Tosi v. Northern California Building & Loan Ass'n

PRESTON, J. Plaintiffs appeal from judgment for defendants. The word “defendant” will be used to refer to defendant Northern California Building & Loan Association, a corporation.

Plaintiffs, for the sum of $10,000, purchased a home in Mill Valley upon which there existed an encumbrance of $8,512.74, plus $159.62 interest, in favor of defendant. They made a $6,000 down payment, $1500 to be paid the owner for his equity and $4,500 to be applied toward discharge of the encumbrance. The remaining indebtedness they promised to pay in monthly installments of $100 or more, so as to retire the loan within a short period. All negotiations with respect to the transaction were handled through a real estate man named MacArthur, whom plaintiffs first approached upon their visit to Mill Valley in search of a purchasable home. MacArthur represented to them that he was the agent of the encumbrancer and that all payments could be made to it through him. Plaintiffs never questioned this representation and did not even know or inquire as to the name of said encumbrancer. From October, 1928, time of purchase, to January, 1932, plaintiffs made to MacArthur periodical payments on account of principal and interest, sufficient in all to cancel their entire indebtedness. MacArthur thereupon acknowledged payment in full and gave plaintiffs a fictitious document which purported to be a duly recorded “deed of reconveyance”. Plaintiffs accepted this document and believed themselves to be owners of the property free and clear of all liens.

In February, 1932, MacArthur disappeared under such circumstances that resulting publicity caused plaintiffs for the first time to apprise themselves of the name of the encumbrancer, defendant, and communicate with it, whereupon [276]it was discovered that MaeArthur had failed to remit to defendant some $2,500 of the $6,000 down payment and numerous items of $25 .or more from the monthly installment payments. According to defendant’s records, MaeArthur sent in for plaintiffs’ account a total of $4,229.23, which was applied as received to principal and interest, leaving still due and unpaid a balance of $5,145.07. Defendant refused to acknowledge MaeArthur as its agent or to accede to plaintiffs’ demands for reconveyance, although this refusal appeared to be entirely inconsistent with defendant’s course of conduct throughout the transaction and the dealings between the parties.

In April, 1932, plaintiffs filed their complaint herein for the purpose of compelling a cancellation of the encumbrance. Issue was joined and the cause went to trial. The evidence was without substantial conflict. From it the court concluded that at all times and in all matters connected with the transaction, MaeArthur acted solely as the agent of plaintiffs and that at no time was he the agent of defendant. Predicated upon a finding to this effect, the court gave judgment for defendant and plaintiffs appealed. The issue on appeal is whether the evidence supports said finding of agency. We are of the view that it does not and that the judgment must therefore be reversed.