PEOPLE of the State of California, Plaintiff and Respondent, v. Andrew Webb WHITAKER, Defendant and Appellant. IN RE: Andrew Webb Whitaker, on Habeas Corpus.
Defendant Whitaker was charged with six counts of grand theft of personal property in violation of Penal Code section 487, subdivision (1) and five counts of a crime charged as “unlawful sale of real estate subject to a blanket encumbrance not containing an unconditional release clause” (Bus. & Prof.Code, §§ 11013.1, 11013.2, 11013.4 & 11023). He was convicted of grand theft and the unlawful sale of real estate charges in the Lopez transaction and two counts of unlawful sale of real estate in the deposit transactions. He was acquitted of the other charges.1 Findings were made that the loss in the Lopez transaction exceeded $25,000. (Pen.Code, § 12022.6, subd. (a). Having been sentenced to three years and eight months in prison, he appeals.
FACTS1. The Companies.
Defendant Whitaker was president of two Texas corporations, Berkshire Dallas, Inc. and Berkshire California, Inc. George Kopecky was the chief executive officer of the two corporations.
Tommy Browning was the division manager in charge of the California project described below. He testified he was an employee of Berkshire California. He also testified that Berkshire California was responsible for building the homes and administering the sales, while Berkshire Dallas was the owner of the property and the “financial entity.” He further testified that he reported to defendant Whitaker, and that defendant Whitaker signed all the checks for bills paid in California. With regard to home sales, he testified that he packaged each deposit check with the sales contract and gave them to defendant Whitaker.
Defendant Whitaker testified that Berkshire Dallas was the entity that signed for the construction loans but that most of the business in California was conducted by Berkshire California. He also testified that Mr. Kopecky and the creditors were in charge of the project, and that Mr. Browning reported to Mr. Kopecky. Specifically, he testified that he had nothing to do with the sale of the homes, and that virtually all the homes were sold by the time he moved to California.
The creditor's attorney testified that all of the financial dealings were with Berkshire Dallas, Inc. as borrower.
2. The Project.
Berkshire Dallas, Inc. decided to build a residential housing project in Fontana, California in three phases (“the project”). Phase 1 had 25 homes that were built and sold in 1987. Phase 2 had 28 homes that were built and sold from August 1987, through June 1988. Phase 3 was planned for 28 homes, but only streets, utilities and building pads were built during the time relevant to this case. Building of homes was delayed due to, among other things, a construction moratorium imposed by the City of Fontana. Before the moratorium, Berkshire accepted deposits on homes in Phase 3.
In November 1987, Phase 2 of the project was experiencing construction delays, and defendant Whitaker moved to California to expedite construction.
3. The Creditors.
The project was financed by land and construction loans from Sterling Savings and Loan, and loans from Frieburke, Inc.2 The loans were evidenced by promissory notes, and secured by four deeds of trust on parcels in the project. Frieburke, Inc. was represented by an attorney, William Holcomb, who testified regarding the various encumbrances on the project.
The four encumbrances were: (1) a deed of trust securing the construction loan from Sterling, recorded May 15, 1987, in the sum of $2,083,125; (2) a deed of trust securing a land loan from Sterling, recorded May 15, 1987, in the sum of $695,000; (3) a deed of trust securing a loan from Frieburke, Inc., recorded May 15, 1987, in the sum of $470,000; and (4) a deed of trust securing a loan from Frieburke, Inc., recorded February 24, 1988, in the sum of $200,792. As discussed below, three of the deeds of trust had conditional release clauses that allowed partial release of the encumbrances as home buyers purchased individual homes in the subdivision.3 All four trust deeds were signed by defendant Whitaker as President and Secretary of Berkshire Dallas, Inc.
Mr. Browning testified that at least three of these loans had not been paid off at the time of the Lopez transaction. Mr. Holcomb testified that the construction loan was paid off in June 1988, and that Sterling recorded notice of default on the $695,000 loan on June 30, 1988. He also testified that all of the notes were overdue and that the deeds of trust were in default. Defendant Whitaker testified that none of the loans were in default at the time of the sale to Lopez.
4. The Lopez Transaction.
Every home in Phase 2 of the project was sold through escrow except the Lopez home. Mr. Lopez had originally bought a home in Phase 3 of the project. When it became apparent that the Phase 3 homes were not going to be built on time, he was subsequently offered the same model home in Phase 2. He paid for it with a check for a deposit of $1,000 and a cashier's check for $87,200. In return, he was given a grant deed on or about May 12, 1988. He was also given receipts signed by Mr. Browning and defendant Whitaker.
