Lomanto v. Bank of America

• Decision Date: 03 January 1972
• Citation: 99 Cal.Rptr. 442,22 Cal.App.3d 663
• Court: California Court of Appeals Court of Appeals
• Parties: Joseph P. LOMANTO and Isabelle T. Lomanto, Plaintiffs and Appellants, v. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION and Continental Auxiliary Company, Defendants and Respondents. Civ. 10878.

Page 442

99 Cal.Rptr. 442

22 Cal.App.3d 663

Joseph P. LOMANTO and Isabelle T. Lomanto, Plaintiffs and Appellants, v. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION and Continental Auxiliary Company, Defendants and Respondents.

Civ. 10878.

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

Jan. 3, 1972.

Plourd & Lewis A. Plourd, El Centro, for plaintiffs and appellants.

Robert H. Fabian, Harris B. Taylor, Alfred T. Twigg and Bert C. Johnson, Los Angeles, for defendants and respondents.

OPINION

WHELAN, Associate Justice.

Plaintiffs Joseph P. Lomanto and Isabelle T. Lomanto, who are husband and wife, appeal from a judgment of dismissal after an order sustaining a demurrer without leave to amend to their complaint for declaratory relief and for injunction.

The facts as stated herein are as alleged in the complaint or appear in the exhibits attached thereto, which are admitted as true by the demurrer.

The complaint was filed on April 28, 1970.

On August 26, 1965, the Lomantos executed a promissory note in the amount of $11,600, to be paid in 180 monthly installments at the rate of $101.60, commencing October 1, 1965, including interest of 6 1/2% Until September 1, 1980.

The Lomantos executed a deed of trust on real property which was acknowledged on August 31 to secure payments on the note. Continental Auxiliary Company (Continental), a defendant, is designated as the trustee; and Bank of America National Trust and Savings Association (Bank) is the beneficiary. The trust deed was recorded on October 4, 1965 at the request of Title Insurance and Trust Company.

The last paragraph of the first page of the deed of trust provides in part:

'FOR THE PURPOSE OF SECURING: . . . (2) payment of such additional amounts as may be hereafter loaned by Beneficiary or its successor to the Trustor or any of them, or any successor in interest of the Trustor, with interest thereon, and any other indebtedness or obligation of the Trustor, or any of them, and any present or future demands of any kind or nature which the Beneficiary or its successor may have against the Trustor, or any of them, whether created directly, or acquired by assignment, whether absolute or contingent, whether due or not, whether otherwise secured or not, or whether existing at the time of the execution of this instrument, or arising thereafter; . . .'

On February 2, 1967, Joseph Lomanto executed a promissory note in the amount of $11,500, with 7% Interest, payable to Bank on demand, and if no demand then on August 1, 1967.

He executed another promissory note on May 29, 1967 in the sum of $5,500, with 7% Interest, payable to Bank on demand, and if no demand then on August 1, 1967.

A notice of breach dated April 1, 1970 and filed April 7, 1970 enumerates the following defaults:

'1. Payment of the installment of the principal and interest on the note of August 26, 1965, due on April 1, 1970 and all subsequent installments of principal and interest due since April 1, 1970.

'2. A default in payment of the sum of $10,500.00 plus interest at 7% Per annum from October 18, 1967 evidenced by promissory note dated February 2, 1967, in the original amount of $11,500.00 executed by Trustor Joseph P. Lomanto and payable to said Beneficiary on demand, and if no demand then on August 1, 1967.

'3. A default in the payment of $5,500.00 plus interest of 7% Per annum from February 3, 1968, evidenced by promissory note dated May 29, 1967, payable to Beneficiary on demand and if no demand then on August 1, 1967, the balance whereof is now $899.71.'

The complaint alleged that Bank claims, and the Lomantos deny, Bank acquired security rights in the subject property because of the after-incurred indebtedness evidenced by the two promissory notes; the deed of trust, with all the conditions added to and included therein, was on a printed form prepared by defendants; the clause upon which defendants rely was set forth therein in type too small for the average reader to see; it was crowded in with numerous other conditions and modified by so many clauses that only after the most careful and intensive study could it be understood.

It alleged that Bank did not direct the attention of the Lomantos to this clause or its legal and practical effects as interpreted by Bank, and at no time did the Lomantos understand and agree to the terms of the clause; Bank failed to explain its interpretation of the numerous terms and conditions in the deed of trust, but presented the deed to the Lomantos merely as a routine matter of business for their signatures; the Lomantos did not know that the deed of trust included anything more than the immediate transaction, the securing of the $11,500 loan, and the giving of the property described in the deed as security.

The April 1, 1970 payment on the August 26, 1965 note was tendered on the due date to Bank at its El Centro branch.

Plaintiffs state their contentions on appeal as follows:

1. Declaratory relief is the only appropriate remedy available.

2. The trial court cannot determine before trial that parol evidence is not admissible because the imperfection of the writing was raised in the pleadings; therefore, even though the evidence at trial may not sustain a finding of fraud, this may not be determined prior to trial.

3. Notwithstanding the determination on the issue of fraud, Mrs. Lomanto has a justiciable claim.

We dispose first of the claim made by Bank that the demurrer might be sustained on the ground declaratory relief is not a proper remedy.

The trial court may refuse to grant declaratory relief where another remedy is available (Adams v. County of San Joaquin, 162 Cal.App.2d 271, 328 P.2d 250) and may exercise the discretion to refuse declaratory relief under Code of Civil Procedure section 1061 ¹ by sustaining a demurrer. (Moss v. Moss, 20 Cal.2d 640, 128 P.2d 526.) However, where other remedies are not suitable and the complaint discloses a justiciable controversy, declaratory relief is the proper action. (La Hue v. Dougherty, 34 Cal.2d 1, 206 P.2d 640.)

The present case is one involving rights and duties of the parties under a deed or instrument in writing. The time was ripe for such a declaration, inasmuch as Bank's proceedings for foreclosure under the trust deed were not by court action. Declaratory relief was granted to resolve a related problem in Gates v. Crocker-Anglo Nat. Bank, 257 Cal.App.2d 857, 65 Cal.Rptr. 536.

The sustaining of the demurrer, therefore, as to both plaintiffs may not be sustained as an exercise of the court's discretion under Code of Civil Procedure section 1061.

Joseph executed the two notes of February 2 and May 29, 1967, and no doubt received money to the amount they represent. He would find it difficult to explain why he would think Bank would lend him $11,500 on his unsecured note of hand in 1967 and an additional $5,500 in the same manner, when in 1965 Bank required security for a loan of $11,500, which was still unpaid. If he alone were involved, we should have no...