Central Bank v. Wells Fargo Bank & Union Trust Co.

McNUTT, J., pro tem. Central Bank of Oakland, Coit Investment Company, and C. H. Crocker will be hereinafter called Bank, Coit Co. and Crocker.

Omitting dates for the moment, Coit Co. borrowed $100,000 from the Bank to which it gave its promissory note secured by a deed of trust on land in Alameda County, and some time thereafter Coit Co. deeded this real property to Crocker, the deed providing that Crocker assumed payment of the note. Coit Co. fell behind in the interest payment and Crocker made some, the Bank haying learned of the Crocker debt assumption [561]clause in the deed. The note having become overdue the Bank recorded notice of breach and election to sell, sold the property, which it took in for $75,000, brought the instant action against Crocker for deficiency, and secured judgment for some thirty odd thousand dollars; Crocker appealed. After recordation of notice of breach and election to sell, and before suit was brought, Coit Co. for a consideration released Crocker from his agreement with it to assume payment of the debt. As disclosed by the opening statement of counsel for the plaintiff Bank (Rep. Trans., p. 2, 1. 23, and p. 3, 1. 4), it took the position that the grantee Crocker’s assumption of the payment of the debt was an offer to pay the Bank, which offer the Bank had accepted, and that hence it was suing under the provisions of section 1559 of the Civil Code as a third person for whose benefit the contract had been made—and before the rescission thereof by the immediate parties to the assumption agreement. Defendant Crocker’s position was that there never had been an acceptance of his offer by the Bank, and that before any steps had been taken by the Bank to enforce the agreement, Coit Co. and he had rescinded the same. On appeal, the respondent Bank would have its judgment sustained upon the additional ground that when Crocker assumed payment of the debt he indemnified the Bank by reason of section 2777 of the Civil Code.

To this phase of the case we shall give later attention. Since the appellant and respondent are in accord that the assumption of payment of the debt by the grantee of the mortgagor (trustor) is but an offer which may be rescinded at any time before acceptance by the mortgagee for whose benefit the same is made, it is unnecessary to analyze all of the authorities which illustrate the application of that doctrine which finds expression in More v. Hutchinson, 187 Cal. 623 [203 Pac. 97]: “Our Civil Code (section 1559) expressly provides that ‘a contract made expressly for the benefit of a third person may be enforced by him at any time before the parties thereto rescind it’. A contract for the benefit of a third person, however, like any other contract, requires an acceptance; and until such acceptance is manifested in some manner no rights creating a corresponding liability in favor of such party can arise. Until then the transaction amounts to a mere offer. ’ ’ Appellant Crocker takes the position that the only manner in which a third party may accept an