Hi-Valley Development Corp. v. Walters

LILLIE, J. Plaintiff (appellant) sued, among others, Continental Capital Corporation (hereinafter referred to as CCC) and attached, as property belonging to it, $12,375 in escrow. Thereafter, Byron J. Walters (respondent) filed a complaint in intervention against all parties claiming to be owner of the funds. Meanwhile, in the main action, plaintiff dismissed all defendants except CCC; judgment was entered against it in favor of plaintiff in the sum of $13,312. Trial on the complaint in intervention resulted in judgment against plaintiff; it appeals therefrom.

Viewing the evidence in a light most favorable to respondent (Crawford v. Southern Pac. Co., 3 Cal.2d 427 [45 P.2d 183]; Primm v. Primm, 46 Cal.2d 690 [299 P.2d 231]; Grainger v. Antoyan, 48 Cal.2d 805 [313 P.2d 848]), we briefly set forth the facts leading up to the attachment. On November 10, 1960, Walters, seeking a loan of $1,100,000 to build a hotel on certain properties in Idyll wild, deposited in the bank in escrow the sum of $17,875 ($12,375 was to be paid “to the lending institution for the standby fee for [Walters’] formal commitment,” and $5,500 was paid to Contractors Counseling Services Inc. [hereinafter referred to as CCS] and for escrow charges), and executed and delivered to the bank escrow instructions acknowledging a deposit of a letter dated November 1, 1960, (Exs. 1 and B) the basic agreement between Walters and CCS. According to the instructions the closing of escrow was conditioned upon receipt by the bank of written instructions from Walters stating that he had received and accepted a “standby” loan commitment to be furnished by CCS. The letter agreement (Exs. 1 and B) offered to Walters a construction loan of $1,100,000 subject to certain contingencies, i.e. CCS’s assumption of the accuracy and authenticity of his figures and information, and subject to approval of CCS’s “lending source.” Neither the escrow instructions nor the letter agreement mentioned CCC. While CCS was agent of the lending source, none of the documents identifies the “lending source,” and the lender was not identified to Walters. The agreement further provided that in the event “the standby agreement from the lending institution is not delivered” to Walters “in accordance with the above-enumerated terms within 30 days, then all remaining funds in the escrow ... will be immediately refunded” to him. The standby commitment was never delivered and nothing was ever heard from the lending institution.

[781]Although a formal commitment had not been delivered to Walters, and no money was yet due under the letter agreement, Walters, five days later, on November 15, 1960, and in order to facilitate matters, prematurely directed the bank to disburse $12,375 to CCC (it developed that CCS was agent for CCC) and notify the latter that he had accepted a loan commitment provided by CCS. However, the bank, apparently recognizing that the sum was not yet due CCC or anyone else, and perhaps exercising sounder judgment than the intervener, did not make the disbursement; the sum remained in escrow, which was never closed. The bank’s answer to the Notice of Garnishment alleged that it was still holding the $12,375 in escrow subject to escrow instructions.