Security-First National Bank v. Hauer

MOORE, P. J.

Plaintiff appeals from an order vacating a summary judgment which had been granted upon its demand. That judgment was vacated twelve days after its entry upon the ground of fraud in its procurement.

[304]

The factual background out of which the instant controversy arose is as follows:

February 13, 1940, plaintiff and defendant entered into an agreement whereby plaintiff sold to defendant: (1) a parcel of land situate in San Bernardino County, California, planted to oranges; (2) 75 shares of the water stock; and (3) 1100 orchard heaters, subject to the second installment of the county taxes for the fiscal year 1939-1940 and to the restrictions and easements of record, for the price of $22,340. The terms of the sale were as follows: $5340 cash, the balance of $17,000 payable in annual installments of $1700 on each first day of June, commencing June 1, 1941; interest at 5 ner cent payable quarterly. The buyer was to pay all taxes, and assessments levied against the property and all utility charges. The agreement contained other provisions which are immaterial to the issue before us.

As security for the deferred payments on the purchase price provided by the sales agreement, defendant executed an assignment to plaintiff of one-half of the net proceeds from the sales of the crops for 1940 which “shall be considered as being applied on the last installment or installments of principal due on said agreement.” The assignment was accepted by the Southern Citrus Association, the marketing agency, which duly came into the possession of the net proceeds from the sales of defendant’s crop for the year 1940. Under the terms of the sales agreement plaintiff might at its option declare the entire balance of the purchase price to be immediately due and payable in the event that defendant should fail to make any payment thereby provided or to fulfill any of its obligations under the agreement.

On April 12, 1940, having conceived that defendant had not fulfilled such obligation, plaintiff exercised its option to declare the entire balance of the purchase price due and payable, and thereupon served notice upon defendant that “unless on or before April 22, 1940, you shall have paid the amounts above declared to be due and payable, the undersigned will declare a forfeiture and termination of all your rights ... in the property described therein and to all sums paid under the terms thereof.” Such payments were not made by defendant as demanded in the notice. The orange crop was picked and marketed by the Southern Citrus Association. One-lialf of the net proceeds amounted to $2120.20.