Banville v. Schmidt

• Decision Date: 04 February 1974
• Citation: 112 Cal.Rptr. 126,37 Cal.App.3d 92
• Court: California Court of Appeals Court of Appeals
• Parties: Thomas G. BANVILLE and Margaret J. Banville, Plaintiffs, Respondents, and Appellants, v. William D. SCHMIDT et al., Defendants and Respondents. FIRST AMERICAN TITLE COMPANY OF SACRAMENTO, Cross-Complainant and Appellant, v. William D. SCHMIDT et al., Cross-Defendants and Respondents. William D. SCHMIDT et al., Cross-Complainants and Respondents, v. FIRST AMERICAN TITLE COMPANY OF SACRAMENTO, Cross-Defendant and Appellant. TOM KIERNAN COMPANY, REALTORS, a corporation, Cross-Complainant and Appellant, v. William D. SCHMIDT et al., Cross-Defendants and Respondents. Civ. 13027.

Page 126

112 Cal.Rptr. 126

37 Cal.App.3d 92

Thomas G. BANVILLE and Margaret J. Banville, Plaintiffs, Respondents, and Appellants, v. William D. SCHMIDT et al., Defendants and Respondents.

FIRST AMERICAN TITLE COMPANY OF SACRAMENTO, Cross-Complainant and Appellant, v. William D. SCHMIDT et al., Cross-Defendants and Respondents.

William D. SCHMIDT et al., Cross-Complainants and Respondents, v. FIRST AMERICAN TITLE COMPANY OF SACRAMENTO, Cross-Defendant and Appellant.

TOM KIERNAN COMPANY, REALTORS, a corporation, Cross-Complainant and Appellant, v. William D. SCHMIDT et al., Cross-Defendants and Respondents.

Civ. 13027.

Court of Appeal, Third District, California.

Feb. 4, 1974.

Gualco, Hummel & Gualco by Allan L. Mellikian, Sacramento, Cal., for Thomas G. and Margaret J. Banville.

McConnell, Backus & Carson by Malcolm L. McConnell, and Robert Hoffman, Sacramento, Cal., for Tom Kiernan Co.

Dahl, Hefner, Stark & Marois by Theodore M. Marois, Jr., Sacramento, Cal., for First American Title Co.

Max H. Hoseit, Sacramento, Cal., for William D. Schmidt.

JANES, Associate Justice.

Plaintiffs Thomas G. Banville and Margaret J. Banville brought an action for rescission of a real estate sale and for damages for negligence, fraud, and misrepresentation. After a nonjury trial, judgment was entered as follows:

(1) For plaintiffs and against defendants William D. Schmidt (Schmidt) and Tom Kiernan Realtor, Inc. (Kiernan Company) in the amount of $12,360, and against Schmidt for an additional $2,000 in punitive damages, on plaintiffs' complaint.

(2) For defendant First American Title Company (First American) and against plaintiffs, on plaintiffs' complaint.

(3) For Kiernan Company and against schmidt on Kiernan company's cross-complaint for indemnity.

(4) For First American and against Schmidt on Schmidt's cross-complaint against First American.

(5) For Schmidt and Kiernan Company and against First American on First American's cross-complaint.

Plaintiffs appeal from that portion of the judgment entered in favor of First American and against plaintiffs. Kiernan Company appeals from the judgment in favor of plaintiffs and against Kiernan Company, and also from an order (treated as a judgmen) sustaining, without leave to amend, the demurrer of cross-defendant First American to the second cause of action of Kiernan Company's cross-complaint against First American.

SUMMARY OF THE FACTS

In 1961 plaintiffs purchased a lot at Tahoe Paradise in El Dorado County (Tahoe property). In 1965 they began construction of a cabin, and by 1967 had expended in excess of $15,000 upon the cabin shell and improvements. Although the cabin had not yet been completed, in June of 1967 plaintiffs listed the property for sale with Kiernan Company through Ray Collins, Kiernan Company's manager at the South Lake Tahoe office. The asking price was $14,950.

On July 11, 1967, defendant Schmidt made an offer on the Tahoe property through Kiernan Company. Schmidt offered a note for $2,600 secured by a second deed of trust on a duplex in North Sacramento and a note for $12,000 secured by a first deed of trust on property near Elverta (Elverta property) in Sacramento County. Plaintiffs were advised by Kiernan Company to look at both properties. Schmidt represented to Ray Collins of Kiernan Company that the Elverta property had an appraised value of $18,000; that the markers of the note were Del J. Fullmer and Erika M. Fullmer (Fullmers); and that Fullmer was a building contractor and a financially substantial individual. Kiernan Company passed this information on to plaintiffs without investigating the value of the Elverta property or the financial condition of Fullmer.

Plaintiffs could not locate the Elverta property but found the approximate neighborhood and looked at what they believed to be the Eleverta property. Mrs. Banville and her mother looked at the North Sacramento duplex. Plaintiffs rejected the $2,600 note and second deed of trust on the North Sacramento duplex as not sufficiently protected by the property; they suggested to Kiernan Company that they would take a $14,000 note from Schmidt secured by the Tahoe property. Ray Collins of Kiernan Company thought this would not be acceptable to Schmidt.

