it clear that since

-*

355

only Transamerica could make the decision

that it would issue its title policy,

only Transamerica could close the escrow,

which was the relief sought by Buyers'

action for specific performance. But

since Buyers failed to join Transamerica,

they left the Court without jurisdiction

to grant such relief, as further discussed

under IV, below.

Il.

THE PROPOSED SECOND AMENDED JUDGMENT IS

IN CONFLICT WITH THE UNDISPUTED FACTS

1. At page 3, line 25, in Finding

of Fact No. 4, Buyers admit that the

agreement provided that the unpaid balance

was to be secured by plaintiffs' notes

and mortgages, but omit the undisputed

fact that in Buyers' letter dated March 5,

1969 they demanded that the escrow agent

close the escrow and record the deeds to

Buyers, subject to mortgages to be simul-

taneously recorded totalling $84,000 less

than the balance due, as discussed below

under subparagraph 3.

2. Finding of Fact No. 6 fails to

mention the undisputed fact that Buyers

took back, and still hold, the $20,000

earnest money paid to Sellers upon the

Signing of the contract, by Buyers' re-

moval from the escrow officer's desk,

and their continued retention of, the

$40,000 note and mortgage deposited into

escrow by F. M. Cocke on or about

January 10, 1969, in exchange for and

as double security for the $20,000 in

escrow funds received by him at that

time.

3. In Finding of Fact No. 7,

|

356

plaintiff Buyers state that they have been

ready at all times to close this trans-

action since December 15, 1968.

However, it is not disputed that, as

mentioned above, Buyers' 25 release des-

criptions were not made available for

F. M. Cocke's signature until March 5,

1969.

Nor is it disputed that by Buyers'

letter of instructions to the escrow

agent dated March 5, 1969, they made a

number of new demands, all of which were

and are in conflict with the terms of the

escrow agreement.

It is not disputed that Buyers'

letter instructed the escrow agent to:

(1) Close the escrow with payment

of about $120,000 in trust land proceeds

to be made to life tenant Joan H. Cocke,

contrary to the trustee Bank's escrow

instructions accompanying the delivery of

its deed into escrow in October, 1968.

(2) Close the escrow and record the

trustee Bank's warranty deed to Buyers,

subject to a mortgage to be simultaneously

recorded for $32,000 less than the balance

due.

(3) Close the escrow and record F.

M. Cocke's warranty deeds to Buyers, sub-

ject to mortgages to be simultaneously

recorded for $52,000 less than the balance

due.

(4) Close the escrow and record

warranty deeds to Parcels 1A and 2A to

Buyers. Neither the trustee Bank rer

F. M. Cocke ever executed any deeds to

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357

Parcels 1A or 2A, either quit-claim or

Warranty, since neither had title. Such

parcels were for that reason specifically

excluded from the land agreed to be sold,

and were not the subject of any contract.

In a second letter to the escrow

agent dated March 26, 1969, Buyers claimed

that the position taken by them in their

letter of instructions to the escrow

agent dated March 5, 1969 amounted to com-

pliance. Marked copies of these letters

are attached as Exhibit B.

Further, it is not disputed that

Buyers have never retracted these new

demands, which constituted a repudiation

of the agreement. In Equitable Trust Co.

of New York v. Denver and R. G. R. Co. v.

Western Pac. R. Co. (1917) 244 F2d 485,

affirmed CCC, 2d (1918) 250 F 327, cert.

den. (1918) 246 U.S. 672, 62 L.ed 932,

38 S. Ct. 432, Hand, District Judge, said:

To say that you will not pay as

bound, unless the promisee make

some concession in his rights, is

to say that you will not pay as

you have promised at all. This is

repudiation without even pretense

of justification. When the default

followed, it took its character

from this preceding declaration, and

gave the obligee the right to treat

the contract at an end and to sue.

4. In Finding of Fact No. 8,

plaintiffs state that defendant Joan H.

Cocke has been ready to perform since

December 15, 1968 and thereafter.

However, it is not disputed that

Joan H. Cocke joined with F. M. Cocke in

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358

instructing the trustee Bank, by the

letter dated October 10, 1968, prepared

by her attorney, to deliver into escrow

its trustee's deed to the half-interest

then held by it in Parcel 1 along with

the instruction to the escrow agent that

the proceeds therefrom would be controlled

by Joan H. Cocke and F. M. Cocke.

Neither is it disputed, as testified to

by Joan H. Cocke's at*orney, Loretta

Whitney, that in February, 1969, Joan H.

Cocke repudiated her agreement as to

jOint control of such proceeds. Nor is it

disputed that she was joined by Buyers and

the escrow agent in the unsuccessful

attempt to in effect rewrite the trustee

Bank's escrow instructions, earlier

approved by all parties, so as to delete

the specification contained therein as

to joint control, and pay such proceeds

to Joan H. Cocke.

5. In Findings of Fact Nos. 9, 10,

ll, and 14, Buyers speak of F. M. Cocke's

refusal or failure to perform the agree-

ment for purchase and sale, but have

never specified the particular act or

failure to act which constituted such

claimed refusal or failure. It is not

disputed that, in accordance with fine

print paragraph 1 of the escrow instruc-

tions (discussed above), F. M. Cocke's

deeds to Parcel 2 and the half-interest

in Parcel 1 were timely delivered into

escrow. Such deeds contain the same

Brown Engineering land descriptions which

Buyers now approve on pages 1 and 2 of

their proposed Second Amended Judgment,

except that Buyers have omitted the

clause subjecting the land to rights of

way for roads, ditches and public

utilities.

359

6. Buyers have never offered one

shred of evidence that their claimed

"preliminary costs," mentioned in

Findings of Fact Nos. 11 and 12, and Con-

clusion of Law No. 2, were within F. M.

Cocke's contemplation at the time the

agreement was entered into. It is undis-

puted that it was Buyers themselves who

chose to incur their claimed preliminary

costs and then refused to perform as

agreed by insisting on the new demands

made in their letter dated March 5, 1969.

