Hower v. Woman's Home Missionary Society of the California Conference of the Methodist Episcopal Church

SPENCE, J. Plaintiffs were lien claimants on certain real property upon which defendant held two deeds of trust. During foreclosure proceedings under one of said deeds of trust, said parties together with the owner of said property entered into a certain written agreement for the purpose of permitting the refinancing of the property. The property was not refinanced and several years elapsed. Plaintiffs brought this action, seeking an accounting and the appointment of a receiver. Defendant filed an answer and cross-complaint whereby it sought judgment declaring that plaintiffs had failed, neglected and refused to perform the provisions of said agreement on their part to be performed and quieting defendant’s title to said property as against plaintiffs. Upon a trial by the court sitting without a jury, defendant had judgment, from which judgment plaintiffs appeal.

The controversy here arises out of the agreement entered into between the parties. The property was owned by Mar-eel E. Juilly. He borrowed the sums of $3,000 and $2,000, respectively, from defendant. Said loans were evidenced by promissory notes and secured by deeds of trust which were recorded. He had a prospective purchaser for the premises and the lien claims arose out of the work of remodeling the premises. It was conceded on the trial that defendant’s deeds of trust had priority over these lien claims. The sale to the prospective purchaser was not consummated. Some [721]of the lien claimants filed actions to foreclose their liens and defendant commenced proceedings to foreclose one of the deeds of trust. While these proceedings were pending, several conferences were held which resulted in the agreement in question between defendant herein as party of the first part, plaintiffs herein as parties of the second part and Mr. Juilly as party of the third part.

Said agreement contains some rather singular provisions. The plaintiffs herein agreed to waive their liens and defendant agreed to assign its “beneficial interest under said deed of trust” to California Pacific Title and Trust Company with instructions to hold “the beneficial interest as trustees for the party of first part hereto for the amounts of their liens and for the following-named seven lien claimants (setting forth the names of plaintiffs and the amounts of their liens) and Marcel E. Juilly as hereinafter provided”. It was then provided: “It is further mutually understood by and between the parties hereto that after the foreclosure of said deed of trust the property shall be refinanced by California Pacific Title and Trust Company, or their representative, in any amount satisfactory to the parties hereto, and that the moneys realized upon such refinancing shall be distributed as follows:” First, to pay $5,000, together with interest, etc., to the party of the first part (defendant herein) to satisfy the loans; second, the balance to the lien claimants (plaintiffs herein) in proportion to the amounts of their respective liens. After the “refinancing as herein mentioned”, the title company was to convey title to the property to Mr. Juilly. It was also agreed that in the event the lien claimants were not paid in full “by moneys raised to refinance the herein described real property as above provided, then either all rents received from said real property shall be placed with the California Title and Trust Company and be prorated among said claimants herein upon any balance remaining unpaid on their respective claims until the same shall have been fully paid and discharged or the said Marcel E. Juilly shall have the option of paying off the balance of the said five (seven) lien claimants, who agree to accept ninety (90) per cent thereof in full satisfaction”.