Spaziani v. Millar

Decision Date02 May 1963
Citation215 Cal.App.2d 667,30 Cal.Rptr. 658
CourtCalifornia Court of Appeals Court of Appeals
PartiesMary SPAZIANI, Plaintiff and Appellant, v. Ben O. MILLAR et al., Defendants and Respondents. Civ. 7053.

Rothman, Silver, Monosson & Hirsch, and Samuel Silver, Hollywood, for plaintiff and appellant.

Shaw & Morgan, Riverside, for defendants and respondents Millar.

Fullerton & Morris, San Bernardino, for defendant and respondent Arrowhead Savings and Loan Ass'n.

Harold Pilskaln, Jr., and Norman E. Caldwell, Santa Ana, for defendants and respondents Land Title Co. of San Bernardino and Ellen Lynn.

COUGHLIN, Justice.

This action arises out of transactions incident to a sale of real property. The plaintiff, who is the appellant herein, was the seller. The defendants, who are the respondents herein, were the buyer, the escrow holder, and a loaning institution which made a loan to the buyer secured by a first deed of trust upon the subject property. The issues presented to the trial court were raised and defined by an amended complaint alleging five causes of action; answers thereto; and a pretrial order. The first cause of action alleges ultimate and evidentiary facts which, in substance, narrate the plaintiff's version of the transaction in question; sets forth the issues in controversy, which are limited to an alleged fraud in which all parties defendant participated; and seeks declaratory relief with respect to controversies concerning the alleged existence of such fraud. Each of the remaining causes of action incorporates some of the allegations in the first cause of action and adds others thereto. The second cause of action seeks reformation of a deed of trust from the buyer to the seller, so that it would include all of the property sold instead of only one-half thereof, and alleges fraud and mistake as a basis therefor. The third and fourth causes of action, respectively, seek recovery of damages for fraud and constructive fraud. The fifth cause of action is based on a negligence theory. The pretrial order, in stating the issues, propounds a number of questions among which was the following: 'Did the defendants or any of them violate or breach any duty or obligation owed to plaintiff?' In substance the stated question amplifies an issue disclosed by the facts alleged in the amended complaint.

The trial court granted motions for nonsuit made by the escrow holder, viz, Land Title Company of San Bernardino, a corporation, by Ellen Lynn, its employee, and by the loaning institution, viz, Arrowhead Savings and Loan Association; found in favor of the buyer, viz, Gerald Millar and his brother, Ben O. Millar, in whose name title to the property had been taken as a matter of convenience; and caused orders and judgment to be entered accordingly. The plaintiff, Mary Spaziani, appeals.

Gerald Millar, one of the defendants, was a real estate broker; hereinafter is referred to as Gerald; had been asked by Mary Spaziani, the plaintiff, to sell two adjoining lots which she owned, and for which she was asking $22,000; took an oral listing thereon; was unable to effect a sale thereof; and, thereafter, indicated his interest in purchasing the same as a speculation. Each of these lots was 65 feet in width by 150 feet in depth; was improved with a rented dwelling; and was part of a larger parcel which included an additional 65 by 150 foot unimproved lot, to the rear thereof. Mrs. Spaziani told Gerald that if he would purchase both lots she would 'throw in' the two unimproved lots to the rear without additional charge. Gerald testified that he told Mrs. Spaziani he would purchase her property for $22,000 'on the basis of securing a first deed of trust for approximately $10,000 on the front portion of the land where the houses were located'; that 'I would give her $2,000 down and she would carry the second trust deed back for the difference of her purchase price'; that he wanted to have the rear portion of the property released 'free and clear with the anticipation that * * * [he] would develop the property and build on it'; that, as to the rear portion, 'I would * * * put a construction loan on it and build on it'; and that 'this was the only condition I would buy it under.' Mrs. Spaziani agreed that Gerald said he would build on the rear portion; 'build us some income in the back'; but does not remember if anything was said about putting a lien on the property for this purpose. After a 'lot of discussion' over a period of time the parties agreed to proceed with the deal as outlined. Gerald told Mrs. Spaziani that he was having marital trouble with his wife, and for this reason wanted the property to be taken in the name of his brother, Ben O. Millar 'Date: October 13, 1958

hereinafter referred to as Ben. She had no objection to such an arrangement. A deposit receipt agreement prepared by Gerald and signed by Mrs. Spaziani, although she does not admit signing it, or seeing it before trial, provided as follows:

'Purchaser Ben O. Miller (not Gerald A. Millar)

'Broker West Coast Land Co., 9535 Sierra

'Broker's Commission None

'Property Sold 16844 Holly St.--Lot 65' X 300'

16834 Holly St.--Lot 65' X 300'

'Purchase Price $22,000

'Terms: $2,000 down Balance $20,000 payable $120 per mo including 6% interest subordinated to a $10,000 trust deed payable $120 mo incl. 6% with release of 120 X 150 with easement to Holly St. TRUST DEED TO BE DIVIDED ON EACH PROPERTY PROPORTIONATELY--Buyer pay escrow. Interest at 6% per annum on unpaid portion of the purchase price to be included in the prescribed payments and possession given close of escrow.

