Opinion
For Opinion on Hearing, see 81 Cal.Rptr. 373, 459 P.2d 925. Les J. Hartley, Century City, for plaintiff and appellant.
Coombs & Friel and Hugh D. Friel, Rialto, for defendants and respondents.
OPINION
McCABE, Presiding Justice.
On July 26, 1963, plaintiff and defendants Fuchs, Coleman, Colombero and their respective wives, entered into a written agreement wherein the former agreed to buy and the latter agreed to sell certain real property known as Tentative Tract 7050, for a total purchase price of $50,000. The agreement consisted of escrow instructions which designated First American Title Company as the escrow holder.
The subject property was part of a larger parcel of land which larger parcel was encumbered by a deed of trust to secure a loan in favor of Sierra Savings and Loan Association (Sierra). This encumbrance contained release clauses as to Tentative Tract 7050 upon payment of $28,000 to Sierra.
The agreement between the parties provided a total consideration of $50,000 to be comprised of $30,000 cash and a purchase money deed of trust in the amount of $20,000. The agreement provided purchaser would 'on or before October 28, 1963 hand you said consideration which is payable as follows: $30,000 to be deposited * * * before the close of escrow and * * * to execute a purchase money deed of trust in the sum of $20,000 as set forth below.' The real property was described as 'Tentative Tract 7050' with the tract to be recorded before the close of escrow. There was a release clause for lots within the tract to be incorporated in the $20,000 deed of trust. The escrow was subject to the property being subdivided into ten lots zoned for R-3 use. The term 'close of escrow' was defined. Time was declared to be the essence of the escrow instructions. The agreement provided a direction to the escrow holder that: 'If you are unable to comply within the time specified herein and such additional time as is required to make an examination of the official records, you will return all documents, money or property to the party entitled thereto upon satisfactory written demand and authorization.'
Commencing on or before July 31, 1963, the defendants undertook the subdivision of the subject property pursuant to the Subdivision Map Act of the State of California (Bus. & Prof.Code, § 11500 et seq. and San Bernardino Subdivision Ordinance 1984), and under the supervision of Mr. Richard Williams of the Engineer's Office, City of San Bernardino.
By October 28, 1963, the defendants had substantially performed the requirements imposed by the City as a prerequisite for the final subdivision map so it could go to the City Council and then, if approved, be recorded. Before this could be accomplished, defendants were required to make a $500 cash payment to the City for future reconstruction of a temporary cul-de-sac on Fifth Street; pay the cost of monument setting in the tract in the sum of $345; pay $28.35 for electrical energy and street lighting; and to either install the remainder of the off site improvements required by the City, or post a bond to guarantee performance of the installation of the remainder of the improvements. There was testimony by Mr. Williams (City Engineer's office) that at any time after October 28, 1963, defendants could have posted the required bond and had they done so, the map could go of record as far as the City was concerned. Mr. Fuchs, one of the defendants, testified that by the end of October 1963, the map could have been recorded by the posting of a security bond, in the face amount of approximately $1,500 for a premium of 3 1/2% of the amount of the bond.
After October 28, 1963, and on or about November 1, 1963, at the request of sellers, the sum of $2,000 was deposited in said es crow On February 19, 1964, the defendants cancelled the subject escrow without the written consent of the plaintiff. The reason for the cancellation was '* * * because the Buyer failed to deposit additional sums of money into escrow by Tuesday, February 18, 1964, as he agreed with William R. Coleman, outside escrow to do.'
On February 24, 1964, the plaintiff caused a letter to be sent by his attorney to the escrow officer offering to perform and demanding performance by the defendants. This letter was transmitted to the defendants who made no response thereto.
On February 27, 1964, the final tract map was executed and approved by the Auditor of San Bernardino County, and recorded in the Office of the Recorder of said County.
Also, on February 27, or 28, 1964, defendants conveyed all their right, title and interest in and to the subject parcels of real property to defendants Dr. Coleman, Monique Coleman and one William Stewart. This sale was for a total purchase price of $65,000.
The trial court on he first cause of action found there was an agreement to buy and sell the property; plaintiff was required to deposit the funds by October 28, 1963, but failed to do so although defendants had made demands upon him to perform; the terms were not extended; defendants rescinded the agreement on February 19, 1964; defendants sold the property on February 27, 1964 at a fair market value of $65,000. On the second cause of action the court found there was no partnership agreement regarding the real property between defendants Coleman and Stewart before February 19, 1964; defendants and Stewart did not induce wilfully or otherwise the sale of the real property; there was no wrongful or malicious act by defendants toward plaintiff. The trial court concluded there was a failure of consideration on the part of plaintiff; no breach of contract on defendants' part; defendants were legally justified in rescinding the contract and cancelling the escrow and plaintiff was not entitled to a judgment.
