Brooks v. Fidelity Savings & Loan Ass'n

GOULD, J. pro tem. Plaintiffs on or about February 3, 1928, borrowed from Fidelity Savings & Loan Association $15,000, payable at the rate of $210 per month with interest at 8.4 per cent per annum, secured by deed of trust upon a 13-unit bungalow court property owned by them at Montebello, California. Soon thereafter an additional borrowing of $1,500, secured by the same trust deed, increased the indebtedness to a total of $16,500. In June, 1935, the unpaid principal balance upon the indebtedness amounted to $11,118.56, and interest was owing from December 5, 1934. Before that date Fidelity assets were transferred to defendant Pacific States Savings & Loan Company, and negotiations hereinafter referred to for the settlement of said indebtedness were had between plaintiffs and officers or agents of defendant Pacific States Company.

[132]In the early months of 1935 several proposals hack and forth, looking to the settlement of the indebtedness, were submitted, and finally on June 25, 1935, it is alleged and so found by the trial court to be a fact, Pacific States accepted a proposition made by the owners to take the sum of $10,000 cash in full payment and settlement of the entire obligation, then amounting to more than $12,500. A letter to this effect was written by Pacific States, and plaintiffs proceeded to open an escrow to complete negotiations theretofore pending to borrow $7,500 upon the same property from the Reconstruction Finance Corporation and to raise an additional $2,500 by borrowings upon life insurance policies and from other sources, as well as to expend money in surveys, insurance policies, escrow fees and other necessary disbursements for refinancing said property.

The loan from the Reconstruction Finance Corporation was approved by that agency September 27, 1935, and, so plaintiffs alleged, they were ready, able and willing to complete the transaction and to carry out their contract with Pacific States by paying the $10,000 to satisfy the note and trust deed held by the latter. Pacific States, however, never became a party to the escrow, but by a letter dated October 23, 1935, refused to proceed unless plaintiffs would pay $11,000. Plaintiffs did not acquiesce in this demand for $1,000 additional, and Pacific States thereupon proceeded with the foreclosure of its trust deed, and pursuant to a sale had in such proceedings purported to bid in said property and take title thereto, at the same time foreclosing a chattel mortgage upon the furniture and furnishings of said bungalow court, held as additional security for said indebtedness. After the sale Pacific States took possession of the property and proceeded to administer it as its own, placing a manager in charge, renting and collecting rents, paying expenses of upkeep, taxes, insurance and other costs.