Honan v. National Thrift Corp.

GOULD, J.,

pro tem.

There is no serious conflict as to the facts in this case. Plaintiffs, husband and wife, the latter acting through a duly authorized attorney-in-fact, executed their promissory note dated July 25, 1932, in the principal sum of $45,000, secured by deed of trust in favor of defendant Estelle Escallier. The latter was simply a “dummy”, advancing no part of the money and having no interest whatever in the transaction. Her appearance in the matter was solely for the purpose of so concealing the facts as to permit defendant National Thrift Corporation, the real party in interest, to secure an unearned 15 per cent upon the face of the loan as a “bonus” for the supposed purchase of the note from the nominal payee.

Oral negotiations between plaintiffs and the agent and general manager of National Thrift Corporation were to the effect, so the court upon substantial evidence found, that plaintiffs’ $45,000 note and trust deed were to be placed in escrow, that the sum of $6,000 was to be advanced to plaintiffs upon the signing of the note, and the remainder of the total of ' $38,250 (being the amount of the note after deduction of the 15 per cent “bonus”) was to be paid by National Thrift Corporation in instalments over a period of ten months, during which time the note was to remain in escrow.

An escrow was opened, but the written documents signed by plaintiffs and defendant Escallier authorized a very different course of procedure than that orally agreed upon, so that pursuant to the written escrow instructions the note for $45,000 was endorsed by defendant Escallier to defendant National Thrift Corporation and by the latter endorsed and delivered, together with the trust deed, to defendant Metropolitan Trust Company, plaintiffs receiving only the initial payment of $6,000. Explaining the fact that the written escrow instructions and agreement differed so radically from the previous oral understanding as to the transaction, plaintiffs and defendant Escallier testified that they did not read the writings which they signed, because the agent and repre

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sentative of Thrift Corporation told them it was unnecessary and a matter of form, and that the written documents simply embodied the matters contained in their oral agreement.