CHAN v. TITLE INSURANCE TRUST CO

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

CHAN et al. v. TITLE INSURANCE & TRUST CO. et al.

Civ. 18483.

Decided: November 13, 1951

Harry M. Irwin, V. P. Lucas, Los Angeles, for appellants Wong. Lawrence L. Otis, Gilbert E. Harris, James F. Healy, Jr., Harold Arman, Los Angeles, for appellant Title Insurance & Trust Co. J. Q. Gilchrist, Los Angeles, for respondents.

From a judgment in favor of defendants Vaughan in an action for money had and received, plaintiffs appeal.

Plaintiffs are seeking a forfeiture of monies deposited in escrow with defendant Title Insurance & Trust Company by the other defendants pursuant to an agreement between Chin Ott Wong and Quan Shee Wong, as sellers, and defendants Melvin E. Vaughan, Sr. and Rozelle Rainey Vaughan as buyers, for the purchase and sale of real property. Chin Ott Wong died after suit was filed and Paul C. Chan as special administrator of his estate was substituted as party plaintiff in his stead.

The escrow was opened at the Title Insurance and Trust Company on April 29, 1946, and the terms of the agreement between the parties are contained in escrow instructions of the same date, and ‘Agreement Re Purchase and Sale of Real Property’ dated May 10, 1946, and filed in the escrow, and instructions dated May 14, 1946, supplementing and amending the original escrow instructions.

The total purchase price was $176,254.15, which was to be paid into escrow by May 29, 1946. Defendants deposited $1,500 in the escrow on April 29, $3,500 on May 1, and agreed to deposit an additional $30,000 and execute a trust deed and note in the amount of $141,254.15. Prior to May 29, defendants paid $77.45 into the escrow in payment of taxes and deposited the trust deed and note, duly executed. Also prior to May 29, plaintiffs deposited in the escrow their grant deed conveying to defendants the property involved.

The escrow instructions of April 29, 1946, contain the following provision: ‘Time is of the essence of these instructions. If this escrow is not in condition to close by May 29, 1946, any party who then shall have fully complied with his instructions may, in writing, demand the return of his money and/or property; but if none have complied, no demand for return thereof shall be recognized until five days after the escrow holder shall have mailed copies of such demand to all other parties at their respective addresses shown in the escrow instructions. If no such demand is made, close this escrow as soon as possible.’

The escrow was not in a condition to be closed by May 29, but on June 18 the Title Company notified defendants that it was ready and able, on receipt of the balance of $30,000 payable by them, to issue its policy of title insurance. On July 1 defendants paid $5,000 into the escrow. On July 15 they executed and delivered to the Title Company, with appellants' approval, amended instructions directing that company to endorse interest paid on the note to June 18, 1946, in lieu of the previous instruction to endorse interest paid thereon to date of the close of escrow.

The instant action was filed on August 27, 1946, and the trial thereof resulted in judgment for plaintiffs. Upon appeal the judgment was reversed, Chin Ott Wong v. Title Ins. & Trust Co., 89 Cal.App.2d 183, 200 P.2d 541, 544, the court stating that ‘plaintiff's complaint affirmatively shows that the transaction was still pending with plaintiff's approval on July 15th which is long after May 29th the date originally agreed upon by the parties within which the agreement was to have been performed. The complaint contains no allegation that a later and different date was agreed upon by the parties to which the ‘Time is of the essence’ condition was to apply. * * * Where time is made of the essence of the contract for the payment of money and this covenant has been waived by the acceptance of money after the same is due, with knowledge of the facts, such conduct will be regarded as creating such a temporary suspension of the right of forfeiture as could only be restored by giving a definite and specific notice of intention to enforce it.'