'Deposit $200'

The $200 deposit was not given to Mrs. Spaziani. Gerald took the deposit receipt to the Land Title Company; spoke to the defendant Ellen Lynn, an escrow officer of that company, about opening an escrow; showed her the agreement; gave her directions concerning the matter; and asked her to prepare escrow instructions accordingly. Later Gerald and Mrs. Spaziani, together, came to the escrow office and were shown the escrow instructions that had been prepared which, among other things, provided that title to the whole property should vest in Ben Millar subject to two deeds of trust; that Mrs. Spaziani was to be paid $2000 in cash, and was to receive a note for $20,000 secured by one of the deeds of trust, in which she and her two daughters would be named payees; and that a policy of title insurance should be procured insuring the title accordingly. The language used in relating the trust deed situation was as follows:

'First Deed of Trust to file: Construction loan to come.

'SECOND DEED OF TRUST TO FILE: Executed by Buyer to secure Note in amount of $20,000.00 with interest thereon at the rate of 6% per annum payable monthly in favor of MARY SPAZIANI, a widow, DIANA SPAZIANI, a single woman, and LINDA GLORIA SPAZIANI, a single woman, mother and daughters all as joint tenants, principal and interest payable in installments of $120.00 or more on the ___ day of each month, begining 30 days from close of escrow. Interest credited to close of escrow.

Deeds of Trust are to cover the following described property:

The South 150 feet of the North 1/2 of the West 1/2 of the East 1/2 of Lot 705 * * *.

Balance of property is to remain clear.'

The instructions further provided: (1) That any policy of insurance called for therein 'may be issued for the benefit of all parties in interest'; and (2) that 'NO NOTICE, DEMAND OR CHANGE OR INSTRUCTIONS SHALL BE OF ANY EFFECT Mrs. Spaziani insisted that the escrow instructions by changed to the end that the property conveyed should include an area 120 feet by 300 feet, instead of 130 feet by 300 feet, thus reducing the width of the two parcels by 10 feet. This demand appears to be related to the provisions in the deposit receipt agreement referring to a 'release of 120 X 150 with easement to Holly St.' Eventually the escrow instructions were modified by reducing the width of the property sold to 120 feet. Mrs. Spaziani also expressed concern about taking a second deed of trust; discussed this matter with a banker, the escrow officer of another title company, and one of her daughters; but signed the escrow instructions without any change in this regard. The evidence leaves no doubt that Mrs. Spaziani knew she was taking a second deed of trust on the property to secure the unpaid $20,000 balance of the purchase price. On the other hand, she claims that she did not agree, and did now know, that her deed of trust covered only the southerly half of the property which she had sold, viz, the two 65 X 150 foot lots upon which the rental dwellings were situated, less the 10 feet reserved from their width in accord with her demand. However, it clearly appears from the escrow instructions that the land to be included in both deeds of trust was limited to the 'South 150 feet' of the property sold; and the description thereof was followed by the unambiguous statement: 'Balance of property is to remain clear.'

IN THIS ESCROW UNLESS GIVEN IN WRITING BY ALL PARTIES AFFECTED THEREBY.'

Ben Millar, the nominal purchaser, filed a loan application with the defendant Arrowhead Savings and Loan Association; stated therein that he sought a purchase assistance loan; and obtained a commitment from that association to loan him a total of $11,000, to be evidenced by two promissory notes in the sum of $5500 each, bearing interest at 6.6% per annum, payable at the rate of $96.00 per month, and secured respectively by deeds of trust on each of the two lots being purchased. The loan company instructed the escrow holder that the $11,000 loan might be used when a policy of title insurance had been issued showing title to the subject property to be vested in Ben O. Millar, subject to its deeds of trust as a first lien thereon.

Prior to close of escrow a loan company representative read the escrow instructions executed by Ben and Mrs. Spaziani; observed that th...

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