Graddon v. Knight

• Decision Date: 20 January 1956
• Docket Number: No. 16364,16364
• Citation: 292 P.2d 632,138 Cal.App.2d 577
• Court: California Court of Appeals Court of Appeals
• Parties: Peyton S. GRADDON and Mary Agnes Graddon, his wife, Plaintiffs, Cross-Complainants, Cross-Defendants, Appellants and Respondents, v. Ralph C. KNIGHT et al., Defendants, The Anglo California National Bank of San Francisco, and The Anglo Safe Deposit Company, Intervenors, Cross-Defenants, Cross-Complainants, Respondents and Appellants.

Page 632

292 P.2d 632

138 Cal.App.2d 577

Peyton S. GRADDON and Mary Agnes Graddon, his wife, Plaintiffs, Cross-Complainants, Cross-Defendants, Appellants and Respondents, v. Ralph C. KNIGHT et al., Defendants, The Anglo California National Bank of San Francisco, and The Anglo Safe Deposit Company, Intervenors, Cross-Defenants, Cross-Complainants, Respondents and Appellants.

No. 16364.

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

Jan. 20, 1956.

Hearing Denied March 14, 1956.

Henry C. Clausen, San Francisco, John H. Machado, San Jose, Richard G. Burns, San Francisco, for Peyton S. Graddon et ux.

Frederick M. Fisk, Chickering & Gregory, San Francisco, Nathan C. Finch, Howe & Finch, Palo Alto (John P. Macmeeken, San Francisco, Charles E. Luckhardt, San Jose, of counsel), for Anglo Bank, et al.

BRAY, Justice.

Cross-complainants (and plaintiffs) Graddon appeal from a judgment of nonsuit in favor of cross-defendant bank on their third cause of cross complaint. The bank appeals (1) as cross-defendant from a judgment for $13,639.79 in favor of cross-complaints Graddon on their second cause of cross complaint, and (2) as cross-complaint from a judgment in favor of cross-defendants Graddon on the bank's cross complaint against them.

Questions Presented.

A. Bank's Appeals.

1. Was the admission of evidence of the oral agreement upon which the estoppel cause of action is based an attempt to vary the terms of the deed of trust and hence a violation of the parol evidence rule?

2. Does the evidence support the judgments?

(a) Estoppel.

(b) Authority of bank's officer.

3. Damages.

4. Failure of jury to offset indebtedness to bank.

5. Interest.

6. Bank's cross complaint.

B. Plaintiffs' Appeal (now moot).

Record.

This action grew out of a fire which destroyed a residence being built for Graddons by defendant Knight upon which the bank had granted a so-called G.I. loan. Graddons sued Knight for alleged negligence in the starting of the fire. Then followed a maze of cross complaints, answers and other pleadings. ¹ After a trial certain judgments were rendered and appeals taken therefrom. These appeals were determined in Graddon v. Knight, 99 Cal.App.2d 700, 222 P.2d 329. All judgments were thereby affirmed save a judgment in favor of Graddons on their cross complaint against the bank. That judgment, based on a jury verdict, had granted Graddons certain damages on the theory that under the terms of the deed of trust executed to the bank by Graddons and oral evidence permitted to explain an alleged ambiguity in said deed of trust, the bank was obligated to procure fire insurance on the property and had failed to do so. Holding that there was no ambiguity in the deed of trust and hence oral evidence was not admissible to explain the document, the appellate court reversed that judgment, stating 'The parties should be allowed to amend their pleadings if they see fit in the light of this opinion.' 99 Cal.App.2d at page 706, 222 P.2d at page 333. Thereafter Graddons with permission of the trial court amended their cross complaint against the bank setting up two additional causes of cross complaint: (1) alleging an estoppel against the bank claiming that it had not agreed to procure insurance on the property; (2) alleging negligence in the failure of the bank to procure said fire insurance. On these two causes of cross complaint and on the issue raised by a cross complaint of the bank charging that under the terms of the deed of trust Graddons had agreed to procure fire insurance on the property and had failed so to do, the cause was retried. The trial court granted a nonsuit on Graddons' third cause of cross complaint (negligence). Graddons appeal. The jury found for Graddons and against the bank in the sum of $13,639.79 on Graddons' second cause of cross complaint, and found in favor of Graddons and against the bank on its cross complaint. From the judgments entered thereon the bank appeals.

A. Bank's Appeals.

(1) Oral Agreement.

