8 Cal. App. 2d 709 | Cal. Ct. App. | 1935
This is an action to quiet title. The Security-First National Bank of Los Angeles is the successor in interest to the Pacific-Southwest Trust & Savings Bank; the defendants Harry A. Clark, Elizabeth Clark and Los Angeles Trust & Safe Deposit Company were served with summons but defaulted. The real controversy is between the Security-First National Bank of Los Angeles and the San Diego Trust & Savings Bank, located in San Diego, relative to a certain parcel of land in San Diego County. As a matter of brevity plaintiff and appellant herein will be referred to as the “Los Angeles bank”, and the defendant and respondent as the “San Diego bank”.
Plaintiff through its predecessor held the legal title to the property involved in trust for certain beneficiaries who had, under the terms of the trust indenture, the entire management and control of the property. Clark offered to buy the property for an agreed sum of $15,000. He deposited $1,000 to apply on the purchase price, the balance to be paid in ninety days. Prior to the expiration of this period and without a written acceptance of the offer by the Los Angeles bank, Clark took possession of the property and started the erection of buildings thereon. Requiring financial aid to continue the work, Clark applied for a loan of $18,000 from the San Diego bank. The Los Angeles bank forwarded to the San Diego bank a deed to Clark and his wife, and a promissory note for $14,000 to be executed by Clark and his wife to be secured by a deed of trust to the Los Angeles bank subject to a first deed of trust to the San Diego bank. A letter accompanied the documents, the portion thereof pertinent to the controversy in this case reading as follows: “Also, it is a further condition of this escrow that the loan of $18,000.00 obtained by Mr. and Mrs. Clark from the San Diego Trust and Savings Bank be used only for the payment of material and
When there is an agreement between the grantor and the grantee to comply with certain conditions, and the grantee fails in whole or in part in the performance of his obligation, the third party as an escrow holder may not deliver the deed until there is a strict compliance with the conditions. (Dyson v. Bradshaw, 23 Cal. 528-536; McLaughlin v. Clausen, 85 Cal 322-327 [24 Pac. 636]; Los Angeles High School Dist. v. Quinn, 195 Cal. 377-383 [234 Pac. 313].) The agreement by the grantor and the grantee to all terms of instructions, and the acceptance by a third party of the position of depositary, creates the escrow. (Holland v. McCarthy, 173 Cal. 597 [160 Pac. 1069].) “It is equally well established in this state that before a proposed escrow may have any validity there must be a binding contract in existence between the parties to such escrow. ’ ’ (Elliott v. Title Insurance & Trust Co., 64 Cal. App. 508, 511 [222 Pac. 175].) The delivery of a deed to a third person merely constitutes the depositary the agent of the grantor. If the grantor deposits with a third party, to await the performance of some condition, an escrow does not exist until there is an acceptance by the grantee of the condition. (Kenney v. Parks, 125 Cal. 146-149 [57 Pac. 772].) The designation of a transaction as an
Appellant cites authorities upholding its contention that the terms of escrow instructions must be strictly construed, and that any delivery of a deed in violation of the instructions passes no title. Assuming that Clark directly or through the San Diego bank accepted the conditions set forth in the letter of instructions, we are,, confronted with the fact that the Los Angeles bank waived compliance with the conditions in controversy. In response to appellant’s communication requesting the filing of a completion notice by the contractors, or requesting that steps be taken to enforce the bond, the San Diego bank in reply explained that “the Clarks are also negotiating for the sale of other property in San Diego, the proceeds of which will be used in full payment of all unpaid claims and amounts due ...” There were other communications between appellant and C. C. C. Tatum, a beneficiary under the original trust indenture and agent of plaintiff in this transaction, showing that the deviation by respondent from the instructions given by the grantor was known by appellant. Knowledge of the failure to perform in accordance with the condition, without protest, was a waiver of the failure to secure a contractor’s bond. Appellant was apprised of the facts and its conduct indicated that the waiver should be
The written instructions, except the request for a contractor’s bond, were fully complied with. In lieu of the bond respondent obtained from the grantee a deed and agreement on property, other than the property in question, guaranteeing the completion of the project. The buildings were completed substantially and no liens or encumbrances attached to the property which would have been discharged by a contractor’s bond. Under all of the circumstances appellant was practically protected and stood in the same position as if a bond had been secured.
Appellant attacks the findings as “wholly unreliable”, the result of conflict and error, but we find that the findings are amply supported by the evidence.
The action filed by plaintiff and appellant Los Angeles bank is to quiet title. In the closing brief appellant requests this court to reverse the judgment of the court below, or, if respondent San Diego bank be permitted to have title to the land, that as a condition precedent to such holding this court decree that the San Diego bank pay to the Los Angeles bank the purchase price of the property. Except under the
The Los Angeles bank executed a deed to the Clarks, and accepted in return a deed of trust subject to the deed of trust of the San Diego bank. If the San Diego bank had not deviated from the letter of instructions but had demanded a contractor’s bond from Clark instead of the deed to the other property • accepted as security, we are not satisfied from the record that the Los Angeles bank would be in any better situation to protect itself than without the contractor’s bond. No evidence of a substantial detriment or injury by noncompliance with the letter of instruction appears from the record. Before the institution of the foreclosure proceedings by the San Diego bank, the Los Angeles bank wrote the San Diego bank in part as follows: “However, so far as this bank is concerned, you need not withhold any action, but may proceed with the foreclosure of the trust deed in your favor.”
Judgment affirmed.
Tyler, P. J., and Knight, J., concurred.
A petition for a rehearing of this cause was denied by the District Court of Appeal on September 7, 1935, and an application by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on October 7, 1935.