Engelman v. Gordon

• Decision Date: 26 May 1966
• Citation: 51 Cal.Rptr. 627,242 Cal.App.2d 510
• Court: California Court of Appeals Court of Appeals
• Parties: Howard ENGELMAN and Betty Joy Engelman, Plaintiffs and Appellants, v. Hank GORDON, Defendant and Respondent. Civ. 28451.

Page 627

51 Cal.Rptr. 627

242 Cal.App.2d 510

Howard ENGELMAN and Betty Joy Engelman, Plaintiffs and Appellants, v. Hank GORDON, Defendant and Respondent.

Civ. 28451.

District Court of Appeal, Second District Division 3, California.

May 26, 1966.

As Modified on Denial of Rehearing June 20, 1966.

Hearing Denied July 21, 1966.

Harold Rubins, Beverly Hills, for appellants.

Fierstein & Dolin and Harvey Fierstein, Los Angeles, for respondent.

FORD, Justice.

The plaintiffs have appealed from a judgment in favor of the defendant Hank Gordon in an action on two promissory notes executed by Trailer Park Enterprises, Inc., a corporation, and bearing the signature of Mr. Gordon. Each note represented a portion of the purchase price of one of two lots which were purchased from the plaintiffs by the corporation and was secured by a deed of trust of the property subordinate to two other deeds of trust. Prior to the rendition of judgment in the case, each lot was sold pursuant to the terms of a prior deed of trust. In their complaint the plaintiffs alleged that Mr. Gordon was a guarantor of each note and not a maker thereof.

The findings of fact of the trial court were in part as follows: 1. The plaintiffs' security in the form of the deeds of trust had become valueless. 2. Mr. Gordon was not a purchaser of either parcel of real property. He was the sole stockholder of the purchasing corporation. 3. 'It is true that plaintiffs made demand upon defendant (Hank Gordon) and upon Trailer Park Enterprises, Inc., for the payment of the notes and it is true that plaintiffs informed the defendant that said notes were not paid when due and it is true that defendant knew that said notes were not paid when due.' 4. 'It is true that the plaintiffs believed and intended the signature of the defendant Hank Gordon as it was placed upon said promissory notes to be a guarantee by the said defendant Hank Gordon, and it is true that the defendant Hank Gordon knew that the plaintiffs believed and intended the signature of the defendant Hank Gordon, as it appeared on said promissory notes, to be a personal guarantee of said promissory notes by the defendant Hank Gordon.' 5. The plaintiffs would not have entered into the transaction without the personal guarantee of the notes by the defendant Hank Gordon and the defendant Hank Gordon so knew. 6. The defendant Hank Gordon was an accommodation maker of each of the promissory notes.

One of the conclusions of law of the trial court was that sections 580a, 580b and 580d of the Code of Civil Procedure constituted 'a complete defense to the action.'

In the escrow instructions it was provided that title was to be conveyed to 'Gordon Building Corp. or nominee.' Trailer Park Enterprises, Inc., was thereafter designated as the nominee. The instructions were executed on behalf of Gordon Building Corp. by Hank Gordon as president.

Each promissory note was entitled 'Note Secured by Deed of Trust.' A portion of the body thereof was as follows: 'May 23, 1962, after date, for value received, I promise to pay to Howard Engelman and Betty Joy Engelman, Husband and Wife, or order, at Los Angeles the sum of Ten Thousand Seven Hundered Fifty and no 100 DOLLARS, with interest from May 23, 1961 until paid at the rate of seven (7%) per cent per annum, payable quarterly.' The defendant Gordon's signature was placed to the left of the signature made on behalf of Trailer Park Enterprises, Inc., and over the typewritten words 'HANK GORDON--Personaly (sic).' (On one of the notes the last word was 'Personnaly.') The deed of trust in each instance was executed only by the purchasing corporation. The escrow instructions showed that the secured obligation in each instance was for the balance of the purchase price of the real property. Since the instruments formed parts of one transaction, they must be read and considered together. (Collins v. Home Savings & Loan Ass'n, 205 Cal.App.2d 86, 98, 22 Cal.Rptr. 817; Mutual Bldg. & Loan Assn. v. Beers, 117 Cal.App. 200, 204, 3 P.2d 565; see Roberts v. Reynolds, 212 Cal.App.2d 818, 824, 28 Cal.Rptr. 261.)

