Giorgi v. Conradi

KAUFMAN, P. J.

This controversy arises from a real estate transaction between the parties. By this action, plaintiffs, Eoy and Victoria Giorgi, sought to have the transaction declared a usurious loan. The parties entered into a stipulation in the trial court that one Charles E. Hoppe had been appointed receiver for the plaintiffs in proceedings under chapter II of the Bankruptcy Act in the United States District Court for the Northern District of California, Southern Division, Nos. 49613 and 49614, and that the said Charles E. Hoppe, as receiver, had been authorized by said court to maintain this action and that any judgment rendered would be binding upon the said Charles E. Hoppe as receiver for the plaintiffs. The trial court, hearing the case without a jury, found that the transaction was not usurious and entered judgment accordingly. Plaintiffs appeal.

Plaintiffs alleged that on May 25, 1956, they borrowed $45,000 directly from the defendants; that as a condition of this loan, the defendants required that the appellants execute and deliver a promissory note for $60,000 secured by a deed of trust, naming defendant, California Pacific Title Insurance Company as trustee; that concurrently with the execution of the $60,000 note, the defendants also required the plaintiffs

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to execute a holding agreement which was a scheme to avoid the usury laws, so defendant’s could charge $15,000 for the $45,000 loan; at all times plaintiffs were the owners of the real property in question; that the defendants also required them to execute another promissory note in the principal sum of $2,000, payable in installments of $25 from the sale of each lot, for legal services; that such charge for legal services was exorbitant and made for the sole purpose of concealing the intent to charge a usurious rate of interest; that the defendants have received $55,325 from plaintiffs.

The trial court found all of these allegations to be untrue and found that on May 31, 1956, the defendants sold to the plaintiffs certain parcels of real property (known as the Sheraton Place Tract) in Santa Clara County. As a part of the purchase price, the plaintiffs validly executed and delivered a promissory note for the principal of $60,000 payable one year from date, at the rate of 10 per cent per annum, secured by a deed of trust for a portion of the purchase price, naming California Pacific Title Insurance "Company as trustee. The deed of trust was recorded on June 29, 1956.