W. P. Fuller Co. v. McClure

RICHARDS, J.

This is an appeal from an order after final judgment whereby the trial court directed the treasurer of the county of Los Angeles to pay over to the respondent Mary C. Young the sum of $598.30, being the balance of a fund in the hands of said official and derived from the transactions attending the pending litigation. The facts of this somewhat complicated case leading up to the making of said order are undisputed and are these: One Lillian Young was the owner of certain unimproved property in the city of Los Angeles and she sold the same to one A. T. Storch, a contractor, who contemplated the erection of a building upon the property, taking as a portion of the purchase price the promissory note of said Storch for the sum of $2,500 secured by a trust deed upon the property to the Title Guarantee and Trust Company, of which she was the beneficiary, which recited that it was subsequent and subject to a first mortgage securing the sum of $6,500 and which was executed by said Storch to one Richman, a money lender, for the purpose of procuring funds for the erection of the building upon the property. Both the mortgage and the trust deed were recorded on May 9, 1916, and the work of construction was immediately begun. By the terms of Richman’s mortgage he was to advance, and did advance, the sum of $1,600 and was to pay further sums at the mortgagee’s option to the amount of said loan as the work proceeded. Certain mechanics and materialmen from time to time performed labor and furnished materials for which they became and continued to be lien claimants. The oral understanding between Storch and Richman at the time of the giving of said first mortgage was that Storch was to endeavor to find a purchaser of said note and mortgage and that Richman was to transfer the same to such purchaser thereof upon repayment to him of such sums as he had advanced in the meantime. About June 20, 1916, Storch found a purchaser for said note and mortgage in the person of one J. Q. McClure, who was willing to pay, and did then pay, the sum of $5,000 therefor, out of which the sum of $2,900 was paid to reimburse Rich-man for the sums to that extent he had theretofore advanced

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to Storch. The agreement between Storch and McClure was that though the latter had paid and was to pay no more than $5,000 for said note and mortgage it should stand as an obligation of Storch to the extent of $6,000 and interest, the result of which understanding being that McClure would thus make a profit of $1,000 on the transaction. When McClure thus took the note and mortgage he did so with knowledge of the agreement' between Storch and Richman as to the optional nature of all the advances to be made by Rich-man other than that of the first $1,600, and also of those advances which had thus been made. He had also actual notice that the work of construction had begun and was going on at the time of his purchase of said note and mortgage and that mechanics and materialmen were performing labor and furnishing materials at various times between the date of the first payment of $1,600, made by the original mortgagee, and the date when he had made his last advancement upon the mortgage loan. In the course of time W. P. Fuller Company, one of said lien claimants, commenced an action for the foreclosure of its mechanic’s lien. Other lien claimants brought like actions in which Storch, McClure, and Title Guarantee and Trust Company were made defendants, and each of these, with the exception of Storch, appeared, setting up their respective claims and alleged piorities with respect to the premises subjected to such liens. The several causes were consolidated and tried as one action, and. as such were decided by the trial court and a general decree of foreclosure entered, wherein the trial court undertook to set forth and determine the respective rights and priorities of all of the parties. The defendant and cross-complainant McClure appealed from such decree of foreclosure and by his said appeal presented as the sole question for determination by the appellate tribunal that of priority and the extent of such priority as between himself as the transferee and holder of the Richman mortgage, Mary C. Young, as the successor of Lillian Young, the beneficiary of the trust deed, and the several mechanics’ lien claimants. That appeal was decided by the district court of appeal on June 15,1920.