EVERTS v. MATTESON ET AL

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District Court of Appeal, Second District, Division 2, California.

EVERTS v. MATTESON ET AL.*

Civ. 12985.

Decided: April 13, 1942

A. P. G. Steffes, of Las Vegas, Nev., for appellants. Edmund Nelson, John E. Walter, and Freston & Files, all of Los Angeles, for respondent.

From a judgment in favor of plaintiff predicated upon a guaranty executed by Raymond H. Vanderbush and Mamie H. Vanderbush of payment of a note of which their codefendants were makers, the defendants Vanderbush appeal.

The essential facts are:

In August, 1934, the Mattesons executed a note in favor of the Bank of America in the sum of $22,500, which note was secured by a deed of trust covering certain real property. In February, 1935, defendants Vanderbush purchased the real property described in the trust deed from the Mattesons, at which time the note which the Mattesons had executed was in default. At the time of this transaction defendants Vanderbush executed a guaranty of payment of the above mentioned note. In June, 1938, the note being in default, the property secured by the deed of trust was sold, pursuant to the power of sale contained therein. Prior to the commencement of the present action the note was assigned to plaintiff. The amount of the judgment, $2,635.28, represents the unpaid balance.

On July 20, 1938, plaintiff filed an original complaint in the above entitled action and service was made upon all defendants. A default judgment on August 15, 1938, was entered against defendants Matteson. On October 4, 1938, plaintiff filed an amended complaint which was never served upon defendants Matteson. The amended complaint contained the following allegation which did not appear in the original complaint:

“That the reasonable value of said real property on June 24, 1938, was the sum of $19,000.00.”

Thereafter defendants Vanderbush filed an answer which contained among others, the following denial:

“Deny that the reasonable value of said real property on the 24th day of June, 1938 was the sum of $19,000.00 and allege that said property upon said date was reasonably valued at the sum of $28,000.00.”

Subsequently the trial court granted plaintiff's motion to strike the foregoing paragraph of defendants Vanderbush's answer. During the course of the trial the trial judge refused to permit defendants Vanderbush to file a proposed second amended answer which in effect alleged that appealing defendants had been told by the defendant Bank of America, when they executed the guaranty above mentioned, that they would not be called upon to pay the note they were guarantying and that under the law they would not be liable for any deficiency if the security for the note was actually worth more than the indebtedness.* [See page 688 of 124 P.2d for pleading.]

It is necessary for us to determine four questions, which will be stated and answered hereunder seriatim.

First: Were defendants Vanderbush liable to plaintiff as guarantors?

This question must be answered in the affirmative. The document executed by the appealing defendants read in part thus:

“FOR AND IN CONSIDERATION of the extension for two (2) years and four (4) months of the maturity of the last installment, said maturity date being October 28, 1935, of that certain promissory note dated August 28, 1934, executed by C. A. Matteson and Martha Daley Matteson, which extension is hereby granted by Bank of America National Trust and Savings Association, I hereby guarantee the payment of the aforesaid note, together with all interest due or to become due thereon, and any renewal or extension thereof, and this guaranty shall not be affected by any forebearance to any successors in interest of the undersigned.” (Italics added.)

It needs no argument to demonstrate that the foregoing provision in the agreement executed by the appealing defendants constituted a guaranty of payment of the note in question.

Second: Since the original complaint did not allege compliance with the provisions of section 580a of the Code of Civil Procedure and thus did not state a cause of action against defendants Matteson, may defendants Vanderbush urge this omission as reversible error?

This question must be answered in the negative, and is governed by the following rules:

(1) In an action founded upon a contract of guaranty it is unnecessary for the plaintiff to allege compliance with the provisions of section 580a of the Code of Civil Procedure in order to state a cause of action against a guarantor (Security–First Nat. Bank. v. Chapman, 41 Cal.App.2d 219, 221, 106 P.2d 431; see, also, Hatch v. Security–First National Bank, 19 Cal.2d 254, 120 P.2d 869.)

(2) A party cannot on appeal urge errors which affect only his nonappealing codefendants. (Nichols v. Nichols, 135 Cal.App. 488, 491, 27 P.2d 414.)

