Reusche v. California Pacific Title Ins. Co.

• Citation: 231 Cal.App.2d 731,42 Cal.Rptr. 262
• Court: California Court of Appeals
• Decision Date: 19 January 1965
• Parties: Caroline A. REUSCHE, Plaintiff and Respondent, v. CALIFORNIA PACIFIC TITLE INSURANCE COMPANY, a corporation, Irving Holcenberg and Florence Holcenberg, Defendants and Appellants. Civ. 21396.

Page 262

42 Cal.Rptr. 262

231 Cal.App.2d 731

Caroline A. REUSCHE, Plaintiff and Respondent, v. CALIFORNIA PACIFIC TITLE INSURANCE COMPANY, a corporation, Irving Holcenberg and Florence Holcenberg, Defendants and Appellants.

Civ. 21396.

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

Jan. 19, 1965.

Rehearing Denied Feb. 18, 1965.

Hearing Denied March 17, 1965.

Landels, Ripley, Gregory & Diamond, San Francisco, for appellants.

George L. Cooke, San Francisco, for respondent.

TAYLOR, Justice.

This is an appeal from an order granting a new trial on general grounds to respondent, Caroline Reusche. Respondent filed a complaint in this action to determine the validity of a promissory note and deed of trust forged by her agent, George Husack. Appellant, California Pacific Title Insurance Company, the title insurer and trustee of the deed of trust, and Irving and Florence Holcenberg, payees of the note and beneficiaries of the deed of trust, answered and cross-complained, contending that respondent was bound by the illegal acts of her agent. Appellants obtained judgment against respondent Reusche and now argue that the trial court abused its discretion in granting a new trial.

The order granting the motion for a new trial did not specify that it was based upon the insufficiency of the evidence, and it is, therefore, conclusively presumed that it was not based on that ground (Code Civ.Proc. § 657). In fact, respondent's contention on the motion was that the trial court's findings were confusing and could not be sustained by the record as a matter of law. The rule that on appeal every intendment is in favor of the order granting a new trial is not applicable where the question presented is purely one of law (Annin v. Belridge Oil Etc. Union, 119 Cal.App.2d Supp. 900, 905, 260 P.2d 295), and if there is any substantial evidence to support the judgment, the new trial order must be reversed unless some error of law is actually demonstrated (Thompson v. Guyer-Hays, 207 Cal.App.2d 366, 24 Cal.Rptr. 461; Stoddard v. Rheem, 192 Cal.App.2d 49, 53, 13 Cal.Rptr. 496; Malkasian v. Irwin, 61 A.C. 801, 40 Cal.Rptr. 78, 394 P.2d 822).

Viewing the evidence in a light most favorable to the judgment, the record discloses the following facts. Respondent first met George Husack in 1951. Subsequently, he acted as her agent, contenant and manager of several properties, most of which had been sold by 1956; his offices were in her Mission Street property. In 1956, with his help, she found and purchased the property in question, an apartment house on LaPlaya Street in San Francisco. Husack received a commission of $2,500 from the About August 1, 1956, Husack, without the knowledge of respondent, called Holcenberg seeking a loan at 10 per cent interest to be secured by a second mortgage on the LaPlaya Street property. Holcenberg, with his broker Pels, saw the property the following day and agreed to the loan. Before the transaction was closed, Pels called respondent and told her about the suggested $15,000 loan and encumbrance on the LaPlaya property. She told him she would discuss the matter with her agent Husack and answered 'yes' when informed of the $750 brokerage commission. Husack represented to the Holcenbergs, their agent Pels, and the title company that he was authorized by respondent to arrange and consummate the loan transaction.

seller but neglected to inform respondent for several months.

The title company prepared the documents and turned them over to Husack. On August 9, 1956, Husack executed the promissory note for $15,000 and the deed of trust to the LaPlaya property by forging respondent's signature and falsely acknowledging as a notary public that respondent had executed the deed of trust. The documents were recorded on August 10, 1956. Neither respondent, the title company nor Holcenberg was aware of the forgeries at this time. However, after the signed documents were returned, the title company noticed a change in the instructions, specifying that the check be forwarded to respondent's Mission Street address instead of her Pine Street address as previously indicated. To verify this change, an officer of the title company called respondent. He identified himself and the transaction and she acquiesced in the mailing of the check to the Mission Street address.

Husack received the title company's check for $14,152.80, endorsed respondent's name thereon and deposited it in his 'Life Investment Company Trustee Account.' A bank official, Mallery, came to see respondent and showed her the check. She realized that Husack had signed her name and told Mallery that there was some mistake as she had not sold any property and was not entitled to the money. She immediately called Husack who informed her that the check related to the sale of the Montezuma Street property on which she had loaned him $3,000.

Respondent then called Mallery, told him everything was all right and, at his request, sent the bank a letter dated August 14, 1956, stating: '* * * everything is regular and meets with my approval. Mr. George J. Husack, Mgr. Life Investment Co. has Power of Attorney to transact business and affix my signature whenever my presence is not available.' In fact, Husack had no power of attorney and respondent testified that she intended the letter to refer only to his authority to sell the Montezuma Street property. On August 17, 1956, respondent received a check for $3,345 from Husack, allegedly from the sale of the Montezuma Street property but in fact drawn on the proceeds of the title company check disbursing the Holcenberg loan.

In September 1656, respondent received a telephone call from a Mr. Murphy about insurance and he told her that a $15,000 loan on the LaPlaya property was disclosed by the records. She referred this matter to Husack who gave her a false explanation. On April 1, 1957, Holcenberg called her about the expiration of the insurance and she told him to contact Husack. On April 3, respondent received the new insurance policy which referred to the second mortgage. On April 12, 1957, Holcenberg again called her to tell her that the loan payments had not been made since February and he had been unable to contact Husack who had made prior payments. Respondent, allegedly in confusion and fearful of losing the property, made several of the loan payments totaling $800.

At the trial, Husack admitted the forgery of the note and deed of trust, and the acknowledgment of respondent's signature; he further stated that he had no authority or power of attorney and admitted giving respondent a fictitious explanation for the The findings of the trial court indicate that the judgment holding respondent Reusche responsible on the forged note and deed of trust was based on ratification, estoppel and the agent's ostensible authority. If there is substantial evidence to support the judgment on any one of these grounds, the judgment must be sustained and the order granting the new trial reversed (Anderson v. Brady, 151 Cal.App.2d 545, 556, 312 P.2d 37).

title company check and keeping her in ignorance of the entire loan transaction until about six months later [January 1957]. It was stipulated that at the time of the $15,000 loan, respondent did not need the loan as she had ample funds and a large equity in the LaPlaya property and that the Holcenbergs had been completely reimbursed by the title company on January 14, 1958, and had assigned their interest in this matter to the title company.

OSTENSIBLE AUTHORITY

Ostensible authority is defined by section 2317 of the Civil Code as such authority '* * * as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess.' Liability of the principal for the ostensible agent's acts rests on the doctrine of estoppel and its essential elements are representation by the principal, justifiable reliance thereon by the third party and change of position or injury resulting from such reliance (Civ.Code, § 2334; Ernst v. Seafle, 218 Cal. 233, 236-237, 22 P.2d 715; Hobart v. Hobart Estate Co., 26 Cal.2d 412, 159 P.2d 958).

A principal who puts an agent in a position that enables the agent, while apparently acting within his authority, to commit a fraud upon third persons is subject to...