Grable v. Citizens National Trust & Savings Bank

COUGHLIN, J. pro tem.*

This is an action for damages. On January 4, 1951, the plaintiffs, as trustees of the Sidney L. Beach trust, borrowed $17,500 from the defendant; executed a note therefor; and secured payment of the note by a need of trust upon certain real property in San Bernardino County. In connection with this transaction the Security Title Insurance and Guarantee Company issued a policy of title insurance, insuring the defendant, together with its successors in interest, against loss or damage, not exceeding $17,500, by reason of any defects in the execution of the aforementioned deed of trust or in the title of said trustees, as

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well as certain other specified causes. This policy of insur-' anee was paid for hy the plaintiffs as a condition of their loan. Subsequently, the plaintiffs furnished the defendant with a copy of a minute order by a judge of the superior court in Los Angeles County indicating his intention to hold that the Sidney L. Beach trust was void because it violated the rule against perpetuities. This was in an action for declaratory relief by the trustor against the trustees. Thereupon, the defendant assigned its note and deed of trust to the Security Title Insurance and Guarantee Company for the unpaid balance due thereon.

The claims of plaintiffs are difficult of ascertainment with the exception that they believe the defendant should pay them $17,500, and ask for judgment accordingly. This demand, apparently, is based on the contentions that the plaintiffs, as well as the defendant, were insured under the policy of title insurance in question; that the money received by the defendant on its assignment of the note and deed of trust to the title company constituted a payment of “insurance” under the title policy; that the defendant has withheld plaintiffs’ share of this “insurance”; that such assignment was improper because the title company has refused to defend the validity of the trust which has resulted in forcing “plaintiffs to defend said trust alone for over seventeen months at tremendous expense and sacrifice”; that as a result of the assignment the title company has brought an action to quiet title in it to the property in question; and that the defendant impliedly agreed to assign to the plaintiffs any claim for loss which the defendant might have against the title company.

At the trial of the action the parties stipulated that the undenied allegations of the complaint be deemed to be true; that certain exhibits be marked and admitted into evidence; and that the cause be submitted without further testimony.