Whiteman v. Leonard Realty Co.

[375]

SHOEMAKER, J.

This is an appeal by defendant San Jose Abstract and Title Company, hereinafter referred to as title company or appellant, from a judgment for damages entered after trial by court in favor of plaintiffs Whiteman. The judgment also ran against the defendants Leonard Realty Company and its employees Louis E. Wilson and Joseph Leonard, who do not appeal.

The facts, either admitted or found by the court upon conflicting evidence, are as follows: The respondents owned a motel known as the Homestead Motor Court in Los Altos. In February 1956, Louis E. Wilson and A. P. Whitehead, employees of Leonard Realty Company, obtained an exclusive listing to sell the motel property for $175,000. A note in the approximate sum of $32,000 secured by a first deed of trust on the property was held by a Mrs. Cailleaud, and was payable at the rate of $400 per month. In March 1956, Benjamin Burke, likewise a defendant in this action but who had judgment in his favor, obtained an offer from a real estate syndicate to purchase the property for $165,000 and it was presented to the respondents in the form of a deposit receipt by the employees of Leonard Realty Company. Before signing the deposit receipt, respondents stated that they wanted it understood that they would not sell at the lower figure if they were going to have to pay a prepayment penalty on the existing deed of trust, that they wished to be notified of any demand for a penalty so they could negotiate to avoid it, and if unsuccessful there was to be no sale. The respondents were assured by the real estate agents that if they would sign the deposit receipt, they would immediately notify them if a demand for a prepayment penalty was made, so that respondents could negotiate, and if the negotiations failed there would be no sale. The deposit receipt makes no mention of the Cailleaud deed of trust.

Thereafter, Burke, Wilson and Leonard came to the respondents with escrow instructions prepared by appellant. Respondents reiterated their position about a penalty and its effect on the sale, and again the agents assured them that if a penalty was demanded they would advise them so as to give them an opportunity to negotiate, and if the negotiations were not successful the deal would not be consummated. Upon this understanding respondents signed the instructions. When Mr. Whiteman signed the escrow instructions, he brought out his payment book on the Cailleaud deed of trust, and told