Radunich v. Basso

Citation45 Cal.Rptr. 824,235 Cal.App.2d 826
CourtCalifornia Court of Appeals Court of Appeals
Decision Date20 July 1965
PartiesWilliam J. RADUNICH, Jr., Plaintiff and Respondent, v. Richard BASSO, Lona Basso, A. J. Basso, Josephine Basso, Surety Title & Guaranty Company, a California corporation, Defendants and Appellants. Civ. 21799.

Timothy A. O'Connor, David R. Sylva, and Thomas P. Breen, San Jose, for appellants.

Marlais & Hover, by John P. Marlais, San Jose, for respondent.

BRAY, Justice. *

Defendants Richard Basso, Lona Basso, A. J., Basso, Josephine Basso and Surety Title & Guaranty Company appeal from the judgment without jury trial in favor of plaintiff, hereinafter described.

Questions Presented

1. Is defendant Surety Title & Guaranty Company a proper party to this appeal? 1

2. Alleged failure to find on meaning of subordination clause.

3. Are the findings supported by the evidence?

4. Was judgment determining plaintiff's deed of trust to be a first lien erroneous as a matter of law?

5. The one-acre tract omission from plaintiffs deed of trust.


This action arises from a sale of plaintiff's property to Cavalier Homes Development Company, Inc. and the latter's issuance of two deeds of trust to secure payment of the sale price. Involved is the proper priority of those deeds of trust.

The action was brought against Cavalier Homes Development Company, Inc., R. Donohue, R. W. Moles, in addition to Surety and the above named Bassos. The gravamen of the complaint 2 is a charge of fraud resulting in the purchase price deed of trust from Cavalier to plaintiff being made a lien subsequent to a deed of trust from Cavalier to Donohue which was assigned to Basso. 3 The complaint prayed for foreclosure of the deed of trust from Cavalier to plaintiff for $51,500 and that said deed of trust be adjudged a first lien on the property superior to the Basso deed of trust; for judgment against Surety and Moles for $41,500; and that the deed of trust to plaintiff be reformed by striking therefrom the provision excepting a certain acre of land.

The court found that Cavalier, Donohue, 4 Moles and Surety undertook a scheme to defraud plaintiff by making the Basso deed of trust superior to plaintiff's deed of trust and misrepresenting the true nature of the transaction. The court then gave judgment against Cavalier for $51,500, plus interest and attorneys' fees of $3,500, and for judicial foreclosure of plaintiff's deed of trust and providing that the lien of the Basso deed of trust was inferior to that of plaintiff, and that plaintiff take nothing against Surety and Moles.

As only Basso and Surety are appealing, the basic question (other than that of Surety's right to appeal) is whether the court properly found that the Basso deed of trust which was issued as a first lien on the property and so insured by Surety, is in fact inferior to plaintiff's deed of trust.

1. Surety Not Entitled to Appeal

Although the court found that Surety and Moles, its corporate and escrow officer, participated in the fraud against plaintiff, the court refused to give judgment against either, apparently on the theory that as the court was foreclosing plaintiff's deed of trust as a first lien on the property, plaintiff was not damaged by their fraud.

In order to have the right to appeal a party must be aggrieved by the judgment from which the appeal is taken. (Code Civ.Proc., § 938.) Plaintiff contends that as the judgment was in favor of Moles and Surety, they were not aggrieved by it. Surety contends that it is aggrieved by the court's determination that the Basso deed of trust is inferior in lien to plaintiff's deed of trust because Surety issued to Basso a policy of title insurance insuring the Basso deed of trust as a first lien, and if the judgment becomes final Surety will be obligated to pay to Basso under its policy any damage Basso may have suffered up to $35,000. Plaintiff's complaint sought damages from Surety for the alleged fraud. Defendant Surety's answer denied the allegations of fraud in plaintiff's complaint and prayed that plaintiff take nothing by his complaint. This prayer was granted. It is true that the answer also asked that the Basso deed of trust be decreed a lien superior to that of plaintiff's, but nowhere in the pleadings is there any allegation of any interest of Surety in the Basso deed of trust or in the property. The mere fact that the title insurance policy insuring Basso was introduced in evidence by plaintiff does not give Surety any direct interest in this action. Moreover, whether Surety will ever have to pay Basso damages is contingent upon future happenings. Surety, which obtained a judgment against plaintiff, is not aggrieved by that judgment and hence has no right to appeal.

