Exchange National Bank v. Ross
Before: James
Synopsis
Contract to Sell Land—Purchaser’s Notes Assigned as Security— Negotiation for Sale to Third Party—Escrow — Payments Agreed—Notice of Assignment—Liability on Notes.—Where defendant, who was a purchaser under a contract to sell land and had given his installment notes therefor, which had been assigned by his vendor to secure his indebtedness to the plaintiff bank, did, without notice of such assignment, negotiate with his vendor and a third party for a deposit of money in escrow, to enable a sale of the land to pay a prior mortgage thereon of $2,000, and to satisfy his debt to the vendor, with the result that the plaintiff received nothing, but where it appears that before the sale was consummated, defendant received notice of the transfer of his notes to the plaintiff bank, he is liable thereon to such bank, as assignee of his notes, notwithstanding the terms of the sale.
Id.—Finding Against Evidence—Estoppel of Plaintiff—Acquiescence in and Consent to Sale.—Although a finding that “after the placing of said money in escrow . . . the plaintiff, having knowledge of the deposit of said money in escrow, consented to and urged the carrying out of said escrow,” would, if sustained by the evidence, show that the plaintiff bank had thereby estopped itself from thereafter making any claim against defendant upon the contract of indebtedness, yet it is held that the evidence is wholly insufficient to sustain such finding, but is to the contrary, and shows that defendant recognized the claim of such bank, and gave instructions that the deal was not to be carried out until the notes held by the bank had been surrendered to the vendor of the land who assigned them thereto.
Id.—Negotiation fob Payment of Debt of Purchaser to Vendor Without Effect—Bights of Bank.—Where it appears that the defendant had paid only $600 out of a total sum of $2,250 to be paid under his contract of purchase, when he negotiated with the vendor and the third party to transfer his interest in the land, and thereby satisfy his debt to the vendor, but the plaintiff with his knowledge had acquired the right to receive all moneys when due under his contract of indebtedness, any settlement or compromise made by him with the vendor was without effect as against the rights of the plaintiff to collect the full amount of his indebtedness.
JAMES, J.
Action brought upon five promissory notes, each being for the sum of $300, executed by defendant and made payable to S. A. Sanderson or order. These notes were negotiable in form, but were given to represent a certain indebtedness arising upon a contract for the purchase of real property. On June 28, 1906, defendant and S. A. Sanderson
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entered into a written contract whereby Sanderson agreed to sell' and defendant to buy portions of two lots of land in the city of Long Beach. The contract provided that the defendant should pay a total sum of $2,250 for the property, and that he was to receive a clear title thereto. The promissory notes were given as evidence of the partial payments to become due under the contract, it being provided in the latter instrument that the sum of $300 should be paid by defendant Boss upon the execution of the contract, and the further sums of $300 every six months thereafter, except that the final payment of $150 was to be made three months after the last in-’ stallment of $300 became due. On April 26, 1907, Sanderson assigned the contract, together with the promissory notes incident thereto, to the plaintiff bank as collateral security for the payment of a large indebtedness then owing by him to said plaintiff. At the time the contract referred to was made, the real property which was the subject thereof was encumbered by a mortgage given prior thereto by Sanderson to secure an indebtedness of $2,000 owing to one Mary M. Shaw. At the time the assignment of the contract was made by Sanderson to plaintiff, defendant Boss had paid all of the money then required to be paid by him, to wit, the initial payment of $300 and the payment of the further sum of $300 which had fallen due on December 28, 1906. Before defendant had notice that Sanderson had assigned the contract and notes to the plaintiff, he had entered into some agreement whereby it was contemplated that one Kirsher should be given title to the real property agreed to be conveyed by Sanderson to defendant. Certain money which was to be used in the consummation of the latter deal was deposited with the escrow clerk of the Citizens’ Savings Bank of Long Beach, but before this transaction was finally consummated defendant Boss received notice that the plaintiff bank held the contract and notes which he had theretofore executed in favor of Sander-son. Notwithstanding this notice, a sale of the property was made to Kirsher, the money received being used to satisfy the mortgage indebtedness then outstanding to Mrs. Shaw, and the plaintiff bank received nothing. The latter commenced this action on July 2, 1909, at which time the several notes for $300 each, falling due, respectively, on June 28,
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