Fidelity & Deposit Co. of Maryland v. De Strajman

KAUFMAN, P. J.

Appellant, Fidelity and Deposit Company of Maryland, filed this action against the respondents to recover moneys paid to indemnify its insured, Western Title Insurance and Guaranty Company, for a loss sustained on certain instruments forged by one Ila Irvine, the manager of

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an apartment house in San Francisco, owned by the respondents. The trial court sustained the respondents’ demurrer to the amended complaint, and this appeal is taken from the judgment on the demurrer. The only question presented is whether the trial court properly concluded that the loss caused by forgery should be borne by the appellant surety rather than the respondents.

The facts are not in dispute. The San Francisco property was acquired by the respondents in 1950 and managed for them by Ila Irvine, as the respondents, Berta G. De Strajman and Elisa S. De Hoffmann, were residents of Buenos Aires, Argentina, at the time of the forgery here involved and at all other times relevant to this action. Mrs. Irvine collected the rents on the San Francisco property but neglected her duties of paying the monthly mortgage installments and United States income taxes. As a result, the holder of the first deed of trust, Bayview Federal Savings and Loan Association (hereinafter referred to as Bayview) recorded a notice of default and the United States filed liens against the property.

In May 1956, the respondents, who were not aware of Mrs. Irvine’s activities, borrowed $27,000 from Home Federal Savings and Loan Association to pay off what they assumed was the balance then owing to Bayview. The proceeds of this loan were delivered to Western Title to pay Bayview. At the same time, in order to obtain the additional funds necessary to pay off the liens, Mrs. Irvine borrowed $4,500 from Irving and Florence Holcenberg who took a note and second deed of trust as security. The names of both respondents were forged by Mrs. Irvine on these instruments. The Holcenbergs relied on the forged documents and delivered the proceeds of the loan to the trustee, Western Title, and obtained a title insurance policy.

Subsequently, the Bayview and United States liens were satisfied and the respondents discovered the forgeries. For more than a year prior to the date on the deed of trust and note, the respondents had been living in South America. Mrs. Irvine admitted the forgeries in a written confession. The Holcenbergs filed a claim against Western Title. Western Title, pursuant to its policy, paid them the $4,500. Appellant, Fidelity and Deposit Company of Maryland, in turn, indemnified Western Title'under its agreement to hold its in