San Jose Abstract & Title Ins. Co. v. Elliott

• Decision Date: 24 January 1952
• Citation: 108 Cal.App.2d 793,240 P.2d 41
• Court: California Court of Appeals Court of Appeals
• Parties: SAN JOSE ABSTRACT & TITLE INS. CO. v. ELLIOTT et al. Civ. 14780.

Page 41

240 P.2d 41

108 Cal.App.2d 793

SAN JOSE ABSTRACT & TITLE INS. CO. v. ELLIOTT et al.

Civ. 14780.

District Court of Appeal, First District, Division 1, California.

Jan. 24, 1952.

Varnum Paul, San Francisco, Bullock, Wagstaffe & Daba, Redwood City, for appellants.

John P. Wilson, Menlo Park, Thomas Pierce Rogers, San Francisco, for respondents.

PETERS, Presiding Justice.

S. D. Orwitz and Jack Orwitz agreed to purchase certain property from the Elliotts for $50,000, paying $5,000 down and the balance to be paid within thirty days. The balance was not paid. The buyers and sellers each claimed the $5,000 deposit. The title company interpleaded the claimants. Each claimant cross-complained, claiming the deposit. The trial court found that S. D. and Jack Orwitz were in default and that, under the contract, the Elliotts were entitled to the deposit. S. D. and Jack Orwitz appeal. Their main contention is that the trial court committed reversible error in failing to find on material issues presented by the answer and cross-complaint. We agree with this contention.

The Pleadings:

The answer and cross-complaint of the Elliotts aver that S. D. and Jack Orwitz agreed to purchase the property for $50,000 pursuant to the terms of a written agreement which is attached to the pleading. It is averred that this offer was made on August 14, 1948, and that the Elliotts approved this offer on August 19, 1948; that the money was deposited ($1,000 with the real estate agent on August 14th, and $4,000 with the title company on August 23rd) by the purchasers; that under the terms of the agreement the purchasers were allowed thirty days from the date of approval to examine the title and to report in writing any objections thereto, and if no such objections were made the balance of the purchase price ($45,000) was to be paid to the title company on or before the expiration of the thirty days; that if not so deposited the down payment was to be retained by the Elliotts as liquidated and agreed damages; that the thirty-day period expired on September 18, 1948; that the purchasers failed to make written or any objections to the title and failed to pay the balance due within the thirty-day period; that the Elliotts have performed and the purchasers have not.

The answer and cross-complaint of S. D. and Jack Orwitz admit the existence of the pleaded agreement and the making of the deposit, but deny that the pleaded agreement constitutes the entire agreement between the parties. They aver that notice of acceptance of the contract was not communicated to the purchasers on August 19th but on August 23, 1948, so that the thirty-day period did not expire until September 23, 1948, and aver that on September 20, 1948, the parties extended the time of performance until October 21, 1948. This then was the first defense set up--that the purchasers were not in default under the terms of the agreement as modified.

By far the greater portion of this pleading is devoted to a second and separate defense, namely, that the purchasers were induced to enter into the contract in question by reason of the false and fraudulent representations of the real estate broker representing the Elliotts, Merryman by name. In this portion of the pleading the purchasers set forth in detail the circumstances under which the contract was entered into and the misrepresentations claimed to have been made by Merryman. Briefly, these allegations are that the property was advertised 'for sale or lease' and as being 'Now temporarily occupied as Menlo Park City Hall--which is moving soon to new Community Center'; that before the purchasers made their offer to buy, Merryman represented that the premises were merely 'temporarily occupied' by the city and that the city 'would move therefrom within thirty days and not to exceed sixty days'; that, relying on these representations, the purchasers entered into the contract; that such representations were false in that the City occupied the premises pursuant to the terms of an unrecorded lease, the term of which did not expire until January 1, 1950; that Merryman intentionally concealed and failed to reveal the existence of this lease to the purchasers with the intent and purpose of inducing them to enter into the contract; that the purchasers discovered the existence of the lease on September 20, 1948, and immediately notified Merryman and the title company, and demanded that the premises be made free of the occupants in accordance with the representations made, or that the deposit made be returned.

