Small v. Charles R. Rogers Productions, Inc.

SHINN, J.,

pro

tem.

This is an action for damages based upon the alleged breach of an agreement to pay a debt secured by a trust deed of real property. The demurrer of defendant Charles R. Rogers to the amended complaint, upon general and special grounds, was sustained without leave to amend. From the resulting judgment in favor of said defendant, plaintiff appeals.

Charles R. Rogers Productions, Inc., a corporation, herein referred to as the “corporation”, agreed to purchase certain real property from Majestic Realty Corporation, herein referred to as “Majestic”, for the sum of $120,000, payable $15,000) in cash, upon the execution of the contract, $30,000 in stated instalments, and the balance by the assumption of a debt of Majestic in the amount of $75,000, secured by trust deed of the property. Defendant Charles R. Rogers, by the terms of the agreement of purchase, assumed certain obligations which give rise to the plaintiff’s claim to damages. The provisions of the contract here involved read as follows: ‘ The corporation and Rogers jointly and severally agree that they will and they do hereby assume the payment of the present outstanding and existing encumbrance on said prop

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erty, which is a mortgage in the amount of $75,000, together with all interest due thereon from April 20, 1931, which is a first lien on said real property, which said mortgage secures a note held by and/or payable to the LaBrea Securities Company of Los Angeles, California, and they do hereby agree to indemnify and save free and harmless of all liability, loss and/or damage the Majestic and the present stockholders in connection with the said note and/or mortgage securing same, and the said corporation and Rogers do hereby jointly and severally agree that they will and they do hereby assume the payment of all taxes and/or assessments levied upon the said real property from April 20, 1931.” By the terms of the agreement, Majestic had the option, upon default of the purchaser, to declare all unpaid sums immediately due and payable or to terminate the contract- and retain the sums paid thereon as liquidated damages. Default was made and the seller elected to declare due the unpaid balance of the purchase price, amounting to the sum of $26,250, no part of which has been paid to plaintiff. This debt is alleged to be uncollectible, because of the insolvency of the corporation. No part of the trust deed indebtedness was paid save the sum of $7,000. The trust deed was foreclosed, the property was sold for the full amount of the indebtedness remaining unpaid, and the security of the seller, consisting of a vendor’s lien for the unpaid balance of the purchase price, was thereby lost. This action is brought upon the theory that had the corporation and Rogers paid the trust deed indebtedness, the seller would have held a vendor’s lien upon the property, otherwise free of encumbrance, as security for the balance of the purchase price. The value of the real property is alleged to exceed this unpaid balance and therefore it is alleged that Majestic has been damaged in the sum of $26,250 and interest. Plaintiff Small is the owner of one-third of the capital stock of Majestic. By the terms of the contract, the progress payments were to be made directly to the stockholders, plaintiff being entitled to one-third thereof. For the purposes of this decision only it will be assumed that plaintiff has authority to maintain this action for the recovery of any damages he may have sustained by reason of the facts alleged.