WRIGHT v. FRED HEYDEN INDUSTRIES INC

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District Court of Appeal, Second District, Division 3, California.

Arthur C. WRIGHT and Glendora Development Co., a corporation, Plaintiffs and Appellants, v. FRED HEYDEN INDUSTRIES, INC., Fred Heyden and Frances J. Heyden, wife of Fred Heyden, Defendants and Respondents.

Civ. 24166.

Decided: July 15, 1960

Darling, Shattuck & Edmonds, Los Angeles, for appellants. I. B. Benjamin, Los Angeles, and James Coleman, for respondents.

The plaintiffs, Arthur C. Wright, the buyer, and Glendora Development Co., his nominee, under a contract for the sale and purchase of a parcel of land, appeal from the judgment denying them a specific performance of the contract. We are affirming the judgment, not because we are convinced that it is immune from the attack made upon it, but because of a defect in plaintiffs' case that makes any other judgment impossible.

Beginning with the pre-trial statement of counsel for all parties and continuing throughout the trial, the issue deemed by all concerned to be the one decisive question in the case, had to do with the period of time given the buyer within which to perform. For the first time in their (respondents') brief on appeal the defendants made the point that the uncertainty of some of the provisions in the contract makes the contract one that may not be specifically enforced. The belated appearance of this contention posed a problem. Should we consider the point raised for the first time on appeal? A negative answer is given to like questions in many cases, we know, but in the each case the answer to be given should depend upon the answer to another question: What course best furthers the administration of justice? In this case the new point is raised by the respondents. If the appellants' attack on the judgment would fail without taking the new matter into account, it need not be considered. If, on the other hand, the newly presented challenge is one that could not be successfully answered on a new trial, if a reversal were granted, with the result that the present judgment would inevitably reappear, there is no good reason for not taking it into account, even though it was an afterthought. As we shall see, that is the situation in this case. If it is true, as expressed in these words taken from L. W. Blinn Lumber Co. v. American C. P. Co., 1921, 51 Cal.App. 479, 482, 197 P. 142, 143 and quoted in Estate of Barber, 1957, 49 Cal.2d 112, 118, 315 P.2d 317, 321; “* * * where material and incurable defects exist in a cause of action, and appear on the face of the record, courts of appeal will not generally refuse to recognize such ground of appeal, even if the objection was not made in the court below”, how much more is it true that courts of appeal should not refuse to recognize a material and incurable defect where it lends support to the judgment appealed form, even though the defect was not called to the attention of the trial court that rendered the judgment.

Briefly summarized, plaintiff Wright's contract was one in which, as buyer, he was given the option of acquiring some land for subdivision purposes. If he decided to buy, he had a choice of two ways of paying: with cash or by a promissory note, secured by a deed of trust on the land. ‘The trust deed hereinabove provided for’ the contract continued ‘shall contain provisions permitting Buyer to subordinate and Owner agrees that the trust deed may, at the option of Buyer, be subordinated to loans for the purpose of improving the property covered by said deed of trust by the subdivision thereof and the construction on the lots produced as a result of such subdivision of houses and related improvements and shall further provide that upon the sale of each house and lot thus produced and improved, Owner will promptly, upon the request of Buyer, place in the escrow in which such house and lot is being sold by Buyer to a third person, a partial release of said deed of trust, which partial release of shall remove from said house and lot the lien of such deed of trust, together with instructions to said escrow that such partial release may be delivered to the purchaser of such house and lot upon said escrow being able to deliver to Owner a sum equal to the full amount of the note of Buyer as hereinbefore described divided by the number of lots produced by the subdivision of the usable part thereof by Buyer.’

