McDougall v. O'Hara

• Decision Date: 19 November 1954
• Citation: 129 Cal.App.2d 12,276 P.2d 6
• Court: California Court of Appeals Court of Appeals
• Parties: Thomas D. McDOUGALL, Plaintiff and Appellant, v. Lillian O'HARA, Defendant and Respondent. Civ. 15971.

Page 6

276 P.2d 6

129 Cal.App.2d 12

Thomas D. McDOUGALL, Plaintiff and Appellant, v. Lillian O'HARA, Defendant and Respondent.

Civ. 15971.

District Court of Appeal, First District, Division 2, California.

Nov. 19, 1954.

Shapro & Rothschild, Raymond T. Anixter, San Francisco, for appellant.

G. H. Van Harvey, San Francisco, for respondent.

DOOLING, Justice.

This is a quiet title action in which the plaintiff-appellant was denied relief because of his prior unconscionable conduct.

Appellant, a concrete contractor in Mill Valley, California and the respondent, a bookkeeper and secretary by occupation, were good friends for many years. In July 1947 appellant told respondent that he owed a lot of bills around the town of San Rafael which amounted to approximately $3000. The Bank of America would not loan him any money so he wanted to borrow the money from respondent. She was willing to loan him that amount if she was given some security. As a result he agreed to give her a deed of trust on his property located at 32 Reed Street.

Later on in the same month appellant informed respondent that his property had been attached by Rose Dietz, one of his creditors, and he needed $625 immediately to pay her. Appellant explained he needed the money to clear the title to his property in order that he might be able to give her a deed of trust.

A promissory note with the appellant's signature acknowledged on the back by a notary public and dated September 3, 1947 was given to respondent on or about September 11. The note was for the amount of $3000 and at the same time she loaned him the balance of that sum.

She had received the note for the first time on or about August 4th, but when she asked about the promised security he took it back and had his signature acknowledged. Respondent testified that appellant at the time he returned the note told her that the note was security; that it was the deed of trust and she believed him. She stated that she would not have loaned him the money if she had not believed that the note was properly secured by a lien on the real estate.

The promissory note became due on August 1, 1948 and was not paid. On April 15, 1949 respondent began an action against the appellant to recover her amount due on the note and caused a writ of attachment to be levied upon appellant's real property. A judgment was rendered on August 5, 1949 against appellant in the sum of $3460 and the judgment was recorded on June 16, 1950. Prior to the entry of the judgment and on July 29, 1949 appellant and his wife had recorded a declaration of homestead on this real property.

Appellant brought this action to quiet title to the property and the trial court found that the respondent relied upon the representations of appellant to the effect that the loan was secured by a deed of trust or mortgage upon appellant's real property, and because of that reliance made the loan. It further found that such representations were false and that respondent realized this for the first time when she attempted to collect on the note at its due date. Based on the above findings the court refused to quiet the title in favor of appellant.

That normally the homestead would take precedence over the later judgment lien and the antecedent attachment is not disputed. However the judgment against appellant is based on the recognized equitable doctrine which denies relief to one seeking the aid of a court of equity where in the very transaction he is found to enter the forum with 'unclean hands'. Here the court found that as to this very property appellant represented to respondent that his acknowledged promissory note constituted a lien thereon and that respondent believed and relied upon this representation. That the clean hands doctrine may be invoked against a claim based upon the declaration of a homestead which would...