Gill v. Mission Savings & Loan Ass'n

COUGHLIN, J.

This is an appeal from a judgment of dismissal upon an order sustaining a general demurrer to a first amended complaint. Leave to amend was granted, but no amendment was filed.

As appears from the first amended complaint, plaintiffs were the owners of four promissory notes executed by Darnell Development Company, a limited partnership; and secured by deeds of trust upon real property each of which contained the following provision: “This deed of trust, shall, ... be subject to a deed of trust to be hereafter executed

[755]

by the trustors or their successors in interest covering said land and securing a loan, not exceeding

$28,000.00”; in

consideration of the foregoing subordination provision the loan referred to therein was “to be used solely for the construction of improvements upon” the realty described in the deed of trust; the defendant, a savings and loan association, made a “construction” loan of $20,000 “upon” the real property described in each deed of trust evidenced by a promissory note secured by a “separate” deed of trust upon that property; the defendant, at all times, “had full and complete knowledge and well knew and . . . acted upon the premises, that the loans referred to in the subordination” provision, “were to be loans solely for the construction of improvements upon” the real property respectively described

in

the deeds of trust; the defendant, “so carelessly and negligently managed and supervised the distribution of said funds, (i.e. those obtained from the “construction” loans made by defendant) that when the same were completely expended the construction had not been completed in accordance with the plans and specifications therefor”; that “as a direct and proximate result of the carelessness and negligence of said defendant, as aforesaid, said properties were not in a condition to be sold and the payments on said notes evidencing said construction loans became delinquent and notice of default was declared”; and “as a direct and proximate result of defendant’s carelessness and negligence, as aforesaid, plaintiffs were damaged” in designated amounts on account of specifically described expenditures they were required to make.