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TEN WINKEL v. ANGLO CALIFORNIA SECURITIES CO.†
In an action to quiet title to an apartment in a community apartment house, the court rendered judgment in favor of the defendant and the plaintiff has appealed therefrom. If the plaintiff's interest in the apartment was subject to a certain deed of trust hereinafter discussed, the judgment should be affirmed, otherwise it should be reversed, because that is the sole material point presented by the record. The rights and liabilities of the respective parties are novel and involve a consideration and interpretation of many written documents. The pertinency of each requires a chronological statement of the following facts:
In 1926, or prior thereto, Mary Thomas owned a lot on the east line of Hyde street north of Greenwich street. F. W. Ten Winkel and his wife, this plaintiff, owned a lot on the east line of Southard place. The first lot extends back to Southard place and the second lot is immediately across Southard place. On the second lot was a two–story building consisting of an upper apartment occupied by the Ten Winkels and a lower apartment occupied by their tenant. Both lots stand on high ground, and, from each, one has an extensive marine view except as the building on the second lot may obstruct the view from the building on the first lot. In 1926, Cleve Shaffer and Geneva Shaffer, his sister, commenced the promotion of a building plan. It contemplated the construction of a community apartment house on the Thomas lot. The building was to be fifteen stories high, and each floor consisting of one apartment. A sales price was to be put on each apartment and the total thereof, $320,365, was to cover the costs. To protect the view of the several apartments, the property of the plaintiff and her husband was to be purchased, the building thereon was to be torn down, and that lot was to remain vacant. A nonstock, nonprofit corporation was to be formed, “View Tower, Inc.,” and in due time one apartment was to be transferred to each member, each member was to enter into a lease, and all members acting through the corporation would operate the apartment house. (At times the parties used different names for the corporation. We have not corrected that misuse.)
An escrow was opened with the California Pacific Title & Trust Company. Later an instrument was executed which was (omitting irrelevant parts) as follows:
“It is agreed that F. W. Ten Winkel and wife, residents of the City and County of San Francisco, State of California, owners of the following described property situated in the City and County of San Francisco, State of California, towit:
“All that certain lot, piece or parcel of land situated on the East line of Southard Court, about 107 feet North of Greenwich Terrace designated and known as No. 1 Southard Court, size of lot being 30 feet by 56 feet, which we desire to exchange for property owned or to be acquired by Tower View, (a corporation to be organized), which said property is now in the name of Mary Thomas, widow and is situated in the City and County of San Francisco, State of California, and described as follows, towit:
“All that certain second floor and its appurtenances, in that certain Class ‘A’ building to be erected on the lot situated on the East line of Hyde Street, 112 feet 9 inches north of Greenwich Street running thence Easterly to the Westerly line of Southard Court. Lot 25 feet by 56 feet. Said apartment to be built and constructed as per plans and specifications hereto attached and made a part hereof.
“Terms of Exchange, being as follows:
“In lieu of a cash payment, grant, bargain and sale deed to first property hereinabove described, shall be immediately deposited in escrow with the Title Insurance Company of San Francisco, upon conditions and terms herein specified and not otherwise. * * *
“4. It is further understood and agreed that all costs of upkeep, and expenses for maintaining and running said Tower View apartment building, shall be based and proportioned to said Ten Winkel, his heirs, successors or assigns, on a valuation of Fifteen Thousand ($15,000) Dollars, and no more.
“B. A. Shaffer is authorized to act as agent in negotiating said exchange, and we agree that if the owner of the property secondly above described will exchange said property on said terms and conditions herein specified, we will, within ten days furnish a certificate of title from a reliable abstract company, and a good and sufficient grant, bargain and sale deed, with the restriction above mentioned, conveying title to the property firstly above described.
