Sheppard v. Banner Food Products, Inc.

Plaintiff brought this action against Max Bortz and Blanche Bortz, husband and wife, and Banner Food Products, Inc., seeking a decree declaring a trust deed held by plaintiff to be a lien upon certain real property owned by defendants Bortz, and directing a foreclosure of the deed of trust and a sale of the property thereunder. A demurrer to the amended complaint was sustained without leave to amend and judgment of dismissal was thereupon entered. Plaintiff appeals.

Defendants Bortz owned premises on East Sixth Street in Los Angeles, where they conducted a wholesale smoked fish business. On October 3,1944, they agreed to sell the land and the business to Banner Food Products, Inc., a corporation, for the sum of $22,500, payable $5,000 down, $5,000 March 1, 1945, and $12,500 at the rate of $200 per month, with 6 per cent interest, to be evidenced by a note and a mortgage upon the real property. On October 9, 1944, defendants Bortz transferred to Banner the fixtures, equipment and trucks belonging to the business for a price of $1,500. At that time the transaction was placed in escrow under instructions by which defendants Bortz agreed to sell and Banner agreed to buy the real property for the balance of the total price, namely, $21,-000, to be paid as follows: $3,500 in cash, $4,300 by the assumption of an existing trust deed indebtedness, and the balance of $13,200 at the rate of $125 per month and a $5,000 payment on March 1, 1945, said sum of $13,200 to be secured by trust deed on the property. The complaint alleged that plaintiff, relying upon the terms of the agreement and the escrow instructions “and upon the express or implied assurance of defendants Banner and Bortz that said transaction

It was not alleged in the complaint that Banner was or is ready, able and willing or has offered to consummate its agreed purchase of the property or that it has demanded of defendants Bortz performance upon their part, nor was it alleged that defendants Bortz have acted with a fraudulent purpose.

If the transaction between Bortz and Banner had been or should be consummated, plaintiff would be the holder of a trust deed for $6,500, executed by the owner of the legal title and subject to the outstanding trust deed of $4,300 and the trust deed of Banner to Bortz in the amount of $13,200. He can gain that position only through a transfer of the title to Banner and the execution by the latter of the $13,200 purchase money trust deed. If the transaction is completed by the defendants voluntarily, plaintiff’s position will thereby be éstablished. The relief which he seeks is in reality a decree of specific performance. In no other way can he be placed in the position he would have occupied if the sale had been carried out as agreed.

Plaintiff’s contentions are stated as follows: “That the amended complaint states a cause of action, whether this be upon the theory of the existence of a constructive trust upon the property in favor of appellant, or that the instrument be regarded as an equitable mortgage, or of the application of the principle of an equitable estoppel, or upon the proposition that Banner had a mortgageable interest in the property which it had the right to mortgage, or upon the theory that appellant, as mortgagee, is a bona fide purchaser for value, or that the instrument constitutes a purchase-money mortgage, or that to deny appellant the relief sought would result in unjust enrichment by Bortz.” What appellant fails to do is to

Plaintiff has no right to enforce performance of the Bortz-Banner contract. He was not a party to it and it was not made specifically for his benefit. Section 1559 of the Civil Code provides: “A contract made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.” If a contract is not made expressly for his benefit, it may not be enforced by him even though he would be incidentally benefited by performance. (Steinberg v. Buchman, 73 Cal.App.2d 605 , 609 [ 167 P.2d 207 ].)

We may examine the allegations of the complaint from another point qf view. Plaintiff relied upon Banner as well as upon Bortz to consummate the purchase of the property. Banner’s obligation in fact was the greater, for the reason that in borrowing money from plaintiff to be used in the purchase, an implied obligation arose to go through with the purchase and to thus place plaintiff in his rightful position. Bortz was under no obligation to convey the property without performance upon the part of Banner. While the complaint alleged that Bortz failed, refused and neglected to consummate and carry out their agreement “unless other and further terms imposing increased obligation upon defendant Banner would be agreed to and complied with by the latter,” it did not allege that Banner was ready, able and willing to perform or ever offered to perform upon its part. It was alleged that plaintiff had requested Bortz to convey the property to Banner as agreed, but it was not alleged that Banner had made any such demand or had tendered performance. So far as disclosed by the complaint, Banner may have abandoned the purchase or it may have been rescinded by mutual consent. The complaint was insufficient to state a cause of action for specific performance, not only because the contract was not made expressly for the benefit of plaintiff, but also for the reason that it failed to allege facts sufficient to show that Banner has complied or offered to comply

In addition to all this is the general rule that specific performance will not be decreed at the instance of one who may be adequately compensated in money. Plaintiff sought to acquire no interest in the land, but only a lien upon it as security for his loan. He could be compensated by a money judgment against Banner and, if he could establish liability of defendants Bortz, against them also. No facts were alleged to show the inadequacy of his legal remedy. (Flood v. Templeton, 148 Cal. 374 [ 83 P. 148 ].)

It was alleged that plaintiff loaned the money “upon the express or implied assurance of defendants Banner and Bortz that said transaction between themselves would be consummated,” etc. No representations or promises on the part of Bortz to plaintiff were alleged. The contract itself was the only inducement to plaintiff to loan the money to Banner. It was not alleged that Bortz and Banner acted in collusion or that either was actuated by bad faith or a fraudulent purpose.

In yet another aspect the complaint was deficient as an appeal for relief upon equitable grounds, under which a lien would be impressed upon the property of Bortz. It was not alleged that Banner is unable to meet its obligation to plaintiff according to the terms of the note, or that plaintiff is likely to suffer any loss, So far as appears from the complaint he has a plain, speedy and adequate remedy at law. He has not brought himself within any exception to the rule stated in Pomeroy’s Equity Jurisprudence (5th ed.), volume 1, section 178, that “Where the primary right of the plaintiff is purely legal, arising either from the non-performance of a contract or from a tort, and the money is sought to be recovered as a debt or as damages, and the right of action is not dependent upon or connected with any equitable feature or incident, such as fraud, mistake, accident, trust, accounting, or contribution, and the like, full and certain remedies are afforded by action at law, and equity has no jurisdiction; these are cases especially within the sole cognizance of the law.”

Upon the facts alleged plaintiff is not entitled to a decree requiring defendants Bortz to convey the property to Banner, nor is he .entitled to have a lien impressed upon the property for the amount of his trust deed while title to the property remains in defendants Bortz and the contract of sale remains unperformed.

The judgment is affirmed.

Wood, J., and Kincaid, J. pro tem., concurred.