Sheppard v. Banner Food Products, Inc.

SHINN, Acting P. J.

Plaintiff brought this action against Max Bortz and Blanche Bortz, husband and wife, and Banner Food Products, Inc., seeking a decree declaring a trust deed held by plaintiff to be a lien upon certain real property owned by defendants Bortz, and directing a foreclosure of the deed of trust and a sale of the property thereunder. A demurrer to the amended complaint was sustained without leave to amend and judgment of dismissal was thereupon entered. Plaintiff appeals.

Defendants Bortz owned premises on East Sixth Street in Los Angeles, where they conducted a wholesale smoked fish business. On October 3,1944, they agreed to sell the land and the business to Banner Food Products, Inc., a corporation, for the sum of $22,500, payable $5,000 down, $5,000 March 1, 1945, and $12,500 at the rate of $200 per month, with 6 per cent interest, to be evidenced by a note and a mortgage upon the real property. On October 9, 1944, defendants Bortz transferred to Banner the fixtures, equipment and trucks belonging to the business for a price of $1,500. At that time the transaction was placed in escrow under instructions by which defendants Bortz agreed to sell and Banner agreed to buy the real property for the balance of the total price, namely, $21,-000, to be paid as follows: $3,500 in cash, $4,300 by the assumption of an existing trust deed indebtedness, and the balance of $13,200 at the rate of $125 per month and a $5,000 payment on March 1, 1945, said sum of $13,200 to be secured by trust deed on the property. The complaint alleged that plaintiff, relying upon the terms of the agreement and the escrow instructions “and upon the express or implied assurance of defendants Banner and Bortz that said transaction

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between themselves would be consummated and carried out to completion,” loaned Banner $6,500 and received Banner’s note in that amount, payable in monthly installments of $541.67, and a trust deed on the real property securing the same “subject to the aforesaid encumbrances,” and also secured by Banner’s chattel mortgage in favor of plaintiff covering said fixtures, equipment and trucks. The complaint alleged: “That the aforesaid loan so made by plaintiff to defendant Banner was made with the full knowledge, consent and approval thereof by defendants Bortz, and with the latter’s full knowledge that said trust deed so executed by defendant Banner in favor of plaintiff would constitute a charge or lien upon said property, and that said deed of trust constituted plaintiff’s principal security for the repayment of said loan.” There remains $5,308.33 unpaid upon the $6,500 note. It was alleged that $8,302.50 has been paid by Banner to Bortz upon account of the purchase, a substantial part thereof being money loaned by Banner to plaintiff. It was then alleged that defendants Bortz failed, neglected and refused to carry out their agreed sale to Banner, “in that said defendants Bortz notified defendants Banner and Union Bank that they would not execute a deed to defendant Banner covering the title to said real property and would not consummate said escrow transaction unless other and further terms imposing increased obligation upon defendant Banner would be agreed to and complied with by the latter.” It was also alleged, ‘‘ That by reason and as a result of said acts and conduct of defendants Bortz in so failing, and refusing to comply with and carry out the terms and provisions of said contracts of October 3, 1944, and October 10, 1944, the deed of trust so executed by defendant Banner to this plaintiff is ineffectual and insufficient to impose a lien upon the real property described therein, in that by reason of the failure of defendants •Bortz to execute and deliver the deed to said property, defendant Banner lacked and now lacks the title and ownership thereof necessary to impose and impress a valid and subsisting encumbrance thereon by deed of trust.” It was alleged that plaintiff has requested defendants Bortz to carry out their agreement and convey the property to Banner, “which defendants Bortz have failed and refused to do,” and if they continue in their refusal they “will be unjustly enriched at the expense of this plaintiff and plaintiff will be without security for the enforcement of the greater part of the sum