Security Trust & Savings Bank v. McAdoo

California Court of Appeal Nov 13, 1930 No. Docket No. 4215.Published

Before: MR. JUSTICE PLUMMER DELIVERED THE OPINION OF THE COURT.

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Holding. The court held that the bank acted within the scope of the appellant's written instructions, which explicitly authorized a mortgage in favor of the bank to take precedence over the appellant's trust deed, thereby precluding claims of undue influence or breach of fiduciary duty.

Issues

Whether the bank's actions in securing a mortgage were authorized by the appellant's written instructions.
Whether a confidential or trustee-beneficiary relationship existed between the bank and the appellant under Civil Code section 2235.
Whether the trial court erred in excluding evidence of private conversations between the appellant and the borrower to which the bank was not privy.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The bank did not acquire any advantage over the beneficiary not contemplated by the parties or not provided for in the letter of instructions.”

“The letter of instructions being plain and unambiguous, there was no occasion, on the part of the trial court, to admit oral testimony as a means of interpreting the instrument.”

“The rights of the parties, including their priorities, were specifically set forth and the record fails to show any violation thereof.”

MR. JUSTICE PLUMMER Delivered the Opinion of the Court.

The plaintiff had judgment in an action to foreclose a mortgage on certain property described in the complaint, from which judgment the Averill-Weymouth Company, a corporation, appeals.

The record shows that the Averill Company was engaged in the building of houses, and in so doing had contracted with one W. H. McAdoo for the erection thereof. The money to erect the buildings and to erect the building upon the lot involved in this action was to be obtained from the plaintiff.

In pursuance of this agreement the appellant, the owner of the lot, executed a grant, bargain and sale deed in favor of the defendant W. H. McAdoo and handed the same to the respondent. In handing this deed to the respondent the appellant accompanied the deed with the following letter of instruction, to wit:

“ Averill-Weymouth Company

“Real Estate, Loans and Investments

“725 South Olive St.,

“Los Angeles, California,.

“Security Trust and Savings Bank,

“San Pedro, Calif.

‘1 Gentlemen:—

“We are enclosing herewith our grant deed drawn in favor of W. H. McAdoo, a married man, covering Lots 1 and 2 in Block 26 Vista Del Oro subject to taxes for the fiscal year 1923-24, conditions, restrictions, reservations and rights of way of record.

“You. may use this deed when you can hold for us a note for $1500.00 in favor of this company, executed by our grantee and his wife, Mrs. Ella M. McAdoo, payable in monthly instalments of $50.00 or more, including interest at 7% per annum, this note to be secured by deed of trust executed by the above parties, affecting the easterly 60 feet of Lots 1 and 2, Block 26, Vista Del Oro, which deed of trust is to be made subject to a mortgage in favor of your bank for an amount not in excess of $4500.00 due in three years. As we do not have the necessary data in order to

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enable us to draw the note and trust deed above mentioned, we would ask that you kindly attend to this matter using Title Guarantee and Trust Company form of note and trust deed.

Security Trust & Savings Bank v. McAdoo

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