7. In Finding of Fact No. 13, Buyers

admit that on December 8, 1970, the Court

granted specific performance of the con-

sOlidated agreement entered into on

October 9, 1968, by Sellers, Buyers and

Transamerica, a copy of which was attached

to Buyers' Complaint for Specific Per-

formance, and a copy of which is also

attached to these Objections. The Court

granted specific performance of the

agreement, not Buyers' letter dated

March 5, 1969.

As pointed out in Jonas v. Leland,

77 Cal. App. 2d 770, 176 P.2d 764, one

of the cases relied on by Buyers in their

Post Trial Memorandum:

Equity enforces performance of a

contract only as it is made; a

court has no power to make a new

contract.

IIl.

THE PROPOSED SECOND AMENDED JUDGMENT IS IN

CONFLICT WITH RULES OF CIVIL PROCEDURE

12(b)7, 19(a) and 19(c), AS AMENDED,

CONCERNING INDISPENSABLE PARTIES

It is clearly not within the province

|

360

or power of the Court to rewrite the

actual agreement entered into by Sellers,

Buyers, and Transamerica so as to alter

any Of its provisions or take out either

a provision or a party. Goodman v.

Newzona Investment Co. (1967) 101 Ariz.

470, 421 P.2d 318, infra. Since an es-

crow agent is undeniably an indispensable

party to an escrow agreement, it must

follow that Transamerica remains under the

terms of the escrow agreement actually

entered into an indispensable party to

any adjudication of the mutual rights and

obligations of Sellers and Buyers under

such escrow agreement.

It is clear that the 1969 amendment

to Rule 19 did not relax the rule where

joinder of the additional party, needed

for just adjudication between those al-

ready joined is feasible.

In Provident Tradesman's Bank &

Trust Co. v. Patterson, 390 U.S. 102,

19 L.ed 2d 936, 88 S. Ct. 733 (January,

1968), in discussing Rule 19 and cases

relied on by the lower court in dismis-

Sing a complaint in the absence of an

indispensable party, the court said at

page 951 of 19 L.ed 2d:

The first of the cases was Mallow

v. Hinde, 12 Wheat. 193, 6 L.ed

599, in which, in essence, the

plaintiff sought specific per-

formance of a contract to convey

land, but sought it not against his

vendor (who could not be joined)

but against a person who claimed

through an entirely different chain

of title. The Court saw that any

declaration of rights between the

parties before it would either

361

urport (incorrectly) to determine

eke validity of plaintiff's contract

with his grantor, or would decide

nothing. The Court said, in

language quoted here by the Court

of Appeals:

"In this case, the complainants have

no rights separable from, and in-

dependent of, the rights of persons

not made parties. Tne rights of

those not before the Court lie at the

very foundation of the claim of

right by the plaintiffs, and a final

decision cannot be made between the

parties litigant without directly

affecting and prejudicing the rights

Of others not made parties. .. . We

do not put this case upon the ground

of jurisdiction, but upon a much

broader ground. .. . We put it on

the ground that no Court can ad-

judicate directly upon a person's

right, without the party being either

actually or constructively before

the Court.'

Nothing in this language is in-

consistent with the Rule 19 formu-

lation, Or Otherwise suggests that

lower courts are expected to pro-

ceed without examining the actual

interest of the nonjoined person.

As the Court explicitly stated,

there is no question of "juris-

diction" and there can be no bind-

ing adjudication of a person's rights

in the absence of that person.

Rather, the problem under the cir-

cumstances was that the substantive

involvement of the grantor was such

that in his absence there was

nothing for the Court to decide.

(emphasis added)

362

In Mallow v. Hinde, as in this in-

stant case, executory agreements were be-

fore the court, but, also as in this

case, without all of the parties whose

mutually dependent rights and obligations

would have to be determined. In Mallow

v. Hinde, the court upheld dismissal of

the complaint, even though the absent

party could not be joined.

As pointed out in the Provident

Tradesman's case, there was nothing in

the language quoted from Mallow v. Hinde

that was inconsistent with the Rule 19

formulation, or otherwise suggested that

lower courts are expected to proceed with-

Out examining the actual interest of the

nonjoined person.

Iv.

THE PROPOSED SECOND AMENDED JUDGMENT IS IN

CONFLICT WITH RULES OF CIVIL PROCEDURE

12(b) 6 and 12(b) 1

Since the escrow agent was not joined

by Buyers, their Complaint seeking specif-

ic performance of the consolidated agree-

ment failed to state a claim upon which

the relief sought could be granted, such

relief requiring jurisdiction over the

escrow agent in order to enforce the

Obligations assumed by it. Without the

jurisdiction to grant the relief sought,

the Court was and is left without juris-

diction over the subject matter of Buyers'

Complaint. 21 CJS, Courts, Sections 26,

35b; Cooper v. Reynolds, 10 Wall 308, 316,

19 L.ed 931. A court cannot render a

valid judgment without jurisdiction to

grant the relief sought. 49 cJS,

Judgments, Sections 19a, 19c, 19d;

Varnes v. White, 40 Ariz. 427, 12 P.2d

879; Wall v. S. Ct. of Yavapai Co.,

y%

363

53 Ariz. 344, 89 P.2d 624; Hill v.

Favour, 52 Ariz. 561, 84 P.2d 575;

Arizona Land & Stock Co. v. Markus, 37

Ariz. 530, 296 P. 251; Western Land &

Cattle Co. v. National Bank of Arizona

at Phoenix, 29 Ariz. 51, 239 P. 299.

V.

THE PROPOSED SECOND AMENDED JUDGMENT IS IN

CONFLICT WITH RULE OF CIVIL PROCEDURE 52(a)

PROVIDING FOR MANDATORY FINDINGS OF FACT

AND CONCLUSIONS OF LAW

On January 17, February 23, and

February 28, 1972, this defendan+ re-

guested findings of fact and conclusions

of law as provided by Rule of Civil Pro-

cedure 52(a).

In their proposed Second Amended

Judgment, plaintiff Buyers have ignored

such requests, in violation of Rule 52(a).

All of these requests were made before

trial, which began February 28, 1972, at

10:09 a.m.

VI.

NO COURT ORDER TO CONVEY

Any statements in Finding of Fact

No. 14, or elsewhere, that F. M. Cocke

was ordered to convey by the Court, are

in error. What was ordered by Minute

Order of December 8, 1970 was specific

performance of the consolidated real

estate and escrow agreement, including

its provisions for cancellation under

fine print paragraphs 16-22 and 24.

i\

364

Vil.