Defendant Whitaker did not put the cashier's check into escrow. Instead, he used the cashier's check to establish a Berkshire California corporate bank account at the Bank of America in Fontana without remitting any money to Sterling or Frieburke, Inc. As a result, the creditors foreclosed on the Lopez property.
The evidence was conflicting as to whether Mr. Lopez actually received clear title or not. Defendant Whitaker testified that he did. Mr. Holcomb testified that the Lopez property was subject to a number of encumbrances at the time the deed was given to Mr. Lopez, and that some of the encumbrances were still of record at the time of trial. A deputy commissioner from the California Department of Real Estate, Mr. Shigemitsu, testified that the trust deeds were blanket encumbrances on the property until reconveyed. An escrow officer testified that the property was encumbered at the time of the Lopez transaction. Another escrow officer testified that the property was still encumbered after the Lopez transaction.
At the time of trial, Mr. Lopez still owned the home, and preliminary title reports showed no encumbrances on his property. He testified, however, that he had to employ an attorney to enjoin a foreclosure, and that he had gone into debt to buy another house in the vicinity.
5. Other Transactions.
Defendant Whitaker was convicted of violating the Business and Professions Code sections discussed below as a result of two other transactions involving Phase 3 buyers Still and Bardone. In each of these transactions, the buyers gave Berkshire deposit checks for $1,000 each. These checks were deposited in a Berkshire California corporate bank account at the Bank of San Bernardino.4 When the buyers canceled the transactions because the homes were not being built on time, Berkshire did not return the deposits to them. Mr. Shigemitsu testified that the issue came to his attention when complaints were made to the Department of Real Estate that the deposits were not put into escrow and were not returned to the buyers. Neither buyer had any direct dealings with defendant Whitaker.
EFFECT OF INSUFFICIENCY OF EVIDENCE OF THEFT BY FALSE PRETENSES
Having found that the evidence was insufficient to support a conviction of theft by false pretenses, but was sufficient to support a conviction of theft by embezzlement, we invited the parties to submit argument on the question of whether reversal of the theft conviction was required by People v. Green (1980) 27 Cal.3d 1, 164 Cal.Rptr. 1, 609 P.2d 468, overruled on other grounds in People v. Hall (1986) 41 Cal.3d 826, 834, footnote 3, 226 Cal.Rptr. 112, 718 P.2d 99. The parties have submitted oral and written argument on the issue.
The relevant portion of Green concerned a special circumstance allegation that the murder was committed in the course of a kidnapping. (People v. Green, supra, 27 Cal.3d 1, 62, 164 Cal.Rptr. 1, 609 P.2d 468.) Specifically, the prosecution presented three possible theories of asportation and the court found two of them legally insufficient. It then applied the following rule: “In these circumstances the governing rule on appeal is both settled and clear: when the prosecution presents its case to the jury on alternate theories, some of which are legally correct and others legally incorrect, and the reviewing court cannot determine from the record on which theory the ensuing general verdict of guilt rested, the conviction cannot stand․ [¶] The rule is perhaps most commonly invoked when the alternate theory is legally erroneous․ [¶] The same rule applies when the defect in the alternate theory is not legal but factual, i.e., when the reviewing court holds the evidence insufficient to support the conviction on that ground.” (Id. at pp. 69–70, 164 Cal.Rptr. 1, 609 P.2d 468.) The court further held that, when the reviewing court cannot determine what theory the jury followed, reversal is required, saying: “To speculate on the basis of the verdict, the court recognized, would ‘usurp the fact-finding function of the jury.’ ” (Id. at p. 71, 164 Cal.Rptr. 1, 609 P.2d 468.) Accordingly, the court found that a miscarriage of justice had occurred, and that reversal was required. (Id. at p. 74, 164 Cal.Rptr. 1, 609 P.2d 468.)
Respondent contends that theft is historically different from kidnapping, felony murder, and the other crimes in which the Green rule has been applied, and that reversal is not required here because the crime charged and proven was theft, a violation of Penal Code section 484, and it is immaterial which type of theft the jury found.
