Holibaugh v. Stokes

STONE, J. pro tem.

*

Respondent Holibaugh was a fellow employee of one Thelma Stokes. She induced him to provide the money with which to buy three separate parcels of real property in Bichmond; one for $2,275; another for $700; and a third for $2,800. Each parcel was purchased in a separate transaction and prior to each purchase, Mrs. Stokes orally agreed to execute a note and deed of trust in favor of respondent to secure the purchase price advanced by him. She neglected to execute the notes and deeds of trust in favor of respondent and he neglected to ascertain whether or not she had done so. Later, Mrs. Stokes needed money and borrowed $700 from appellants and gave them a deed to one parcel of property as security. Concurrently, she entered into an agreement with appellant, Mrs. Claytor, a real estate agent, and appellant, Masterson, Mrs. Claytor’s father, a building contractor, to construct a “fourplex” on the property. Mrs. Stokes had the privilege of buying the property back by paying $22,500 in installments in addition to repaying the $700 loan. A few weeks later, Mrs. Stokes again needed money and borrowed $500 from appellants, giving them a deed to the second parcel of property as security and approximately six months later, she borrowed $500 additional from appellants, giving them a deed instead of a mortgage to the third parcel of real property. Only the one parcel was improved by appellants.

Respondent filed an action naming Mrs. Stokes and appel

[567]

lants as defendants, alleging that Mrs. Stokes held title in trust for him and that the deeds from Stokes to appellants were in fact mortgages. Defendant Stokes defaulted but she appeared at the trial and testified fully concerning all of her transactions with the respondent and with appellants. The testimony of Mrs. Stokes, as well as that of respondent, disclosed that she had agreed to give respondent a note and deed of trust to secure the purchase price of each of the three lots. Respondent, however, in his complaint had alleged that title was to have been taken in his name rather than in that of Mrs. Stokes’, and that she had the privilege of obtaining title by reimbursing him the purchase price. At the conclusion of the trial, the court permitted respondent to amend his complaint to conform to the proof and allege title in Stokes and the agreement to execute notes and deeds of trust from Stokes to him. Respondent was permitted to also allege that the deeds from Stokes to appellants were in fact mortgages. Thereafter, the court entered judgment that (1) defendant Stokes was the owner of the three parcels of real property; (2) that the three deeds from Stokes to appellants were in fact mortgages and that appellants have a first lien against each lot for the amount loaned on that parcel, together with interest; (3) that respondent have a lien against each parcel for the purchase price he had advanced to Stokes plus interest and that respondent’s liens were each subordinate to appellants’ liens on the same parcels; (4) that respondent have judgment for $1,300 against appellants for lumber used in constructing the “fourplex.” There is no issue on appeal as to the $1,300 since counsel, during the trial, agreed that appellants were indebted to respondent for that amount.