Rianda v. San Benito Title Guarantee Co.

• Decision Date: 21 April 1950
• Citation: 217 P.2d 25,35 Cal.2d 170
• Parties: RIANDA et al. v. SAN BENITO TITLE GUARANTEE CO. S. F. 18017.
• Court: California Supreme Court

Page 25

217 P.2d 25

35 Cal.2d 170

RIANDA et al. v. SAN BENITO TITLE GUARANTEE CO.

S. F. 18017.

Supreme Court of California, in Bank.

April 21, 1950.

Hearing Denied May 18, 1950.

Phil F. Garvey, San Francisco, John J. Jones and Julia M. Easley, San Jose, for appellants.

Royal E. Handlos, San Francisco, for respondent.

GIBSON, Chief Justice.

Plaintiffs appeal from a judgment for defendant in an action to recover damages arising from the alleged negligence of defendant in failing to present for payment a check delivered to it in connection with a real estate transaction.

On July 3, 1946, Marian Hublit, a real estate agent and one of the plaintiffs herein, wrote a letter to defendant at Hollister requesting it to 'prepare title search, necessary deed and deed of trust etc. Covering the sale of 608 acres in San Benito County by Harry Rianda to Nick Daskarolish.' She enclosed an unsigned copy of a 'Deposit Receipt' or sales agreement on which the names of Daskarolis and plaintiff Rianda were typed after the word 'signed' at the appropriate places for their signatures. Under the terms of the agreement, the total sales price was $91,200, payable $30,000 within 60 days, and the balance by installment note secured by a deed of trust. The agreement acknowledged receipt of a deposit of $5,000. (This sum was apparently retained by plaintiffs as a forfeiture and is not involved in this action.) The agreement further provided that the deposit should be increased to 10% of the purchase price upon 'acceptance by purchaser,' and that any payments could be converted into cash, if made in other than lawful money, and could be retained by the seller in case of default.

On July 5, Hublit sent defendant a $5,000 check drawn by Daskarolis on a Hollister bank. This check, which named defendant as payee, was not accompanied by any explanations or instructions. Although the check may have been given in pursuance of the agreement that the deposit was to be increased to 10% of the purchase price, defendant was not informed that such was its purpose, and the check was for $880 in excess of the amount required to complete the necessary deposit of $9,120. Defendant's manager endorsed the check, 'Pay to the order of 12 The Hollister National Bank 12 Hollister, Cal. Escrow Account San Benito Title Guarantee Co.,' and placed it in defendant's files with other papers relative to the transaction.

A few days later Hublit told defendant that Daskarolis' wife was to be named as a grantee in the deed from Rianda, that the cash payment was to be $27,000 rather than $30,000, and that the amount of the note secured by trust deed was to be correspondingly increased to $64,200. Defendant made a title search and prepared a deed, note, deed of trust and proposed escrow instructions. No reference was made in these instructions to the $5,000 payment mentioned in the deposit receipt, nor to the $5,000 check made payable to defendant. The seller's instructions, which were signed by Rianda, authorized defendant to deliver the deed to the grantees upon the payment to the defendant of the sum of $27,000 plus the note and deed of trust for $64,200. The buyer's instructions were never delivered to or signed by Daskarolis, and he never gave defendant any instructions, oral or written, with respect to the transaction. Although he inspected the note and trust deed at defendant's office, he did not sign them.

In a letter to defendant dated August 23, Rianda's attorney, whose office was in San Jose, demanded that defendant forward $5,000 to Rianda 'covering' the amount deposited with defendant, stating that Daskarolis had indicated his intention not to complete the purchase. On Monday, August 26, Daskarolis withdrew $5,000 from his commercial account with the drawee bank, leaving a balance insufficient to cover the check, and orally informed defendant that he had 'stopped payment' on the check. It does not appear when the letter from Rianda's attorney was received but defendant answered it on August 26, informing the attorney of the action taken by Daskarolis. The time set for performance of the contract by Daskarolis passed, and plaintiffs brought this action seeking to recover the amount of the check on the theory that defendant was negligent in failing to cash or deposit the check promptly. The title company defended on the ground that it had received no instructions from either party to cash or deposit the check and that it was not guilty of negligence in failing to do so.

The court found that defendant had not been negligent, and the question to be determined is whether there is evidence to support this finding.

Defendant's duty to plaintiffs is to be determined by the application of ordinary principles of agency, whether ...