“It is also agreed that when said agent has secured an acceptance in writing upon the terms and conditions herein contained to make said exchange, and when notice in writing is given to said Ten Winkel that half the apartments in said Tower View are sold, we will deposit with said Title Insurance Company, Fifteen Hundred ($1,500) Dollars, balance of purchase price of said apartment, being the total purchase price of Fifteen Thousand ($15,000) Dollars, and will allow sixty (60) days for the furnishing of satisfactory certificate of title or title search of said property secondly described.
“Dated October 18, 1926
“Florence L. Ten Winkel
“F. W. Ten Winkel.”
“(Duly acknowledged.)
“Acceptance
“This agreement witnesseth: That Mary Thomas, or Tower View (a corporation to be organized) or agents or assigns, owner of the piece of real estate secondly herein described, hereby accepts the said proposition of exchange upon the terms and conditions herein mentioned, and agree to furnish a certificate of title to said second floor cooperative apartment, the price of which is Fifteen Thousand ($15,000) Dollars, free and clear of all liens or incumbrances except those on building as a whole and then to deliver a proprietary lease and proportionate interest in the said cooperative apartment building to F. W. Ten Winkel and wife, or their assigns, or agrees to pay said Ten Winkel the sum of Thirteen Thousand Five Hundred ($13,500.00) Dollars for said real property first above described, or re–deed said property to said Ten Winkel.
“And we further agree to pay customary commission.
“Dated at 560 Sutter St. this 25 day of September, 1926.
“Mary Thomas”
“(Not acknowledged.)
“Recorded at the request of G. A. Shaffer, Oct. 25, 1926, at 42 min. past 2 p. m.”
It was recorded at the time written thereon. On October 25, 1926, Mr. Ten Winkel deposited in the escrow said agreement and a deed executed by himself and wife. No claim is made that they did not do and perform all things by them agreed to be done. Later, View Tower, Inc., was incorporated, it adopted by–laws, a certificate of membership was issued to the Ten Winkels, they took a lease on their apartment, and on November 14, 1928, they took possession of their apartment and commenced to occupy it. Ever since they have continued to occupy it by themselves or by their duly authorized tenant.
In the meantime, the promoters and their assignees and transferees proceeded as follows:
On November 23, 1926, Mary Thomas conveyed to Cleve Shaffer, both of the above–mentioned lots. On April 30, 1927, Cleve Shaffer executed a deed of trust to the Anglo California Trust Company in favor of Mary Thomas to secure the payment of an installment promissory note of $175,000. The note was payable $1,486.74 per month commencing on the 1st day of March, 1928. Mary Thomas indorsed and transferred said note and assigned her interest in said deed of trust to this defendant. But the record does not disclose the date. It was recorded May 23, 1927. Except as we will note, neither View Tower, Inc., nor the Ten Winkels have ever assumed or agreed to pay said note or any part thereof.
Mr. Ten Winkel died September 29, 1933. His wife was appointed executrix of his will. Later the interest of the decedent was distributed to her under the terms of the will.
Certain installments on the note not having been paid the defendant foreclosed the deed of trust and at the sale it claims to have purchased the entire property.
The original executory agreement of exchange was not produced at the trial. The plaintiff produced a certified copy from the recorder's office and introduced in evidence the offer of Mr. and Mrs. Ten Winkel to wit, all of said instrument down to the word “Acceptance.” The defendant offered all of the rest of said instrument. Before doing so it introduced no evidence whatever that said acceptance was ever signed by Mary Thomas, nor any evidence as to the contents of any instrument that may have been signed by Mary Thomas. The plaintiff objected to said offer, the objection was overruled, and she asserts that the ruling was erroneous. We think that assertion is well founded. The offer to exchange was in effect an agreement that the Ten Winkels would grant to Mary Thomas their lot and at the same time it was an agreement that Mary Thomas would grant to the Ten Winkels an interest in real estate held by her. In other words, each agreed to grant. That agreement was acknowledged by the Ten Winkels and was binding on them. Mary Thomas did not acknowledge the instrument, and it was not, as to her, entitled to recordation and the recordation thereof was not constructive notice to the defendant. Keese v. Beardsley, 190 Cal. 465, 472, 213 P. 500, 26 A.L.R. 1538; Mayhew v. Melby, 206 Cal. 396, 397, 398, 274 P. 517; Harjo v. Collins, 146 Okl. 131, 293 P. 179, 72 A.L.R. 1034, and note. It follows that the “Acceptance” should not have been admitted in evidence.
