Barr v. Rhoades

ROTH, P. J.

Plaintiffs James Barr and Bonnie Jean Barr, purchased a three-unit commercial building from defendant-owners Morris D. Scott and Annie Lee Scott.

[853]

Concurrently with the execution of the contract to purchase the building plaintiffs made a contract with said owners and with defendants Virginia Lee Rhoades and Dean Rhoades, brokers for said owners, whereby the four defendants agreed to provide plaintiffs, prior to the consummation of the escrow for the purchase of the building, with lessees for two vacant units in the building, and with trust deed financing upon such terms as would enable plaintiffs to operate the building at a profit.

The evidence showed without conflict that all four defendants knew that plaintiffs could not handle the purchase of the building or operate it on a profitable basis, unless the defendants arranged for a trust deed and procured two separate tenants on leases at specified rentals for two unoccupied units of the building, such leases to commence immediately after the consummation of the escrow.

The escrow was consummated. The purchase price was paid by plaintiffs by a small cash payment and the balance in the form of a first trust deed, obtained by the defendants, although in a lesser amount than that promised, and a second deed of trust taken back by the owner-defendants. No leases for the two vacant units were consummated.

A few months after the close of escrow, no tenants having been provided as promised, defendants were notified by plaintiffs of their desire to rescind and to return the building upon payment to them of their total out of pocket expenses.

Defendants did nothing. Plaintiffs brought an action for rescission and damages. Because of the nonconsummation of the two leases as promised, plaintiffs were unable to meet tax and trust deed payments. They defaulted under the first trust deed. During the pendency of this action against defendants herein, the property in question was sold under the default provision of the first trust deed.

Plaintiffs’ evidence showed various out of pocket expenses in connection with the purchase of the building, to wit: 1) Cash paid on purchase price; 2) payment to building and loan; 3) payment on note to defendant; 4) title charges; 5) architect fees; 6) interest on the foregoing. The total expenses were $9,562.04.