THE PROPOSED SECOND AMENDED JUDGMENT IS

BEYOND THE JURISDICTION OF THE COURT

The Second Amended Judgment proposed

by plaintiff Buyers in effect rewrites the

actual agreement entered into, as admitted

by the judgment itself at page 9, line l,

thereof. Buyers propose the deletion from

the actual agreement of the rights and

duties assumed thereunder by Transamerica,

which deletion, like the insertion of a

provision requiring Sellers "to convey,"

is not within the province or power, or

jurisdiction, of the Court.

As pointed out in a unanimous de-

cision by the Supreme Court, sitting en

banc, in Goodman v. Newzona Investment

Co. (1967) 101 Ariz. 470, 421 P.2d 318:

It is not within the province or

power of the court to alter,

revise, modify, extend, re-write

Or remake an agreement. Its duty

is confined to the construction or

interpretation of the one which

the parties have made for

themselves. Graham County

Electric Coop., Inc., v. Town of

Safford, 95 Ariz. 174, 383 P.2d

169. Where the intent of the

parties is expressed in clear and

unambiguous language, there is no

need or room for construction or

interpretation and a court may not

resort thereto. Neale v.

Hinchcliffe, 21 Ariz. 452, 189 P.

1116.

Included in Buyers' proposed dele-

tion are fine print paragraphs l, 7,

y%

365

16-22, 24 and 43 of the fine print escrow

instructions, which are quoted hereinabove,

beginning at page 4. Paragraphs 1 and 7

will bear repeating here:

SELLER:

1. Will deliver to Escrow Agent a

deed of the property from Seller to

Buyer to be held by Escrow Agent

until the terms hereof have been

performed, at which time it shall

deliver said deed to Buyer.

SELLER AND BUYER:

7. Direct Escrow Agent to comply

herewith within the time limits

provided herein for compliance,

Or aS soon thereafter as possible

unless a demand for cancellation

has been made on Escrow Agent as

herein provided.

It cannot be denied that the intent of

Sellers, Buyers and Transamerica is here

expressed in clear and unambiguous

language. Paragraphs 16-22, 24, and 43

are equally clear.

In proposing the deletion of these

paragraphs, and others, Buyers are asking

the Court to go beyond the limits of its

power or jurisdiction, and so beyond the

limits of due process. In Old Wayne

Mutual Life Assn. v. McDonough, 204 U.S.

8, 51 L.ed 345, 27 S. Ct. 236, the court

pointed out, quoting Scott v. McNeal,

154 U.S. 34, 46, 38 L.ed 896, 901, 14

S. Ct. 1108, that no judgment of a court

is due process of law, if rendered with-

Out jurisdiction in the court.

JOHNSON SHELLEY ROBERTS & RIGGS

366

By /s/ L. Alton Riggs, Jr.

Attorneys for F. M. Cocke

STATE OF ARIZONA )

zs

COUNTY OF MARICOPA )

FRANCIS M. COCKE being first duly

sworn, On oath deposes and says:

That he is one of the defendants in

the foregoing entitled and numbered cause;

and that he has read the foregoing in-

strument and knows the contents thereof,

and that the matters and things stated

therein are true of his own knowledge,

except as to those matters therein

specifically stated to be upon information

and belief, and as to those matters he

believes them to be true.

/s/ Francis M. Cocke

Subscribed and sworn to before me this lst

day of August, 1972.

_f/s/ Irene Millsaps

Notary 1c

My Commission Expires:

9-30-75

367

BUYERS' REPLY TO DEFENDANT F. M. COCKE'S

OBJECTIONS TO AMENDED PROPOSED FINDINGS

OF FACT, CONCLUSIONS OF LAW, AND SECOND

AMENDED JUDGMENT LODGED JULY 26, 1972

ORAL ARGUMENT REQUESTED

Filed: August 2, 1972

Defendant Cocke's memorandum of

objections to Plaintiffs' Second Amended

Judgment again raises old arguments which,

time and again, have been considered and

rejected by the Court. Nothing gainful

would be accomplished by repeated rebuttal

of those copious arguments.

Respectfully submitted,

KELLY AND CORBIN

By /S/ Hubert E. Kelly

Attorneys for Plaintiffs

# %

368

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an Arizona corporation;

M. SETH HORNE and MAURINE E. HORNE, his

wife; vs. FRANCIS M. COCKE, a divorced

man; and JOAN H. COCKE, a divorced woman

C-222472

F. M. COCKE'S MOTION TO VACATE THE JUDG-

MENT OF NOVEMBER 10, 1970, AND THE JUDG-

MENT OF SEPTEMBER 29, 1972

Filed: October 10, 1972

Comes now defendant-counterclaimant

F. M. Cocke and moves the Court to vacate

the Summary Judgment of November 10, 1970,

in favor of Transamerica, and to vacate

the Summary Judgment of September 29, 19-

72, in favor of plaintiff Buyers, such

judgment being void for want of juris-

diction in the Court, for the reasons set

forth below.

Be

THE MULTI-PARTY ESCROW AGREEMENT

On October 9, 1968, Sellers, Trans-

america as escrow agent, and Buyers enter-

ed into an escrow agreement for the pro-

posed sale and purchase through the es-

crow of two parcels of land, designated

as Parcels 1 and 2. The provisions of

Transamerica's printed escrow form are

parts of the agreement. Schedule A,

attached to the printed form as part of

the agreement, specifies:

These instructions and that certain

369

Sales Agreement entered into

October 9, 1968, between Buyer

and Sellers constitute a binding

agreement between Buyer and Seller

for purchase and sale of the

property described under the terms

set forth herein.

The printed escrow form includes the

following provisions:

Paragraph 1 provides:

SELLER:

I. Will deliver to Escrow Agent a

deed of the property from Seller

to Buyer to be held by Escrow Agent

until the terms hereof have been

performed, at which time it shall

deliver said deed to Buyer.