Since the appealing defendants were guarantors, the alleged error in the instant case affects only their nonappealing codefendants and are therefore not available to appellants. In view of the holding in Loeb v. Christie, 6 Cal.2d 416, 419, 57 P.2d 1303, section 2809 of the Civil Code is inapplicable to the facts of the instant case. The case of Bank of America v. Sanchez, 3 Cal.App.2d 238, 38 P.2d 787, is factually distinguishable from the instant case and, therefore, is not in point.

Third: Did the trial court err in refusing appealing defendants leave to file their proposed second amended answer?

This question must be answered in the negative. The proposed amended answer in substance offered as a defense that appealing defendants were told by the officers of the Bank of America at the time they executed the guaranty in question that they would not be called upon to pay the note which they were guarantying to pay and that under the law they would not be liable for any deficiency if the security for the note was actually worth more than the indebtedness. Evidence of such allegations would have been inadmissible, for the law is established that parol evidence of fraud to establish the invalidity of an instrument must tend to establish some independent fact or representation in the procurement of the instrument or some breach of confidence concerning its use, and not merely a promise directly at variance with the promise contained in the writing. (Bank of America, etc., Ass'n v. Pendergrass, 4 Cal.2d 258, 263, 48 P.2d 659; W. Ross Campbell Co. v. Sears, Roebuck & Co., 136 Cal.App. 765, 769, 29 P.2d 910.)

It is evident from a reading of the allegations of the proposed amended answer that any evidence tending to support such allegations would fall within the inhibition of the foregoing rule.

Fourth: As there was no issue raised by the pleadings of fraud or mistake, was the following conclusion of law of the trial court prejudicially erroneous:

“The execution of the instrument described in the findings of fact herein as a guaranty by defendants Raymond H. Vanderbush and Mamie H. Vanderbush was neither induced, obtained, nor procured by any false or fraudulent representations or by reason of any mistake of law or fact.”?

This question must likewise be answered in the negative. The conclusion was surplusage. It was not in response to any issue after the special defenses of fraud and mistake had been stricken. Such surplusage is harmless. The appropriate conclusions derived by the court from the findings abundantly justify and support the judgment. (Art. VI, sec. 4 1/2, Const. of Cal.)

For the foregoing reasons the judgment is affirmed.