It will be noted that nowhere in the provisions quoted—and, we add, in no part of the contract not quoted—is there any statement made as to the maximum amounts of the loans, the lengths of time they may be made to run, in what manner they are to be paid, what, if any, interest they are to bear, or as to other conditions of importance in determining to what burdens the property being sold and scheduled to be held in trust to secure the buyer's obligation to the seller, is to be subjected. Provisions of subordination strikingly similar to the above, were under review in two fairly recent cases decided by this court: Gould v. Callan, 1954, 127 Cal.App.2d 1, 273 P.2d 93 and Kessler v. Sapp, 1959, 169 Cal.App.2d 818, 338 P.2d 34. In each of these cases a decree of specific performance was sought, but denied because the contract was held to be too uncertain, due to the indefiniteness of the subordination provisions. In between these cases a third appears, Roven v. Miller, 1959, 168 Cal.App.2d 391, 335 P.2d 1035, dealing with similar provisions and reaching the same result for the same reason. We remain in accord with these decisions.

The contract involved, which the trial court was asked to order performed by the defendants, was attached as an exhibit to the complaint and by reference incorporated in it. By its silence, defendants' answer raised no issue concerning the execution of text of the contract. The complaint further alleged that the plaintiff Wright elected to pay the purchase price by a promissory note secured by a deed of trust on the property, and that he deposited in escrow the note and a deed of trust ‘containing the terms specified’ in the contract. The answer expressly admitted that the note and a trust deed ‘containing the terms specified in [the contract]’ had been deposited in escrow. To avoid any possibility that, in the event of a reversal of the judgment and a new trial, with the claim of uncertainty an issue before the court, the proof might disclose that the trust deed actually tendered by the plaintiff did not contain the subordination provisions that the contract authorized the buyer to insert, we took evidence ‘in the interest of justice’ (section 956a, Code of Civil Procedure), and obtained by means of a stipulation of counsel, a copy of the trust agreement placed in escrow. It contains the paragraphs, among others, that are set out below in the finding that we make.

Beyond question, then, the provisions of the contract respecting the subordination of the trust deed, to be given by the buyer, to the loans that he would negotiate, remain material to the case. By his choice of actions the buyer has elected to pay by note and trust deed, not by cash, and to give a trust deed with the subordination provisions included. On the record now established, the present judgment would have to be repeated, should we reverse it. In the premises, no good purpose would be served by a reversal.

We order, therefore, that the findings of fact be supplemented by this one: XIX That the trust deed hereinabove referred to contains the following paragraphs:

‘(1) Said land may be subdivided into lots and, during the life of the trust created by this deed of trust and provided that this deed of trust is not in default, either before or after subdivision, Trustor:

‘(a) may borrow, from time to time, for and as construction loans, money from a life insurance company, savings and loan association, bank, or trust company, on the security of each of the lots into which said land may be subdivided, or on each of the building sites into which said land may be divided, each of said loans to be evidenced by a promissory note or notes; and

‘(b) may, as security for each of said loans, place, keep, and maintain a deed of trust or mortgage on each of the lots or building sites in connection with which the particular construction loan is made.

‘(2) In addition to the rights set forth to obtain loans on each lot or building site and to place separate deeds of trust or mortgages thereon, Trustor, during the life of the trust created by this deed of trust and provided that this deed of trust is not in default, in lieu of obtaining separate loans and placing separate deeds of trust or mortgages on each lot or building site, in any group or groups of lots or building sites selected by it:

‘(a) may borrow, from time to time, for and as construction loans, money from a life insurance company, savings and loan association, bank, or trust company, on the security of all of the lots or building sites within such group or groups so selected by it, each of said loans to be evidenced by a promissory note or notes; and

‘(b) may, as security for each of said loans, place, keep, and maintain a deed of trust or mortgage on all of the lots or building sites in each group or groups in connection with which the particular construction loan is made.

‘(3) Each and every one of said deeds of trust and/or mortgages, when duly recorded, shall constitute a lien and charge on the land respectively covered thereby prior and superior to the lien and charge of this deed of trust, and this deed of trust shall ipso facto be, and automatically become, subordinated to the lien and charge of said deeds of trust and/or mortgages, and each of them, when so recorded.’

The judgment is affirmed.

BISHOP, Justice pro tem.

SHINN, P. J., and VALLEE, J., concur.

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