MacHado v. Bank of Italy

TYLER, P. J.

Appellant instituted this action against the Bank of Italy, a corporation, for the purpose of requiring it and others to state and set forth their rights and interests in and to certain lands described in the complaint, whether acquired through deed of trust, liens or otherwise. The relief asked for was that the court determine the amount due, together with the cost of reconveyance, and upon payment or deposit in court of such sum the title of plaintiff be quieted. General relief, was also asked for. Defendants, answering, set up the defense that they claimed certain rights and interests in the property as beneficiaries by virtue of a certain deed of trust given as security for a loan in the sum of $25,000, together with interest thereon, and that such deed of trust provided and required that defendant corporation make future advances. It is then alleged that said defendant did accordingly make such advances in the sum of $25,500, in addition to the original loan of $25,000, aggregating, with interest, more than $50,500. The answer prayed that plaintiff take nothing and that it be decreed that defendants have a lien upon the property under the terms of the deed of trust to the amount of its original note, 'together with the additional advances, amounting in all to the sum of $53,254.77 principal and accrued interest, and that such lien be declared to be prior in right to plaintiff in the premises.

After trial judgment went for defendants as prayed for and plaintiff appeals.

The facts disclosed by the record are the following: Prior to and on the twenty-first of February, 1920, the appellant was the owner and in possession of the lands described in the complaint. At that time the land was encumbered by two deeds of trust in favor of one Dussing, which were executed to secure the payment of notes aggregating the sum

[771]

of $25,000 principal and some $300 accrued interest. One Francesco Amato desired to purchase the land, and he, together with an agent named Danzi, visited appellant and entered into negotiations with him with that end in view. Appellant was ready to sell and the parties agreed upon the terms. Amato, the intending purchaser, had no ready money, and he, accompanied by the agent, called at the defendant bank at its branch in the city of Santa Clara for the purpose of procuring a loan. They there met Fatjo, the manager, and Amato made the request that he be permitted to borrow the sum of $25,000 and such other sums later on as he might need to erect improvements on the land and make it fit for his business purposes. The principal sum requested was required 'by him to pay off the Bussing encumbrance. Mr. Fatjo stated that he would have the property appraised and would lend up to sixty per cent of its value. Thereupon, at the suggestion of Mr. Fatjo, Amato and the agent interviewed one I. E. Pomeroy, the bank’s official appraiser, and they proceeded to the premises, and the land was appraised 'by Pomeroy as of the value of $72,000. Thereafter Amato and Danzi again visited the bank, and, in a conversation with Manager Fatjo, Amato again requested that he be advanced sums in excess of $25,000 for the necessary improvements. Fatjo again agreed to lend up to sixty per cent of the appraised value of the land. Subsequently Amato, Danzi, and the appellant Machado called at the office of John G. Jones, an attorney at law, for the purpose of having the oral agreement concerning the sale and purchase of the land reduced to writing. The agreement was prepared on February 21, 1920, and executed in duplicate. By the terms thereof appellant agreed to sell and Amato agreed to purchase the land for the sum of $72,600, and Amato also agreed to buy certain personal property used by Machado in his business for the further sum of $10,000. The sum of $25,000 was to be paid in cash on account, which sum it was agreed should be used to pay off the amount due under the Bussing deeds of trust then encumbering the land so as to make it clear of all liens, and the payment of the balance of the purchase price amounting to the sum of $57,600 was to be secured by the execution of a deed of trust by Amato on the real estate and a chattel mortgage on certain cattle. The agreement provided that beginning May 1, 1920, Amato