Paso Builders, Inc. v. Hebard

• Decision Date: 06 April 1967
• Docket Number: No. 5025,5025
• Citation: 426 P.2d 731,83 Nev. 165
• Parties: PASO BUILDERS, INC., a California Corporation, Appellant, v. R. T. HEBARD, H & H Investment Corp., a Nevada Corporation, First Western Savings and Loan Association, a Nevada Corporation, First Title Insurance Company, a Nevada Corporation, Nevada Escrow Services, Inc., a Nevada Corporation, Lawyers Title of Las Vegas, Inc., a Nevada Corporation, and Karsten T. Bronken, Respondents.
• Court: Nevada Supreme Court

Page 731

426 P.2d 731

83 Nev. 165

PASO BUILDERS, INC., a California Corporation, Appellant, v. R. T. HEBARD, H & H Investment Corp., a Nevada Corporation First Western Savings and Loan Association, a Nevada Corporation, First Title Insurance Company, a Nevada Corporation, Nevada Escrow Services, Inc., a Nevada Corporation, Lawyers Title of Las Vegas, Inc., a Nevada Corporation, and Karsten T. Bronken, Respondents.

No. 5025.

Supreme Court of Nevada.

April 6, 1967.

Morton Galane, Las Vegas, for appellant.

Michael L. Hines, Las Vegas, for respondent Karsten T. Bronken.

John Peter Lee, Las Vegas, for respondents Nevada Escrow Services, Inc., and Lawyers Title of Las Vegas, Inc.

Christensen, Bell & Morris, Las Vegas, for respondents R. T. Hebard and H & H Investment Corp.

OPINION

THOMPSON, Chief Justice:

This suit started below as one in equity to reform a deed of trust running to the plaintiff Paso Builders as beneficiary, but later, by supplemental complaint, was converted to an action at law for damages. The case was never tried. The supplemental complaint was dismissed pursuant to Rule 12(b)(5) as to some of the defendants, and as to others, summary judgments were entered in their favor. Paso has appealed from the dismissals and summary judgments. It is worthwhile to relate the circumstances giving rise to this litigation, the original posture of the law suit, and Paso's later shift of position.

In January, 1963 Paso entered into a written agreement with Hebard for the sale of approximately 80 acres of land. A down payment of 29% of the purchase price was made. The balance, $321,970.80, plus interest, was to be paid in specified installments over the ensuing 3 years. An escrow was opened with Nevada Escrow Service, and instructions prepared and signed in conformity with the agreement of sale. Lawyers Title Insurance was to issue a joint protection policy of title insurance.

The agreement allowed Hebard to designate a 'nominee' in whom title to the 80 acres was to vest. Hebard named the H & H Investment Corp. as his nominee, and Paso executed a grant deed to that company. The agreement also provided that the balance of the purchase price was to be evidenced by a promissory note and secured by a first deed of trust upon all but 16 acres of the property. On January 17, 1963 H & H Investment Corp. signed the note and trust deed. Hebard did not sign the promissory note as maker, though the agreement of sale provided that the obligations of the buyers were 'joint and several.' The trust deed was recorded, the promissory note was delivered to Paso, title insurance issued, and the escrow closed in May, 1963. Paso did not object to the form of the instruments.

The description of the property embraced by the deed of trust running to Paso was incorrect. The agreement of sale provided that the 16 acres to be excluded by the deed of trust were 'bounded on the north by Jewel Avenue, Sandhill Road on the west, and Lamb Boulevard on the northeasterly side.' An exact legal description was to be supplied by Karsten Bronken, a licensed civil engineer, whom Paso was to pay. Bronken made the survey and furnished a description to Nevada Escrow and Lawyers Title in order that the deed of trust could be prepared. The legal description which he supplied did not conform to the general description of the agreement of sale, although one would not be aware of the mistake by merely reading the document. It embraced almost 20 acres rather than 16, it was not bounded on the northeasterly side by Lamb Boulevard, and extended farther along Sandhill Road than contemplated by the agreement. By excluding more property from the trust deed than intended, Paso's security was impaired to some extent.

In October, 1963 H & H Investment Corp. executed a deed of trust on some of the property which had been mistakenly excluded from the deed of trust previously given by it to Paso. This later deed of trust named First Title Insurance Co. as trustee, and First Western Savings and Loan Association, beneficiary. It secured a promissory note for $1,187,800. made by H & H Investment Corp. to First Western. A portion of the property embraced by the deed of trust was subdivided (Capitol Hills No. 2) was further encumbered by second trust deeds on individual lots to secure the payment of various promissory notes to individual contractors for labor and materials supplied by them. The record is bare of any suggestion that either First Title Insurance or First Western, knew or should have known of the incorrect description in the prior trust deed from H & H Investment Corp. to Paso.