The primary issue on appeal is whether the plaintiff's obligation to deposit in escrow on or before October 28, 1963 or after demand was made, cash in the sum of $30,000 and a $20,000 note was a condition precedent to the duty of defendants to deposit in said escrow a recorded tract map and valid conveyance. The trial court found that it was a condition precedent.
An examination of the escrow agreement discloses a patent ambiguity. (See Atchison, T. & S. F. Ry. Co. v. Brotherhood R. R. Trainmen, 229 Cal.App.2d 607, 614, 40 Cal.Rptr. 489.) The first portion of the escrow instructions provides that buyer hereby agrees 'to purchase the hereinafter described property for a total consideration of $50,000 and will on or before October 28, 1963, hand you said consideration. * * *' This provision is immediately followed by the words 'payable as follows: $30,000 to be deposited by buyer before the close of escrow. * * *' In addition, the escrow instructions provided for the tract map, 'to be of record before close of escrow;' for the release clauses of the proposed deed of trust to operate as to 'each' of the ten (10) lots; and that, 'This escrow is subject to the property being subdivided into ten (10) R-3 zoned lots at the expense of the Seller.'
Extrinsic evidence by the testimony of plaintiff Rubin and defendants Fuchs and Coleman was received, without objection, in an attempt to ascertain what Meyer v. State Board of Equalization,
Coronet Credit Corp. v. West Thrift Co., Santa Clara Properties Co. v. R. L. C., Inc., Ziganto v. Taylor, Santa Clara Properties Co. v. R. L. C., Inc., Parsons v. Bristol Development Co., Coronet Credit Corp. v. West Thrift Co.,In light of the pronouncements in the cited cases, the trial court found it necessary to determine from the conduct and statements of the parties (see Woodbine v. Van Horn, 29 Cal.2d 95, 104, 173 P.2d 17; Anchor Cas. Co. v. Surety Bond Sav. & Loan Assn., 204 Cal.App.2d 175, 183, 22 Cal.Rptr. 278; 1 Witkin, Contracts, § 221, p. 249) what was meant by the language in the contract requiring plaintiff's deposit 'on or before October 28, 1963' and in doing this, it undoubtedly considered the unequivocal conduct of the defendants and the equivocal conduct of plaintiff.
Plaintiff urges that assuming the sellers' interpretation is correct, the fact remains that after October 28, 1963, they requested and accepted a $2,000 deposit in escrow on November 1, 1963. Plaintiff argues that this conduct constituted a waiver by defendants of the time limit fixed in the escrow instructions for his performance. Plaintiff cites numerous cases wherein it is stated that 'The rule is well settled that where the vendors allow the entire amount called for by the contract to become due, the payment of the price and the tender of the deed become dependent concurrent conditions, and the seller cannot put the buyers in default until the deed is tendered.' (Kerr v. Reed, 187 Cal. 409, 411, 202 P. 142; Lemle v. Barry, 181 Cal. 6, 10, 183 P. 148; Boone v. Templeman, 158 Cal. 290, 297, 110 P. 947; Bassett v. Johnson, 94 Cal.App.2d 807, 810, 211 P.2d 939; Grimes v. Steele, 56 Cal.App.2d 786, 790, 133 P.2d 874; see Beck v. Combs, 169 Cal.App.2d 583, 585-586, 337 P.2d 505.) Plaintiff's urging ignores the fact that after the possible waiver occurred, the defendants continually requested plaintiff to perform and on February 10, 1964 demanded that plaintiff deposit his money by February 18, 1964. The rule is well settled that where the requirement as to time has been waived by one party, he must, in order to put the other in default, not only give notice that delay will no longer be tolerated but must allow the other party a reasonable time within which to perform. (Chan v. Title Ins. & Trust Co., 39 Cal.2d 253, 259, 246 P.2d 632; Tancredi v. Garrett, 210 Cal.App.2d 818, 824, 27 Cal.Rptr. 52; Pease v. Brown, 186 Cal.App.2d 425, 429, 8 Cal.Rptr. 917; Carberry v. Trentham, 143 Cal.App.2d 83, 89, 299 P.2d 966; Lifton v. Harshman, 80 Cal.App.2d 422, 433, 182 P.2d 222.) The evidence establishes that plaintiff was continually apprised of defendants' desire to conclude the escrow. The demands and particularly the demand of February 10 gave plaintiff a reasonable time within which to perform.