As stated in the bank's opening brief, the 'pivotal issue presented * * * is that of upon whom the duty to insure the Graddons' home * * * reposed.' The bank contends that as the opinion in the first appeal, Graddon v. Knight, supra, held (and such holding is the law of the case) that the deed of trust was a fully integrated, unambiguous and certain written agreement requiring Graddons to procure and maintain fire insurance, and that parol evidence could not be admitted to vary its terms, the court could not admit oral evidence to support the estoppel charge pleaded in the second cause of action in the amended cross complaint. ² The bank cites many cases concerning 'integrated' written agreements, and the fact that such are not subject to variance by parol evidence. There can be no question about that principle of law nor that the law of the case here is that the deed of trust is such an 'integrated' instrument. But the admissibility of parol evidence here was not to vary the terms of the deed of trust, but to show a contemporaneous oral agreement to the effect that while plaintiffs obligated themselves under the written agreement to procure and maintain fire insurance, the parties agreed that the physical act of obtaining the insurance which plaintiffs were obligated to furnish was to be done by the bank. In other words the bank agreed to act as Graddons' agent to obtain the insurance. There is nothing in such agreement that in any way varies the terms of, or is contradictory to, the written instrument. Almost the identical situation as here appears in Painter v. Twinsburg Banking Co., 1949, 84 Ohio App. 418, 87 N.E.2d 502. There the bank made a loan secured by a mortgage on certain property, the building on which later burned. The mortgage contained provisions similar to those in the deed of trust here obligating the mortgagor to procure fire insurance, the policies to be approved by the bank, the bank having the right to procure the insurance if the mortgagor failed to do so. In the action brought by the mortgagor against the bank for failure to obtain the insurance, based upon a contemporaneous oral agreement of the bank to obtain the insurance, the same contention was made as here, namely, that evidence of such oral agreement was inadmissible as being violative of the parol evidence rule. After stating that under the provisions of the mortgage it was the duty of the mortgagor to procure the insurance, the court stated 87 N.E.2d at pages 503-504: 'There was, however, no obligation of the mortgagor to personally secure the insurance. She could contract with another to care for this business detail. * * * Such verbal agreement, in which the mortgagor employs the mortgagee as her agent, is not contradictory to or in derogation of the written agreement in the motgage. * * * [T]here is sufficient consideration for the promise to insure if the execution and delivery of the mortgage, the agreement to procure insurance, the disbursement of the money loaned, and the recording of the deed and mortgage, is one continuous business transaction. If it is, then the giving of the note and the mortgage, and the borrowing of the money with promise to pay interest, presents sufficient consideration to support a contract with a mortgagee which makes such mortgagee the agent of the mortgagor to procure the fire insurance.' See also, Sheller v. Seattle Title Trust Co., 1922, 120 Wash. 140, 206 P. 847, and Bates v. Northern Bond & Mortgage Co., 1924, 129 Wash. 343, 225 P. 52. These cases apply the well known rule set forth in Buckner v. A. Leon & Co., 204 Cal. 225, 227, 267 P. 693: 'It has long been the rule that when parties have not incorporated into an instrument all of the terms of their contract, evidence is admissible to prove the existence of a separate oral agreement as to any matter on which the document is silent and which is not inconsistent with its terms. * * *' See also, Gardiner v. Burket, 3 Cal.App.2d 666, 669, 40 P.2d 279, and Dobbins v. Horsfall, 58 Cal.App.2d 23, 29, 136 P.2d 35.

(2) Evidence.

(a) Estoppel.

The evidence amply supports the jury's implied finding that the bank agreed to procure the insurance, or, at the very least, by its conduct led Graddons to believe that it had done so, and is estopped to deny such agreement. Coppock was a vicepresident and the manager of the bank's Palo Alto branch and was the person with whom Graddons dealt in obtaining the loan on their property and in the execution of the necessary documents. Coppock instructed them about getting appraisers and then stated: "* * * We have to start a file for our own system here, we have to see the plans and get them approved and they have to be approved by the G.I. in San Francisco, and when all those are in and complete, then we can go over this loan * * *" Coppock also stated that the bank would do the checking of all necessary papers. Graddons were required to sign a letter instructing the bank to pay 'any and all expenses in connection with the completion of this loan * * *' The bank purchased the title insurance and charged it to Graddons. Coppock stated at the close of the signing of the papers, "Well, that takes care of everything," and then: 'When we had finished signing the papers and had gotten up to leave, Mr. Coppock was looking over the papers and he looked up to us and says, 'Do you want the full amount of the insurance?' and I said, 'Yes.' And he says, '12,000?' And I said, 'Yes." It should be noted that Coppock denied these statements. Graddons relied upon this apparent agreement of the bank to do the actual obtaining of the insurance and made no effort to get it themselves. That Coppock intended to convey to Graddons that he would procure the insurance is additionally shown by the fact that the day after the fire he told the architect 'he thought the bank held the fire insurance papers.' Coppock testified that he was 'dumfounded' to find no policy in the file, that ...