FOOTNOTES

FOOTNOTE.  The proposed pleading read as follows:“SECOND AMENDED ANSWER OF DEFENDANTS RAYMOND H. VANDERBUSH AND MAMIE H. VANDERBUSH TO AMEND COMPLAINT.“Defendants, Raymond H. Vanderbush and Mamie H. Vanderbush, having obtained leave of court, file this, their second amended answer to amended complaint, and admit, deny, and allege:“I“Answering paragraph IV of said amended complaint, these defendants admit signing the instrument, a copy of which is set forth in said paragraph IV, but deny generally and specifically that they or either of them guaranteed the payment of the promissory note set forth in paragraph II of said amended complaint.“Allege that these defendants were induced to sign and did sign said instrument set forth in Paragraph IV, as the result of certain representations and promises made to them for the purpose of inducing them to sign said instrument, as will more particularly hereinafter be alleged.“II“Answering Paragraph V, these defendants deny generally and specifically each and every allegation contained therein.“These defendants deny generally and specifically that the reasonable value of the real property mentioned in said paragraph V was on the 24th day of June, 1938, the sum of Nineteen Thousand ($19,000.00) Dollars, and allege in this respect that said real property upon said date was reasonably worth not less than the sum of Twenty–four Thousand ($24,000.00) Dollars.“III“Answering Paragraphs VI, VII, VIII, and IX, of said amended complaint, these defendants allege that they have not sufficient knowledge, information or belief to enable them to answer the allegations contained in said paragraphs, and upon that ground deny, generally and specifically each and every allegation contained therein.“IV“Answering Paragraph X, these defendants deny, generally and specifically each and every allegation contained therein and allege in this respect that said promissory note has been fully paid.“AND FOR A SECOND, FURTHER AND SEPARATE ANSWER AND DEFENSE, THESE DEFENDANTS ALLEGE:“I“That at all times hereinafter mentioned, and at all times mentioned in plaintiff's amended complaint, H. L. Perry was an officer, agent, servant, and employee, to wit, vice–president and branch manager of plaintiff's assignor, Bank of America National Trust and Savings Association, in its branch bank at Whittier, California.“II“These defendants are informed and believe, and upon such information and belief allege that H. W. Everts, plaintiff herein, was at the time of the commencement of the above–entitled action, and now is an officer and employee of said Bank of America National Trust and Savings Association; that said H. W. Everts paid no consideration to said bank for assignment to him of the promissory note mentioned in plaintiff's complaint, and took the same with notice of any and all defenses thereto; that the said H. W. Everts became the owner and holder of said promissory note after its maturity.“III“That for many years prior to the 7th day of February, 1935, these defendants and particularly the defendant Raymond H. Vanderbush, enjoyed friendly business relations with the Bank of America National Trust and Savings Association and its predecessors in interest; that said friendly business relations commenced in the year 1924 when the defendant Raymond H. Vanderbush opened an account with the Hellman Bank, one of the predecessors in interest of the bank of America National Trust and Savings Association; that said defendant continued to carry his bank account with said Hellman Bank, and its successor in interest, the Bank of America National Trust and Savings Association, until after the 7th day of February, 1935; that said defendant always had a substantial amount of money on deposit with said bank and at various times borrowed money from said banks in sums ranging from Five Hundred to Five Thousand Dollars.“That at all times prior to the 7th day of February, 1935, and on said date, the business relations of said defendant with banks were most friendly; that said defendant on numerous occasions consulted with various officers of said banks about financial and estate matters which concerned said defendant and his business affairs; that on one occasion said defendant paid to said Bank of America National Trust and Savings Association the sum of Twenty–five Hundred ($2,500.00) Dollars in payment of the balance due on a certain promissory note which had been executed by a corporation which became insolvent; that at said time the officials of said bank expressed great gratitude and thanks to said defendant for his payment of said note, and by reason thereof said defendant felt and believed that said Bank of America National Trust and Savings Association would at all times treat him fairly and would not attempt to take advantage of him in any business transactions that he might have with said bank.“That during said entire period of time these defendants, and particularly the defendant, Raymond H. Vanderbush, placed great confidence in the integrity and honesty of said Bank of America National Trust and Savings Association, its officers, agents, servants, and employees, and placed great confidence in the truth of whatever representations said Bank of America National Trust and Savings Association, its officers, agents, servants, and employees, made to defendants with regard to transactions had between them.“That by reason of the knowledge and belief acquired by said defendant during said period of time and by reason of the numerous transactions involving promissory notes secured by mortgages and trust deeds in which said Bank of America National Trust and Savings Association was interested and involved, said Bank of America National Trust and Savings Association obtained and had superior means of information and possessed a knowledge of law superior to the knowledge possessed by these defendants; that by reason thereof these defendants believed that said Bank of America National Trust and Savings Association, its officers, agents, servants, and employees, had a superior knowledge of the law and these defendants sincerely believed that said Bank of America National Trust and Savings Association, its officers, agents, servants, and employees would correctly state said law to these defendants and would not mislead them in any manner or to any extent with respect to the law applicable to the transaction existing between these defendants and said Bank of America National Trust and Savings Association.