It is, of course, obvious that if by signing each promissory note Hank Gordon subjected himself to no greater liability with respect to a personal judgment than did the corporation which was the purchaser of the property, ¹ there was no purpose to be served in having his signature on the note. Under the circumstances thus presented there was an ambiguity as to the nature of the obligation undertaken by the defendant Hank Gordon. Since the contents of the face of each note did not preclude a construction in harmony with the contention of the plaintiffs, extrinsic evidence hearing upon the issue of the nature of the obligation undertaken by Hank Gordon was admissible. ² (Reid v. Overland Machined Products, 55 Cal.2d 203, 210, 11 Cal.Rptr. 819, 359 P.2d 251; Roberts v. Reynolds, supra, 212 Cal.App.2d 818, 825, 28 Cal.Rptr. 261; see Schaeffle v. Nolan, 115 Cal.App.2d 651, 655, 252 P.2d 732, 35 A.L.R.2d 1027.)

It was stipulated that the typewritten words under Mr. Gordon's signature on the notes were written on Mr. Gordon's typewriter. The escrow officer testified that the notes were taken from his office and were returned with Mr. Gordon's signature thereon. He further testified as follows: 'Q. BY MR. RUBINS (attorney for plaintiffs): Now you have stated on cross-examination that at the time of this initial meeting and prior to your preparation of the actual escrow instruction, you were told that the buyer in that escrow would be Gordon Building Corporation, or its nominee, is that correct? A. That is correct. Q. Now were you told in Mr. Gordon's presence what Mr. Gordon's personal capacity would be in this escrow, if any? A. Well, we were told that he was going to sign--he was going to back up the deal, he was going to sign--he was going to co-sign it personally. Q. I see. That is your best recollection of the language that was expressed to you? A. I do not recall the specific recollection, but--Q. Is that your best recollection of the substance of what was said to you at that time? A. Yes; that is correct. Q. And that Mr. Gordon was present at the time of that discussion? A. That is correct. * * * Q. BY MR. RUBINS: Now you also stated on cross-examination that you had two conversations with Mr. Engelman relating to the subject matter of Mrs. Gordon's not signing the * * * documents. Now, can you tell us, as best you can remember, what you stated to Mr. Engelman in the first of these conversations? A. Yes. I told Mr. Engelman that it would not be possible. We would be informed by Mr. Gordon that it would not be possible for Mrs. Gordon to meet the requirement of the escrow and that she could not--* * * that there was some sort of a trust involved that prevented her from executing anything concerning his business. Q. And that is the substance of what you stated to Mr. Engelman, is that right? A. That is correct. * * * Q. And is it a fact, then, that Mr. Gordon had told you this? A. Yes.' With respect to an escrow instruction signed by Hank Gordon as president of 'G.B.C.,' the body of which was 'The Deeds of Trust in this escrow shall be personally guaranteed and executed by Hank Gordon', the escrow officer testified as follows: 'Q. BY MR. RUBINS: * * * when Mr. Gordon signed this in your office and in your presence, did he make any objection to you about its contents? * * * THE WITNESS: As far as I know, there was no objection. I do not recall any objection to signing it.'

The plaintiff Howard Engelman testified in part as follows: 'I called Mr. Gordon early in May of 1962, about three weeks before the notes were to become due and I said, 'Hank, can you tell me if these notes are going to be paid off on their due date?' and he said, 'Everything will be taken care of satisfactorily. Don't be concerned.' * * * A couple--a week or so later I called him again and I said, 'Hank, there is a situation that has come to me and I want to be sure that these funds will be available. Can you tell me if this note will be paid off on the date of it, so that I can perhaps make preparation or make a commitment. And at this time he said, 'There is a problem because * * * Roger Schwimmer (who had signed the notes on behalf of Trailer Park Enterprises, Inc., as its secretary) is in the process of getting a divorce and is not willing to put up the cash for it, insofar as there is some involvement about who is producing the cash and the divorce agreement and he said it looks like it may be delayed a while. * * * I kept calling him to find out what is going to happen. For a while I received no return on the calls and I believe I had one more conversation. Gordon was the only representative of Trailer Park I knew how to get in touch with and so I reached him once more at his office and he said, 'Well, it will probably work out,' he said, 'but it is going to take time. " That conversation was either a few weeks before or after the date upon which the notes were due.

Mr. Engelman further testified that after the maturity of the notes he talked to the defendant Hank Gordon and asked him, Hank, are the notes going to be paid off? ' Mr. Gordon replied, 'My attorney has advised me that I do not have to pay these notes; that I am not liable because of the way the thing was drafted and I think if you want to try to get payment, sue me or if the Court orders me to pay, then I will have to pay.' He testified that Mr. Gordon was present on the occasion when the sale of the property was conducted under the terms of the prior deeds of trust. On cross-examination, Mr. Engelman testified that he never made a written demand for payment upon Trailer Park Enterprises, Inc. He served no written notice of dishonor on Mr. Gordon.

The defendant Hank Gordon testified that on the occasion of the preparation of the escrow instructions by the escrow officer there was conversation with respect to the matter of the...