On July 20, 1967, after some further negotiations, plaintiffs agreed to sell the Tahoe property for $2,000 in cash and an assignment of the $12,000 note and deed of trust on the Elverta property. Although plaintiffs were not told that Collins had seen the Elverta property or that Collins knew Fullmer (the maker of the note) personally, they relied upon the representations that Fullmer was financially responsible and that since the Elverta property was appraised at $18,000 it was certainly First American handled the escrow of the $2,000 down payment and the assignment from Schmidt to plaintiffs of the note and deed of trust on the Elverta property. On August 15, 1967, plaintiffs signed escrow instructions at First American. Also on August 15, the Fullmers recorded a deed conveying the Elverta property back to Schmidt. At no time did Collins, Kiernan Company, Schmidt, or First American advise plaintiffs of the August 15 deed from the Fullmers to Schmidt.

adequate security for the $12,000 note--in Collins' words, 'a good transaction.'

On August 21, plaintiffs' Tahoe property was conveyed to Schmidt, and Schmidt's assignment of the Fullmer deed of trust was contemporaneously recorded. Also on August 21, First American issued to plaintiffs a First American policy of title insurance, insuring plaintiffs that title to the Elverta property was vested in the Fullmers subject to a deed of trusting securing Fullmers' note to Schmidt in the amount of $12,000, which deed of trust was assigned to plaintiffs.

In February 1968, when the first payment came due on the $12,000 note, plaintiffs learned for the first time that the Fullmers had deeded the Eleverta property back to Mr. and Mrs. Schmidt. ¹ The Schmidts attempted to deed the Elverta property to plaintiffs by a deed dated September 19, 1968. Plaintiffs refused to accept the deed.

I

THE KIERNAN COMPANY APPEALS

The judgment in Favor of Plaintiffs

The trial court found, inter alia, that the actual value of the Elverta property 'during the transaction' was $7,300 and the value of the Tahor property was $14,000. The court further found that Schmidt (who has not appealed) made representations to Kiernan Company, including a representation that the fair market value of the Elverta property was in excess of $12,000; and that Schmidt concealed from Kiernan Company the fact of Fullmer's financial instability. It was further found that Kiernan Company was the agent of plaintiffs and had a fiduciary duty to plaintiffs while handling the disposal of the Tahoe property, and that without making any investigation on those subjects, but relying completely upon the information given by Schmidt, Kiernan Company represented to plaintiffs that '12,000.00 was a safe figure;' that Fullmer was 'a financially substantial individual;' and that the proposed transaction with Schmidt 'was a good deal.' The court then found that '(i)n entering into said agreement the plaintiffs relief upon the representations made by KIERNAN COMPANY and COLLINS.'

In its conclusions of law, the trial court determined that '(t)he defendant SCHMIDT intentionally and deliberately misrepresented to the plaintiffs and misrepresented to the KIERNAN COMPANY and/or its agents or representatives the true value of the Eleverta Property, the financial condition of DEL J. FULLMER, and the fact that DEL J. FULLMER was desirous of deeding the Eleverta Property back to the defendant SCHMIDT.'

It further concluded that '(t)he defendant KIERNAN COMPANY was guilty of negligent misrepresentation in advising the plaintiffs that FULLMER appeared reliable and by advising plaintiffs as to the value of the property without making any independent effort to ascertain the actual value of the said property or the financial condition of FULLMER. The defendant KIERNAN COMPANY was negligent in not advising the plaintiffs of the incidence of a purchase money deed of trust.'

Kiernan Company's contention that there is no reasonable evidence to support a finding that plaintiffs justifiably relied on Kiernan Company's representations is without merit. 'When a finding of fact is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court Begins and Ends with the determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the finding of fact.' (Green Trees Enterprises, Inc. v. Palm Springs Alpine Estates, Inc. (1967) 66 Cal.2d 782, 784, 59 Cal.Rptr. 141, 143, 427 P.2d 805, 870; see also, Primm v. Primm (1956) 46 Cal.2d 690, 693, 299 P.2d 231.) Plaintiffs had a number of conversations with Collins about the value of the Eleverta property and the financial responsibility of Fullmer. Collins displayed no misgivings about his repeated representation that the property was worth $18,000 and therefore adequate security for the $12,000 note or his representation that it seemed Fullmer was a man of substance. Plaintiffs testified that they relied on Collins' representations. There is substantial evidence to support the trial court's finding.

Kiernan Company contends that '(t)here was no reasonable evidence that Kiernan Company's not advising the plaintiffs of the incidence of a purchase money deed of trust was the proximate cause of any damages suffered by plaintiffs.' It is true that in its conclusions of law the court states: 'The defendant KIERNAN COMPANY was negligent in not advising the plaintiffs of the incidence of a purchase money deed of trust.' However, at no point does the court find or conclude that this negligence was the proximate cause of damage to plaintiffs. Rather, the court in effect negates such a conclusion in Finding of Fact No. 19: 'The deed of trust on...