King v. Smith

CARTER, J.

This appeal involves a controversy over $3,000 and $800, which plaintiff claims.

It appears that Emma C. Arenz was the owner of an hotel property which she leased to defendant Cawog. Cawog subleased the property to defendant Smith for a rental of $600 or $1,350 a month (there is conflict as to the amount). The sublease transaction was handled through an escrow in which defendant Bank of America National Trust and Savings Association was the escrow holder. In that transaction the sum of $3,000 was deposited with the bank to assure the payment by Smith to Cawog of the rent under the sublease. Smith having defaulted on the rent, two successive judgments were obtained against him by Cawog aggregating $2,632.55. Execution thereon was levied on the bank which paid them from the $3,000.

In this action for declaratory relief and money had and received plaintiff seeks to recover the $3,000 from Cawog and the bank, asserting that he put up that sum as guarantor of Smith that the latter would pay the rent under the

lease;

that by reason of the statute of frauds (a contract to answer for the default of another must be in writing, Civ. Code, §1624(2)), alteration of the- principal obligation and other rules of law applicable to a guaranty relation, Cawog had no right to take nor the bank to release any portion of the $3,000. If, however, his relation to the transaction was not that of a guarantor, then it follows that Cawog properly received the money on his execution and the bank properly paid, it, leaving plaintiff’s claim without foundation.

The court found that there was no guaranty relationship, but on the contrary, that plaintiff

loaned

the $3,000 to Smith which the latter deposited with the bank as

Ms

guarantee of the payment by him of the rent under the sublease. There is no doubt that if Smith was the guarantor rather than plaintiff, such guaranty was valid and enforceable inasmuch as he signed the escrow instructions involving the sublease and therein agreed to deposit $3,000 with the bank to “guarantee” his performance of the sublease; that if the $3,000 was loaned

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