Prentice v. North American Title Guaranty Corp.

McCOMB, J. Defendant appeals from a judgment in favor of plaintiffs in an action to recover damages for negligence in the closing of a sale of real property.

Facts: Plaintiffs agreed to sell certain land to Robert J. Horton and Mary R. Horton, to accept the Hortons’ deed of trust for most of the purchase price, and to subordinate their interest to any loan the Hortons might obtain for the purpose of constructing an apartment building on the land.

The Hortons obtained a loan from Blanche Pope Neal and gave their note in the amount of the loan, secured by a first deed of trust on the property.

Defendant acted as escrow holder and closed the transaction pursuant to written instructions from the parties.

Upon completion of the sale, the Hortons had title to the land, subject to a first deed of trust in favor of Neal and a second deed of trust in favor of plaintiffs for the balance due on the purchase price.

The Hortons did not use the proceeds of the loan from Neal to construct an apartment house, but devoted the money to other purposes, later filing a petition in bankruptcy.

Plaintiffs then brought this action against the Hortons, Neal, and defendant.

[620]Plaintiffs’ complaint contained various counts against defendants Horton and Neal, and the trial court granted relief against these defendants by a decree quieting plaintiffs’ title against their claims.

The counts against defendant were based purely on the ground of negligence. The trial court found that defendant had been negligent in closing the sale and awarded plaintiffs as damages the amount of attorney’s fees incurred by them in the prosecution of the counts in the complaint against defendants Horton and Neal.

Questions: First. When a vendor of land has been required, because of the negligence of a paid escrow holder, to protect his interests by bringing a successful quiet title action against the purchaser and the holder of a first deed of trust, may he recover from the escrow holder the amount of attorney’s fees paid in the quiet title action? Yes.

General rule: In the absence of some special agreement, statutory provision, or exceptional circumstances, attorney’s fees are to be paid by the party employing the attorney. (Code Civ. Proc., § 1021; Reid v. Valley Restaurants, Inc., 48 Cal.2d 606, 610 [5] [311 P.2d 473] ; Estate of Reade, 31 Cal.2d 669, 671 [2] [191 P.2d 745]; Estate of Williamson, 150 Cal.App.2d 334, 341 [8] [310 P.2d 77].)