Plaintiff next contends that inasmuch as the escrow agreement was a contract to sell a subdivision within the purview of Bus. and Prof.Code, § 11538, which makes such contracts unlawful unless the final map has been duly recorded, it is apparent that the escrow was contingent upon recordation of the map. He argues that 'the adoption of sellers' position would produce an illegal agreement which certainly was not the intention of the parties, and is contrary to the rules of interpretation.'
A review of the record discloses no related contention appeared in the pleadings Himmelman v. Henry,
Wood v. Girot,Where the matter, point or defect is one which could have been raised in the trial court but was not, it is outside the scope of review and cannot be raised on appeal. (See 3 Witkin, Appeal, § 94, p. 2261; Loving & Evans v. Blick, 33 Cal.2d 603, 613-614, 204 P.2d 23.)
In any event closing of the escrow was made conditional upon the recording of the tract map and hence there was no violation of either the letter or the spirit of the Subdivision Map Act. (Rubens v. Texam Oil Corp., 239 Cal.App.2d 78, 81, 48 Cal.Rptr. 411; Kaneko v. Okuda, 195 Cal.App.2d 217, 231-233, 15 Cal.Rptr. 792.)
Plaintiff argues that defendants had no right to rescind. This argument is based, of course, upon plaintiff's basic premise that the case involves conditions concurrent rather than a condition precedent imposed upon plaintiff. Plaintiff deposited $2,000 of the required $30,000 on November 1, 1963, but made no further deposit. Based upon this fact the trial court concluded that there was a material failure of consideration which justified rescission. As provided for in section 1689 of the Civil Code, failure of consideration authorizes a rescission. (Taliaferro v. Davis, 216 Cal.App.2d 398, 411, 31 Cal.Rptr. 164; Crofoot Lumber, Inc. v. Thompson, 163 Cal.App.2d 324, 332, 329 P.2d 302.) Failure of consideration has been defined as the failure to execute a promise, the performance of which has been exchanged for performance by the other party. (Bliss v. California Cooperative Producers, 30 Cal.2d 240, 248, 181 P.2d 369, 170 A.L.R. 1009.) This failure usually arises from the wilful breach of the promise. (Bliss v. California Cooperative Producers, supra.) While the facts do not reveal a total failure of consideration, the right to rescind for a partial failure of consideration may be exercised although there has been a partial performance by the party against whom the right is exercised. (Brown v. National Electric Works, 168 Cal. 336, 143 P. 606; Coleman v. Mora, 263 A.C.A. 147, 160, 69 Cal.Rptr. 166; Wilson v. Corrugated Kraft Containers, Inc., 117 Cal.App.2d 691, 697, 256 P.2d 1012; Carlton v. Sevin-Vincent Seed Co., 129 Cal.App. 222, 18 P.2d 407.)
Since the trial court's conclusion that a material failure of consideration occurred is supported by substantial evidence, the judgment must be affirmed. This determination eliminates the necessity of discussing the contentions relating to plaintiff's cause of action for inducing breach of contract inasmuch as defendants were entitled to cancel the escrow due to plaintiff's failure to perform.
Plaintiff's final argument is that the trial court committed prejudicial error in unduly restricting the scope of cross-examination of defendant Fuchs and in failing to rule on Paragraph Thirty Seven (37) of his request for specific findings of fact and conclusions of law. Plaintiff's argument is directed towards his attempt at trial to impeach Fuchs by showing that the defendants would not have received any immediate cash from the closing of escrow due to the outstanding loan of Sierra and that hence the defendants were not in a 'hurry' to close escrow. This matter, however, was clearly beyond the scope of the direct examination and thus properly excluded. (Evid.Code, § 761; Wechsler v. Capitol Trailer Sales, 220 Cal.App.2d 252, 259, 33 Cal.Rptr. 680; Smellie v. Southern Pac. Co., 128 Cal.App. 567, 573, 18 P.2d 97, 19 P.2d 982.) Moreover, these contentions are not properly before this court inasmuch as they are first Monk v. Ehret,
Crowder v. Lyle, Duncanson-Harrelson Co. v. Travelers Indemnity Co.,Judgment affirmed.
TAMURA, J., and McGOLDRICK, J. Pro Tem., concur.
Retired Judge of the Superior Court, assigned by the Chairman of the Judicial Council.