California Court of Appeal Jul 15, 1919 No. Civ. No. 1881.Published
Before: James
Synopsis
The facts are stated in the opinion of the court.
JAMES, J.
Appeal from a judgment entered against defendant and from an order denying his motion for a new trial.
In the year 1910 defendant had bargained for the purchase of a certain thirteen unsurveyed lots then owned by one Clark, and as evidence of his right to such property had received the following writing:
“Received of R. R. Raymond four thousand dollars in payment for (13) thirteen lots in Laurel Canyon known as the Clark Addition, a part of the Hermit Place. These lots are to be 25x100 in size and the title to be perfect.
“E. H. Clark.”
At the same time plaintiff was the owner of an equitable interest in certain real estate for which she had paid about the sum of two thousand five hundred dollars. This equitable interest she agreed to exchange with defendant for the rights which he had acquired in the lots first mentioned, and the exchange was effected. In consummating the deal, plaintiff was taken by defendant into the presence of Clark and a new receipt was executed by Clark in favor of the plaintiff, which was identical in terms with that above set out except that plaintiff’s name was inserted instead of the name of the defendant. Plaintiff was informed at the time that the lots had not been surveyed. The lots were never surveyed and deed was never delivered to the plaintiff, notwithstanding her demand therefor, which demand was made upon Raymond; and it appears that at the time of the transaction an attachment had been levied against the property out of which the lots were to be carved by a creditor of Clark’s and the property was afterwards sold under execution. It was bid in by a friend of Clark’s for the latter’s benefit, but before the period of redemption expired another creditor of Clark’s redeemed from the purchaser, and so the legal title which had rested in Clark at the date of the transaction herein referred to was taken away. More than three years after the date of the transaction plaintiff brought this action.
It is difficult, indeed, to determine just what character to give the alleged cause of action set forth in plaintiff’s amended complaint, for it contains allegations in part appropriate to the equitable action of rescission, and in
part appropriate to the legal action for damages by reason of failure of consideration. The action as first brought included both Raymond and Clark as defendants, but before the trial dismissal was made as to Clark. In the complaint it was alleged that Raymond and Clark conspired together to cheat and defraud the plaintiff and that they falsely and fraudulently represented that defendant Raymond was the owner of thirteen lots in Laurel Canyon, the same being known as Clark’s Addition, and that Clark stated that Raymond had purchased the said thirteen lots from him (Clark) and had paid the sum of four thousand dollars therefor, and that Raymond exhibited a receipt signed by Clark wherein it was fraudulently represented that Raymond had paid to Clark the sum of four thousand dollars as the purchase price of said lots. It is further alleged “that said receipt and each and every part thereof was a fabrication, false and fraudulent, and was shown to and exhibited to plaintiff for the further purpose of deceiving and misleading her to believe the said false and fraudulent representations and statements so made by defendants and each of them as to the existence of the Clark Addition, and of the ownership thereof by Raymond, for which he had paid to defendant Clark in cash a large sum of money, as defendants Raymond and Clark and each of them well knew the same and each and every of said statements to be false. That in fact and in truth the said defendant Raymond had not then and there nor prior thereto and has not since paid to said Clark the sum of four thousand dollars or anything of value whatever for said Laurel Canyon lots, and the said Clark did not then, nor theretofore, nor at any time thereafter own a clear or an encumbered or any title to thirteen lots, or to any lot or piece or parcel of land in Laurel Canyon; that there was not then and there or ever before or since that time any lots in said Laurel Canyon known as lots in the Clark Addition, and there never has been any such addition in said canyon laid out or recorded or laid out and recorded or at all, as provided or otherwise or at all, . . . and defendant Raymond then and there, and in the presence of Clark offered to convey and transfer to plaintiff said thirteen lots in Laurel Canyon by good and sufficient title thereto free from all liens and encumbrances, in even exchange for plaintiff’s interest in real estate in the town of
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Monte Vista.” Further allegation was made “that relying upon the integrity and good faith of said defendant Raymond, plaintiff believed said statements and each of them as to his ownership of the said described Laurel Canyon lots, and relying upon his said promise to convey to plaintiff said lots by a good and sufficient title free from all liens and encumbrances, ...” conveyed the interest owned by her in the Monte Vista property. Allegations followed that Raymond had refused to convey the lots and that the plaintiff had offered to rescind and demanded that title to her property be restored to her. Further allegation followed to the effect that Raymond had appropriated plaintiff’s real estate to his own use and benefit, which she alleged he held “in'trust” for plaintiff; and the complaint concluded with the following prayer: “Plaintiff prays for judgment against said defendant Raymond upon an implied contract for direct payment of money in the sum of four thousand dollars, the value of the real estate so conveyed away by him in violation of his said trust, and that an attachment against the property of defendant Raymond issue forthwith for the amount of said debt; and for such further relief ...” The court made findings which in general followed the allegations of the complaint as to the alleged fraudulent representations made, and concluded by first entering judgment for the sum of four thousand dollars. Later, when the motion for new trial was presented, the court made an additional order that unless plaintiff remit all amounts except the sum of two thousand five hundred dollars, the motion for new trial would be granted. The excess was accordingly remitted.
