Daniels v. Williams
| Decision Date | 19 May 1954 |
| Citation | 270 P.2d 556,125 Cal.App.2d 310 |
| Court | California Court of Appeals Court of Appeals |
| Parties | DANIELS et al. v. WILLIAMS et al. Civ. 15919. |
Thiel, Sassone & Howard, Oakland, for appellant.
John A. Grennan and Burt S. Hofmann, Oakland, for respondents.
Plaintiffs brought this action to annul a promissory note and deed of trust which they had executed, claiming fraud in the procurement thereof.
As defendants, they joined Ben Melmet, the payee of the note, James A. Williams allegedly active in procuring the note, Milton N. Owens, allegedly engaged by Melmet to sell the note, and Walter E. McMannis, the present holder of the note.
Upon application of the plaintiffs, a preliminary injunction was issued restraining McMannis, during the pendency of the action, from disposing of the note or the deed of trust or from causing the sale of the real property covered by the deed of trust, conditioned upon the filing of a $3,000 corporate surety bond by the plaintiffs.
McMannis has appealed from the order for this injunction. He contends it was an abuse of discretion, a reversible error, to make the order because, according to his view of the evidence and the law, (1) there was no evidence to support the order and (2) the order was based upon the mere allegations of the complaint which were fully and specifically controverted by verified answer and sworn testimony.
(1) Our examination of the record convinces us that the evidence adequately supports the order.
The evidence consists of the verified complaint and the testimony of McMannis and one Rudy Washburn. McMannis did not file an answer until after the injunction had been granted.
McMannis claims he is a holder in due course but has adduced no evidence tending to prove that any prior holder had a good title to the note. He testified that prior to purchasing the note he had no knowledge at all of any of the dealings between any of the other parties to the action in connection with this transaction.
Accordingly, the following facts stated in the complaint are uncontradicted: Plaintiffs own certain real property subject to a secured indebtedness of $4,187.15. Plaintiffs requested defendant Williams to procure a purchaser. He later informed them he had a purchaser but represented that, to consummate the sale, it would be necessary to extinguish the existing loan and for that purpose execute and sell a new note and deed of trust for $4,000. Relying upon his representations, they executed the note and deed of trust in suit, which Williams without plaintiffs' knowledge or consent sold to Melmet, taking the proceeds for his own use and not extinguishing the original indebtedness of $4,187.15. Melmet was at all times aware of Williams' plan to defraud plaintiffs and convert the proceeds to his own use, and purchased the note with knowledge of Williams' defective title. Melmet employed Owens to sell the note and Owens knew or had sufficient cause for knowing that Melmet's title was defective.
The verified complaint further states that McMannis knew or had good cause for knowing that Melmet's title was defective, and, upon information and belief, that McMannis paid $2,500 for the note.
McMannis testified that he first learned of this note and deed of trust from a newspaper advertisement which stated: He called the phone number and talked to one Dancy, an employee of defendant Owens, and was given the street address of the property. He inspected the property; phoned Dancy that $2,800 was too high; they agreed on $2,500. He deposited the money in escrow, his instructions being that upon Melmet's endorsing the note the sale would be complete. The transaction was completed and he received the note and deed of trust. He did not know the plaintiffs when he bought the note, nor did he know the payee, nor had he any prior dealings with Owens or Dancy. He did not know and did not inquire who was the maker of the note which supposedly was secured by the first deed of trust. He is a real estate broker and has purchased a number of second deeds of trust while in the real estate business.
Rudy Washburn testified on behalf of McMannis that in his opinion the second deed of trust when McMannis bought it was worth about $2,400 and that the property is worth between $9,500 and $10,500. When valuing the deed of trust in suit, Washburn viewed the premises but did not inquire as to the amount of rent being paid and did not know the amount of the first deed of trust. He admitted that the amount of the first would make a...
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