The plaintiff contends that the execution of the trust deed was subordinate to her title, and that she is not responsible for the payment of the debt secured by the trust deed or any part thereof. That contention is broken up into the statement of several points. She first asserts that she and her husband acquired an interest in real property. Estate of Pitts, 218 Cal. 184, 22 P. 2d 694. The defendant does not argue to the contrary. That contention may therefore be taken as admitted.
The plaintiff further contends that she and her husband were never divested of their interest in apartment No. 2, that the defendant had notice of their interest, and that there is no evidence to support the findings to the contrary. That contention she supports by three separate arguments. In the first one she claims that when on April 30, 1927, Cleve Shaffer executed a promissory note in the sum of $175,000 in favor of Mary Thomas, and executed a deed of trust to the Anglo California Trust Company to secure said note, the above–mentioned offer to convey had been executed by the plaintiff and her husband and had been duly recorded. Continuing, she argues that the record of their said offer to convey was constructive notice of its contents. That argument is not sustained by the authorities. When the agreement to exchange was delivered to the recorder as noted above, it was in two parts; the offer by the Ten Winkels and the acceptance by Mary Thomas. On receipt of it, it was the duty of the recorder to record the whole, but to index it merely in the name of the Ten Winkels. People v. Donegan, 226 N.Y. 84, 123 N.E. 71. As the grantor of the property in suit had not acknowledged the acceptance, that portion was not entitled to recordation, and the fact it was recorded would not be constructive notice of its existence against the grantees and mortgagees of Mary Thomas. Keese v. Beardsley, supra, 190 Cal. 465, 473, 213 P. 500, 26 A.L.R. 1538.
However, the plaintiff goes further. She claims the defendant had actual knowledge of the existence of the agreement to exchange. In support of that claim she calls attention to the following matters: It was stipulated that notice to the Anglo California Trust Company was notice to the defendant Anglo California Securities Company. On April 12, 1922, Mary Thomas executed to Western American Realty Company as trustee a deed of trust in favor of Anglo California Trust Company to secure a promissory note in the sum of $13,000. That trust deed covered the Hyde street lot. On March 30, 1927, when the transactions involved in this action were being had the obligation last mentioned was renewed. Mary Thomas executed another trust deed to the same trustee in favor of the same party to secure the payment of a promissory note in the sum of $10,000. It was stipulated that said act was for the purpose of renewing the existing debt. Before accepting the documents, Anglo California Trust Company required the Ten Winkels to jointly execute the documents with Mary Thomas. Such demand the plaintiff asserts showed knowledge on the part of the trust company, and therefore on the part of this defendant, that the Ten Winkels had an interest in the Hyde street property. However, there is no evidence that the Ten Winkels had any interest whatever excepting through the above–mentioned agreement to exchange. The record supports no other inference than this, that the Anglo California Trust Company knew of the existence of said agreement and the terms thereof. It is a significant fact that the trust company and its affiliate thereafter cause the $10,000 trust deed to be recorded April 4, 1927, and the $175,000 trust deed to be recorded May 23, 1927. In this same connection it should be noted that Mr. Laugher, assistant trust officer of the Anglo California Trust Company, on May 13, 1927, wrote an acknowledgment of the receipt of $13,500 from the Ten Winkels (being the value of their lot) upon the face of the agreement between Tower View Community, Inc., and the Ten Winkels. Moreover, in this same connection, as hereinabove noted, from April 30, 1927, the date of the $175,000 trust deed, down to November, 1933, no demand was ever made on Tower View, Inc., or on the Ten Winkels for any part or portion of the $175,000 loan. These facts we think sustain the claim of the plaintiff that the defendant had actual notice of the exchange agreement.
