ESSAY EXAM QUESTIONS AND ANSWERS

QUESTION 3

          Art was the record owner of Greenacre, a vacant tract of land. Art and Bob discussed the sale of this land to Bob, and they orally agreed on a purchase price of $5,000 in cash. Art then typed up a statement setting forth all the terms that had been agreed upon, including the fact that Art would deliver to Carl, a real estate broker, a warranty deed conveying Greenacre to Bob and that Carl would hand deliver the deed to Bob if Bob gave Carl the purchase price within one month.

Art placed one copy of this statement, unsigned, unwitnessed and undated, in an envelope and mailed it to Bob. Upon receiving it, Bob telephoned Art and told him that the statement accurately reflected his understanding and that he would deliver $5,000 in cash to Carl within the month in accordance with their agreement.

Art then executed the warranty deed, complete in all respects, and gave it to Carl with a copy of his statement.

One week later, Art learned that a highway was to be built near Greenacre, greatly increasing its value. Art immediately wrote to Carl, telling Carl he had changed his mind and wanted the deed returned to him.

One day later and before Carl had received Art’s last letter, Bob called Carl and said he had to show the deed to his bank to obtain a loan for the $5,000. Carl sent the deed to Bob, who promptly recorded it and immediately executed and delivered a warranty deed for Greenacre to Dale.

Bob has disappeared and has not paid the $5,000 to Art or Carl.

(1) In an action to quiet title between Art and Dale, who prevails? Discuss.

(2) What are the rights of Art and Dale against Carl? Discuss.