Tinker v. McLellan

WARNE, J. pro tem.

*

This is an appeal from a judgment in favor of the defendants granted by the court sitting without a jury in an action arising out of the alleged breach of a contract to purchase real property.

On October 13, 1955, the respondents William McLellan and his wife, Diane, hereinafter referred to as the McLellans, agreed to purchase certain real property from the appellants for $20,000 subject to the condition that they were able to obtain an FHA loan in the amount of $15,200. The MeLellans deposited $2,500 with the respondent Sutter County Title Company, hereinafter referred to as the title company, and thereafter, with the consent of the McLellans the title company released $500 thereof to the appellants. As part of the

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purchase price of the property, the appellants agreed to accept a lot owned by the McLellans valued at $2,300. A deed conveying that lot to appellants was deposited with the title company, as was the deed from appellants to the MeLellans conveying the subject property. However it may be noted parenthetically that the property which appellants agreed to sell to the McLellans was subject to the lien of a deed of trust which secured a note upon which there was a balance of approximately $9,000 due and owing to the Mid-Valley Saving and Loan Association, which lien was foreclosed during the pendency of this action, so presumably appellants no longer have any interest in the property.

The McLellans entered upon the premises and retained possession thereof until December 23, 1955, when the disastrous flood in Sutter County so damaged the dwelling on the property as to render it uninhabitable. In the interim the MeLellans had obtained a conditional commitment on an FHA loan, and pursuant thereto, on December 7, 1955, the respondent Northern Counties Bank, hereinafter referred to as the bank, deposited $15,200 with the title company under authorization for disbursement thereof upon recordation of a deed of trust executed by the McLellans to secure the FHA loan. Under the bank’s instructions the title company was to record the deed of trust when it could “. . . cause a ATA Policy with CLTA Ind No 100 form title insurance policy to be issued for not less than $15,200.00, insuring said Deed of Trust to be a lien or charge upon the real property described therein ...” The authorization was also conditional upon the title company’s securing a policy of fire insurance upon the subject property in a sum not less than $15,200. On December 12, 1955, the title company advised the McLellans by letter that the escrow was ready to be closed and would be closed as soon as they paid the amount due from them for various closing costs, totaling $87.92. Although the escrow instructions which the McLellans signed required them to pay these costs they nevertheless questioned their liability for said charges, but thereafter, and not later than December 21, they promised appellants that they would pay the said $87.92. However, the payment was not made, and after the destructive flood of December 23 the bank demanded and received the return of the $15,200 theretofore deposited with the title company. Apparently the title company still holds the balance of the $2,000 deposited by the McLellans and the unrecorded deeds.