Stockwell v. Lindeman

• Decision Date: 18 September 1964
• Citation: Stockwell v. Lindeman, 229 Cal.App.2d 750, 40 Cal.Rptr. 555 (Cal. App. 1964)
• Court: California Court of Appeals
• Parties: Eugene A. STOCKWELL and Barbara Stockwell, Plaintiffs and Appellants, v. Clara Eleanor LINDEMAN, Defendant and Respondent. Civ. 28090.

Page 555

40 Cal.Rptr. 555

229 Cal.App.2d 750

Eugene A. STOCKWELL and Barbara Stockwell, Plaintiffs and Appellants, v.Clara Eleanor LINDEMAN, Defendant and Respondent.

Civ. 28090.

District Court of Appeal, Second District, Division 4, California.

Sept. 18, 1964.

Neil R. Lewis, Torrance, for plaintiffs and appellants.

Ellis & Sloan and Lyle C. Ellis, Los Angeles, for defendant and respondent.

BURKE, Presiding Judge.

Plaintiffs entered into an escrow agreement with defendant for the purchase and sale of certain real property.Defendant refused to consummate the sale and plaintiffs filed suit for damages.A demurrer to the complaint was sustained with leave to amend, and an amended complaint was filed which omitted the escrow instructions which were included as an exhibit in the original complaint, pleading their purported legal effect.A general demurrer was interposed to the amended complaint which was sustained without leave to amend and judgment for defendant was granted.

Plaintiffs appeal from such judgment and contend the trial court erred: (1) in finding that there were not sufficient facts to state a cause of action; (2) in sustaining the demurrer to the first amended complaint in its entirety in that a second and separate cause of action was properly alleged; and (3) that there was abuse of discretion in not permitting plaintiffs to further amend.

The trial court, in a memorandum of opinion of ruling on demurrer, stated that plaintiffs assert the same cause of action in their amended complaint as was stated in their original complaint which was in turn based upon the escrow instructions, Exhibit 'A' in the original complaint; that allegations which made the original complaint vulnerable to demurrer are not withdrawn from the court's consideration by the filing of an amended complaint omitting those allegations without an explanation.

Defendant had urged on demurrer in both instances that the written escrow instructions did not constitute a valid and enforceable contract because the purported agreement was lacking in essential terms in three respects: (1) The subordination clause respecting the imposition of three trust deed encumbrances was indefinite in terms and therefore unenforceable; (2) the descriptions of the parcels into which the subject property was to be divided, and encumbered with construction loans, were lacking; and (3) the option for the purchase of additional land was merely an agreement to agree in the future and therefore unenforceable.The pertinent provisions of the escrow agreement are set forth in the footnote.¹

We concur with the trial court that the omission of the specific language of the escrow agreement and the attempted pleading of the contract in general terms does not have the legal effect of withdrawing it from consideration of the court in construing the amended pleading.In Wennerholm v. Stanford Univ. Sch. of Med., 20 Cal.2d 713, 716, 128 P.2d 522, 524, 141 A.L.R. 1358, the court stated: 'If any verified pleading contains an allegation which renders a complaint vulnerable, the defect cannot be cured simply by omitting the allegation, without explanation, in a later pleading.'(See, also, Hardy v. Admiral Oil Co., 56 Cal.2d 836, 16 Cal.Rptr. 894, 366 P.2d 310.)However, we conclude that, when the first amended complaint is considered with the escrow instructions set forth in the original complaint, it does state two causes of action and that the general demurrer was improperly sustained.

The escrow instructions indicate defendant is to sell to plaintiffs, for $34,200, a portion of lot 8, tract 263, which portion is described by metes and bounds.Thus, the property being sold is definitely established.Of the purchase price, $5,000 is to be paid in cash and the balance in the form of three notes, one for $14,600 and two for $7,300 each.The subject property is to be divided into three parcels--'legal description of said parcels is to be furnished [the escrow agent] by the buyers on [sic] the title company.'Each of these notes is to be secured by a purchase money deed of trust to be recorded as a lien on the three parcels, respectively.The instructions provide that the $14,600 note is to be secured by a trust deed 'against the most northerly portion of said land.'No other description is given.The two $7,300 notes are likewise to be secured, each trust deed to be 'a lien against the remaining parcels of said land, one on each parcel.'

The legal effect of this paragraph is to delegate to the buyers the task of dividing the property into the three parcels and to supply the escrow agent with the descriptions for insertion in the trust deeds.Imprudent as such a delegation to buyers may appear, it does not render the agreement of the parties void for uncertainty.It leaves nothing to subsequent agreement between the parties.Their understanding is definite and enforceable and simply stated means--the buyers are to divide the property into three parcels as they see fit and are to secure the balance of the purchase price by the three notes and trust deeds on the parcels in the amounts indicated and with the sole qualification that the largest loan of $14,600 be secured by the 'most northerly portion of said land.'It may be assumed the seller had confidence that the property would be divided by the buyers into three parcels in a fair and reasonable manner and one which would fit in with buyers' plans for development of the property.The court should accord an interpretation which is reasonable (Civ.Code, § 1643) and which gives effect to the intent of the parties as it may be interpreted from their entire agreement rather than one which renders their contract void.(Civ.Code, §§ 1650,1652,1655,1656.)Any fraud on the part of buyers in dividing the property would give rise to a cause of action by seller.

Each of the trust deeds is to bear a subordination clause stating that the seller agrees '* * * at a future date to subordinate this deed of trust to a new construction loan deed of trust not to exceed the sum of $80,000.00 with interest not to exceed 7.5% per annum, payable at such terms and upon such conditions as are required by the lender making such construction loan.'(Emphasis added.)No terms for the payment of such encumbrances are stated.

Again, while it may seem imprudent or poor business for the seller to agree that the buyers may arrange with the lender, whoever it might be, for the remainder of the terms of the construction loans, so long as principal and interest do not exceed the maximums agreed upon, it is not the function of the court to remake the contract between the parties if the terms are clear and certain.Here, again, there is nothing left for future agreement between the seller and buyers.In effect, the seller states that whatever terms of repayment the lender may require which are satisfactory to the buyers are acceptable to the seller.It is noted that, in the most crucial areas of the maximum amounts of construction loans and of interest rates, the seller has fully protected herself and as to the other details we must assume from their agreement she is content to allow buyers to contract with lenders for new construction loans as they see fit and that whatever serves their interests will not adversely affect her own.

The option covers a particular parcel, the balance of lot 8, to be sold at a purchase price of $31,000, payable $5,000 down, and $250 per month, including interest at 6 per cent, exercisable within six months.The instructions state, 'balance of terms to be set out in said option.'Thus, this provision of the contract makes certain the property to be sold, purchase price, down payment, monthly payments, interest rate, and the term, six months, within which the option is to be exercised.Standing alone, this provision for an option constitutes an enforceable contract with the elements essential to a valid option being specified with definiteness and certainty.

True, other items could well have been provided for, such as, whether the sale is to be on a written contract of sale or by the delivering of a deed with the seller taking back a purchase money trust deed securing the remainder of the purchase price, or whether the remainder is to be secured by a mortgage on the subject property.But none of these details are necessary or vital to its enforcement as a valid contract.

What effect then does the addition of 'balance of terms to be set out in said option' have upon the...