Drukker v. Howe & Haun Investment Co.

THE COURT.

The plaintiff, who was the owner of lot 625 of Tract No. 6380, sometimes known as Beverly Vista, in Los Angeles County, applied to Howe & Haun Investment Company, a corporation, for a loan of $5,000, to be secured by a deed of trust of the property, her purpose being to erect a dwelling thereon. A written application for a loan signed by her recited that the loan was to be used for said purpose, and that the money should be advanced in installments as the building progressed, the installments to be as follows: “$200.00 to the agent above named as a commission for procuring the said loan; $960.00 when the foundation is in and subfloor laid; $960.00 when the sidewalls and roof are up and on and the building completely inspected; $960.00 when the building is plastered; $960.00 when the building is completed and notice of completion recorded in proper file; $960.00 thirty days after completion.” The commission mentioned was to be paid to H. K. Howe, an officer of the company. The company agreed to make the loan, and on March 17, 1930, plaintiff executed to it her note, negotiable in form, for the above amount, payable three years after date with interest payable quarterly. At the same time she executed the deed of trust, the company being named therein as beneficiary, and the Title Insurance and Trust Co. as the trustee. A contract was also made by her with Hermann Johnson, a contractor, for the erection of the dwelling, the contract price being $4,800, to be paid in five installments as provided in the loan application. Plaintiff instructed the company to pay these installments to the contractor as they became due from the amount agreed to be loaned.

Work on the dwelling commenced on or about March 20, 1930, and on April 5th the sum of $864.32 was paid by the company to the contractor on account of the first installment. Some further work was done and on April 10th the company delivered a second check for $960 to the contractor for the second installment. This check, however, was not

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paid and the dwelling was not completed. The amount of the first check appears to be all that the company paid except certain items which will be hereinafter considered.

Shortly after their execution the company advertised the note and deed of trust for sale, and after negotiations* which commenced on April 4, 1930, defendants Losey on April 7th agreed to purchase the same for the full face value thereof. On that date they paid the company $4,040, and agreed to pay the balance thirty-five days after the filing of a notice of the completion of the dwelling. The instruments were transferred to said defendants, and on June 17, 1930, plaintiff paid them $100, this being the first quarterly installment of interest. On July 5, 1930, plaintiff filed her complaint, asking that the note and deed be declared void as to all sums in excess of $864.