Patapoff v. Reliable Escrow Service Corp.

California Court of Appeal Mar 16, 1962 No. Civ. 25396Published

Before: Shinn

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Holding. The trial court erred in granting a nonsuit based on the plaintiffs' opening statement, as the facts proposed to be proven were sufficient to state a cause of action for fraud. The court improperly assumed the existence of a valid debt, ignoring allegations that the underlying note was fictitious and obtained through fraudulent conspiracy.

Issues

Whether the trial court erred in granting a nonsuit based on the plaintiffs' opening statement.
Whether a prior unlawful detainer judgment is res judicata regarding a subsequent fraud action for damages.

Disposition. reversed

Quotations verified verbatim against the opinion

“Proof of the facts stated by plaintiffs’ attorney would have been sufficient to entitle them to some relief.”

“The question of title was not triable in the unlawful detainer action, but only the question of the right of possession.”

“The judgment is reversed.”

SHINN, P. J.

Plaintiffs appeal from a judgment of non-suit granted at the conclusion of the opening statement of their counsel.

The action is for damages for fraud against Reliable Escrow Service Corporation, O. W. Nelson, Helen Spilker, M. Spilker, E. L. Winn, Samuel D. Burgeson, Charles Uhrig and Land Title Insurance Company. All the defendants who were served with process filed answers, denying the charges of fraud and asserting special defenses. The material allegations of the complaint, as amended, were that plaintiffs owned a residential lot worth $4,000; defendants arranged for the construction of a home on the lot and represented that it would cost $11,000; in order to obtain a maximum loan it would have to be made to appear that the house would cost $13,450; the loan papers must show that amount as the cost; plaintiffs executed two trust deeds, one representing the amount of the first loan and a second trust deed for $2,450, being the difference between the actual cost and the fictitious cost of $13,450; defendants represented that the amount of the second note and trust deed would be returned to them upon completion of the transaction; plaintiffs did not understand that they were signing the second trust deed; the transaction occurred in October 1951 and plaintiffs did not learn of the existence of the trust deed until May 4,1954; it was not placed of record until January 8, 1953; the trust deed was foreclosed without any notice to plaintiffs and they thereby lost title to their property. It was alleged that all the representations of defendants and all their promises were false and fraudulent and part of a design to cheat and defraud the plaintiffs of their property. Compensatory and punitive damages were claimed.

Demurrers having been sustained, plaintiffs filed an amended complaint which omitted the previous allegations of the representations as to the cost of the house and the reasons for the deposit of second trust deed money and the promises of defendants with respect to the same. Instead it was alleged that defendants “pretended” to assist plaintiffs in the erection of a home and in obtaining for plaintiffs the necessary financing; that they concealed the nature of the second trust deed, representing that it was just another document, and persuaded plaintiffs to sign it without reading it

[486]

Patapoff v. Reliable Escrow Service Corp.

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SHINN, P. J.

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