Whitaker v. Brainard

CONREY, P. J.

The plaintiffs employed the defendant Kenneth A. Brainard to sell for them a lot in the city of Beverly Hills, which we will identify as “lot 69”, at the price of $60,000. Brainard pretended to find one M. A. Forsythe as purchaser, but in fact was himself the purchaser. Forsythe was Brainard’s uncle and acted as dummy in the transaction. An agreement was made for the sale of the property to Forsythe at said price. The sum of $2,000 was paid on signing of the agreement, which provided that if the purchaser failed to complete the purchase the amounts paid thereon should be retained as liquidated and agreed damages. It was further agreed that the seller should pay to the agent Brainard as commission the

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sum of $3,000. The terms of sale were $25,000 cash, including the $2,000 deposit; balance on first mortgage. Purchaser was to have clear title. The transaction was conducted through the usual process of. escrow, the escrow agent being the Security Trust & Savings Bank (Beverly Hills Branch). While the transaction was-in escrow, Forsythe and wife notified the bank that they had assigned their interest in the property to the defendants Brainard, saying, “we therefore nominate the title in the above described property to be vested in them as joint tenants”. Accordingly a deed of conveyance was prepared, naming defendants as grantees, and in that form the deed was executed by the plaintiffs. Mr. Brainard, by supplemental escrow instructions in his own name directed the bank to “place to the credit of the buyer in this escrow the commission coming to me”. He also deposited with the bank in cash the sum of $20,000 and executed in due form a $35,000 mortgage to the plaintiffs on said lot 69. The bank, out of said funds and in accordance with an instruction given by the plaintiffs, paid off an existing trust deed obligation of $11,500 plus certain accrued interest. The cash remaining after satisfaction of the incidental charges amounted to a little over $8,000 which was paid to the plaintiffs by the bank in closing the transaction. A short time thereafter plaintiffs served on the defendants a written notice of rescission of the transaction. By said notice plaintiffs tendered back and offered to restore to the defendants all sums of money received by said plaintiffs, together with the mortgage and everything and anything received by said plaintiffs from the said defendants in said transaction. No question is presented affecting the sufficiency in form of said notice or the fact that the attempted rescission was based upon the claim of the sellers that the defendant Kenneth A. Brainard, while acting as agent for the plaintiff, had wrongfully purchased the property for himself, and upon the further claim that the plaintiffs had made their conveyance of said lot 69 without knowledge that the agent was the real purchaser, and in the belief that said agent was acting in good faith as the agent of the plaintiffs in the sale of said real property. Promptly after said notice of rescission, the plaintiffs commenced this action to obtain reconveyance of said lot 69 and for other stated