It will be noted that plaintiff did not allege that Raymond represented that title to the lots which rested in Clark was then free and unencumbered. She does allege that the title was not unencumbered, but she knew when she completed the transactions that by the terms of the receipt itself Raymond had no title which he could then convey to her, and that the legal title rested in Clark; in other words, that Raymond’s interest was a mere equitable one evidenced by an unrecorded receipt. She was also informed, as the undisputed evidence shows, that Clark was to survey the property and furnish the deed. That she exchanged her equity for the rights which were evidenced by the receipt from
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Clark to Raymond, seems to us to be beyond the possibility of debate. Plaintiff in her testimony stated that the property composing the thirteen lots was shown to her, and offered no evidence to show that the property was not of great value or that it was not the same property that Clark owned at that time. She offered Clark as a witness and he testified to his ownership of the same, admitted his obligation to transfer the lots, and explained first that he had not had them surveyed because he lacked the money to pay for the same, and explained also how it happened that title to the property was taken away from him through the attachment proceedings and redemption by his creditors. It appeared by his testimony that he had been a man of considerable wealth. He accounted for the fact that he was not at the time of the trial financially responsible by showing that he had had to respond to the liabilities of others with whom he had become interested or as surety, and that he had given to members of his family large sums of money. It cannot altogether be inferred from his testimony, however, if such matter is material to this controversy, that he had not been, within a reasonable time after the date of the transaction between plaintiff and defendant, of sufficient financial responsibility to make good the value of the lots which he had agreed to convey. It was asserted in the complaint that the recitation in the receipt of the payment of four thousand dollars was false and that Raymond had given nothing for his contract with Clark. The evidence showed that Raymond had exchanged with a man named Jones, in whose interest Clark issued the first receipt, property or an equity in property of some considerable value—the evidence fixed it at about two thousand five hundred dollars. So, by way of remark, it may be said that under the evidence the defendant had paid for his contract with Clark about the amount that plaintiff had paid for her equity in the Monte Vista property. Considering the question of fraud, it is nowhere contended that the evidence shows that either Clark or Raymond had any knowledge at the time of this transaction that an attachment had been levied upon the property of Clark.
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So we think, as will appear from what has been stated, that the effect of the exchange transaction between plaintiff and defendant was to invest the plaintiff with the right to have conveyed to her by Clark a good
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title to thirteen lots, or an equivalent amount of the same property. When she concluded her deal it was altogether within her power to have ascertained the condition of the title to the Clark property and by so doing have become informed of the ability of Clark to convey to her title when demanded. Clark was produced before her and made assurances that he was an honest man and would carry out his agreement, and plaintiff was in no wise left in the dark as to who was the owner of the legal title to the property and as to who would be, her grantor under the receipt. We cannot by any effort of construction say that the complaint states a cause of action against Raymond as a guarantor of the responsibility of Clark.
Defendant specially pleaded that plaintiff had been guilty of laches in pursuing her remedy and had allowed defendant to change his position of ownership with reference to the property which he secured from plaintiff. This defense, no doubt, is presented with the idea of meeting the claim that this action should be deemed one in equity for rescission, and if we were so to treat the action, we think that under the evidence that plea should have been sustained. This transaction occurred in March, 1910. Plaintiff testified that in June of the same year she demanded of Raymond that he return to her her property, and she stated: ‘ ‘ He said that he would return me my property. I told him that something must be done, the time was going by. Mr. Raymond said he would return me my property if I would give him five hundred bonus besides paying up all of whatever interest accrued, or what indebtedness. I told Mr. Raymond that I saw no reason why I should give him five hundred dollars bonus when he had given me nothing whatever. He replied that that was the settlement that he would make and no other. I demanded that he return my property to me or give me the deeds and he refused to return me the property unless I paid him the five hundred dollars bonus.” The amended complaint in this action was not filed until November 26, 1913, more than three years and five months after plaintiff had made her demand for rescission and been definitely informed of the only terms upon which defendant would accede.
The grounds for reversal asserted by appellant and to which we have given consideration are entitled to be sus
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tamed. We think that under the complaint and the admitted facts the findings of the court cannot he confirmed. That the plaintiff had a cause of action against Clark cannot be gainsaid, but she abandoned that action and elected to proceed against this appellant alone.
The judgment and order are reversed.
Shaw, J., and Conrey, P. J., concurred.
A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on September 11, 1919.
All the Justices concurred.
AI Brief
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Holding. The court held that the evidence did not support a finding of fraud or that the defendant acted as a guarantor for the third-party grantor's performance, and further concluded that the plaintiff's claim for rescission was barred by laches due to an unreasonable delay in filing suit.
Issues
Whether the defendant was liable for fraud or as a guarantor for the third-party grantor's failure to convey title.
Whether the plaintiff's action for rescission was barred by the doctrine of laches.
Disposition. reversed
Quotations verified verbatim against the opinion
“We cannot by any effort of construction say that the complaint states a cause of action against Raymond as a guarantor of the responsibility of Clark.”
“The amended complaint in this action was not filed until November 26, 1913, more than three years and five months after plaintiff had made her demand for rescission and been definitely informed of the only terms upon which defendant would accede.”