Garcia v. Atmajian

Opinion

Plaintiffs, Mr. and Mrs. Crecenciano Garcia (hereinafter Garcia), appeal from a bench judgment in favor of the defendant, Aram Atmajian, in this action to declare the rights of the respective parties, commenced by Garcia, with regard to a residential lot described as lot 11 of tract No. 1360, Sutherland Subdivision, in the County of Fresno.

Arnold De La Cruz and Jessica De La Cruz (hereinafter De La Cruz) had been the owners of secured lots including the lot in dispute. The defendant, Atmajian, acquired a note secured by a deed of trust on lot 11 and other lots dated July 27, 1955, recorded August 1, 1955, in the original amount of $5,700. On February 27, 1958, De La Cruz executed a second deed of trust on lot 11 and other lots to the defendant, Atmajian, to secure a note to Atmajian in the original sum of $2,600. This deed of trust was recorded on March 18, 1958. Both deeds of trust contained a provision that they stood as security for “[pjayment of such additional sums, with interest thereon, as may be hereafter borrowed from the beneficiary by the then record owner or owners of said property when evidenced by another promissory note or notes.”

Sometime in 1963 Garcia entered into an oral contract with De La Cruz to purchase lot 11 for $3,000, payable in monthly installments with interest. The evidence shows that the installment contract was paid

This action in declaratory relief was commenced by Garcia on June 12, 1974, naming as defendants Atmajian, De La Cruz and others. On August 1, 1974, De La Cruz quitclaimed their interest in the property to Garcia. Atmajian was the only remaining defendant at the time of trial.

The trial court found that all of the payments made by Garcia on the contract of sale were actually made to Atmajian. Garcia argues that the payments evidence an oral agreement made with Atmajian at the time of entering into the original contract to the effect that Atmajian would accept the payments from Garcia and apply them to pay off the debt owed by De La Cruz to Atmajian, and when the contract amount was totally paid the preexisting debt of De La Cruz would be satisfied and Atmajian would thereupon quitclaim his interest in lot 11 to Garcia. In the face of sharply conflicting testimony with regard to the existence of such an agreement the trial court found that no such agreement existed. We are bound by that finding.

The evidence showed that prior to and subsequent to the date of the oral contract of sale between De La Cruz and Garcia, Atmajian advanced additional sums to De La Cruz. The actual amount owed on the original $5,700 and $2,600 notes and the amounts represented by promissory notes that may have been advanced prior to the date of the contract of sale pursuant to the optional advance clauses in the deeds of trust do not clearly appear in the record nor do the number and amounts of the post-1963 loans. There were a number of post-1963 loans to De La Cruz by Atmajian for which promissory noles were executed, which were apparently made pursuant to the optional advance clause of the deeds of trust. Testimony in regard to the amount of the debts owed by De La Cruz to Atmajian at various points of time is confusing and contradictory.

The trial court found and decreed that Garcia’s interest in lot 11 is subject to the lien of the deeds of trust for the total amount owed by De La Cruz and concluded that Garcia was entitled to no relief. We reverse because we have concluded that Garcia’s interest in the property is subject to the prior deeds of trust only to the extent of the amount owing by De La Cruz to Atmajian as of the date of the con

Further, upon judicial recognition of the lien, it dates back to the time it was initially created, that is, in this case, to the date of the contract of sale. (Hise v. Superior Court (1943) 21 Cal.2d 614 , 627 [ 134 P.2d 748 ].)

Accordingly, in the case at bench, we have no hesitancy in recognizing the vendee’s lien to the extent of the amount he has paid on the contract plus any amount he is entitled to for having created improvements upon the property plus expenditures for taxes and insurance (Civ. Code, § 3050; Montgomery v. Meyerstein, supra, 186 Cal. 459 , 465), effective as of the date of the contract of sale in 1963. From what has been said, the vendee’s lien so created has priority over advances made subsequent to the date of the oral contract pursuant to the optional advances clause in the prior recorded deeds of trust. Advances represented by promissory notes made prior to the date of the contract of sale have priority over the vendee’s lien.

In view of the above conclusions, we need not pass upon appellant’s contention that the beneficiary under a preexisting deed of trust has the affirmative duty to notify a known installment buyer of the encumbered property of future advances made to the trustor/seller pursuant to a future advance clause in the underlying recorded deed of trust. In passing, however, we note that appellant cites no authority for this proposition and our independent research has revealed none.

Appellant also makes arguments regarding estoppel and refers to pri- or transactions between the parties regarding other lots. However, there is no testimony or documentary evidence in the record to support these arguments. Even assuming such prior transactions took place, however, that evidence would be insufficient for a Court of Appeal to find an estoppel as a matter of law.

Hopper, J., and Andreen, J., concurred.