Bauman v. Castle

Opinion

SHOEMAKER, P. J.

Plaintiff brought this action against the guarantors of a promissory note following a nonjudicial sale under a second deed of trust of the property securing the note. Judgment was entered for defendants and plaintiff appeals.

The facts are essentially without dispute. Plaintiff John Bauman was the owner of an interest in an apartment building located in Redwood City, and in March 1964 the building was sold. For his interest in the property, plaintiff received $16,000 in cash, an assignment of the promissory note involved herein in the face amount of $40,000, which was secured by a second deed of trust on an apartment building in Mountain View, and a guaranty of said note executed by defendants William Dias, Samuel Stewart and Edward Castle.

The promissory note assigned to plaintiff had originally been executed in December 1963 as part of the purchase price paid when Cornelius and Elena Gillespie bought the Mountain View apartment building from Robert

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and Eileen Gronachon. The Gillespies were the trustors under the note and the Gronachons were the beneficiaries. The note was subsequently assigned by the Gronachons to New Castle Realty and in turn by it to defendants Dias, Stewart and Castle, who were all employees of New Castle Realty. In March 1964, when plaintiff sold his interest in the Redwood City apartment building, defendants Dias, Stewart and Castle assigned the note with recourse to plaintiff and also executed a written guaranty and promise with respect to the note. The guaranty limited Castle’s liability to 25 percent, Dias’ liability to 3714 percent, and Stewart’s liability to 3714 percent. The guaranty and promise contained a waiver of defendants’ right to require plaintiff to proceed against the security provided by the principal debtors, and defendants agreed that plaintiff “may proceed against the undersigned directly and independently of the makers. . . .”

Contemporaneous with the execution of the guaranty, defendants received from John Minor and William Norton, two other employees of New Castle Realty, a guaranty and promise that Minor and Norton would reimburse defendants to the extent of 30 percent of any loss which defendants might suffer as a result of their guaranty to- plaintiff.