The Findings:

These allegations were denied by the Elliotts and the cause proceeded to trial. A major portion of the trial was devoted to evidence, pro and con, on this fraud issue. The trial court, however, made no findings at all on this issue. It simply found that the offer was made on August 14, 1948, accepted on August 19, 1948, and that it contains the entire agreement of the parties; that the purchasers deposited their $5,000 pursuant to the contract; that under the terms of that contract the purchasers had thirty days to examine title and report any objections thereto to the sellers, or to pay the balance of the purchase price; that if such were not done the deposit was to be retained by the sellers; that the thirty-day period expired September 18, 1948; that the purchasers did not make written objections to the title or tender the purchase price within these thirty days; that the sellers have performed under the contract and the buyers have not. The court concluded that the buyers had breached the contract and that the sellers were entitled to the deposit, and judgment was entered accordingly.

The Facts:

Clayton Elliott, who is an attorney, and his wife, owned the property in question. They authorized Merryman, a real estate broker, to sell the property. He caused an advertisement to be inserted in the Wall Street Journal offering the premises for 'sale or lease.' The advertisement contains a picture of the building and states, among other things, 'Now temporarily occupied as Menlo Park City Hall--which is moving soon to New Community Center.' In fact, the building was then occupied as a city hall and also by the library and by certain attorneys. The advertised price was $65,000.

S. D. Orwitz, a dentist with offices in San Francisco, Sacramento and Palo Alto, was desirous of securing a more central location for his Palo Alto office. He saw the advertisement and believed that the building in question would meet his needs, and that he could advantageously lease to others the portion of the building not desired by him for his offices. His brother, Jack Orwitz, is a real estate broker who handles the doctor's business affairs. Jack agreed that the purchase of the building might constitute a good investment.

On August 14, 1948, the doctor and Jack looked at the property. They observed, of course, that it was then occupied as a city hall and by other tenants. They called on Merryman at his home. Most of the conversation was between Merryman and Jack but Dr. Orwitz was present. Jack testified, and was corroborated by the doctor, that Merryman stated that the city had purchased some property from the Federal government and was constructing a civic center thereon; that the city would be out of the building here involved within thirty days, or within sixty days at most. Merryman also stated that the attorneys who were tenants were month-to-month tenants and would vacate at any time. He also stated that the library would vacate no later than September 15th. Merryman failed to mention that any of the tenants had a written lease. After some discussion Dr. Orwitz offered to purchase the property for $50,000. This offer was on a form furnished by Jack. He and Merryman made the necessary corrections and insertions. It is entitled 'Uniform Agreement of Sale and Deposit Receipt,' and is dated August 14, 1948. It acknowledges receipt of $1,000 from Dr. Orwitz on account of the $50,000 purchase price. It contains the following: 'Conditions of Sale: 30 days from the date of approval are allowed the purchaser to examine the title to said property and to report in writing any valid objections thereto, to the agent for the seller. If no such objections to title be reported the balance of said purchase price shall be paid by said purchaser on or before the expiration of said time to San Mateo Co. Title Insurance Co. for account of the seller and said seller shall deliver to said office a properly executed and acknowledged deed of grant, bargain and sale of said property.' The sellers were given ninety days to clear up any objections to the title, and if they could not be removed the deposit was to be returned to the buyers. The agreement expressly provided that in case the 'purchaser shall fail to comply with any conditions at the time or in the manner herein provided for, said seller shall be released from all obligations hereunder. In that event all rights hereunder, legal and equitable, of said purchaser shall case, and said deposit shall be retained by said seller, as liquidated and agreed damages, or said seller may, if he so elects, apply said deposit on account of the purchase price of said property and enter suit against said purchaser to compel the specific performance of this contract.' Time was made the essence of the agreement. It further provided that the sellers were allowed fifteen days for approval. Two signed copies of the offer were left with Merryman.

Merryman testified that the sellers signed the deposit receipt on August 19th; that on that date he telephoned to Jack and informed him that the sellers had approved; and that on the same date he wrote to Jack giving him the same information. The Elliotts signed both copies of the offer. They kept one copy and the other copy was retained by Merryman. No copy was sent to the buyers. The letter stating that the Elliotts had signed the agreement was received by...