Rose v. Arnwine

GRIFFIN, J. Plaintiffs brought this action against defendants to recover upon a promissory note for $500, made on May 17, 1948. It was secured by a pledge of a third trust [38]deed for $4,215, executed by Harley V. Cooper, on April 24, 1948.

Defendants answered and in effect admitted the due execution of the note, that it was past due, and had not been paid. By way of cross-complaint they alleged that plaintiffs were guilty of conversion of the third trust deed in its principal sum, and sought damages accordingly. The court found against defendants on the cross-complaint and in favor of plaintiffs and rendered judgment accordingly. Defendants appeal. There is little controversy pertaining to the facts in reference to the claimed conversion.

Defendants owned a small parcel of property on a hillside near Spring Valley1: They constructed what plaintiffs described as a “home-made” house on it, the value of which is one of the main factors in dispute. Defendants sold the property, through plaintiffs’ agent, Wilbur Young, to one Harley B. Cooper for $10,500, on April 23, 1948. The property was taken subject to a first trust deed for approximately $4,000. Under the terms of sale the purchaser agreed to assume this trust deed, pay $1,000 cash, and give a second trust deed for $2,350, payable to the agent Young for a loan made by him to the purchaser. He assigned the second trust deed to plaintiffs. Cooper then executed to defendants the note and third trust deed here in question, which was payable 90 days from the close of escrow. Money which the purchaser thought would arrive to make the payments on the trust deeds failed to materialize and the payments on the third deed of trust became delinquent on July 30, 1948. Demand was made for payment but no payment was made thereon. In May, 1949, the first and second deeds of trust became delinquent. Plaintiffs, to protect their interests, commenced making payments on the first deed of trust and paid all delinquent taxes and insurance. Defendants borrowed $500 from plaintiffs and, before its maturity, assigned to them the third deed of trust as security. During this time Cooper borrowed $700 from plaintiffs. Cooper paid that money to defendants to apply on the third deed of trust but defendants failed to pay any part of it to plaintiffs.

According to plaintiffs’ testimony, plaintiffs applied at the title company to foreclose on the third deed of trust but were told that they were not entitled to do so since they were only holding it as security; that plaintiffs were then advised to foreclose on the second deed of trust which they did do. Defendants endeavored to make some form of financial arrange