(emphasis added)

Paragraph 14 provides:

SELLER AND BUYER:

14. Direct that when these instruc-

tions have been complied with and

Transamerica Title Insurance Com-

pany is willing to issue its title

insurance policy, as hereinafter

provided, and when Escrow Agent's

charges have been paid, it shall

deliver for filing for record in

the appropriate public office, all

necessary documents required to be

filed or recorded, instructing the

County Recorder's office to mail

any documents recorded therein to

the parties entitled thereto at the

addresses given herein at which

time Escrow Agent shall disburse

all funds paid to it hereunder, as

370°

provided herein.

Paragraph 43 provides:

43. "Close of Escrow" shall mean

the date of the policy of title

insurance to be issued herein.

The printed form also includes the

following provisions: ‘

Paragraph 7 provides:

SELLER AND BUYER:

7. Direct Escrow Agent to comply

herewith within the time limits -

provided herein for compliance,

or as soon therafter as possible

unless a demand for cancellation

haS been made on Escrow Agent as

herein provided.

And under the heading "CANCELLATION":

16. If either party elects to cancel

these instructions because of the

failure of the other party to

comply with any of the terms hereof

within the time limits provided

herein, said party so electing to

cancel shall deliver to Escrow Agent

a written notice to the other

party and Escrow Agent demanding

that said other party comply with

the terms hereof within thirteen

days from the receipt of said

notice by Escrow Agent or that

these instructions shall thereupon

become cancelled.

17. When such written notice is

delivered to Escrow Agent by the

|

371

party so electing to cancel,

Escrow Agent shall within three

days thereafter send a copy of

said notice to the other party

in the manner provided herein for

the mailing of Notices, Demands

or Declarations.

18. In the event said other party

shall fail within said thirteen-

day period to comply with all of

the terms hereof, these instructions

shall become cancelled and Escrow

Agent is thereupon authorized: ...

24. If Escrow Agent is unwilling

to comply with these instructions

for any reason other than cancel-

lation as hereinbefore provided, or

if Transamerica Title Insurance

Company is unwilling to issue any

title insurance policy provided for

herein, Escrow Agent is directed to

pay the charges payable by Buyer

from any money deposited hereunder

by Buyer, paying the balance then

remaining to Buyer, and to pay the

charges payable by Seller from any

money deposited hereunder by Seller,

paying the balance then remaining

to Seller, and all documents exe-

cuted by one party only on deposit

with Escrow Agent shall be returned

to the parties who executed said

documents. Mutually executed in-

struments shall be retained by

Escrow Agent.

(emphasis added)

Undeniably, the whole thrust of the

escrow agreement, as plainly spelled out

therein, was the delegation by Buyers

and Sellers to the escrow agent, and the

372

assumption by the escrow agent, of the

right and duty either (1) to close the

escrow and deliver the deeds and title

policies to Buyers upon performance by

Buyers under paragraph l, 14 and 43, or

(2) to cancel the escrow upon Buyers'

failure to perform, under paragraphs 16,

17 and 18, or, under paragraph 24, upon

the escrow agent's unwillingness to per-

form or Transamerica's unwillingness to

issue the title policies.

The courts insist on the strict per-

formance of an escrow agent's duties by

the escrow agent itself. It is well

settled that Transamerica as escrow agent

was and is absolutely bound to perform,

as a trustee, the duties delegated to it

by Sellers and Buyers and voluntarily

assumed by it, as spelled out by the es-

crow agreement and instructions.

28 Am Jur 2d, Escrow, in Section 16

discusses the duties and liabilities of

an escrow agent, and points Out that:

Where a person assumes to and does

act as the depositary in escrow, he

is absolutely bound by the terms

and conditions of the deposit and

charged with a strict execution of

the duties voluntarily assumed.

As briefly stated in Higgins v. Kittleson,

1 Ariz. App. 244, 401 P.2d 412 (1965):

The law. is well settled that an

escrow agent acts in a fiduciary

capacity and must conduct affairs

with which he is entrusted with

scrupulous honesty, skill, and

diligence. Tucson Title Ins. Co.

f\

373

Vv. D'Ascoli, 94 Ariz. 230, 383

P.2d 119 (1963). That he (Escrow

Agent) is a trustee and must act

in accordance with terms of the

escrow agreement. Malta v. Phoenix

Title & Trust Co., 76 Ariz. 116,

259 P.2d 554 (1953). And that if

he (Escrow Agent) delivers a deed

in violation of the terms of deposit

that the deed conveys no title to

grantee. Hixon v. Davis, 46 Ariz.

943, 52 P.2d 1166 (1935), D'Ascoli

(supra).

As stated in Tucson Title Insurance Co.

v. D'Ascoli:

An escrow agent is held to strict

compliance with the terms of the

escrow agreement, and is liable

for all damages resulting from

any deviation.

If.

THE ATTEMPT TO SECURE A WARRANTY DEED

TO LAND NOT OWNED BY SELLERS

After delivery into escrow, by the

broker, of F. M. Cocke's deeds to Parcel

2 and his half-interest in Parcel l on or

about December 31, 1968, the close of

escrow was delayed solely by Buyers' con-

tinued failure to complete their descrip-

tions of the 25 five-acre releases of

mortgage provided for by Schedule A of

the agreement. These 25 releases were

finally completed and delivered into

escrow, and were submitted by the escrow

officer, at the escrow office, to F. M.

Cocke for his signature on March 5, 1969.

He signed the 25 releases, but refused to

g

374

Sign the 26th document in the stack sub-

mitted to him. This last document was a

warranty deed which included Parcels 1A

and 2A, a long narrow strip of land con-

taining a large drainage canal, the Jen-

kins Ditch, which abuts the south boundary

of Parcels 1 and 2, and provides drainage.

The Cockes had never acquired title to

the land in the canal right of way. It

was for that reason Specifically excepted

from the land proposed to be sold, by

the property descriptions attached to

the escrow agreement, and was not the

Subject of any contract. Upon question-

ing, the escrow officer stated that

Buyers had prepared and delivered the

deed into escrow for his (F. M. Cocke's)

Signature along with the releases. F.

M. Cocke thereupon signed and delivered

into escrow, on a form furnished by the

escrow officer, a notice of intention

to cancel as provided by paragraph 16

of the escrow agreement.

IIfl.

