Lewis v. Security-First National Bank

McCOMB, J. From a judgment in favor of defendant predicated upon the sustaining of a demurrer to plaintiffs’ complaint as amended without leave to amend, on the ground that the alleged cause of action was barred by the statute of limitations, plaintiffs appeal.

This is an action to recover damages for breach of an oral contract to purchase fire insurance for plaintiffs’ benefit, and was filed December 23, 1941.

The pertinent facts alleged in the complaint as amended are: In February, 1937, pursuant to plaintiffs’ application, defendant loaned to them the sum of $4,000. To secure the loan plaintiffs executed a promissory note and trust deed in favor of defendant covering certain real property owned by plaintiffs, and at such time, and as part of the transaction, defendant “orally promised to procure” fire insurance covering a building plaintiffs intended to erect upon the property described in the trust deed. In June, 1937, the proposed building was completed, which building, December 23, 1940, was destroyed by fire. Defendant failed to obtain a policy of fire insurance in accordance with the terms of its agreement, and plaintiffs learned of this fact for the first time on December 26, 1940. As a result of defendant’s failure to procure a policy of fire insurance covering the property which was destroyed, plaintiffs were damaged in the sum of $4,000.

Defendant demurred to the complaint as amended, among others, on the following ground:

‘'That the first amended complaint is barred by the statute of limitations of the State of California.”*

The demurrer was sustained without leave to amend.

This is the sole question necessary for us to determine: Was plaintiffs’ alleged cause of action barred by the [829]statute of limitations, section 339, subdivision 1, of the Code of Civil Procedure?

This question must be answered in the affirmative. The rule is established in California that an action to recover damages for breach of an oral contract must be commenced within two years after the cause of action accrues. (Sec. 339, subd. 1, Code of Ciy. Proc.)

In the instant case plaintiffs allege that the contract, for the breach of which they are suing, was an oral contract. Since defendant did not, at any time, procure a policy of fire insurance in accordance with its alleged agreement, plaintiffs’ cause of action accrued, if at all, not later than June 1, 1937, the date the building was completed upon the property described in the trust deed mentioned above. The present action was not filed until December 23, 1941. Therefore, since more than two years had elapsed after plaintiffs’ cause of action accrued before the present action was commenced, it was clearly barred by the applicable provision of the statute of limitations, section 339, subdivision 1, of the Code of Civil Procedure.