2. Finding on Subordination Clause

Defendants contend that the court failed to find on 'the nature and scope' of the subordination clause. Such a finding would not be a finding of fact but a conclusion of law. On the fact side, the court found that defendant Moles, when he presented the deed to plaintiff for execution, 'did represent and state to PLAINTIFF that the deed of trust from Defendant CAVALIER to PLAINTIFF, securing the promissory note for the balance of the purchase price, could not be made a second lien deed of trust for any purpose other than to a loan for improvements and/or construction on the property when the said property was subdivided by the purchasers.' The court further found that said representations were false and made with the intent of defrauding plaintiff of the security of a first deed of trust for the balance of the purchase price and that said representations were relied upon by plaintiff, and that no written or verbal authorization was given Moles by plaintiff to record the Basso deed of trust prior to plaintiff's deed of trust. These findings of fact, together with the conclusions of law to the effect that the deed of trust to plaintiff is a first lien on the property and that the Basso deed of trust is junior and subordinate to it, constitute a sufficient finding on the nature and scope of the subordination clause in the agreement of sale and which was inserted in the plaintiff's deed of trust. See Richter v. Walker (1951) 36 Cal.2d 634, 640, 226 P.2d 593, 596, holding, 'It is also to be noted that while full findings are required upon all material issues a judgment will not be set aside on appeal because of a failure to make an express finding upon an issue if a finding thereon, consistent with the judgment, results by necessary implication from the express findings which are made. (Citation)'; and Spaziani v. Millar (1963) 215 Cal.App.2d 667, 678-679, 30 Cal.Rptr. 658, 664, 'The finding on the ultimate fact in the fraud issues herein, impliedly constitutes a finding of the nonexistence of a confidential or fiduciary relationship between the parties if such a finding is essential to support the judgment. (Citations)' 5

3. Findings Are Supported

We here apply the long established rule that where the evidence is conflicting, the findings of the trial court must be sustained if based upon substantial evidence. (Crawford v. Southern Pacific Co., 3 Cal.2d 427, 429, 45 P.2d 183.) Some of the evidence supporting the judgment was this:

Plaintiff was the owner, subject to a life tenancy in his father, of a nine-acre parcel of land with a house in Santa Clara. A neighbor, Alaric Gashler, advertised the property for sale. Roy Donohue, president of Cavalier Homes Development Company, answered the ad. Donohue first presented to Gashler a real estate deposit receipt signed by Donohue personally as buyer. This was not satisfactory to plaintiff and his father. Later, one satisfactory to them was presented which gave 'R. Donohue or nominee' as purchaser. The purchase price was $71,500. It contained the following provision inserted by Donohue: 'Total purchase price of $71,500.00 subordinate to land and improvement loan or loans. $20,000.00 paid to Seller at close of escrow representing total down payment. * * * Trust deed shall provide for partial reconveyance at the rate of $6,125.00 per acre or fraction thereof, one acre shall be reconveyed for down payment paid.' (Emphasis added.)

Surety and its escrow officer, defendant Moles, handled the escrow. The escrow instructions were prepared by Moles after discussion with Donohue, Percy, secretary of Cavalier, and one Sany Novak. Plaintiff did not participate. The escrow file of the transaction was lost and no records of the escrew could be produced at the trial. Plaintiff denied ever signing or receiving any escrow instructions.

Three startling features appear in the escrow instructions:

First, the sale was to be a double sale; Donohue would buy the property from plaintiff for $71,500 and then would resell the property to Cavalier for $80,912. However, the resale to Cavalier was to be considered a 'paper sale,' requiring no grant deed. This double sale was not reported to plaintiff. The accounting statement to plaintiff showed the sale of the property from plaintiff to Cavalier at a sale price of $71,500 with a down payment of $20,000 and a note and deed of trust from Cavalier to plaintiff in the amount of $51,500. The separate accounting statement to Donohue showed a sale from Donohue to Cavalier at a sale price of $80,912 and notes and deeds of trust from Cavalier to plaintiff and Donohue totaling $80,912. A copy of this statement was not sent to plaintiff. Neither Donohue nor Moles informed plaintiff that the sale would be to Donohue and that Donohue would convey the property to Cavalier.

Second, it was decided that the property would be acquired through use of multiple deeds of trust. Donohue would borrow from Novak sufficient money with which to make the down payment of $20,000 to plaintiff, giving Novak a deed of trust as security. Donohue would sell the property to Cavalier, Cavalier would issue two notes and deeds of trust,...

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