Carter v. Turner

California Court of Appeal Mar 17, 1928 No. Docket No. 3358.Published

Before: Pullen

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Holding. The court affirmed the foreclosure of the mortgage but remanded the case for a redetermination of damages, holding that the trial court applied an incorrect measure of damages for fraud by failing to calculate the difference in value at the time of the transaction.

Issues

Whether the trial court erred in joining a foreclosure action with an action for damages based on fraudulent misrepresentation.
Whether the trial court erred in its application of the measure of damages for fraud in the sale of a note and deed of trust.
Whether the parol evidence rule bars evidence of fraudulent misrepresentations made to induce an endorsement 'without recourse.'

Disposition. remanded

Quotations verified verbatim against the opinion

“the rule against varying the terms of a written instrument by parol is not applicable in the face of established fraud and misrepresentation.”

“The time for the comparison of values to ascertain the defrauded party’s damage is the time the deal was made.”

“it is ordered that this cause be referred back to the trial court with directions to take such testimony as may be necessary to establish the relative values of the properties at the time of the transfer”

PULLEN, J.,

pro

tem.

On March 12, 1917, appellant herein, Rodney L. Turner, was the owner of a tract of land in Tulare County, and on that date mortgaged it to one W. J. Walters, trustee, to secure the repayment of $18,000, with interest, maturing in three years.

[195]

Thereafter W. J. Walters, trustee, assigned this note and the mortgage securing the same to Security Savings' Bank of Riverside, and subsequently the Security Savings Bank assigned to Elizabeth A. Frost; shortly before the filing of the original complaint in this action Elizabeth A. Frost assigned the note and mortgage to George A. Carter, the plaintiff and respondent herein.

On March 11, 1919, appellant conveyed the Tulare County land above referred to, to J. B. Pilcher, taking in ostensible payment therefor Pilcher’s note for $12,000 secured by a deed of trust upon the property, which was subsequent to the mortgage above referred to. This note and deed of trust was executed to Citizens Trust & Savings Bank as trustee for Turner. On March 14, 1919, Pilcher conveyed the property to W. J. Buell, subject to the mortgage for $18,000 and the deed of trust for $12,000.

Before the commencement of this action Carter, the respondent, and Turner, appellant herein, consummated a deal whereby Carter, for a valuable consideration, became the owner and holder of the $12,000 deed of trust which was assigned to him by Turner “without recourse,” and subsequently, to protect his junior lien, acquired from Elizabeth A. Frost the first mortgage for $18,000.

Carter having become the owner and holder of the $18,000 note and mortgage, brought an action to foreclose the same. Turner answered, and as one of his defenses, alleged the existence of the junior and subsequent deed of trust for $12,000, and asked that the trustee and the owner and holder of said note and deed of trust be made parties to the action. Thereupon Carter filed an amended complaint setting up as a first cause of action the foreclosure of the mortgage, and in a second and third cause of action, set up the transaction of the deed of trust, and also allegations of fraudulent representations made by Turner on the sale of the note, and alleged the damages of such false representations to be the amount due on the trust deed. To this amended complaint defendant demurred on the ground that causes of action were improperly united, which demurrer was overruled, and Turner thereupon answered. The findings of fact followed the allegations of the amended complaint, including findings of fraudulent representations on the sale of the note by

Carter v. Turner

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PULLEN, J.,

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