In December, 1963 Paso first became aware of the mistake in the description of the property of the trust deed running to it as beneficiary and commenced a suit in equity seeking reformation of the deed of trust so that the property covered thereby would conform to the agreement of sale. Paso named Hebard, H & H Investment Corp., First Title Insurance Co., and First Western as defendants. Later, Nevada Escrow Services, Lawers Title Insurance and Bronken were added as defendants. The original complaint was twice amended. It is not useful to relate all of the motions of the various defendants successfully directed to the original, the first, and the second amended complaints. As we read the record, Paso finally abandoned its effort to plead a claim for reformation of the trust deed. We assume that such abandonment came about because of Paso's election to foreclose the deed of trust. The record shows that in December, 1963 Paso delivered to Lawyers Title, Trustee, a written declaration of default of payments due upon the $321,970.80 promissory note given to Paso by H & H Investment. Paso demanded sale of the security. On March 31, 1964, a trustee's sale was held. Paso bid in the property for $180,000 and received a grant deed from the trustee. By choosing to foreclose the deed of trust, Paso proceeded upon a course wholly irreconcilable with the reformation of that instrument. In the words of Cardozo: 'Where two inconsistent remedies, proceeding upon irreconcilable claims of right, are open to a suitor, the choice of one bars the other.' Ratchford v. Cayugo County Cold Storage & Warehouse Co., 217 N.Y. 565, 112 N.E. 447, 448, L.R.A.1916E, 615 (1916). Trachtenberg v. Glen Alden Coal Co., 354 Pa. 521, 47 A.2d 820, 172 A.L.R. 647 (Pa.1946).

In any event, the lower court granted Paso leave to file a supplemental complaint. It did so. That pleading requests damages of $177,461.10 (the deficiency remaining after foreclosure of the trust deed) from Hebard, H & H Investment Corp., Nevada Escrow Services, Lawyers Title and Bronken. First Title Insurance and First Western are not named as defendants and we deem them to be removed from this litigation. ¹

Hebard and H & H Investment jointly answered the supplemental complaint, and later moved for summary judgment. Their joint motion was granted, Nevada Escrow and Lawyers Title jointly filed a motion to dismiss the supplemental complaint pursuant to Rule 12(b)(5), or in the alternative, for summary judgment since matters outside the pleadings were presented for consideration. Their joint motion to dismiss was granted. Since the court in its order of dismissal, did not expressly exclude matters outside the pleadings from consideration (NRCP 12(b)), we shall treat the dismissal order as a summary judgment. S. & S. Logging Company v. Barker, 366 F.2d 617 (9 Cir.1966); cf. Buss v. Consolidated Casinos Corporation, 82 Nev. ---, 418 P.2d 815 (1966). The defendant Broken filed a Rule 12(b)(5) motion to dismiss which was granted. We turn to determine the propriety of the rulings below as to each of the defendants.

1. Paso v. Bronken. As noted, Karsten Bronken was the civil engineer who supplied the erroneous property description. The claim for relief against him is based on negligence. He did not respond to this appeal or otherwise seek to sustain the dismissal in his favor. We choose to treat his default in this regard as a confession of error, and, therefore, reverse the dismissal. Toiyabe Supply Co., v. Arcade Dress Shops, Inc., 74 Nev. 314, 330 P.2d 121 (1958).

2. Paso v. H & H Investment Corp. The prayer for relief alleged against H & H Investment Corp. is that a constructive trust be impressed upon the real property called 'Capitol Hills No. 2' (refer to statement of facts). Legal title to that property is, by trust deed, vested in First Title Insurance Company as Trustee. The beneficiary of that trust deed is First Western Savings & Loan Association. Neither the trustee nor the beneficiary is a party defendant to the supplemental complaint. Though other reasons may exist to defeat a constructive trust here, we affirm summary judgment for H & H Investment Corp. upon the ground that the plaintiff failed to join indispensable parties. Cf. Robinson v. Kind, 23 Nev. 330, 47 P. 1, 977 (1896).

In passing we note that Paso does not seek a deficiency judgment against H & H Investment Corp. for the amount due upon the $321,970.80 promissory note after foreclosure of the trust deed given as security therefor. See Sims v. Grubb, 75 Nev. 173, 336 P.2d 759 (1959); McMillan v. United Mortgage Co., 82 Nev. 117, 412 P.2d 604 (1966).

3. Paso v. Hebard. Paso's claim for relief against Hebard rests upon the provision of the agreement of sale that the buyers shall be jointly and severally liable. Paso seeks damages of $177,460.10. The record does not disclose whether Hebard assigned his rights under the agreement of sale to H & H Investment Corporation, his nominee. In any event, it is Paso's contention, that Hebard, by promising to be severally liable for the purchase price, cannot now escape that liability by insisting that Paso must look only to the H & H Investment Corp. who signed the promissory note and trust deed.

When Paso and Hebard made the agreement of sale, the identity of Hebard's nominee, should he decide to name one, was unknown...