We agree with respondent. Penal Code section 484 defines a number of different varieties of theft as one crime. Application of the Green rule in this context would mean that the jury would have to agree on which specific variety of theft was committed in each case. This would mean that the purpose of the statutory consolidation of the theft offenses would be negated, and we would once again be bogged down in applying the technicalities that differentiated the pleading and proof of these crimes in the common law.
The common law technical distinctions between larceny, embezzlement, and false pretenses led to “[g]reat inconvenience ․ in selecting the proper offense to be charged and the appropriate instructions to be given the jury; and variance sometimes resulted in a reversal of a conviction for the wrong crime. It has been rather common, therefore, for modern legislation to abolish the procedural distinctions and to combine the crimes under one general heading, such as theft.” (2 Witkin & Epstein, Cal.Criminal Law (2d ed. 1988) § 562, pp. 640–641.) In California, the consolidation resulted from the amendment of Penal Code section 484 in 1927 and the simultaneous enactment of Penal Code section 490a.14
The effect of this amendment was that the jury need only agree that the defendant committed theft, and the jury does not need to decide on the particular technical form of theft. Accordingly, the jury here was instructed that “[i]f you are satisfied beyond a reasonable doubt and unanimously agree that defendant committed the crime of theft, you should find the defendant guilty. You are not required to agree as to which particular form of theft the defendant committed.” (CALJIC No. 14.47.)
Because of the statutory consolidation of theft offenses, theft is different from the other situations in which the Green rule has been applied. Our Supreme Court discussed these principles in People v. Ashley (1954) 42 Cal.2d 246, 267 P.2d 271 and People v. Nor Woods (1951) 37 Cal.2d 584, 233 P.2d 897. In Ashley, an opinion by Justice Traynor, defendant was charged with grand theft after two elderly women made loans to his corporation which were not repaid. The jury was instructed on larceny by trick and device and obtaining property by false pretenses. Justice Traynor points out that Penal Code section 484 defines theft in various ways, including the fraudulent appropriation of property entrusted to a person, or obtaining of property by false pretenses. He states: “Although the crimes of larceny by trick and device and obtaining property by false pretenses are much alike, they are aimed at different criminal acquisitive techniques. Larceny by trick and device is the appropriation of property, the possession of which was fraudulently acquired; obtaining property by false pretenses is the fraudulent or deceitful acquisition of both title and possession. [Citations.] In this state, these two offenses, with other larcenous crimes, have been consolidated into the single crime of theft (Pen.Code, § 484), but their elements have not been changed thereby. [Citations.] The purpose of the consolidation was to remove the technicalities that existed in the pleading and proof of these crimes at common law. Indictments and informations charging the crime of ‘theft’ can now simply allege an ‘unlawful taking.’ [Citations.] Juries need no longer be concerned with the technical differences between the several types of theft, and can return a general verdict of guilty if they find that an ‘unlawful taking’ has been proved. [Citations.] The elements of the several types of theft included within section 484 have not been changed, however, and a judgment of conviction of theft, based on a general verdict of guilty, can be sustained only if the evidence discloses the elements of one of the consolidated offenses.” (Id., 42 Cal.2d at p. 258, 267 P.2d 271, emphasis added.)
Thus, theft may consist of theft by larceny, theft by trick and device, theft by false embezzlement or theft by false pretenses. (CALJIC No. 14.00.) The jury must agree that theft was committed, but “You are not required to agree as to which particular form of theft the defendant committed. ” (CALJIC No. 14.47.) People v. Vineberg (1981) 125 Cal.App.3d 127, 139, 177 Cal.Rptr. 819 held that this instruction is a correct statement of the law. Accordingly, “it is not necessary to instruct that all the jurors must agree on the particular theory of theft shown by the evidence, provided all agree the defendant fraudulently appropriated the property; in that event, ‘it is immaterial whether or not they agreed as to the technical pigeonhole into which the theft fell.’ ” (People v. Failla (1966) 64 Cal.2d 560, 567, 51 Cal.Rptr. 103, 414 P.2d 39.) Failla goes on to discuss the issue in burglary, murder and theft cases, saying that “the jurors need not be instructed that to return a verdict of guilty they must all agree on the specific ‘theory’ of the entry—i.e., what particular felony or felonies the defendant intended at the time—provided they are told they must be unanimous in finding that a felonious entry took place.” (Id. at p. 569, 51 Cal.Rptr. 103, 414 P.2d 39.)
