Hayward Lumber & Investment Co. v. Starley

BARNARD, P. J.

Charles Victor Hall, being the owner of a tract of real property in San Diego County, conveyed it to the Southern Trust & Commerce Bank early in September, 1926, receiving back a declaration of trust providing that the bank should have power to subdivide and sell the property, to execute contracts of sales and conveyances, to receive all payments and to take steps for foreclosures and the like, that the bank was to make certain advances for the improvement of the property and providing for the payment to Hall of the net proceeds from time to time. Later, the property was conveyed to the Bank of Italy National Trust and Savings Association as successor to all the rights and obligations of the Southern Trust & Commerce Bank. On -December 21, 1927, a sales agent received from W. S. Starley and his wife a down payment of $50 in connection with four lots in this tract. A receipt was given reciting: “for an option to purchase” the lots “at the total price of $4,697.00 payable $50 cash herewith and $647.00 cash within 11 days

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from date hereof”, and the balance in installments. The receipt also stated that it was given “preliminary to the execution of a contract of sale”. On January 3, 1928, a further payment of $647 was made by Starley to the agent and a similar receipt given, reciting it was for an option to purchase the lots “at a total price of $4,697.00 payable $647.00 cash herewith and $50.00 cash on 12-21-27, balance of $4,000.00 payable as follows: $242.40 on or before July 1, 1928, $3,757.60 on or before 10 years—Trust Deed to be given with interest at seven per cent per annum, payable quarterly on unpaid balances”, and that it was preliminary to the execution of a contract of sale. No contract was ever executed, but on April 17, 1928, Starley paid to the agent the sum of $242.40 and at the same time executed a note and trust deed for the balance of the purchase price, the note being payable to Hall and the trust deed being to the Bank of Italy, as trustee for the benefit of Hall, securing this note. The note and trust deed were sent to the Bank of Italy to be placed in escrow pending the completion of the deal. The Bank of Italy ordered a preliminary report on the title company on April 25, 1928, and executed a deed conveying the property to the ’ Starleys on April 30, 1928, but did not record or deliver the same until later.

During April, 1928, Starley approached the plaintiff and arranged to purchase materials with which to erect certain buildings on the property. He testified at the trial that he then informed the plaintiff that the property was subject to this trust deed securing the balance of the purchase price. Starley and his wife then executed and delivered to the plaintiff a trust deed for $6,000 covering this property. On May 2, 1928, the plaintiff sent this trust deed to a title company, asking them for a policy of title insurance when they could show the property vested in Starley or his wife, subject to the trust deed. On May 17th the manager of the plaintiff company telephoned to the title company and was informed that the trust deed had not yet been recorded. On the same day the title company wrote the plaintiff that it might not be able to record the trust deed as directed. On that day the plaintiff furnished Starley with twine and stakes for preliminary work, of the value of $2.39. On May 18th the title company advised the plaintiff that the title to the property in