Bate v. Marsteller

• Decision Date: 25 November 1959
• Docket Number: No. 18229,18229
• Citation: Bate v. Marsteller, 175 Cal.App.2d 573, 346 P.2d 903 (Cal. App. 1959)
• Parties: Reginald Frank BATE and Oleta W. Bate, Plaintiffs and Appellants, v. Agnes MARSTELLER, Arnold S. Gridley, Sr., dba Gridley Realty Co., Burton Graham, Arnold S. Gridley, Jr., Roland W. Stromberg, Marion Stromberg, City Title Insurance Company, Defendants and Respondents.
• Court: California Court of Appeals

Page 903

346 P.2d 903

175 Cal.App.2d 573

Reginald Frank BATE and Oleta W. Bate, Plaintiffs and Appellants, v. Agnes MARSTELLER, Arnold S. Gridley, Sr., dba Gridley Realty Co., Burton Graham, Arnold S. Gridley, Jr., Roland W. Stromberg, Marion Stromberg, City Title Insurance Company, Defendants and Respondents.

No. 18229.

District Court of Appeal, First District, Division 1, California.

Nov. 25, 1959.

Rehearing Denied Dec. 10, 1959.

Dodge & Evans, Robert P. Brorby, Oakland, for appellants.

Jerome L. Schiller, San Francisco, Tobin & Tobin, San Francisco, for respondents.

FOLEY, Justice pro tem.

Appellants have appealed from a judgment in favor of respondents in an action brought to recover damages for alleged fraud in a real estate transaction.

Appellants were the owners of an apartment house in San Francisco. Having become financially involved, they decided to sell the property which had become heavily encumbered. They authorized respondent Arnold S. Gridley, St., doing business as Gridley Realty Company to procure a purchaser for said property. At that time and at all times mentioned herein respondents Agnes Marsteller, Burton Graham, and Arnold A. Gridley, Jr. were servants, agents, and employees of said realty company and were acting in the course and scope of their employment with full knowledge, consent and ratification of Gridley, Sr. The above named defendants-respondents will hereafter be referred to collectively as the brokers.

At the time they originally procured authorization to sell the property, the brokers were informed that appellant owners were in financial difficulties and that it was necessary for them to dispose of the property. Appellants informed the brokers that they desired to sell the property for $50,000 and that they should ask $52,500 for it. On many occasions the brokers showed the property to prospective purchasers and received many telephone inquiries concerning the property but they were unable to sell it.

Plaintiffs withdrew the property from sale for several months and then replaced it with the Gridley Company. Thereafter the brokers advertised the property for sale in local newspapers for $52,500 and later for $45,000.

Defendant Graham called on defendants Strombergs and told them that if they would make an offer of $37,000 for the property he believed the owners would accept it.

On November 4, 1955, the Strombergs executed a Uniform Agreement of Sale and Deposit Receipt in which they offered to buy the property for $37,000 and on the same day gave Graham a $500 deposit. At this time the Strombergs indicated to Graham that they might require his financial assistance or his participation in the transaction.

The sales agreement which also provided for the payment by plaintiffs of a $1,500 broker's commission was submitted to plaintiffs who signed it on November 7, 1955. On behalf of Gridley Realty Company, Graham at the same time signed the document in plaintiffs' presence.

Also on November 7, 1955, the Strombergs executed a letter agreement whereby, as additional consideration, plaintiffs were to be permitted to remain rent free in the apartment then occupied by them until November 30, 1956. The rental value of this apartment was $100 per month. This brought the sale price to $38,200.

On November 8, 1955, Graham placed the $500 deposited with him in escrow with City Title Insurance Company. The sales agreement provided that the deposit was required to be increased to 10% of the sale price upon approval of the offer by the sellers. However, the Strombergs, after plaintiffs had approved the sale, declined to increase their deposit and on November 9, 1955 the brokers, themselves, deposited in escrow $3,200 by check, the balance due upon the deposit.

In her own name, defendant Agnes Marsteller initiated a request for a loan commitment, and, pursuant thereto, on November 16, 1955, an appraisal report was made by Mr. B. B. Howe, assistant secretary and treasurer of Surety Savings and Loan Association of San Jose. This appraisal reported a proposed sale price of $47,500 and a long term loan value of $42,900. As a result of this appraisal, a commitment for a loan in the amount of $30,000 was made by Surety to Marsteller in her name.

