MAINS v. CITY TITLE INS CO

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District Court of Appeal, First District, Division 1, California.

MAINS v. CITY TITLE INS. CO.

No. 13936.

Decided: April 12, 1949

Tobin & Tobin and Richard Raoul–Duval, all of San Francisco, for appellant. Roland Becsey and Joseph B. Bates, both of San Francisco, for respondent.

This is an appeal by defendant, City Title Insurance Company, from a judgment awarding plaintiff $10,292.35, plus interest and costs. The complaint alleged “That on December 20th, 1946, Roland Becsey, as agent of said plaintiff in the above entitled action, delivered to the said defendant, a deed indenture dated December 11th, 1946, from Mary E. Mains, as Administratrix of the Estate of Earl L. Mains, deceased, grantor to Alexis M. Derkatch grantee, with instructions to said defendant to deliver or record the same upon the payment to the plaintiff of the sum of $11,450.00 less the sum of $12.65 Revenue Stamps, and less the further sum of $1145.00, being the deposit received by plaintiff from Alexis M. Derkatch, making the sum of $10,292.35 to be collected by the defendant pursuant to said instructions.”

In the lower court the following facts were established: Plaintiff is the administratrix of the estate of her son, Earl Mains. He was the owner of an improved parcel of real property located in the city of San Francisco and commonly described as No. 73 Beaumont Street. At the time of decedent's death, September 2, 1946, the property was subject to a deed of trust executed by him and his wife to a corporation as trustee for a bank. At the time of the transaction here involved there was $3,834.52 owing under the deed of trust. In November of 1946, plaintiff, through her attorney, in compliance with section 780 of the Probate Code, published a notice of sale containing the following statement: “Terms and conditions of sale. Purchaser to assume the payment of and take the property purchased by him, subject to all the State and County taxes and whatsoever assessments of whatsoever name or nature which are now or may hereafter be charged as a lien against the property purchased by him.”

Subsequent to the giving of the notice of sale one Alexis M. Derkatch and one Joseph Tourtouret, a real estate broker representing Derkatch, called at the office of plaintiff's attorney. They presented to the attorney a printed form entitled “Uniform Agreement of Sale and Deposit Receipt”, customarily used by real estate brokers for the making of offers to purchase real property and which called for the payment of a real estate commission by the estate. The attorney refused to accept the offer because it included the commission. The following bid was submitted on behalf of Derkatch: “I, the undersigned Alexis M. Derkatch hereby bid the sum of 11,450 00/100 Dollars for the real property No. 73 Beaumont Street, San Francisco, and herewith accompany said bid with check for $1,145.00 Less 2.50 cash Dollars, being ten (10) per cent of the amount bid for said real property at said 73 Beaumont Street. It is distinctly understood and agreed that said check for $1,145.00 less $2.50 cash shall be forthwith delivered back to me, or my agent, in the event I shall not become the owner of said property on confirmation of the sale of the same by order of the Superior Court of the State of California in and for the City and County of San Francisco in the Matter of the Estate of Earl L. Main, deceased.” Plaintiff accepted this offer. Evidently the question of the existence of any deed of trust was not discussed by the parties. No contention is made that there was any express representation concerning the absence of any deed of trust. On December 10, 1946, an order confirming the sale was made by the superior court in compliance with section 755 of the Probate Code.

The notice of sale, the purchaser's bid which was accepted by the seller, and the order of confirmation, construed together, did not expressly obligate the seller to convey the real property free of the deed of trust. It is defendant's contention, however, that the sale was such that the seller's obligation to convey free and clear is implied by law. See Civil Code, section 1113.

On December 20, 1946, plaintiff's attorney deposited with defendant a deed to the property, dated December 11, 1946, from plaintiff to Derkatch. He received in return a “receipt for papers” which constitutes plaintiff's Exhibit A, attached to the complaint. Plaintiff's cause of action is based on this document.

This document instructed defendant to record the deed upon the receipt of the sum of $11,450, less $12.65 for revenue stamps, and less $1145 which was the deposit made by Derkatch. The printed word “pay mortgage—deed of trust” were followed by a blank space. Defendant produced no evidence that it was expressly authorized to pay off the above-mentioned deed of trust, but when it received the purchase price from Derkatch it paid off the deed of trust. After making further deductions for recording charges, it tendered plaintiff the balance amounting to $6,456.73, which plaintiff refused to accept. Subsequently the present action was instituted.

The court found that plaintiff delivered a deed in proper form and that “the said plaintiff then and there instructed and authorized the said defendant title company, and the said defendant then and there undertook and agreed, to deliver or record the said deed upon receipt by the said defendant for the plaintiff of the sum of eleven thousand four hundred fifty dollars” subject to certain disbursements mentioned in the “receipt for papers”. The court also found that the deed had been delivered and recorded by the title company in conformity with the instructions; that after the instructed disbursements there was held by the title company $10,292.35, together with an interest thereon from the date of the delivery of the deed until the entry of judgment. The court further found that the title company had paid the beneficiary of the deed of trust $3,834.52, the then amount of the indebtedness secured by the deed of trust. It was further found that such payment was without authorization from the plaintiff or any other person and that in none of the documents connected with the sale was the lien of the deed of trust mentioned.