The Failla quotation comes from People v. Nor Woods, supra, 37 Cal.2d 584, 233 P.2d 897, another opinion by Justice Traynor. In that case, the defendant argued that the information was defective in failing to specify the kind of grand theft with which he was charged. After discussing distinctions between theories based on the victim's intent, Justice Traynor said: “Irrespective of [the victim's] intent, however, defendant could be found guilty of theft by one means or another, and since by the verdict the jury determined that he did fraudulently appropriate the property, it is immaterial whether or not they agreed as to the technical pigeonhole into which the theft fell.” (Id. at p. 586, 233 P.2d 897.)
Respondent also relies on People v. Schramling (1987) 192 Cal.App.3d 989, 238 Cal.Rptr. 8. In that case, defendant argued that the evidence was insufficient to support his grand theft conviction because it did not support theories of either embezzlement or larceny. The court, finding the evidence sufficient to support an embezzlement theory, found that it did not need to determine whether the larceny theory was supported by the evidence. (Id. at pp. 992–993, fn. 2, 238 Cal.Rptr. 8.) The court cites these relevant principles: “A ‘conviction of grand theft may be had upon proof of either larceny, embezzlement or obtaining money by false pretenses' ” and “ ‘[A] judgment of conviction of theft, based on a general verdict of guilty, can be sustained only if the evidence discloses the elements of one of the consolidated offenses.’ ” (Id. at p. 993, 238 Cal.Rptr. 8.)
Respondent also relies on People v. Dubrin (1965) 232 Cal.App.2d 674, 678, 43 Cal.Rptr. 60. Defendant was charged with grand theft and urged that the evidence was insufficient to support the conviction. The court found sufficient evidence of embezzlement, and thus found it unnecessary to determine if there was sufficient evidence that he obtained money by false pretenses.
Similarly, in People v. Lafka (1959) 174 Cal.App.2d 312, 316–317, 344 P.2d 619, the court said: “As the evidence supports conviction on both counts of grand theft by trick and device, it becomes unnecessary to consider whether it also supports conviction on obtaining property by false pretenses which requires corroboration if the conviction rests primarily on the testimony of a single witness.”
Defendant rests on Green, the cases discussed in Green, and subsequent cases which have applied its rule. Green discusses People v. Anderson (1965) 63 Cal.2d 351, 46 Cal.Rptr. 763, 406 P.2d 43, and People v. Houts (1978) 86 Cal.App.3d 1012, 150 Cal.Rptr. 589. In Anderson, the prosecution argued four possible theories of first degree murder. The appellate court found two of the theories insufficient and therefore reversed under the prejudicial error rule. In Houts, an erroneous instruction on felony murder “gave the opportunity to the jury to bypass the finding of malice. We simply cannot tell, therefore, upon which theory the verdict was based, and we are required under the law to reverse the conviction.” The prejudice in Houts flowed from the possibility that the jury applied the felony murder rule and therefore disregarded the malice requirement that would otherwise apply. (People v. Houts, supra, 86 Cal.App.3d 1012, 1022, 150 Cal.Rptr. 589.)
Subsequent cases also find prejudice in this situation. In People v. Sellers (1988) 203 Cal.App.3d 1042, 250 Cal.Rptr. 345, the court applied Green after it found that a failure to properly instruct on rape tainted a first degree murder verdict because one of the felony murder theories presented was murder in perpetration of rape. In People v. Martinez (1984) 150 Cal.App.3d 579, 603, 198 Cal.Rptr. 565, disapproved on other grounds in People v. Hayes (1990) 52 Cal.3d 577, 628, footnote 10, 276 Cal.Rptr. 874, 802 P.2d 376, Green was applied in a kidnapping case. As in Green, one improper kidnapping theory led to reversal. In People v. Young (1987) 190 Cal.App.3d 248, 235 Cal.Rptr. 361, the court found substantial evidence of rape by force but insubstantial evidence of fear of immediate and unlawful bodily injury. Since the theory used to find defendant guilty of rape was unclear, the conviction was reversed. (Id. at p. 259, 235 Cal.Rptr. 361.)