BUYERS' LETTER OF NEW DEMANDS

NOT PART OF THE AGREEMENT

It is not disputed that the Buyers'

letter dated March 5, 1969, to Trans-

america as escrow agent, and enclosing

two personal checks for $32,000 each,

dated March 7, 1969, and notes and mort-

gages totalling about $420,000, directed

the escrow agent to:

ITEM 1. Close the escrow with pay-

ment of about $120,000 in trust land

proceeds to be made to life tenant Joan

H. Cocke, contrary to the trustee Bank's

escrow instructions accompanying the

375

delivery of its deed into escrow in

October, 1968.

ITEM 2. Close the escrow and record

the trustee Bank's warranty deed to

Buyers, subject to a mortgage to be simul-

taneously recorded for $32,000 less than

the balance due.

ITEM 3. Close the escrow and record

F. M. Cocke's warranty deeds to Buyers,

subject to mortgages to be simultaneously

recorded for $52,000 less than the balance

due.

ITEM 4. Close the escrow and record

Warranty deeds to Parcels 1A and 2A to

Buyers.

ITEM 5. Accomplish Items 1 through

4 before turning over to Sellers the two

personal checks for $32,000 each, as the

annual payment which entitled Buyers to

their first releases.

By letter of March 10, 1969, the

escrow agent enclosed a copy of Buyers'

letter dated March 5, 1969, and announced

to Sellers that Buyer had done everything

required of him to close the escrow.

The documents and demands contained

in Buyers' letter to the escrow agent

dated March 5, 1969, plainly show that

the letter constituted a written refusal

by Buyers to comply with the terms set

forth in the escrow agreement. In a second

letter to the escrow agent dated March

26, 1969, Buyers claimed that the deposit

of such documents and demands met all re-

quirements on the part of Buyers. Clearly,

Buyers did not even attempt to comply with

376

the actual terms of the escrow agreement

within the 13-day period following the

filing on March 5, 1969, of F. M. Cocke's

notice of intention to cancel. Buyers

have never retracted their new demands

in the manner required by paragraph ll,

or in any other manner. Further, Buyers’

insistence that such new demands be met,

as a condition to close of the escrow,

constituted, without more, a repudiation

of the agreement. In Equitable Trust Co.

of New York v. Denver and R. G. R. Co. v.

Western Pac. R. Co. (1917) 244 F.2d 485,

affirmed CCC, 2d (1918) 250 F 327, cert.

den. (1918) 246 U.S. 672, 62 L.ed 932,

38 S. Ct. 432, Hand, District Judge, said:

To say that you will not pay as

bound, unless the promisee make some

concession in his rights, is to say

that you will. not pay as you have

promised at all. This is repudiation

without even pretense of justification.

When the default followed, it took

its character from this preceding

declaration, and gave the obligee

the right to treat the contract at

an end and to sue.

IV.

BUYERS' FAILURE TO JOIN THE ESCROW

AGENT

This litigation began with plaintiff

Buyers' Complaint, filed in April, 1969,

as C-222472, For Specific Performance of

the escrow agreement, a copy of which was

attached to the Complaint. The Complaint

itself admits the delegation to and as-

sumption by Transamerica of the escrow

agent's duties, by demanding that the

SS See

a)

;

377

title insurance policies be issued, that

the escrow be ordered closed, and that

Transamerica be ordered to release the

mortgages on the five-acre tracts upon

future payments as provided. Notwith-

standing these demands, Buyers failed to

join Transamerica as a party to their

action, so leaving the Court without

jurisdiction to grant the relief sought

and so without jurisdiction over the sub-

ject matter of Buyers' Complaint, requir-

ing its dismissal under Rule 12 (i) 3,

as amended. Cooper v. Reynolds, 10 Wali

(U.S.) 308, 316, 19 L.ed 931; 21 cJS,

Courts, Sections 26 and 35(b).

It is not disputed, nor could it be,

that only a single multi-party escrow

agreement was entered into by the parties.

An examination of Schedule A and the

printed portion of the escrow agreement

establishes beyond question that Seller,

Escrow Agent, and Buyer were and are

each an indispensable party to such es-

crow agreement, and that their rights

and obligations were and are mutually

dependent. In the absence of any one of

such three parties, there Could have been

no escrow agreement at all between the

other two. Likewise, in the absence of

any one of such parties, ther could be

no enforcement of such mutually dependent

rights and obligations by a court. Rules

of Civil Procedure 19(a) and 19(c), as

amended. Provident Tradesman's Bank and

Trust Co. v. Patterson, 390 U.S. 102, 19

L.ed 2d 936, 88 S. Ct. 733 (Jan., 1968);

Mallow v. Hinde, 12 Wheat. 193, 6 L.ed

599; State of Washington v. United States,

87 F.2d 421 (9th Cir. 1936); Bolin v.

Superior Court, Maricopa County (1959)

378

85 Ariz. 131, 333 P.2d 295; Siler v.

Superior Court, Coconino County (1957)

83 Ariz. 49, 316 P.2d 296.

For these reasons, pursuant to amend-

ed Rules 13(a), 13(h), and 18(a), and

with leave of court first obtained, F. M.

Cocke brought in Transamerica as escrow

agent, seeking enforcement of the can-

cellation provisions of the escrow agree-

ment. Transamerica then counterclaimed

in C-222472 against F. M. Cocke, seeking

attorney fees by enforcement of paragraphs

8, 9, and 10 of the escrow agreement with-

out regard to its obligations to Buyers

and Sellers to either close or cancel the

escrow.

V.

SEPARATE PROCEEDINGS FOR ENFORCEMENT

OF THE SINGLE ESCROW AGREEMENT

As shown by the record of C-222472,

this Court on November 10, 1970, entered

its separate summary judgment in favor of

the escrow agent, and on December 8, 1970,

entered its minute order that Buyers’

motion for summary judgment on their

Complaint For Specific Performance of the

escrow agreement was granted. Following

Separate proceedings, the separate sum-

mary judgment in favor of Buyers was

entered on September 27, 1972.

It must be concluded that by the

separate summary judgmentsin favor of the

escrow agent and the Buyers, the Court

has attempted to alter the single escrow

agreement into two separate and independ-

ent agreements, one between F. M. Cocke

and the escrow agent, and another between

F. M. Cocke and the Buyers. This was

379

completely beyond the Court's jurisdic-

tion.

