## Facts

- Sharon Turbiville (plaintiff) entered a contract for deed to purchase the State Line Club, a nightclub, from Erling and Avis Hansen (defendants), paying in installments while the Hansens retained title until full payment.
- The contract for deed included terms requiring Turbiville to maintain the club’s liquor-related licenses and to avoid acts or omissions that could jeopardize those licenses.
- Turbiville, the Hansens, and First National Bank and Trust Company (the Bank) (defendant) executed an escrow agreement appointing the Bank as escrow holder.
- Under the escrow agreement, the Bank was designated as the depository for Turbiville’s installment payments.
- The escrow agreement also provided that, if the Hansens gave notice that Turbiville was in default and demanded cancellation, the Bank was to cancel the contract for deed as directed by the escrow instructions.
- Over the following year, when Turbiville fell behind on payments, the Bank contacted her about the delinquencies, even though the escrow agreement primarily required the Bank to receive payments and act on a cancellation demand after notice of default.
- Turbiville later arranged to sell her interest in the club to a foreign purchaser.
- The Hansens concluded that the contemplated sale threatened the club’s liquor license and treated that risk as a default under the contract for deed.
- The Hansens notified the Bank that Turbiville was in default and demanded that the Bank cancel the contract pursuant to the escrow agreement.
- The Bank canceled the contract for deed after receiving the Hansens’ notice and demand, acting as directed by the escrow instructions.
- Turbiville sued the Hansens and the Bank; she settled her claims against the Hansens, but continued to pursue claims against the Bank.
- Turbiville alleged the Bank breached duties owed to her by canceling the contract without first verifying whether the Hansens had a valid basis for declaring a default.
- The trial court granted summary judgment to the Bank, and Turbiville appealed to the Montana Supreme Court.

## Issues

1. Whether an escrow agent bank, whose written escrow instructions required cancellation upon the sellers’ notice of default and demand, owed the buyer a duty to investigate or verify the factual basis for the claimed default before canceling a contract for deed.
2. Whether summary judgment for the escrow bank was proper when the escrow agreement defined the bank’s responsibilities and the bank acted as the instructions directed.

## Decision

- The Montana Supreme Court affirmed the trial court’s grant of summary judgment for the Bank.
- The court held the Bank’s obligations were limited to the duties set out in the escrow agreement.
- The court rejected Turbiville’s argument that the Bank was required to confirm the validity of the Hansens’ default claim before canceling the contract.
- Because the Bank followed the escrow instructions and no additional investigatory duty was created by the agreement, the Bank was entitled to judgment as a matter of law.

## Legal Principles

- An escrow agent’s duties are defined by the escrow agreement and instructions; the agent must carry out those instructions as written.
- Unless the escrow instructions impose an investigatory or decision-making role, an escrow agent is not required to determine whether a contracting party’s asserted default is factually or legally justified.
- Disagreements about whether a default occurred are for the contracting parties to resolve; an escrow holder is not a referee of the parties’ underlying contract dispute.
- When the operative documents are undisputed and the scope of an escrow agent’s duty turns on those writings, the duty question is one of law that may be resolved on summary judgment.

## Conclusion

Turbiville v. Hansen holds that an escrow bank tasked with receiving contract-for-deed payments and canceling the contract upon the sellers’ notice of default and demand had no duty to verify the default allegations before canceling; by acting according to the escrow instructions, the Bank incurred no liability to the buyer, and summary judgment was properly affirmed.


Turbiville v. Hansen, 761 P.2d 389 (1988)