Witty v. Clinch

CURTIS, J.

The defendant Anna M. Parsons was on the twenty-first day of April, 1924, the owner of lot 61 of Hollywood Heights Tract in the county of Los Angeles. On or about said date she conveyed said lot to defendant Nan K. Clinch, wife of defendant Colin N. Clinch. It was agreed by said parties at the time of said conveyance that the purchase price of said lot was to be the sum of $3,000 and that in payment thereof Colin N. Clinch and wife should execute to Anna M. Parsons four promissory notes for $750 each, secured by a trust deed to said lot. It was further agreed that Clinch and wife should execute their note for $5,000, secured by a mortgage upon said lot, and that said mortgage should take precedence over said trust deed when filed for record in the office of the county recorder of said county. In consideration of the execution and delivery to the Clinches of said deed with the right to mortgage said lot to secure said note of $5,000, said Colin N. Clinch agreed to erect upon said lot a dwelling-house to cost not less that $5,000. In pursuance to said agreement Colin N. Clinch and wife executed their promissory note for $5,000 in favor of W. A. Prole, together with a mortgage on said lot to secure the same.

[781]

They also executed four promissory notes for $750 each in favor of Anna M. Parsons, together with a trust deed of said lot to secure said notes, and said trust deed was made subject to said $5,000 mortgage of W. A. Prole. Clinch failed to comply with his contract to construct a dwelling-house on said lot. He did not build or commence the building of any house thereon. Prole, through the efforts of Clinch, sold said note of $5,000 secured by said -mortgage to the plaintiff herein for $1500, which sum was actually paid by plaintiff for said note and mortgage. Default was made in the payment of said note and this action was instituted to foreclose said mortgage. Anna M. Parsons and the Hellman Trust and Savings Bank, the trustee named in said trust deed, appeared in said action and filed an answer to plaintiff’s complaint, in which they set up the agreement under which said mortgage was executed and delivered, and the violation of said agreement by Clinch, and further alleged that plaintiff paid no consideration for the said note and mortgage, and that she took said note and mortgage with full knowledge of the terms of the agreement under which it was given. The trial court found that plaintiff paid to said W. A. Prole the sum of $1500 for said note and mortgage, and that at the time of the purchase by her of said note and mortgage she had no knowledge of any of the transactions between Clinch and wife on the one hand and Anna M. Parsons and the Heilman bank on the other, and that she was an innocent purchaser before maturity of said note and mortgage, and for a valuable consideration, to wit, for said sum of $1500. It accordingly rendered judgment in favor of the plaintiff for the sum of $1500, besides interest, attorney’s fees and costs. Prom this judgment Anna M. Parsons and the Heilman bank, now known as the Merchants National Trust and Savings Bank, have appealed.