King v. Carroll

California Court of Appeal Feb 18, 1936 No. Civ. 10087Published

Before: Roth

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Holding. The court held that an extension agreement and a purchase agreement constituted a single, inseparable transaction, and that the failure of the appellant to perform the purchase agreement constituted a material failure of consideration justifying rescission of the extension agreement. Consequently, the respondents were entitled to enforce the original guaranty.

Issues

Whether the extension agreement and the purchase agreement constituted a single, inseparable transaction.
Whether the failure of the appellant to perform the purchase agreement justified the respondents' rescission of the extension agreement.
Whether the appellant waived the objection to the premature service of the cost bill by failing to move to strike it in the trial court.

Disposition. affirmed

Quotations verified verbatim against the opinion

“the extension and purchase agreements were inseparable parts of one and the same transaction.”

“Such an executory agreement may be rescinded if the consideration for the same fails in a material.part.”

“The appellant made no motion to strike the cost bills and we think she has therefore waived the objection.”

ROTH, J.,

pro

tem.

Appellant and her husband (now deceased), on August 15, 1930, executed a guaranty of note secured by a deed of trust. The note matured in three years. Respondents herein are the payees of said note and the beneficiaries of said deed of trust. The note, deed of trust and guaranty were all executed as a part of one transaction. At

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the time of the execution of said instruments appellant and her husband (both of whom will be hereinafter referred to as appellant) held a junior encumbrance on the property described in the deed of trust. Subsequent to the execution of said instruments the original makers of the note and trustors named in the deed of trust conveyed the property described in the deed of trust to A. W. Lane and Edith M. Lane, husband and wife, subject to the lien of respondents and the junior lien of appellant. Some time prior to August, 1932, the husband of appellant died and she became the sole owner of the junior lien as a surviving joint tenant. In August, 1932, the Lanes were delinquent in the payment of interest on the note held by respondents, and wrote a letter to respondents acknowledging the delinquency and advising them that they intended to have a conference with appellant. Respondents upon receipt of said letter authorized the bank (trustee named in said deed of trust) to call the loan secured by the deed of trust, and thereafter had a conversation with appellant concerning the purchase by appellant of the trust deed and note owned by respondents. As a result of this conference between respondents and appellant, said parties called upon the Lanes, at the request of appellant, the Lanes being unknown to respondents, and as a consequence of this latter conference and others which succeeded it, appellant agreed orally to extend the junior lien and respondents agreed orally to extend their senior encumbrance. On September 7, 1932, a written agreement was executed between respondents and the Lanes (hereinafter for convenience referred to as extension agreement) which extension agreement, in consideration of $1 paid by the Lanes and their promise to pay accrued and accruing interest on said note, provided in substance that respondents would extend the maturity date of the note and the trust deed securing same for a period of one year. This extension agreement between respondents and Lanes was delivered to the Lanes on September 8, 1932, immediately

King v. Carroll

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ROTH, J.,

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