Green and Ashley are not necessarily inconsistent because both courts were considering whether defendant was prejudiced by the presentation of the theories to the jury. In Green, as noted above, the court found two of the asportation theories legally insufficient and the possibility that the jury neglected to find the requisite mental state weighed heavily in the Green analysis: “[A]n error that relieves the jury from the necessity of making a difficult but crucial finding as to state of mind is especially likely to be prejudicial.” (People v. Green, supra, 27 Cal.3d 1, 73, 164 Cal.Rptr. 1, 609 P.2d 468.) Even though intent was also relevant in Ashley, it was clear that the defendant had committed theft by false pretenses, and the additional instruction on larceny by trick or device, which he requested, was found to be nonprejudicial. (People v. Ashley, supra, 42 Cal.2d 246, 258–259, 267 P.2d 271.)
To summarize, we find that the Green analysis is not applicable to the theft distinctions subsumed within the general category of theft in Penal Code section 484. (CALJIC No. 14.00.) As to theft, Ashley still states the applicable rule: “Juries need no longer be concerned with the technical differences between the several types of theft, and can return a general verdict of guilty if they find that an ‘unlawful taking’ has been proved.” (People v. Ashley, supra, 42 Cal.2d 246, 258, 267 P.2d 271.) The jury here was so instructed by the giving of CALJIC No. 14.47. At least two forms of theft were legally correct here and, even though the theft by false pretenses theory was factually insufficient, there was ample evidence of theft by embezzlement. We find that the additional instructions on theft by false pretenses did not prejudice defendant, and that his conviction for the crime of theft was factually and legally supported by the evidence.
SUFFICIENCY OF EVIDENCE TO SUPPORT THE BUSINESS AND PROFESSIONS CODE CHARGES
The specific Business and Professions Code charges were violations of Business and Professions Code sections 11013.1, 11013.2, 11013.4 and 11023. These charges, arising under the Subdivided Lands Act, relate to the Lopez transaction and the real estate deposit transactions involving buyers Still and Bardone.15
Business and Professions Code sections 11013.1 and 11013.2 provide that it is unlawful to sell lots within a subdivision which are subject to a blanket encumbrance unless the blanket encumbrance contains an unconditional release clause, or unless the conditions stated in section 11013.2 are met.16
Business and Professions Code section 11013.2, subdivision (a) provides in part for an escrow of the entire sum paid or advanced by the purchaser for the parcels until a proper release is obtained for the blanket encumbrance. Mr. Shigemitsu testified that this condition was used in 99.9% of the subdivision sales in California. The funds here were not escrowed, and none of the other exceptions stated in subdivisions (b), (c) and (d) of that section were applicable.
Business and Professions Code section 11013 defines a blanket encumbrance as “a trust deed or mortgage or any other lien or encumbrance, mechanics' lien or otherwise, securing or evidencing the payment of money and affecting land to be subdivided or affecting more than one lot or parcel of subdivided land, or an agreement affecting more than one such lot or parcel by which the owner or subdivider holds said subdivision under an option, contract to sell, or trust agreement.”
Mr. Shigemitsu testified that the trust deeds here were blanket encumbrances on the property. He further explained that the term “encumbrance” includes a trust deed covering the property, and a “blanket encumbrance” includes a trust deed covering more than one lot in a subdivision.
Defendant contends that the evidence was insufficient to establish a violation of Business and Professions Code sections 11013.1 and 11013.2 because “the bare existence of a deed of trust is not substantial evidence of the continuing validity of the debt secured by the deed.” Instead of merely proving recorded trust deeds, defendant contends that the prosecutor also had to show that the promissory notes underlying the trust deeds had not been discharged by payment at the relevant times. He argues that one of the elements of the crime is that there is an undischarged and valid deed of trust encumbering more than one parcel in the subdivision. If defendant is correct, the prosecution would have to prove not only that there was a recorded encumbrance, but that it was a valid one at the time of the subject sales transaction, that is, not discharged because the underlying promissory note had not been paid in full.
We find nothing in Business and Profession Code sections 11013 and 11013.1 which limits those sections to valid encumbrances. Accordingly we reject defendant's contention.
The prosecution's expert testified that the trust deeds were blanket encumbrances within the meaning of Business and Professions Code sections 11013 and 11013.1. Section 11013 requires that the encumbrance “affect” more than one parcel, while section 11013.1 refers to subdivided parcels which are “subject to” a blanket encumbrance. An encumbrance “affects” a parcel when the encumbrance acts on the parcel. It is “often used in the sense of acting injuriously upon persons and things” (Black's Law Dict. (6th ed. 1990) p. 57, col. 2). A parcel is “subject to” an encumbrance when it is “governed or affected by” that encumbrance. (Id., at p. 1425, col. 2.)