Thereafter plaintiffs amended one paragraph of their complaint to allege that on August 1, 1946, August 5, 1946, and August 9, 1946, plaintiffs demanded of defendant Melvin E. Vaughan, Sr. payment of the total sum due in the escrow and on August 9, 1946, plaintiffs notified Melvin E. Vaughan, Sr. that ‘thereafter they intended to and would require strict compliance by said Melvin E. Vaughan, Sr. with the conditions of his agreement in said escrow instructions and that in the event that he, Melvin E. Vaughan, Sr., failed to pay said total sum of $35,077.45 on or prior to August 26, 1946, plaintiffs intended to and would thereupon strictly enforce their rights under said escrow instructions and would thereupon file an action in court for the enforcement thereof.’ Defendants filed an answer to the amended complaint and a cross-complaint for money had and received. The case was tried and submitted. Thereafter the court, upon its own motion, made an order setting aside the submission and fixing a date for ‘taking further evidence upon the issue of the damage suffered by plaintiff and the price for which the property was sold, and to consider the amending of the pleadings to conform to the proof.’ When the matter came on for hearing plaintiffs objected upon the ground that the court had no jurisdiction to reopen the cause after submission and objected to the introduction of any further evidence upon the ground that the matter of damages was beyond the issues as framed by the pleadings. The objection was overruled. Plaintiffs declined to submit evidence or to amend their pleadings. Judgment was rendered against them on their complaint and in favor of defendants on their cross-complaint, from which judgment this appeal is taken.

It is plaintiffs' contention that the evidence does not support the findings and that the judgment is contrary to law.

In the negotiations between the parties Harry M. Irwin acted as the agent of plaintiffs. The court found that ‘from time to time after May 29, 1946, and prior to August 28, 1946, said agent Irwin and Vaughan, Sr. had various telephone conversations in which the proposed modifications of the escrow instructions and the performance and the completion of the Escrow by Vaughan, Sr., and the payment by him into said Escrow of the sum of $30,000, or such portion thereof as remained unpaid, were discussed, and said Irwin insisted upon the completion of said Escrow but no definite date was ever fixed when the balance of said sum should be paid; that at no time did the Wongs, or their agent Irwin, inform Vaughan, Sr. that they would insist upon a strict performance of the provision in the Escrow Instructions making time the essence thereof; that at no time did they give to Vaughan, Sr. a definite notice whereby another date for the performance of the contract was fixed, or that they would thereafter insist upon the performance of the contract and the payment of said sum of $30,000, and all thereof, into the escrow at any particular time so fixed.’

Plaintiffs' agent, Harry M. Irwin, testified Vaughan telephoned him on July 8th stating that he was completing arrangements for financing a building on the property and would be able to pay the balance due in the escrow in a few days; on July 30th Vaughan telephoned him and said he would call Irwin the following Thursday and give him a definite statement as to when the escrow would be closed; on August 2d, Vaughan telephoned Irwin that he was at home, ill, and would call him the following Monday; August 5th Vaughan telephoned Irwin and asked him to make an appointment with Mr. Wong to meet him (Vaughan) at Irwin's office on the following Thursday and said he had a proposition to make to Mr. Wong which he felt would be satisfactory or acceptable; Vaughan failed to keep the appointment but telephoned Irwin the following day, August 9th; at that time Irwin told Vaughan, ‘I am giving you notice now for Mr. Wong that Mr. Wong will not wait any longer for you to perform. He has now waited for you about two months and if you do not pay the balance of this purchase price in escrow within fifteen days, Mr. Wong will proceed to enforce whatever right he has under the contract’; looking at his calendar he noted that the fifteenth day would fall on Saturday and he then told Vaughan, ‘since the fifteen days expire on Saturday, for Mr. Wong I will give you two days longer, to and including Monday, August 26th. * * * If you have not paid the balance in full in escrow by Monday, August 26th, Mr. Wong will file suit on you immediately thereafter to enforce whatever rights he may have under the purchase contract. In view of your insulting attitude, we will demand strict compliance.’

Vaughan testified that prior to the filing of the action he had never talked personally or by telephone to Harry M. Irwin or to plaintiffs.

Irwin's testimony as to the fact that on certain dates he had telephone conversations with Vaughan is contradicted only by Vaughan's testimony that he had never talked to Irwin either personally or over the telephone. Since the court found that from time to time between May 29, 1946, and August 28, 1946, Irwin and Vaughan had various telephone conversations it is obvious that the court believed Irwin's testimony and disbelieved that of Vaughan. It follows therefore, that Irwin's testimony as to the substance of those conversations stands uncontradicted.