It has long been settled that a multi-

party contract containing mutual conven-

ants on behalf of each party, such as the

escrow agreement, cannot be specifically

enforced by one party thereto against

only one other party thereto, since that

would require rewriting the contract. 81

CJS, Specific Performance, Sections l, 26,

158; 49 Am Jur, Specific Performance,

Sections 2, 22, 157, 171.

In Goodman v. Newzona Investment CO<,

101 Ariz. 470, 421 P.2d 318 (1967), the

case relied on by Transamerica to Support

its claims under paragraphs 8, 9, and 10,

the court said:

It is not within the province or

power Of the court to alter, revise,

modify, extend, rewrite or remake

an agreement. Its duty is confined

to the construction or interpreta-

tion of the one which the parties

have made for themselves. Graham

County Electric Coop., Inc., v.

Town of Safford, 95 Ariz. 174,

383 P.2d 169. Where the intent of

the parties is expressed in clear

and unambiguous language, there is

not need or room for construction

or interpretation and a court may

not resort thereto. Neale v.

Hinchcliffe, 21 Ariz. 452, 189

P. 1116.

In Jonas v. Leland, 77 Cal. App. 2d

770, 176 P.2d 764, one of the cases relied

on by Buyers, the court briefly stated

the universal rule as follows:

ey

380

Equity enforces performance of a

contract only as made; a court has

no power to make a new contract.

49 Am Jur, Specific Performance,

Section 171, states:

In rendering a decree of specific

performance, the court has no power

to decree performance in any other

manner than according to the agree-

ment of the parties. The court

should not assume to make a new

contract for the parties and then

decree its specific performance,

or undertake to compel the defendant

to do something he did not contract

Or agree to do, but should enforce

the contract in question according

to its terms or not at all. Specific

performance will not be decreed of

something which a party has not agreed

to do, in spite of the fact that it

is deemed essential to the complete

attainment of the benefits or ad-

vantages anticipated as a result of

the contract.

Clearly, the Court was without juris-

diction to rewrite the escrow agreement

so as to delete therefrom Transamerica's

obligation as escrow agent to either

close or cancel the escrow, and enforce

only its claimed rights under paragraphs

8, 9, and 10 of the same agreement.

Further, paragraph 8 itself specifies

the time limit within which the escrow

agent was authorized by Buyers and Sellers,

in the event a demand was made upon it

concerning the escrow, to hold the money

and documents deposited into escrow with-

out incurring liability and responsibility

381

for damage suffered by Buyers and Sellers

from the delay. Paragraph 8 provides:

SELLER AND BUYER:

8. Authorize Escrow Agent, in the

event any demand is made upon it

concerning these instructions or the

escrow, at its election, to hold any

money and documents deposited here-

under until an action shall be

brought in a court of competent

jurisdiction to determine the rights

of Seller and Buyer or to interplead

Said parties by an action brought in

any such court. Deposit by Escrow

Agent of said documents and funds,

after deducting therefrom its charges

and its expenses and attorney's fees

incurred in connection with any such

court action, shall relieve Escrow

Agent of all further liability and

responsibility.

(emphasis added)

The record shows that such a demand was

made by Buyers in their letter of new

escrow instructions dated March 5, 1969,

and by F. M. Cocke on or about April 3,

1969. Even so, paragraph 8 clearly does

not relieve the Escrow Agent of liability

and responsibility for holding the money

and documents from and after June 23, 19-

69, when the required action to deter-

mine the rights of Seller and Buyer was

filed, inasmuch as the escrow agent has

not yet deposited the money and documents

into court as specified. Obviously, the

escrow agent is liable for all damages

resulting from this deviation from the

terms of the escrow agreement. Tucson

Title Insurance Co. v. D'Ascoli, supra.

382

Since the trial court was also with-

out jurisdiction to extend the time lim-

it specified by paragraph 8, it is clear

that the separate summary judgment in favor

of the escrow agent was and is a nullity,

and that the appellate courts therefore

lacked jurisdiction to review it. Quiroz

v. Alfaro, No. 2 CA-CIV 1276; Riley v.

County of Cochise, 10 Ariz. App. 55, 455

P.2d 1005 (1969). See also Pacific Na-

tional Insurance Co. v. Transport Insur-

ance Co. (8th Cir., 1965) 341 F.2d 514.

Since the escrow agent's obligations

under the escrow agreement cannot be

deleted, the Summary Judgment of November

10, 1970, was plainly premature. It

should have awaited a final judgment

which specifies whether the escrow agent

is to close or cancel the escrow, with

findings of fact and conclusions of law

as to whether or not the documents and

demands contained in Buyers' letter dated

March 5, 1969, constituted compliance by

Buyers, and should also have awaited a

determination of the damages suffered by

Buvers and Sellers by reason of the es-

crow agent's delay, in closing or can-

celling the escrow, beyond the time limit

specified by paragraph 8. Clearly, the

escrow agent could relieve itself of

liability and responsibility, for holding

the money and documents beyond the time

limit, only by delivering same either to

the court, or, by closing or cancelling

the escrow, to Buyers and Sellers. Trans-

america has so far chosen to do neither.

In F. M. Cocke's affirmative actions

to enforce the escrow agreement, he join-

ed both the escrow agent and the Buyers,

383

as required by Rule 19 discussed above

under IV.

The question of whether parties to a

multi-party contract, such as the escrow

agreement, can separate the enforcement

of its mutually binding covenants into

separate controversies, with separate

judgments, has arisen innumerable times

following attempts by one of such parties

to remove part of the case from a state

to a federal court on the grounds of di-

versity. In Louisville and Nashville

Railroad Co. v. Ide, 114 U.S. 52, 5 S. Ct.

735, 29 L.ed 63, in affirming the circuit

court's order remanding the case to the

state court in accordance with the estab-

lished rule, the Court said:

The cause of action is the subject

matter of the controversy, and that

is for all the purposes of the suit

whatever the plaintiff declares it

to be in his pleadings. Here, it

is certain joint contracts, entered

into by all the defendants for the

transportation of property. On the

one side of the controversy upon

that cause of action is the plaintiff,

and on the other all the defendants.