We think it clear that even invalid blanket encumbrances “affect” a subdivided lot because the purchaser does not receive the free and clear title he or she bargained for. Instead, the purchaser is “buying a lawsuit.” The purchaser may be threatened with foreclosure, and may lose the property if he or she does not have the resources necessary to defend the foreclosure action.
More broadly, the legislative history supports the conclusion that the purpose of the statute was to insure that the purchaser of a subdivision lot receives clear title upon payment of the purchase price, and to protect the purchaser from all blanket encumbrances on his fee title. (Office of Legis. Counsel, Report on Sen. Bill No. 1147 (June 7, 1955).)
“The over-all purpose [of the 1955 amendments] was that the purchaser of a subdivision lot would be able to receive legal title free and clear of an existing blanket encumbrance and other encumbrances upon payment of the purchase price or would have the assurance that he would receive back his deposit or purchase money.” (39 Ops.Cal.Atty.Gen. 16, 20 (1962); see, also, Selected 1963 Legislation (1963) 38 State Bar J. 622–624.)
A predecessor statute was held constitutional in In re Sidebotham (1938) 12 Cal.2d 434, 85 P.2d 453. Among other things, the law considered there required that the vendor must deliver title free and clear of liens or encumbrances. The court said: “The object of the present law, prevention of fraud and sharp practices in a type of real estate transaction peculiarly open to such abuses, is obviously legitimate; and the method, involving investigation and disclosure of certain essential facts, and a protection for the innocent purchaser against loss of his land by foreclosure of the underlying mortgage, is perfectly reasonable.” (Id. at p. 436, 85 P.2d 453. See, also, People v. Byers (1979) 90 Cal.App.3d 140, 148, 153 Cal.Rptr. 249; 19 Ops.Cal.Atty.Gen. 65, 66 (1952); Assem.Com.Rep. on Finance and Insurance (1961–1962) Appen. to Assem.J. (1963 Reg. Sess.) pp. 25 et seq.; Warren, California Instalment Land Sales Contracts: A Time for Reform (1962) 9 UCLA L.Rev. 608.)
Since the purpose of the statute is to protect against fraud against unsophisticated consumers who purchase subdivision lots, we think it clear that the statutory language refers to all blanket encumbrances of record which have not been reconveyed. The subdivision lot purchaser should receive title free and clear of such encumbrances, meaning that there should be no such encumbrances at the close of escrow except those encumbrances in which reconveyance is a ministerial act. Thus, Business and Professions Code section 11013.2 provides that the monies paid or advanced by the purchaser can be released from escrow when “a proper release is obtained from such blanket encumbrance.”
Here, Mr. Lopez was caught in the exact situation the statute was designed to protect against. He should have received the free and clear title he thought he was receiving. He was put to the burden of defending a foreclosure action, including the expenses connected therewith, and had to prove in that action that the encumbrances were improperly of record, or should have been reconveyed because the underlying notes had been paid. As the prosecutor argued, Mr. Lopez was trying to buy a home, not a lawsuit.
Accordingly, Business and Professions Code sections 11013.1 and 11013.2 are violated by the sale of lots in a subdivision (1) when the record title shows blanket encumbrances on the lot at the time of sale; (2) when the blanket encumbrances do not include unconditional release clauses; and (3) the conditions of Business and Professions Code section 11013.2 are not met. The prosecution can rely on record title, and it does not need to prove that the trust deeds or the underlying promissory notes are valid by being unpaid as an element of the offense. Payment of the underlying note, subsequent reconveyance or the failure of the lender to pursue a foreclosure action against the purchaser is not a defense to the vendor.
Here there was substantial evidence that the trust deeds were of record at the time of the transactions. Since they were blanket encumbrances lacking the proper release clauses, the sale of lots without complying with Business and Professions Code section 11013.2 violated Business and Professions Code sections 11013, 11013.1 and 11013.2.
The second portion of defendant's argument applies his definition of the elements of the crime. He argues that there were no blanket encumbrances on the property, and no violation of these sections, because the trust deeds of record had actually been discharged by payment at the time of the transactions.
