Blue Diamond Co. v. Gollos

STEPHENS, P. J.

Plaintiff, a building materials company, appeals from judgment in favor of respondent bank. An escrow had been started with the bank by defendant Gollos and one Reynolds, from whom the former was purchasing an apartment site. A sum of $47,500 remained unpaid on the purchase price. .Gollos went to plaintiff and made certain representations concerning a projected building loan which he hoped to obtain and use for the erection of an apartment building. Plaintiff interested itself in the proposition, apparently with the idea that by extending its credit resources to Gollos it would receive the contract to supply the building materials for the structure and profit thereby.

On October 6, 1926, Gollos executed and delivered to plaintiff three promissory notes totaling $95,000 to be held

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by the latter as security, and received in turn a letter from plaintiff agreeing to accept $47,500 in full payment of the same. Thereupon plaintiff borrowed $47,500 on a note executed to Lasker Finance Corporation and by it sold to Discount Corporation of America. Later plaintiff was obliged to and did pay this note. The proceeds of the loan by Lasker to plaintiff was delivered in the form of a check payable to the latter.

After 3 o’clock in the afternoon of October 7, 1926, one Windmueller, assistant credit manager of plaintiff, went to defendant bank and left with the stenographer, to be handed to the escrow officer, one Bander, two documents: (1) check $47,500 Lasker to plaintiff and specially indorsed by latter to the bank. (2) Letter of instructions to the bank concerning the Gollos-Reynolds escrow directing it to use the check when they hold for plaintiff various documents, including an assignment of the proceeds of mortgage for $200,000 to be placed on the property, an acceptance of the same by a specified surety company, an assurance by Lasker Corporation that it would pay the existing encumbrance on the property, a bond guaranteeing faithful performance of the building contract, an indemnity bond and a contract to purchase promptly materials to erect the building on the property and closing “Unless you shall have the above for us within ten days from the date, time being strictly the essence hereof, you will hold the within note for our further instructions. Tours very truly, Blue Diamond Company by Black, Hammack & Black.” The stenographer accepted the check and declined the letter of instructions on the ground that plaintiff was not a party to the escrow. Both documents were left at the bank, however, with that limitation, since the escrow officer was not personally present. The next morning the escrow officer phoned Windmueller and Gollos, informing them that the bank did not consider plaintiff a party to the escrow and that Gollos would have to place the amount above indicated in escrow that day, October 8, 1926, or the escrow would be concluded and Gollos would lose the property.