The separate defenses of the defen-

dants relate only to their respective

interests in the one controversy.

The controversy is the case, and

the case is not divisible.

It is said, however, that by the

New York Code of Civil Procedure,

section 1204, "judgment may be given

for or against one or more plain-

tiffs, and for or against one or

more defendants,” and under this it

384

has been held that when several

are sued upon a joint contract,

and it appears that only a por-

tion are bound, the plaintiff

May recover against those who are

actually liable. The same rule

undoubtedly prevails in many

other States, but this does not

make a joint contract several,

nor divide a joint suit into

separate parts.

As pointed out in 88 CJS, Trial, Sec-

tion 9, Necessity or Propriety of Separate

Trials of Separate Issues:

There should be one full and com-

prehensive trial covering all dis-

puted matters, and parties cannot,

as of right, have a trial divided.

Separate trials will be denied

where the cases arise out of the

Same event... .

It has long been settled that to pro-

ceed in a matter, the Court must have jur-

isdiction of the subject matter of the

case, jurisdiction of the persons involved

in the litigation, and jurisdiction to

render the particular judgment given. Van

Ness v. Superior Court of Maricopa County

(1950), 69 Ariz. 362, 213 P.2d 899; Wall

v. Superior Court of Yavapai County (1939)

53 Ariz. 344, 89 P.2d 624.

The separate proceedings on Transamer-

ica's counterclaim against F. M. Cocke to

enforce paragraph 8, 9, and 10 of the es-

crow agreement were under Rule 19 beyond

the jurisdiction of the Court in the ab-

sence of the Buyers, and the separate

385

proceedings on Buyers' suit against F. M.

Cocke for specific performance of the es-

crow agreement were likewise beyond the

Court's jurisdiction in the absence of the

escrow agent.

It must therefore be concluded, since

the Court did not have jurisdiction to

proceed, that Rule 13 (i) did not author-

ize the separate proceedings or the separ-

ate summary judgments against F. M. Cocke

on his affirmative action brought against

the escrow agent and the Buyers for en-

forcement of the escrow agreement. The

summary judgment in favor of the escrow

agent does not even mention the Buyers or

their rights or obligations, and the sum-

mary judgment in favor of the Buyers ad-

mits the escrow agreement but does not

mention the escrow agent or its duties.

vI.

DUE PROCESS OF LAW AS PRESCRIBED

BY THE RULES OF CIVIL PROCEDURE

In neither of the summary judgments

against F. M. Cocke on his affirmative

claims against the escrow agent and again-

st the Buyers was there any finding of

fact, conclusion of law or decision as to

whether Buyers' letter of new demands, and

the checks, notes and mortgages delivered

into escrow thereby, constituted compli-

ance with the escrow agreement, Or a re-

pudiation thereof. Nor was there any find-

ing, conclusion or decision as to whether

the escrow agent was bound to either close

or cancel the escrow. Clearly, judgment

was not rendered upon the whole case or

for all the relief asked, since the

386

questions as to these fundamental and de-

cisive facts were undeniably put in issue

by F. M. Cocke in seeking the return of

Sellers' deeds, and damages for delay.

However, in violation of Rule 56(d)

the Court in neither of the summary judg-

ments ascertained or specified that such

material facts existed without substantial

controversy.

As to the recent judgment in favor of

Buyers, neither the Buyers in making their

claim for damages suffered by reason of

claimed delay by F. M. Cocke in the clos-

ing of the escrow, nor the Court in grant-

ing summary judgment in favor of Buyers on

their Complaint For Specific Performance

of the escrow agreement specified the par-

ticular date which marked the beginning of

the claimed delay. Without a finding of

whether and when Buyers complied with the

escrow agreement, so that the escrow could

close and Buyers could proceed with their

development, and a finding of whether and

when F. M. Cocke violated the agreement

and so caused the claimed delay, there can

be no determination of just when such de-

lay began. As Buyers themselves stated in

their letter of March 26, 1969:

Some action must now be taken to

see that this matter is closed so

that title can pass to the buyers

and they can proceed with their

development and obtain releases

for the annual payment and for

other land as required.

Further, Buyers' Complaint irrevocably

demanded that the escrow be closed and the

title policies issued, even though Buyers

failed to join Transamerica.

387

In view of these admissions that Buy-

ers' right to begin development must await

the close of escrow and the issuance of the

title policies, and in the absence of find-

ings that the escrow has actually been

closed and the title policies issued, or

findings as to how and when F. M. Cocke

delayed same, the award of damages for his

claimed delay in such development is based

on delay over a period of time which has

not yet begun.

Prior to the trial on the issue of dam-

ages, F. M. Cocke made three requests, as

provided by Rule 52(a), for findings of

fact and conclusions of law, all of which

were and are material to, if not decisive

of, the period of time during which the

damages claimed by Buyers could have ac-

crued. In violation of Rule 52(a) the

requests have been ignored.

The Supreme Court of Arizona, in

Fritts v. Ericson, 87 Ariz. 227, 349 P.2d

1107 (1960), held that where the request

was made before trial, the special find-

ing of fact and conclusions of law are

mandatory.

In United STates v. Aluminum Co. of

America, 2 F.R.D. 224 (1941) the court

held that the District Court was without

authority to dispense with the findings

or the conclusions contemplated by the

federal rule. (Rule 52.) The Court said:

Rule 52 is incontrovertibly valid.

It is also mandatory; it is as

binding on this court as would be

a statute in the same terms. Rio

Grande Irrigation & C. Co. v.

Gildersleeve, 174 U.S. 603, 608,

388

609, 19 S.Ct. 761, 43 L.Ed. 1103;

Weil v. Neary, 278 U.S. 160, 165,

169, 170, 49 S.Ct. 144, 73 L.Ed.

243. See in G. W. Giannini, Inc.,

2 Cir., 90 F.2d 445, 447, 448, 111

A.L.R. 1492.

In the present case, as yet, I

have not complied with Rule 52.