From an examination of the pleadings and proof, it appears that there is no merit to defendant's contention that the following finding is outside of the issues, and must therefore be disregarded: “That the defendant title company did, on the 28th day of December, 1946, deliver and record the said deed of conveyance in conformity to said instructions and authority, and did thereupon receive for the use and benefit of plaintiff the said sum of $11,450.00, and did disburse out of the same the said sums of $12.65 and $1,145.00, leaving a balance had and received, and then and there held by the defendant to and for plaintiff's use and benefit, of $10,292.35; that although plaintiff has made demand upon defendant for the payment thereof, the defendant has failed, neglected and refused to pay to plaintiff the said sum of $10,292.35, and said sum is, together with interest thereupon at the rate of seven per cent per annum from December 28, 1946, until the entry of judgment herein, due and owing from defendant to plaintiff.”

The trial court properly found that the action was one for money had and received. While it is true that there is no specific allegation in the complaint that the defendant did actually collect and receive moneys for plaintiff's use and benefit, the omission was cured by defendant's allegation in the answer that “the purchaser of said real property, caused to be deposited with the said City Title Insurance Company the balance of the purchase price of said real property *” The proof to this effect is uncontradicted. Furthermore, the alleged defect claimed by defendant cannot be raised for the first time on appeal. Bouey v. Porterfield, 96 Cal.App. 674, 274 P. 766; Colbert v. Colbert, 28 Cal.2d 276, 169 P.2d 633; Hart v. Olson, 68 Cal.App.2d 657, 157 P.2d 385; see also 24 Cal.Jur. 981.

Defendant contends that the record does not support the court's finding “That it is not true that the said Alexis M. Derkatch did purchase the real property the subject matter of said deed of conveyance of and from the plaintiff as administratrix of the Estate of Earl L. Mains, deceased, or otherwise, free and clear of, and not subject to, the lien and encumbrance of the said deed of trust, and it is not true that the plaintiff, as administratrix, or otherwise, did so sell said real property to him.”

To support this contention, defendant urges that the sale involved herein, which was made pursuant to Probate Code sections 754, 755 and 756, obligated plaintiff to convey the real property “free and clear of the deed of trust”. See Civil Code, sec. 1113. Plaintiff, however, in making the sale was an instrument of the law in the transfer of the title held by the estate. “The deed of the representative is in fact but a quit-claim deed * The representative merely sells such title as the estate may have and, unless the court otherwise orders, the purchaser takes the property subject to all encumbrances, such as an existing deed of trust.” 11b Cal.Jur. 165–167. See also Blankenship v. Whaley, 124 Cal. 300, 57 P. 79; Miller & Lux v. Gray, 136 Cal. 261, 68 P. 770; In re Estate of Wickersham, 139 Cal. 652, 73 P. 541; In re Estate of Verwoert, 177 Cal. 488, 171 P. 105; Texas Co. v. Bank of America, etc., Ass'n, 5 Cal.2d 35, 53 P.2d 127; Hamilton v. Elvidge, 132 Cal.App. 21, 22 P.2d 239.

It is true, as pointed out by defendant, that in 1919 the requirement that “No sale of any property of an estate of a decedent is valid unless made under order of the superior court” (former Code Civ.Proc. sec. 1517, as amended by Stats.1880, p. 92) was abandoned in favor of the provision that “The executor or administrator may sell any property of the estate of a decedent without order of court, and at either public or private sale,” but that “no sale of such property is valid unless” reported, under oath, to and confirmed by the court. (Stats.1919, p. 1178; basis of present Probate Code, secs. 754, 755.) It has been said that “there is doubt whether a probate sale under the present provisions can be considered as a judicial sale *” 11b Cal.Jur. 39. However, the change made by the legislature is mainly procedural for now “the questions whether a sale is necessary for payment of debts, expenses of administration, or legacies, and whether a sale would be for the advantage, benefit, and best interests of the estate, as provided in section 1536 (now Prob.Code sec. 754), are now to be decided upon the hearing of the return of sale and application for confirmation thereof, instead of upon the hearing of the petition for an order of sale as formerly provided by sections 1540, 1542, 1543 and 1544, which sections were repealed by the amending act of 1919.” In re Estate of Benvenuto, 183 Cal. 382, 384–386, 191 P. 678; see also Wood v. Roach, 125 Cal.App. 631, 636–637, 14 P.2d 170.