Sometime around the Christmas holidays of 1955, the Strombergs became dissatisfied with the transaction and were willing to lose their deposit rather than go through with the purchase. However, they requested Graham to assist them in order to avoid the loss of their $500 deposit if it were possible. Sometime during this same period, the brokers agreed to participate in the purchase.

On January 11, 1956, a formal request for a loan was made and Surety made the loan to Agnes Marsteller individually as purchaser.

On January 13, 1956, plaintiffs executed a grant deed of the property to the Strombergs and this deed acknowledged by Graham as a notary public on January 30, 1956, was deposited in escrow on January 31, 1956.

On this latter date the instructions of plaintiffs as sellers were deposited in escrow by Graham. These instructions showed a sale price of $37,000, and $1,500 brokers' commission. The buyer's instructions were deposited in escrow on behalf of and signed by Agnes Marsteller and showed a purchase price of $47,500.

A grant deed was then executed by the Strombergs conveying this property to Agnes Marsteller. This deed was acknowledged by Graham an notary public, as was a deed of trust executed by Marsteller for the benefit of Surety. This deed of trust dated January 13, 1956, secured two promissory notes totalling $30,000 also dated January 13, 1956, and executed by Marsteller in her own name.

It appears that while record title to the property was placed in the name of Marsteller, she holds such title for the benefit of herself, the Gridleys, and Graham to the extent of a total undivided 7/8 interest and for the benefit of the Strombergs to the extent of 1/8 interest.

On February 1, 1956, Graham placed an additional $800 in escrow on his own behalf and $300 on behalf of the Strombergs. These amounts added to the $500 cash and the $3,200 check already deposited made a total of $4,800 in escrow.

Thereafter Graham withdrew the $3,200 which had been placed in escrow but an additional $4,800 was them put in escrow on behalf of Gridley Realty Company and Marsteller on February 2, 1956, and this brought the total amount in escrow to $6,400. 7/8 of which had been placed there by the brokers on their own behalf. In other words, of the money in escrow, Graham put in $800, the Strombergs $800, Gridley $1,600, and Marsteller $3,200. The $30,000 obtained as a loan from Surety by Marsteller was also placed in escrow on February 2, 1956. The Stromberg to Marsteller deed was also at the same time placed in escrow.

On February 2, 1956, the escrow was closed and copies of the sellers' closing statement showing a sale price of $37,000 were sent to Gridley Realty Company, but none were sent to plaintiffs. Copies of the buyers' closing statement showing a sale price of $47,500 together with title policy insuring Marsteller for $47,500 and a refund of $131.29 were sent to Marsteller; no copy of this statement was sent to plaintiffs.

After completion of the sale plaintiffs continued to live in the apartment for approximately 10 months. They requested an extension of their lease which request was denied by Gridley, Sr. in a letter dated October 2, 1956, in which he stated that the new owners desired occupancy of the apartment as of December 1, 1956.

The ultimate result of these transactions which were handled in one escrow was that the brokers became owners of 7/8 of the property and the Strombergs became owners of 1/8 thereof. The brokers were also paid a commission of $1,500 by the plaintiffs.

Appellants urge the following as grounds for reversal of the judgment: (1) The trial court's findings that the Strombergs were bona fide purchasers of the property on their own behalf are not supported by any substantial evidence; (2) The trial court's findings that the brokers made a full and complete disclosure to appellants and that appellants had knowledge of all material facts concerning the transaction are not supported by any substantial evidence; (3) The trial court's findings that appellants did not rely upon any representations made by defendants and at all times acted solely and only upon independent advice are not supported by any substantial evidence; (4) The trial court's findings that appellants after obtaining knowledge of the transaction ratified and confirmed the same is not supported by any substantial evidence; (5) The trial court's finding that the respondent brokers were entitled to a commission is against the law and evidence; (6) The trial court erred in finding that $37,000 was the best available market price for the property and that therefore appellants did not suffer any damages; and (7) The trial court erred in refusing to allow testimony as to the relationship between extended loan value and fair market value.

I. Is there any substantial evidence that the Strombergs were bona fide purchasers of the property on their own behalf?

The answer to this question must be in the affirmative at least to the extent of a 1/8 interest in the property.

II. Is there any substantial evidence that the brokers made a full and complete disclosure to the appellants of all the material facts concerning the transaction and that appellants had full knowledge of all the material facts?

The answer to this question must be in the negative.

The most that the record discloses in this regard is that appellants were advised that the brokers would participate or were...