Security-First National Bank v. Clark

WARD, J., pro tem. This is an action to quiet title. The Security-First National Bank of Los Angeles is the successor in interest to the Pacific-Southwest Trust & Savings Bank; the defendants Harry A. Clark, Elizabeth Clark and Los Angeles Trust & Safe Deposit Company were served with summons but defaulted. The real controversy is between the Security-First National Bank of Los Angeles and the San Diego Trust & Savings Bank, located in San Diego, relative to a certain parcel of land in San Diego County. As a matter of brevity plaintiff and appellant herein will be referred to as the “Los Angeles bank”, and the defendant and respondent as the “San Diego bank”.

Plaintiff through its predecessor held the legal title to the property involved in trust for certain beneficiaries who had, under the terms of the trust indenture, the entire management and control of the property. Clark offered to buy the property for an agreed sum of $15,000. He deposited $1,000 to apply on the purchase price, the balance to be paid in ninety days. Prior to the expiration of this period and without a written acceptance of the offer by the Los Angeles bank, Clark took possession of the property and started the erection of buildings thereon. Requiring financial aid to continue the work, Clark applied for a loan of $18,000 from the San Diego bank. The Los Angeles bank forwarded to the San Diego bank a deed to Clark and his wife, and a promissory note for $14,000 to be executed by Clark and his wife to be secured by a deed of trust to the Los Angeles bank subject to a first deed of trust to the San Diego bank. A letter accompanied the documents, the portion thereof pertinent to the controversy in this case reading as follows: “Also, it is a further condition of this escrow that the loan of $18,000.00 obtained by Mr. and Mrs. Clark from the San Diego Trust and Savings Bank be used only for the payment of material and [712]labor claims existing vs. the property on this date and the balance for the completion of the Bungalow Court now in the process of construction to the extent of 32 cottages, under a contractors bid and bond guaranteeing the completion of such project without further incumbrance.” No bid or bond as set forth in the letter of instruction was procured by the San Diego bank. Clark was personally superintending the construction of the work and refused to employ a contractor. The San Diego bank claims title through the deed from the Los Angeles bank to the Clarks, the trust deed from Clark and his wife to the San Diego bank, and a foreclosure of said trust deed at which the San Diego bank became the purchaser. It will be noted that the deed was deposited by the grantor, appellant herein, with respondent San Diego bank to be delivered to grantees upon the performance of certain conditions ; namely, obtaining a contractor’s bond guaranteeing the completion of the project without further incumbrance, to be used only for the payment of material and labor claims existing against the property on the date of delivery of the deed, and the balance for the completion of the building project then in course of construction.