He relies on the rule that payment of the debt secured by a deed of trust terminates the deed of trust and vests title in the former debtor without the necessity of a reconveyance. He cites Nilson v. Sarment (1908) 153 Cal. 524, 530, 96 P. 315; Cohen v. Hellman Commercial T. & S. Bk. (1933) 133 Cal.App. 758, 766, 24 P.2d 960; and Snider v. Basinger (1976) 61 Cal.App.3d 819, 823, 132 Cal.Rptr. 637. Those cases, and other authority, apply the principle that “When the obligation secured by a trust deed is satisfied, the deed is terminated and title to the property automatically revests in the trustor or his successor without a reconveyance.” (Ibid.; see, also, Civ.Code, §§ 2909, 2941; Prob.Code, § 15407; Bank of Italy etc. Assn. v. Bentley (1933) 217 Cal. 644, 655, 20 P.2d 940; Montgomery v. Meyerstein (1921) 186 Cal. 459, 463, 199 P. 800; 4 Miller & Starr, Cal.Real Estate (2d ed. 1989) § 9.62, pp. 178–186, Cal.Mortgage and Deed of Trust Practice (Cont.Ed.Bar 2d ed. 1990) § 1.10, p. 15, § 6.16, p. 292.)
As noted above, the prosecution is not required to show that the underlying debts had not been paid. It is sufficient to show the recorded blanket encumbrances. But, even if we accepted defendant's theory that the prosecution had to show that the promissory notes underlying the deeds of trust were not repaid, and that the deeds of trust automatically ceased being blanket encumbrances on the property upon repayment of the notes, there was ample substantial evidence that the notes here were not repaid at the time of the Lopez, Still and Bardone transactions.
Defendant argues that his testimony that the notes were repaid should be accepted and that we should then find that the trust deeds were automatically discharged and were not blanket encumbrances on the lots at the time of the subject sales transactions. In effect, he urges that we accept his contrary testimony and reject the jury's resolution of the factual issues against him. We decline to do so.
The third portion of defendant's argument is that he did not violate Business and Professions Code sections 11013.1 and 11013.2 in the Still and Bardone transactions because there was no evidence that the property was “sold” in those transactions. He points out that, in those two transactions, the potential buyers advanced deposits and signed deposit receipts. There was no evidence that the contracts were ever signed by the corporate seller, and no evidence that an escrow was ever opened or closed.
Defendant argues that, in these circumstances, the statute is inapplicable. He points out that the ordinary meaning of the word “sale” is “[a] contract between two parties, called, respectively, the ‘seller’ (or vendor) and the ‘buyer’ (or purchaser), by which the former, in consideration of the payment or promise of payment of a certain price in money, transfers to the latter the title and the possession of property.” (Black's Law Dict. (6th ed. 1990) p. 1337, col. 1.) The signing of a deposit receipt by the buyer, and the payment of a deposit, is not normally considered a sale, and title does not normally pass until escrow closes. He cites 1 Miller & Starr, California Real Estate (2d ed. 1989) section 2.32, page 631: “Ordinarily, the buyer's deposit has no legal significance. It is not consideration for the contract․ [¶] However, where the Deposit Receipt does provide for the delivery of a deposit by the buyer, it may be considered as a condition precedent to the formation of a contract and if it is not paid the court, may conclude that there is no contract.”
We have no disagreement with these general principles. However, the issue here is the meaning of the term “sale” as used in a particular statutory scheme. As noted above, one of the purposes of the statute is to protect the purchaser of a residential subdivision lot from fraudulent activities by the sellers of lots in a subdivision. Mr. Shigemitsu specifically testified that the purpose of the statute was to protect the money paid by the purchaser. The commonly used escrow alternative of Business and Professions Code section 11013.2 specifically requires “[t]he entire sum of money paid or advanced by the purchaser” to be deposited in escrow, and it specifically provides that if any party to a contract of sale defaults, the deposited sums shall remain in escrow until there is a determination as to the disposition of such monies. Limiting Business and Professions Code sections 11013.1 and 11013.2 to completed sales would effectively nullify and eliminate the intended effect of those Business and Professions Code sections.
These two statutes must be read together in the light of the legislative purpose. Both parties have submitted materials dealing with legislative intent. The most persuasive is the Legislative Counsel's analysis of the proposed 1955 legislation. Formerly, Business and Professions Code section 11013 required any blanket encumbrance to contain a release clause. This requirement was incorporated into Business and Professions Code section 11013.1 and the alternatives provided in Business and Professions Code section 11013.2 were added. Other provisions were adopted to protect purchasers in subdivisions not covered by blanket encumbrances. According to the Legislative Counsel, the purpose of these changes was “to protect the deposits or sums advanced by purchasers or lessees whether the lots or parcels in the subdivision are subject to encumbrances or not.” (Legis.Counsel's Rept., Sen. Bill No. 1147, June 27, 1955, p. 2.)
