Appeal from Circuit Court, Multnomah County. Robert E. Jones, Judge. No. 372-176.
Al J. Laue, Assistant Attorney General, Salem, argued the cause for appellant. With him on the brief were Lee Johnson, Attorney General, and John W. Osburn, Solicitor General, Salem.
Fred A. Granata, Portland, argued the cause and filed the brief for respondents.
Paul J. O'Halloren, Portland, submitted a brief amicus curiae for The Oregon Escrow Council, Inc.
Langtry, Judge. Schwab, Chief Judge, and Fort, Judge.
This is an appeal in a declaratory judgment proceeding in which the plaintiffs sought to have certain alleged "orders" of the Real Estate Commissioner declared invalid. The alleged "orders" were in the form of three letters. Two were to "All Escrow Agencies," informing them that the Real Estate Commissioner had determined that ORS 696.240*fn1 requires that a broker may not use the services of an escrow agency owned by the broker or one in which he had a sufficient interest to permit him to exercise control. The third alleged "order" was a letter to the legal counsel for the Oregon Escrow Council, Inc., informing him that a procedure for complying with the statute formulated by the Oregon Escrow Council, Inc. which was prompted by the first two letters did not satisfy the Commissioner's interpretation of the statute.*fn2
The Real Estate Commissioner's answer to the complaint denied that the above-mentioned letters were orders and counterclaimed for a declaratory judgment defining the duties of plaintiffs under ORS 696.240.
No factual issues are in dispute. It was stipulated that the plaintiff Banif Corporation dba Cascade Escrow Service Co. was a separate corporate entity that was owned and controlled by the same stockholders and directors who owned and controlled plaintiff Tri-State Realty, Inc. The circuit court decreed that: (1) The letters referred to above in the complaint were not orders. (2) Banif Corporation dba Cascade Escrow Service Co. was a neutral escrow depository within the meaning of ORS 696.240. (3) Banif Corporation dba Cascade Escrow Service Co. is neutral in its relationship to the other plaintiff Tri-State Realty, Inc. and to the general public and can act as an escrow agent in real estate sales made by Tri-State Realty, Inc.
The two basic issues involve the construction to be given ORS 696.240. The first is the construction to be given the term "neutral escrow depository." The second is, if ORS 696.240 is to be construed as prohibiting a broker from depositing funds in an escrow agency which he controls, does it also prohibit the broker from using such an escrow agency for closing transactions?
I. The first issue arises from the fact that "escrow" by definition means "neutral," independent from the parties to the transaction. McPherson v. Barbour, 93 Or 509, 515-17, 183 P 752 (1919). The parties to the transaction are the buyer and the seller;
the broker is not a party and is capable of acting as an escrow depository despite his interest in his commission. Tyler v. ...