Pierce v. Cleveland

SHINN, P. J. In this action for rescission of a sale of real property, and for other relief, upon the ground of fraud, judgment of nonsuit was for defendants and plaintiffs appeal.

Mr. and Mrs. Pierce owned a residence in Los Angeles County of the value of $10,500 but subject to a trust deed encumbrance of some $8,700. On September 25, 1954, they [445]executed a grant deed which contained no description of the property or name of a grantee and delivered the same to William E. Cleveland, who was a real estate broker of their acquaintance. An agreement was signed at that time by Mrs. Pierce and Cleveland as set out in the margin.1 Although it was agreed that Cleveland would transfer and deliver to the Pierces the note of Mr. and Mrs. Conley to him for $1,200 the Conleys executed another note for $1,200 payable to the Pierces, who accepted it without any guaranty by Cleveland. On December 22, 1954, the Conleys also executed a third trust deed on property they owned, with the Pierces as beneficiaries, to secure payment of the note. Cleveland sold the Pierce property to Mr. and Mrs. Stovall for about $10,000. He inserted their names in the deed he had received from the Pierces. The Conleys made one payment of $20 to the Pierces and defaulted in payments on the prior encumbrances. About four months after the Pierce-Cleveland agreement, when they learned of threatened foreclosure of a prior trust deed, the Pierces gave Cleveland notice of rescission of the transaction with him. They brought this action against Cleveland, his wife and the Stovalls. Upon the trial judgment of nonsuit was granted.

The complaint purported to allege fraud on the part of Cleveland. The allegations differed so widely from the terms of the agreement and from the admitted facts that it is unnecessary to enumerate them. It is apparent that counsel who prepared the complaint had not seen the agreement. There was, however, an allegation that Cleveland falsely represented that the Conleys’ credit rating was good. Mrs. Pierce testified that Cleveland assured her that he had checked their credit “clear back east” and that “he would be willing to back it one hundred percent.” It is apparent that the Pierces entered into the agreement knowingly but that they [446]accepted the Conley note and trust deed in reliance upon their belief that the Conleys could and would pay the note.