It is the general rule that the trier of fact cannot arbitrarily disregard uncontradicted, entirely probable testimony of an unimpeached witness. Mantonya v. Bratlie, 33 Cal.2d 120, 127, 199 P.2d 677; Fidelity & Casualty Co. of New York v. Abraham, 70 Cal.App.2d 776, 782, 161 P.2d 689. Testimony which is not inherently improbable and is not impeached or contradicted by other evidence must be accepted as true by the trier of fact. Dobson v. Dobson, 86 Cal.App.2d 13, 14, 193 P.2d 794. The trial court's finding that in the conversations between Irwin and Vaughan the performance and completion of the escrow by Vaughan and the payment into escrow of the unpaid balance were discussed and that Irwin insisted upon the completion of the escrow is supported by Irwin's testimony and solely by his testimony. There is no rational ground upon which the court can disregard Irwin's evidence, which is uncontradicted and not inherently improbable, that he told Vaughan on behalf of plaintiffs that he would give him until August 26th to pay into the escrow the balance of the purchase price and that if the balance was not paid by that date plaintiffs would bring suit to enforce their rights under the contract. Since the court found that Irwin and Vaughan had various telephone conversations between the dates specified, there is no evidence in the record to support the finding that plaintiffs did not at any time give Vaughan a definite notice whereby another date for the performance of the contract was fixed or that they would insist on a strict performance of the contract or that no definite date was fixed when the balance of the purchase price should be paid into escrow.

The court further found that ‘any failure of Vaughan, Sr. to comply with the terms of the Escrow Instructions was not wilful and/or fraudulent and/or grossly negligent; that shortly after entering into the Escrow Instructions he learned that without some change in the provisions thereof, he would be financialy unable to construct the building contemplated on said real property and that he would be financially unable to pay the purchase price of said property or the amount of said deed of trust; that he therefore endeavored to secure in good faith a modification if said contract so that he could secure the property and proceed with his plans for the construction of said building; that he believed at all times, and had reasonable grounds for such belief, that the provision for strict performance of the contract was not being invoked by the Wongs up to and including said August 28, 1946’ when plaintiffs terminated the escrow by demanding the return of their deed from the Title Company. The court found also that ‘Vaughan, Sr. was at all times reluctant and adverse to completing the escrow as constituted and endeavored to the best of his ability to secure a modification thereof.’

Such finding is contrary to the evidence. Vaughan testified that he had sufficient money and ample credit with which to pay the balance of the purchase price. When asked by the court why he did not pay it if he had such money and credit Vaughan stated: ‘That's a matter there of getting something done that was to be done. If I had paid the $35,000 when Mr. Wong wanted it, I still couldn't have borrowed enough money to put up the building that I had bought from Mr. Bailey and paid him $21,000 for, and he was after me to get it moved, and I had taken it up with the Security Bank, I had taken it up with the Union Bank and they all told me, ‘Whenever you get that piece of property so that you can get a clear title to one acre or 1 4/10410th acres of it, we will loan you the money. You can erect your building and we will take a first trust deed on the acre and the building and then you can give Mr. Wong the second trust deed on the balance of it.’' Vaughan further testified that when he learned that in order to borrow the money to erect the building it would be necessary for him to have clear title to at least an acre, he entered into negotiations outside the escrow for the sale of a part of the property to other parties; that he could not complete the escrow and delined to pay the balance of the purchase price unless he also completed these other negotiations.

The word ‘wilful’ as used in civil cases merely means that when a person does or fails to do an act he does so intentionally. Wilson v. Security-First Nat'l Bank, 84 Cal.App.2d 427, 431, 190 P.2d 975; May v. New York Motion Picture Corp., 45 Cal.App. 396, 404, 187 P. 785. Since Vaughan testified that although he had ample money and credit to complete the escrow he did not intend to do so unless plaintiffs would agree to a modification of their agreement or he could complete other negotiations whereby he would receive a clear title to a part of the property, his failure to pay the balance of the purchase price cannot be regarded as anything but intentional and deliberate and therefore wilful.

Inasmuch as the evidence does not support the findings the judgment must be reversed and it is therefore unnecessary to decide other points raised by counsel.

Judgment reversed.

WILSON, Justice.

MOORE, P. J., and McCOMB, J., concur.

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