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Knowles v. Williams

Court of Chancery of Delaware, New Castle County

January 26, 1954

KNOWLES
v.
WILLIAMS et al.

Proceeding by escrow agent for instructions with respect to disposition of realty to which he held only deed title. The administrator of the alleged equitable owner's estate filed cross-claims seeking authority to sell realty and to pay debts and for construction of will of such owner. The Court of Chancery, New Castle County, Seitz, Chancellor, held that escrow agreement which was executed by husband and wife in conjunction with divorce proceeding commenced by wife, and which designated escrow agent to take title to realty which husband and wife owned as tenants by entireties, subject however to wife's instructions with respect to its disposition, and which was executed to relieve husband of his obligations to support wife, gave wife exclusive equitable title to realty after divorce became final, but that under the circumstances the Chancery Court would not take jurisdiction of executor's request for order permitting sale of realty involved for payment of debts.

Order in accordance with opinion.

[34 Del.Ch. 244] William T. Knowles, Wilmington, plaintiff, pro se.

J. D. Winslow, Wilmington, for defendant Albert J. Stiftel, administrator.

Leighton S. Dorsey, Wilmington, for defendants John W. Williams and Johnnie Mae Adams.

Howard M. Berg, Wilmington, guardian ad litem for Stephanie A. Hunt, minor, pro se.

SEITZ, Chancellor.

Plaintiff characterizing himself as trustee seeks the instructions of this court with respect to the disposition of certain real estate to which he admittedly holds only deed title. Defendant-administrator has filed

Page 443

cross-claims seeking authority to sell the property to pay debts and also seeking a construction of the will of the alleged equitable owner, now deceased.

On March 29, 1935, Louis Gaitwood and his wife, Lillian E. Gaitwood (hereafter called ‘ deceased’ ) took title as tenants by the entireties to a piece of real estate known as 1323 Tatnall Street, Wilmington. In conjunction with a divorce proceeding commenced by the deceased against her husband on March 1, 1949, she and her husband entered into a so-called escrow agreement dated March 7, [34 Del.Ch. 245] 1949, by which plaintiff, denominated as escrow agent, was to take title to the real estate, subject however to the deceased's instructions with respect to its disposition. The Gaitwoods also executed deeds to the escrow agent. It was further provided that if the deceased should die ‘ after a decree nisi has been granted or prior to the final decree’, the escrow agent should transfer the property to the defendant, Johnnie Mae Adams.

The divorce became final on September 9, 1949. The deceased died testate July 15, 1950, without having caused the legal title to be transferred out of the escrow agent's name. Neither the escrow agreement nor the deeds have been recorded.

After the filing of the complaint and the two cross-claims, a default judgment was entered against many of the defendants, including the defendant, Herbert Charles Thompson. The case was submitted for decision on the basis of the pleadings and certain stipulated facts.

The court is asked to rule on the following two questions:

1. Under the terms of the escrow agreement of March 7, 1949, did the deceased, after the divorce became final, obtain the absolute equitable ownership of the real estate or did she only have an inter vivos power of appointment?

2. Assuming that the escrow agreement gave the deceased the absolute equitable interest in ...


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