The defendant does not claim that it did not have notice but asserts that under the terms of certain written instruments the plaintiff took subject to its trust deed securing the payment of the loan for $175,000. It first relies on the “Acceptance.” But as shown above said document was not acknowledged by Mary Thomas and it has no standing as a recorded instrument. No evidence was introduced that Mary Thomas executed a document of which it was a copy, and therefore it was merely a scrap of paper and not entitled to be received in evidence. Defendant then relies on a purported exchange agreement dated May 9, 1927. That document refers back to the “trade agreement,” meaning perhaps the first agreement written by the plaintiff and Mary Thomas. But the instrument dated May 9, 1927, was, on its face, an agreement between the Ten Winkels and “Tower View Community, Inc. (a corporation to be formed).” No such corporation was ever formed. Tower View, Inc., was formed July 11, 1928. On May 9, 1927, it had no power to contract. It then relies on passages contained in the articles of incorporation, by–laws, certificate of membership, and the lease by Tower View, Inc., to the Ten Winkels. Each and all of those documents were executed many months subsequent to the exchange agreement. Each and all were executed by Tower View, Inc., and the Ten Winkels. As to the Anglo California Securities Company and its affiliates, said documents were res inter alios acta. It is not claimed and there is no evidence that after the exchange agreement was made in October, 1926, any additional contract was made which purported to modify, change, or alter the original agreement of exchange. It follows there was no evidence that the Ten Winkels took their interest in the apartment house subject to the trust deed held by the defendant to secure the payment of its loan of $175,000 to Cleve Shaffer. The conclusions just stated are in accord with the acts of the parties. Although the Ten Winkels were required by the Anglo California Trust Company to join with Mary Thomas in executing a trust deed to Western American Realty Company to secure the payment of the $10,000 loan, they were not asked to join with Cleve Shaffer in executing the trust deed executed to secure the payment of the $175,000 loan. Furthermore, at no time from the date of the execution of the trust deed last mentioned down to November, 1933, were the Ten Winkels asked to make any payments on said loan. This, notwithstanding the fact that as each apartment was sold or leased the contract was deposited with this defendant and this defendant thereafter made the collections under such contracts according to the terms thereof. The Ten Winkels' contract was also deposited, but thereon Mr. Laugher, an officer of the defendant, indorsed the fact of the first payment and its date and of the second payment. Such indorsements were made before the defendant recorded its deed and before it had made any advancements whatsoever.
Bearing in mind the basic fact that the parties were contemplating the construction of a community apartment house of approximately fifteen separate apartments, it is clear that an intending purchaser might desire to purchase an apartment paying the whole of the purchase price in advance. It is equally clear that to construct a class A building fifteen stories high and purchase the ground to build on, a total cost of $320,365, the promoters might be called upon to negotiate a building loan. It is further clear that such transactions would require accounts to be kept with the building and with each apartment. However, it is also clear that if an intending purchaser agreed to pay cash for his apartment in advance, it would require clear language to show that he also assumed to pay in addition thereto his pro rata of the building cost. Such clear language does not appear in any single document called to our attention. It follows that under their contract the Ten Winkels did not agree to pay any part of the loan made by the defendant, that they were not parties to the trust deed in any respect, and that the trust deed was subordinate to their contract. As the plaintiff contends, portions of findings 3, 4, and 5 to the contrary are not supported by the evidence.
The judgment is reversed, and the trial court is directed to reframe its findings interpreting the contract in a manner not inconsistent with what has been said, and thereupon to enter judgment in favor of the plaintiff.
STURTEVANT, Justice.
We concur: NOURSE, P. J.; SPENCE, J.
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Docket No: Civ. 10566.
Decided: December 17, 1937
Court: District Court of Appeal, First District, Division 2, California.
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