Vigen v. Castle Building Co.

NOURSE, P. J.

In an action upon a promissory note against the makers and endorsers judgment went for the endorsers.

The defendants Lee and Gensler operated under the name of the Castle Building Co. in the purchase and sale of real property. Prior to the execution of the note in suit, they purchased from the plaintiffs certain real property for which they gave them in part payment five promissory notes held by them and endorsed to plaintiffs. One of these defaulted, and these defendants substituted for it the note in suit. This was done under the agreement of the parties reserving to the defendants the right to substitute a second deed of trust and note “conforming to the same requirements as the note” and deed in default “in order to enable them to protect themselves against the default of others or to refinance the property”. The note thus substituted, and which is the subject of this action, was made by Charles Thorpe and wife and was indorsed, with recourse, by the three other defendants. It

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was secured by a deed of trust, and was given in part payment for property sold the Thorpes by these defendants. It was made payable in San Francisco, and, after delivery to the plaintiffs, it was placed for collection in the Seventh and Irving Street branch of the American Trust Company, where the Thorpes made regular monthly payments from August 4, 1929, to April 4, 1932. In June, 1932, the plaintiffs first learned that the Thorpes were in default, and they then called upon the defendants who, with full knowledge of the default, of the disappearance of the Thorpes, and of the failure of plaintiffs to make demand and presentment, expressly and unconditionally promised to take care of the obligation by the substitution of one or more secured notes for the note in suit. They also requested the plaintiffs to give them time to contact the makers and to aid them in finding their address. These delays continued over several weeks at the request of these defendants, and, in the meantime, several other notes were offered to the plaintiffs, one of which was already in default and the others were secured by property of little or no value. Finally, the defendants informed plaintiffs that they had run out of notes and mortgages and could not make any substitution. The foregoing facts are all shown by uncontradicted evidence or were stipulated to during the trial.