LaHue v. Dougherty

SHENK, J. This is an appeal by the plaintiffs from a judgment entered on an order sustaining a demurrer to their complaint without leave to amend.

The complaint is for declaratory relief and alleges the following facts:

Prior to February 1, 1947, the plaintiffs and defendants owned in common and operated as copartners a ranch consisting of approximately one section of land near Lancaster, California. On that date an agreement of dissolution of the partnership and settlement of accounts was executed by the parties. In addition to the dissolution and settlement the agreement provided for a transfer to the defendants of the plaintiffs’ interest in the real property and improvements, payment by the defendants to the plaintiffs of $1,500 in cash, and the execution and delivery to the plaintiffs of the defendants’ nonnegotiable promissory note in the principal sum of $3,500 payable in five years bearing annual interest of 5 per cent. A copy of the agreement and note is attached to the complaint. The reason alleged for the deferred due date on the note is the defendants’ representation that they had incurred considerable expense in remodeling the barn and procuring dairy equipment in pursuit of their intention to operate a dairy on the ranch, and that because of these facts they required postponement on the payment of the principal of the note for the five-year period.

[3]It is also alleged that the only asset of the partnership was the real property and that the $1,500 cash payment and the amount of the note were intended to compensate the plaintiffs for their interest therein; that the obligations of the agreement were performed including the execution by the plaintiffs to the defendants of a quitclaim deed to the premises, and the delivery of the cash payment and the note by the defendants to the plaintiffs.

The complaint and the agreement show that during the partnership period and thereafter a $12,000 note and mortgage was held by a bank against the property. It is alleged that shortly after the settlement of these matters between the parties and the execution and delivery of the deed the defendants sold a substantial portion of the real property for $8,500 which they applied on the mortgage indebtedness.

The plaintiffs allege that the defendants refuse to recognize that the foregoing facts give rise to a vendor’s lien on the property for the alleged unpaid balance of $3,500 on the purchase price, and that an actual controversy exists between them relating to the existence of the lien; that the defendants are negotiating for the sale of the remainder of the property and if successful in transferring or encumbering their remaining interest without the prospective transferee’s knowledge of the alleged lien, the plaintiffs will be deprived of their right to subject the proceeds of sale or loans to the payment of the $3,500 unpaid on the note. They seek a judicial declaration that they have a vendor’s lien against the property to secure the payment of the alleged unpaid portion of the purchase price.