Schut v. Doyle

• Decision Date: 16 March 1959
• Citation: 168 Cal.App.2d 698,336 P.2d 567
• Court: California Court of Appeals Court of Appeals
• Parties: Bert J. SCHUT and Winifred Schut, Plaintiffs and Respondents, v. B. E. DOYLE et al., Defendants, Helen Estelle Fry and John Harold Page, as Executors of the Estate of Jennie E. Page, Deceased, Appellants. Civ. 5967.

Page 567

336 P.2d 567

168 Cal.App.2d 698

Bert J. SCHUT and Winifred Schut, Plaintiffs and Respondents, v. B. E. DOYLE et al., Defendants Helen Estelle Fry and John Harold Page, as Executors of the Estate of Jennie E. Page, Deceased, Appellants.

Civ. 5967.

District Court of Appeal, Fourth District, California.

March 16, 1959.

Rehearing Denied April 15, 1959.

Ferguson & Judge, Fullerton, for appellants.

McCabe & Schumacher, Fullerton, for respondents Schut.

Raymond F. Vincent, Buena Park, for respondent, Buena Park Lumber Co.

MUSSELL, Justice.

This is an action to quiet title in which plaintiffs seek to establish the priority of their rights under a contract which they entered into with the defendants B. E. Doyle and Mollie A. Doyle for the purchase of lots 7 and 8, Tract 1756, in Buena Park, Orange County.

There is no dispute as to the material facts, which are set forth in the pretrial conference order.

On January 22, 1953, Jennie E. Page sold and conveyed Tract 1756 to the Doyles without having received payment in full therefor and also without reserving any specific security or lien on said property by way of a deed of trust, or otherwise. After January 22, 1953, the Doyles subdivided the property, sold some of the lots and constructed houses on others. On October 8, 1954, the Doyles were indebted to the defendant Buena Park Lumber Company, a corporation, on an open book account in the amount of $9,215 for lumber and building materials sold and delivered to them, a portion of which was used in the construction of houses on said property. On October 8, 1954, the Doyles executed and delivered to the lumber company their promissory note for $9,215, secured by a deed of trust covering lots 7, 8 and 9 of said tract. This deed of trust was recorded on the same day and the note and deed of trust were given to and received by the lumber company as full payment of the open book account. On May 23, 1957, the balance due on said note was $7,832.50, plus interest. At the time of the execution, delivery and recording of said deed of trust and at all times prior thereto the Buena Park Lumber Company and its agents and officers had no knowledge of any kind or nature, either actual or constructive, that Mrs. Page had any claim of any kind or nature against said lots 7, 8 and 9 nor did the lumber company have any notice of any kind or nature, either actual or constructive, that the purchase price of said property had not been paid Mrs. Page by the Doyles.

On January 12, 1955, a judgment was rendered in favor of the Transcontinental Credit Service, a corporation, against the Doyles in the amount of $5,429.60, the abstract of which was recorded on January 17, 1955. This judgment had been paid down to a balance of $1,669.48 at the time of trial.

On February 11, 1955, Bert J. Schut and Winifred Schut (plaintiffs herein) entered into a written contract with the Doyles to purchase from them lots 7 and 8 of said Tract 1756 for the sum of $4,800. This agreement consisted of escrow instructions with the Orange County Title Company. The instructions were never recorded and the escrow was never closed. The Schuts paid to the Doyles as a part of the purchase price of said property the sum of $2,100, a portion of which was paid on February 11, 1955, and the remainder thereof prior to May 1, 1955. At no time prior to May 1, 1955, did the Schuts have any knowledge of any kind or nature, either actual or constructive, that Mrs. Page had any claim of any kind or nature against said lots 7 and 8, nor did they have any notice of any kind or nature, either actual or constructive, that the purchase price of the property had not been paid to Mrs. Page by the Doyles.

On August 22, 1955, the executors of the estate of Jennie E. Page, deceased, obtained a judgment against the Doyles and it was decreed that the Pages have a vendor's lien upon said Tract 1756 effective as of January 22, 1953. The judgment also provided that the vendor's lien was not binding upon purchasers of property within the tract who purchased in good faith, for value, and without notice, either actual or constructive, of the rights of the Pages.

On November 9, 1955, the Schuts brought the present action to quiet title to lots 7 and 8 in said tract. The default of the Doyles was entered and on motion of plaintiffs the action was dismissed as to Orange County Title Company and Haskell A. Kelley.

The trial was had by the court without a jury and the principal issues presented and tried were (1) Whether the respondents Bert J. Schut and Winifred Schut and the Buena Park Lumber Company took with knowledge, actual or constructive, of appellants' vendor's lien; and (2) Whether the Buena Park Lumber Company is a purchaser or encumbrancer for value so as to be entitled to priority over the vendor's lien of the Pages.

The trial court rendered judgment that the Doyles have no interest or claim of any kind or nature in and to the property involved and 'that the interests of the hereinafter mentioned parties in and to said Lots 7 and 8 of Tract No. 1756 and/or the proceeds therefrom, are in the following priorities:

First: The interest of defendant Buena Park Lumber Company;

Second: The interest of defendant Transcontinental Credit Service;

Third: The interest of the plaintiffs, Bert J. Schut and Winifred schut;

Fourth: The interest of defendants Helen Estelle Fry and John Harold Page, as executors of the estate of Jennie Elizabeth Page, deceased.

Defendants, executors of the estate of Jennie E. Page, appeal from the judgment, claiming that as a matter of law the vendor's lien of Mrs. Page has priority over the interests, claims and liens of the other parties to the action.

One who sells real property has a vendor's lien thereon, independent of possession, for so much of the price as remains unpaid and unsecured otherwise than by the personal obligation of the buyer (Civ.Code, sec. 3046), and the liens defined in sections 3046 and 3050 are valid against every one claiming under the debtor, except a purchaser or incumbrancer in good faith and for value. Civ.Code, sec. 3048.

In Frey v. Clifford, 44 Cal. 335, 342, it was held that a mortgagee, in a mortgage given for the security of a preexisting debt, is to be regarded in this state as a purchaser for a valuable consideration. And in Smitton v. McCullough, 182 Cal. 530, 537, 189 P. 686, 689, the court said:

'The law in this state on this question is well settled to the effect that not only does an antecedent indebtedness constitute a valuable consideration for a transfer in satisfaction and discharge of said indebtedness, but it is also a valuable consideration, within the protection of the equitable doctrine of bona fide purchase, for a transfer merely as security for a preexisting debt. 2 Pomeroy's Equity Jurisprudence, 4th ed., vol. 2, § 749. The earliest cases in this state held that an antecedent indebtedness was a valuable consideration to support the transfer of commercial paper as security, and rendered the pledgee thereof free from equities between the original parties. Payne v. Bensley, 8 Cal. 260, 68 Am.Dec. 318; Robinson v. Smith, 14 Cal. 94; Naglee v. Lyman, 14 Cal. 450; Jones' Pledges and Collateral Securities, 2d ed., § 128; Pomeroy's Equity Jurisprudence, 4th ed., §§ 480, 749. While these cases dealt with a bona...