In addition to this clear statement by the Legislative Counsel other materials document that the purpose of the statute was to force the subdivider to either deliver title clear of blanket encumbrances or to insure that the monies advanced or paid by the purchaser be returned. (25 Ops.Cal.Atty.Gen. 144 (1955); 39 Ops.Cal.Atty.Gen. 16, supra; Selected 1963 Legislation, supra, 38 State Bar J. 622–624.) Without repeating all of the history in those materials, we note only that the entire purpose of the statutory scheme would be defeated if we interpreted the term “sale” in Business and Professions Code section 11013.1 to mean a “completed sale.” We decline to do so.
The judgment is affirmed. The petition for a writ of habeas corpus is dismissed.
1. Following are the specific charges, and the outcome:Count 1: Theft from Mr. Lopez (Pen.Code, § 484). Defendant was found guilty and the allegation that the property taken exceeded $25,000 was found to be true.Count 2: Unlawful Sale of Real Estate to Mr. Lopez. Defendant was found guilty and the allegation that the property taken exceeded $25,000 was found to be true.Count 3: Theft from Mr. Cosby. This count was dismissed by the court.Count 4: Theft from Mr. and Mrs. Still. Defendant was found not guilty.Count 5: Theft from Mr. and Mrs. Bardone. Defendant was found not guilty.Count 6: Theft from Mr. and Mrs. Fox. Defendant was found not guilty.Count 7: Theft from Sandra Hall and Douglas Bright. Defendant was found not guilty.Count 8: Unlawful Sale of Real Estate to Mr. and Mrs. Still. Defendant was found guilty.Count 9: Unlawful Sale of Real Estate to Mr. and Mrs. Bardone. Defendant was found guilty.Count 10: Unlawful Sale of Real Estate to Mr. and Mrs. Fox. Defendant was found not guilty.Count 11: Unlawful Sale of Real Estate to Sandra Hall and Douglas Bright. Defendant was found not guilty.
2. Defendant Whitaker and Mr. Browning testified that Mr. Burkeman and Mr. Friedman were also corporate officers and stockholders of Berkshire California, Inc. Their attorney, Mr. Holcomb, denied that they were anything but creditors. Defendant Whitaker also accuses Burkeman, Friedman and Holcomb of conspiring to loot Berkshire for their own profit. These issues are not relevant to the charges here. (See the discussion of the petition for writ of habeas corpus, post.)
3. The fourth trust deed secured a land loan which was tied to the construction loan so that the lender was obligated to release both encumbrances on sale of a home.
4. Mr. Browning testified that he gave the sales contracts and deposit checks to defendant Whitaker. Defendant Whitaker denied that he received any deposits from Mr. Browning and denied that he deposited any of the deposits in a corporate bank account. Defendant Whitaker did personally endorse the Lopez cashier's check and used it to establish a corporate bank account.
FOOTNOTE. See footnote *, ante.
14. We note that the United States Supreme Court has recently held that the long-standing history of a state's definition of a crime is relevant in considering the due process issue: “Where a State's particular way of defining a crime has a long history, or is in widespread use, it is unlikely that a defendant will be able to demonstrate that the State has shifted the burden of proof as to what is an inherent element of the offense, or has defined as a single crime multiple offenses that are inherently separate.” (Schad v. Arizona (1991) 501 U.S. 624 [–––– – ––––, 111 S.Ct. 2491, 2501, 115 L.Ed.2d 555, 570–571].) Justice Scalia concurred, observing that “It is precisely the historical practices that define what is ‘due’ [in due process].”
15. The jury apparently differentiated the deposit transactions by only convicting defendant of the deposit transactions in which the checks were deposited into a Berkshire California corporate bank account at the Bank of San Bernardino.
16. Business and Professions Code section 11023 provides that it is a felony to violate certain sections, including sections 11013.1 and 11013.2.
FOOTNOTE. See footnote *, ante.
HOLLENHORST, Acting Presiding Justice.
TIMLIN and McKINSTER, JJ., concur.