Sherwood v. Robertson

RICHARDS, J.

This appeal is from a judgment in favor of the defendant in an action instituted by the plaintiffs for the purpose of having their promissory note and mortgage, in the hands of the defendant, so reformed as to express the amount actually due upon said note and to secure that amount.

The defendant was the holder of said note and mortgage by virtue of an assignment to her of the same from the original payee thereof. The facts attending the execution of these instruments by the plaintiffs are undisputed and may be summarized as follows: On August 1, 1917, the plaintiffs executed and delivered to one Joseph M. Gore their promissory note for the sum of $2,300 and interest, due three years after date, giving as security for said note their mortgage upon a certain piece of real estate in Los Angeles County, which mortgage was recorded upon the date of its execution. The transaction upon the face of these instruments appeared to be a straight loan of $2,300 to the plaintiffs, but it appeared at the trial that the money for which said note and mortgage were given was to be used by said plaintiffs in erecting two buildings upon the mortgaged premises, and was to be advanced from time to time by the mortgagee to them as the erection of said structures progressed. This plan was carried out to the extent that between the date of said loan and the fifteenth day of September, 1917, the said mortgagee had advanced on account of said loan the sum of $895. On or about said last-named date said Gore undertook to sell said note and mortgage to the defendant herein, an old lady having some money which she desired to have safely invested. The sale of said securities was being negotiated by one R. W. Martin who, on September 15th, took one Arthur J. Madison, a son-in-law of the defendant, to inspect the property which was the

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subject of the mortgage. They found the plaintiff, Mr. Cedric Sherwood, upon the premises. As to the conversation which occurred there between Mr. Madison and Mr. Sherwood there is a dispute in the evidence; but Mr. Madison, who was acting as the agent of the defendant, testified that he spent from fifteen minutes to half an hour looking over the property after being introduced to Mr. Sherwood by Mr. Martin as a gentleman who was looking at the property with a view to buying the mortgage, and that in the course of that time Mr. Sherwood stated to Mr. Madison that both bungalows were rented to be occupied as soon as completed, and that the property was worth .approximately $4,500; and when Mr. Madison stated that the property looked like a nice piece of property, and as it was new was a good loan, Mr. Sherwood answered yes, he thought so. Mr. Martin corroborates that portion of the 'testimony of Mr. Madison wherein the latter stated that Mr. Sherwood was informed that Mr. Madison might buy the mortgage if it was all right. Two days later the defendant herself went out to see the property, accompanied by Mr. Martin, and she testified that she was there introduced to Mr. Sherwood by Mr. Martin as a prospective purchaser of the note and mortgage, and that, to quote her own language, “I said to Mr. Sherwood, ‘It looks like a good loan—I have to be pretty careful, I haven’t very much money, and I have to be very careful how I let it’; and he said it was a good loan; my money would be safe, and everything was all right. . . . Mr. Sherwood stated that the interest was to be paid on it; I think he said there would be no trouble.” Mr. Martin also corroborated Mrs. Robertson in her testimony to the effect that she was introduced to Mr. Sherwood as “the woman with the money, and if the loan suited her she would possibly buy it. ’ ’ A few days later Mrs. Robertson bought the note and mortgage from Gore, paying to him the full face value thereof. The assignment of the mortgage to her was recorded on September 26, 1917, and on the following day the plaintiffs brought this action to have the instruments reformed.