“IV“That on or about the 7th day of February, 1935, these defendants desired and intended to purchase the real property described in the trust deed mentioned in paragraph III of plaintiff's amended complaint, on condition, however, that a certain extension of time for the payment of certain installments provided for by the promissory note be granted; that the Bank of America National Trust and Savings Association, through its vice–president and branch bank manager, H. L. Perry, agreed to the extension of time that was requested, but stated that it would be necessary for these defendants to sign the instrument which is set forth in Paragraph IV of plaintiff's amended complaint.“That these defendants refused to sign said instrument if by doing so they would render themselves, or either of them, liable under any deficiency judgment based upon said promissory note.“V“That for the purpose of inducing these defendants to execute said instrument, the said H. L. Perry, while acting within the scope of his employment for plaintiff's assignor as aforesaid, made the following representations to these defendants, to wit:“1. That he was familiar with the law with respect to deficiency judgments and with recent changes in said law.“2. That if these defendants would execute said instrument, neither of them would be liable to pay any deficiency judgment under the law as it then existed. And that the present law provided that persons executing similar instruments, could not be held liable for any deficiency judgment in the event of a foreclosure of any trust deed securing a promissory note.“3. That in any event, if there was a foreclosure, a court of law would appoint an appraiser and that it would be necessary for the property to be bid in at the price which the court appraiser would fix as the reasonable market value of the property at the time of sale; that such appraisal would not be less than the sum of Fifty–four Thousand ($54,000.00) Dollars.“4. That the Bank of America National Trust and Savings Association had had an appraisal made of said property for its own use and that by virtue thereof said bank showed the property on its books to be worth not less than the sum of Fifty–four Thousand ($54,000.00) Dollars.“VI“That by reason of the foregoing, a misapprehension of the law by all parties resulted, all supposing that they knew and understood it and all believing that said law was substantially the same as the said H. L. Perry had represented to these defendants said law to be; that if the said H. L. Perry did not at said time and place understand and believe said law to be as he represented the same to these defendants then the said H. L. Perry was aware at the time he induced these defendants to sign said instrument, that these defendants were laboring under a misapprehension of the law and that said H. L. Perry did not rectify or attempt to rectify such misapprehension on the part of these defendants.“VII“That these defendants, had they known or believed that the law was different than as represented to them by the said H. L. Perry, and had they known or believed that they would become liable to a deficiency judgment by signing said instrument, they would not have signed the same, nor would they have purchased the property in question.“VIII“That these defendants believed each and every representation and statement made by said H. L. Perry and Bank of America National Trust and Savings Association as aforesaid, and these defendants relied upon such representations and were induced to sign said written instrument as the result of such reliance thereon.“IX“That if the said H. L. Perry was not laboring under the same misapprehension of law as these defendants, then the said H. L. Perry made the representations set forth above falsely and fraudulently, and himself did not believe the representations and statements made by him, to be true.“That as part of the same transaction these defendants received a grant deed from C. A. Matteson and Martha Daley Matteson, husband and wife, conveying the property in question to them, which said grant deed was prepared by the escrow department of the Bank of America National Trust and Savings Association, and said grantors above named acknowledged their signature before R. A. Downing, a notary public, who was also an escrow officer of said Bank of America National Trust and Savings Association.“AND FOR A THIRD, SEPARATE, AND FURTHER ANSWER AND DEFENSE, THESE DEFENDANTS ALLEGE:“I“And refer to Paragraphs I to IX inclusive, of their second affirmative defense and incorporate the same and each and every allegation thereof, herein, as if herein fully repeated and set forth.“II“That the said H. L. Perry and Bank of America National Trust and Savings Association, by their acts, declarations, and omissions above mentioned, intentionally and deliberately led these defendants to believe that the law of the State of California was such that if they signed the instrument set forth in Paragraph IV of plaintiff's amended complaint they would not render themselves liable to a deficiency judgment, and that in the event of a foreclosure sale an appraiser would be appointed by the court who would fix the reasonable value of the property sold, at the time of such sale and that such appraisal would exceed the balance due on the promissory note in question.“III“That these defendants believed this to be true and acted thereon; that as the result of such belief and in reliance on the truth of the foregoing, these defendants executed the instrument in question.“IV“That the said Bank of America National Trust and Savings Association, H. L. Perry, and plaintiff herein are now estopped to deny or falsify the statements and representations made to these defendants as aforesaid.“V“That if the plaintiff or the said Bank of America National Trust and Savings Association or the said H. L. Perry are permitted to falsify said representations and statements to these defendants then these defendants will be greatly and irreparably damaged and plaintiff and the said Bank of America National Trust and Savings Association will obtain an unconscionable advantage over these defendants.“WHEREFORE, these defendants pray that plaintiff take nothing by his action for costs incurred herein, and for such other and further relief as to the court may seem just and proper.”

McCOMB, Justice.

MOORE, P. J., and W. J. WOOD, J., concurred.