Appellant argues that In re Estate of Backesto, 63 Cal.App. 265, 218 P. 597, is authority for holding that the sale by an administratrix involved herein is not a judicial sale. In that case this court held that a sale made pursuant to an express direction in the will was not a judicial sale even though title would not pass until confirmation of the sale as “it was made under the express and mandatory directions contained in the will of the deceased” 63 Cal.App. page 269, 218 P. page 598, and that there was an implied covenant of clear title. To the same effect, see In re Pearsons' Estate, 98 Cal. 603, 33 P. 451; see also In re Estate of Isaman, 68 Cal.App.2d 755, 157 P.2d 872. Respondent distinguishes the Backesto case on the ground that in the present case the requirements of Probate Code sections 754–756 as to proper notice and proof at a hearing that the sale is for the benefit of the estate had to be met, whereas, “When property is directed by the will to be sold, or authority is given in the will to sell property, the executor may sell the same either at public auction or private sale, and with or without notice, as he may determine; but he must make a return of sales and obtain confirmation thereof as in other cases. In either case no title passes unless the sale is confirmed by the court; but the necessity of the sale, or its advantage or benefit to the estate or to those interested therein, need not be shown. If directions are given in the will as to the mode of selling, or the particular property to be sold, such directions must be observed.” Probate Code sec. 757.

Whether the sale by the administratrix involved herein can be properly termed a judicial sale or not, upon its confirmation by the Superior Court on December 10, 1946, in compliance with Probate Code section 755, plaintiff was merely bound to “convey all the right, title, interest and estate of the decedent in the premises at the time of his death.” Prob.Code, sec. 786. This court held in Hamilton v. Elvidge, supra, 132 Cal.App. at page 26, 22 P.2d at page 241, that a buyer at a probate sale “is subject to the maxim of caveat emptor, and takes without warranty of the title of the decedent” and “under the plain terms of the statute is entitled to all of the right, title, interest, and estate that the decedent owned at the time of his death or which his estate may have acquired subsequently.” The appellate courts of California have not held that the 1919 legislative changes resulted in a change in the rule that “an administrator, in making sales of real estate, is the mere instrument of the law to transfer such title, and only such title, as is held by the estate.” Miller & Lux v. Gray, supra, 136 Cal. at page 263, 68 P. at page 771. On the contrary, decisions rendered prior to 1919 are cited as authority. Texas Co. v. Bank of America, etc., Ass'n, supra.

As plaintiff's deed was in fact but a quitclaim deed there is no need to consider that in normal inter vivos transactions “where one makes a contract to sell and convey, without any provision as to the title or encumbrances, the law implies an agreement on his part to convey a good title free from encumbrance. And if certain encumbrances are specifically provided for, there is an implied agreement that the title shall be conveyed free from others.” 25 Cal.Jur. 635.

Defendant also contends that the finding hereinabove quoted is in the form of a negative pregnant and is in effect a finding that Derkatch purchased the property free and clear of the deed of trust. The finding is that it is not true that the property was purchased “free and clear of, and not subject to” the deed of trust. As the meaning of the words on either side of the “and” is substantially the same, no confusion appears in said finding, and thus Mardesich v. C.J. Hendry Co., 51 Cal.App.2d 567, 572–575, 125 P.2d 595, is not in point.

As plaintiff did not expressly authorize or consent to the payment of the deed of trust and as she was not obligated to convey the property free of said encumbrance, it follows that the court correctly found “That the payment of the amount then due upon said deed of trust by the defendant as aforesaid, was voluntary, without right and of its own accord and was without the authority, authorization, consent or instructions of or from the plaintiff, or of or from the said Alexis M. Derkatch, or of or from any other person, firm or corporation whomsoever, and that the said sum of $3,834.52 so paid by the defendant to the Bank of America N.T. & S.A. on the indebtedness secured by said deed of trust is not chargeable to or against, or collectible from, the plaintiff herein, or to or from the Estate of Earl L. Mains, deceased.” Similarly, as the “receipt for papers” did not authorize defendant to pay any deed of trust, the court correctly found that defendant agreed “to deliver or record the said deed upon the receipt by the said defendant for the plaintiff of the sum of eleven thousand four hundred fifty dollars ($11,450.00), of which said sum the plaintiff then and there instructed and authorized the defendant, and the defendant undertook and agreed, to disburse the sum of $12.65 for federal revenue stamps to be affixed to said deed by defendant for plaintiff, and the sum of $1,145.00 to be allowed the grantee in said deed as and for a credit for a like sum theretofore paid and deposited by him *”

In defendant's reply brief it is argued for the first time that even if defendant had no implied authority to act, so that it was a mere volunteer, plaintiff should not be allowed to recover because plaintiff has not acted fairly and equitably. It is true that an action for money had and received, which is the nature of the present action, is governed by principles of equity, although the action is one at law. Philpott v. Superior Court, 1 Cal.2d 512, 36 P.2d 635, 95 A.L.R. 990; Stone v. Superior Court, 214 Cal. 272, 4 P.2d 777, 77 A.L.R. 743. Here the court impliedly found that such principles had not been violated. The record supports this finding. Although plaintiff knew that there was a deed of trust outstanding, she did not know it was to be paid until defendant had done so; and the real benefit of such payment accrued, not to plaintiff, but to the purchaser, since plaintiff was not obligated to convey the property free of the deed of trust. Miller & Lux v. Gray, supra; Texas Company v. Bank of America, etc., Ass'n, supra; Hamilton v. Elvidge, supra.

The judgment is affirmed.

WARD, Justice.

PETERS, P.J., and BRAY, J., concur.