MAJEWSKY MAJEWSKY v. EMPIRE CONSTRUCTION CO

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

Adolfo MAJEWSKY and Consuaelo MAJEWSKY, Plaintiffs and Appellants, v. EMPIRE CONSTRUCTION CO., Ltd., a corporation;  Glens Falls Insurance Company, a corporation;  United California Bank, a California banking corporation;  and Anderson & Perkins, Inc., a corporation, Defendants and Respondents.

Civ. 24414.

Decided: March 24, 1969

Joseph L. Bortin, San Francisco, for appellants. Gerald R. Knecht, Joseph L. Fink, Knecht, Dingus, Fink & Boring, San Francisco, for respondents Empire Const. Co., Ltd., and Glens Falls Ins. Co. Joseph A. Kiernan, San Francisco, for respondent United California Bank. Joseph H. Inglese, Bruce M. Lubarsky, San Francisco, for respondent Anderson & Perkins, Inc.

Plaintiffs Adolfo and Consuaelo Majewsky appeal from a judgment refusing to quiet their title to real property as against judgment liens claimed by defendants.

The uncontradicted evidence shows that in early January 1965, Allen Waugh located a parcel of San Francisco real property which was owned by Irving and Beatrice Cuslidge and which was available for sale at the price of $11,000.   Waugh then attempted to find a buyer who would purchase the property for $12,500 and, in furtherance of this object, contacted a real estate broker who referred him to a broker named Gummufsen.

After Waugh had discussed the matter with Gummufsen, the latter contacted plaintiff Adolfo Majewsky, a real estate broker, and advised him that the property was available for $12,500.   Plaintiff looked at the property, obtained a preliminary title report which indicated that the property was owned by the Cuslidges, and talked with the tenant, who told him that the Cuslidges had owned the property since 1947.   Both the tenant and Gummufsen also told plaintiff that the Cuslidges resided out of town.

On January 23, 1965, plaintiffs signed a deposit receipt agreement offering to purchase the property for $12,500 and paid a deposit of $1,000.   An escrow was thereafter opened at First American Title Company, and plaintiffs paid into the escrow the balance of the $12,500 purchase price, plus closing costs.

No funds other than those furnished by plaintiffs were ever deposited in the single escrow used in this transaction.   Plaintiffs' escrow instructions merely provided that in return for the funds so deposited, they should receive a deed to the property and a policy fully insuring their title.   The Cuslidges deposited their deed to the Waughs with a demand for $11,000;  the Waughs deposited their deed to the plaintiffs with instructions to pay brokerage and other fees and remit the balance of the $12,500 to them.   The deed from the Cuslidges to the Waughs was recorded immediately prior to the deed from the Waughs to plaintiffs.   The title company's records show that of the $12,500 deposited by plaintiffs into escrow, $11,000 was paid to the Cuslidges, $1,109.25 was paid to the Waughs, and the remainder was used to pay a real estate commission of $375, recording charges and the cost of revenue stamps.

Plaintiff Adolfo Majewsky testified that he received a deed to the property in the mail approximately six weeks after the escrow was opened.   He placed it in a drawer and did not examine it or notice that his immediate grantors were the Waughs rather than the Cuslidges.   He had never heard of the Waughs and was unaware that they were in any way connected with the sale until September 1965, when he decided to sell the property and ordered a preliminary title report.   He then learned that the property had been deeded through the Waughs and also learned that on the date the Waughs took title to the property, there were some $50,000 in judgment liens outstanding against them.

Plaintiffs thereafter commenced the instant action to quiet their title to the property, as against the Waugh's judgment lienors, on the theory that the Waughs never held title to the property in any capacity other than as constructive trustees for plaintiffs and that the Waughs' interest in the property was accordingly not one to which the judgment liens could attach.

The trial court ruled against plaintiffs and in favor of the judgment lienors, even though it expressly found that the only funds deposited in the escrow were furnished by plaintiffs.

 The sole issue presented by this appeal is one of law which, under the settled rule followed in this state, must be resolved favorably to plaintiffs.   The rule, as stated in Ogden's California Real Property Law (1956) section 15.13(4), page 562, is that “The lien of a judgment does not attach to the naked legal title to real property held by the judgment debtor in trust, as where the debtor takes legal title as a mere agent or conduit in effecting a transfer from the seller to a purchaser, or where the mere legal title is held by the debtor as trustee under an express trust or under a resulting trust in favor of a third party who paid the purchase price of the property.”

 In Zenda Mining and Milling Co. v. Tiffin (1909) 11 Cal.App. 62, 65, 104 P. 10, 12, the court stated, “ ‘the doctrine is well established that where land is purchased in the name of one person, and the consideration is paid by another, the land will be held by the grantee in trust for the person furnishing the consideration.’  Riley v. Martinelli, 97 Cal. 575, 32 P. 579, 21 L.R.A. 33, 33 Am.St.Rep. 209;  Currey v. Allen, 34 Cal. 254;  Civ.Code, sec. 853.  ‘Whenever one is a mere conduit, as where he purchases property in his name as the agent of another, with the latter's funds, and subsequently conveys to him, there is no interest to which a judgment, lien can attach.’   Freeman on Judgments, § 373.”  (To the same effect, see Riverdale Mining Co. v. Wicks (1910) 14 Cal.App. 526, 534–537, 112 P. 896;  Iknoian v. Winter (1928) 94 Cal.App. 223, 225–226, 270 P. 999;  Spear v. Farwell (1935) 5 Cal.App.2d 111, 114, 42 P.2d 391;  Schriber v. Alameda etc.   Title Ins. Co. (1958) 156 Cal.App.2d 700, 707, 320P.2d 82.)

 Defendant lienors contend that the rule above set forth should be deemed inapplicable because the Waughs purchased the property from the Cuslidges for “a valuable consideration” of $11,000 and because there was no express agreement between the plaintiffs and the Waughs to the effect that the Waughs were acting solely as agents of plaintiffs.   We do not agree.   The undisputed evidence established and the trial court found that all of the funds deposited into the escrow were furnished by plaintiffs.   A portion of these funds, $11,000, was paid to the Cuslidges for the property.   The Waughs never paid any funds of their own for the property and were never in a position to claim any interest in it.   Their absolute duty was to convey the property to plaintiffs.   In a case such as this, the Waughs served as a “mere conduit” and their interest was not one to which the outstanding judgment liens could attach.   Defendants' reliance upon the absence of any express agreement of agency between plaintiffs and the Waughs is misplaced.   The Waughs did not acquire a greater interest in the property because their role in the transaction was a surreptitious one and returned a profit to them by the use of plaintiffs' money, without their knowledge or consent.

The judgment is reversed, with directions to the trial court to enter a new judgment quieting plaintiffs' title as against the Waugh's judgment lienors.

SHOEMAKER, Presiding Justice.

AGEE and TAYLOR, JJ., concur.

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