Layne v. Malmgren

THE COURT.

An action to recover .damages for alleged deceit in connection with the sale by defendant Malmgren to the plaintiff of a promissory note secured by a chattel mortgage and a deed of trust.

Defendant Dempsey, who was a real estate broker, acted for defendant Malmgren in the transaction. The Fidelity and Deposit Company of Maryland, a corporation, on November 28, 1924, as surety for defendant Dempsey, issued to the real estate commissioner its bond in the form prescribed by the Real Estate Brokers’ Act, and was joined as a defendant in the action. A general demurrer filed by the corporation was sustained, and a judgment thereon was entered in its favor.

[744]

Upon the trial of- the action upon the merits judgment was also entered in favor of the other defendants, and from both judgments the plaintiff has appealed.

The promissory note, which was originally for $17,840 and interest, was executed by Carl and Mary White to Rose Johnson on January 15, 1924, and was both as to principal and interest payable in monthly installments. As security therefor the makers executed to trustees a deed of trust to certain real property in San Francisco and also a chattel mortgage upon the furnishings in an apartment house situated upon the property. At the time of the execution of the trust deed there were two prior liens upon the property, aggregating $32,000.

It was alleged .that defendant Dempsey, acting on behalf of Malmgren, conducted the negotiations, in the course of which he falsely represented the amount unpaid on the note, the value of the security, the cost of conducting the apartment house, the income therefrom, and that the security for the note was sufficient. The complaint set forth these amounts as represented with those which plaintiff contended were true in fact, the latter with the exception of the cost of conducting the apartment house, which was more, being less than represented. It was further alleged that plaintiff believed and relied upon the representations in making the purchase, and also that he was compelled to foreclose the mortgage and enforce the deed of trust, with the result that insufficient was realized to satisfy the note, all to his damage in the sum of $10,950.