Among the deficiencies are the

following: I have made "no for-

mal findings." I have not stated

"separately: the court's "con-

clusions of law." With few ex-

ceptions, I have stated "but

ultimate conclusions.” I have

not, -- at least except ina

discursive and general way, --

formulated “underlying findings

of fact." I have discussed only

“portions of the evidence." In

great part I have engaged in

"reasoning." Neither the dis-

cussion nor the reasoning con-

stitutes "special" or "formal"

findings. So far I have re-

frained entirely from going

into numerous issues made by

the pleadings and have not even

mentioned the evidence bearing

on them. Nor have I "separately"

or "specifically" determined, or

even made a partial determination

of, “all the issues which the

case presents."

For the reasons given, therefore,

it seems to me (1) that this

court is without authority to

dispense with either the find-

ings or the conclusions contem-

plated by Rule 52 and (2) that,

389

in order to obey the rule, as

construed by the Supreme Court,

-- regardless of the contents

of the oral opinion, -- findings

must be made and conclusions

stated on all issues in the

present case.

The fundamental rule as to findings of

fact to support a judgment was clearly

stated in the early case of Hultberg v.

Anderson (1912) 97 N.E. 216, 252 Ill. 607,

writ of error dismissed (1914), Anderson

v. Swedish Evangelical Mission Covenant

of America, 35 S. Ct. 418, 238 U.S. 605,

59 L.ed 1485:

A judgment pronounced without any

judicial determination of the

facts which alone can support it

is wanting in due process of law

and may be impeached.

A judgment pronounced without any

judicial determination of the

facts which alone can support

such judgment is merely the ar-

bitrary edict of the judge, and

is as much wanting in due pro-

cess of law as though the party

against whom it is entered had

received no legal summons. Chi-

cago, Burlington & Quincy Rail-

road Co. v. City of Chicago, 166

U.S. 226, 17 Sup. Ct. 581, 41 L.ed

979; Fayerweather v. Rich, 195

U.S. 276, 25 Sup. Ct. 58, 49 L.ed

193. -

It must therefore be concluded that

the entry of the two judgements in viola-

tion of Rules 56(d) and 52(a) constituted

390

violations of due process of law, as pre-

scribed by such Rules.

For the reasons set forth above the

Judgments of November 10, 1970, and Sept-

ember 27; 1972, should be vacated and set

aside for want of jurisdiction in the

Court.

Respectfully submitted this

10th day of October, 1972.

By lL. Alton Riggs, Jr.

Attorney At Law ©

391

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an Arizona corporation;

M. SETH HORNE and MAURINE E. HORNE, his

wife; vs. FRANCIS M. COCKE, a divorced man;

and JOAN H. COCKE, a divorced woman

C-222472

RESPONSE TO F. M. COCKE'S MOTION

TO VACATE THE JUDGMENT OF NOVEMBER 10,

1970, AND THE JUDGMENT OF SEPTEMBER 29,

1972

Filed: October 12, 1972

Plaintiffs, by and through their attor-

neys undersigned, for their response to

F. M. Cocke's motion to vacate the judg-

ment of November 10, 1970 and the judgment

of September 29, 1972 move the Court for

entry of its order denying said motion.

Said response is based upon all the pro-

ceedings had herein, including the pro-

ceedings had before the Court of appeals

in a special action, and upon Memorandum

of Points and Authorities attached hereto.

MEMORANDUM OF POINTS AND AUTHORITIES

Job's lament that there is nothing new

under the sun must have been made with the

anticipa’*ion of this lawsuit in mind. Once

again Mr. Cocke has set forth the same

tired and stale arguments so consistently

and frequently rejected by this Court in

every phase of this litigation. It is

submitted that by now the Court is pain-

fully aware of Mr. Cocke's contentions,

and that the restatement of the same in

the form of a motion to vacate judgment

392

adds nothing new to these proceedings.

Therefore, for the reasons set forth in

dozens of arguments concerning the same

matters raised in this motion, Plaintiffs

move that the motion be denied.

Respectfully Submitted,

KELLY AND CORBIN

By Steven H. Schneider

Attorneys for Plaintiffs

393

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

JAMES STEWART CO., an Arizona corporation;

M. SETH HORNE and MAURINE E. HORNE, his

wife; vs. FRANCIS M. COCKE, a divorced man;

and JOAN H. COCKE, a divorced woman

C-222472

RESPONSE TO F. M. COCKE'S MOTION TO

VACATE THE JUDGMENT OF NOVEMBER 10,

1970, and the JUDGMENT OF SEPTEMBER 29,

1972

Filed: October 24, 1972

Defendant and counterclaimant, Trans-

america Title Insurance Company of Arizona,

by and through its undersigned counsel,

respectfully respond to the Motion of

F. M. Cocke to vacate the Judgment of Nov-

ember 10, 1970, and the Judgment of Sept-

ember 29, 1972, as follows:

The Motion of F. M. Cocke is virtually

a photostating of the multiple arguments

that have been raised by Mr. Cocke in the

trial court, the Court of Appeals, the

Superior Court, again in the trial court

and on numerous interim occasions. Each

of the courts referred to above has judi-

cially considered the arguments and author-

ities cited by F. M. Cocke and have on

each occasion found the contentions of

Mr. Cocke to be frivolous and the legal

arguments non-persuasive. Suffice it to

say that the Motion of Mr. Cocke is in

all candor simply a rehash of various

arguments that have been made time and

time again in these proceedings and have

been denied by the various courts

394

considering them and therefore, the issues

sought to be raised by the Motion are with-

out question res judicata. In particular,

the Motion requests that the judgment be

set aside for lack of jurisdiction, a ques-

tion which was specifically determined by

the Court of Appeals in Cocke v. Transamer-

ica, 494 P.2d 756, and by the Arizona

Supreme Court on a writ of special action

brought by Francis M. Cocke and heard on

June 6, 1972.

It is therefore respectfully submitted

that for the reasons set forth in this re-

sponse and in the numerous responsive

pleadings filed by Transamerica Title

Insurance Company of Arizona in this mat-

ter, that the Motion of Francis M. Cocke

to vacate the Judgment of November 10,

1970, as modified on September 29, 1972,

be denied and for such other and further

relief as the Court deems appropriate.

BROWDER & GILLENWATER, P.C.

By Powell B. Gillenwater

Attorneys for Transamerica

Title Insurance Company of

Arizona