Court Opinion

ID: 9733350
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:04:21.490645+00
Date Added: 2024-06-11T18:26:40.734950
License: Public Domain

*278FILES, J., Dissenting.
I would reverse the judgment on the ground that the complaint states a cause of action on a contract.
It is alleged that plaintiff Lee accepted defendants’ written offer for the purchase of a lot, as set forth in a deposit receipt. This document called for a conveyance subject to covenants, restrictions, reservations, rights of way and easements of record, if any. It is alleged that the property was then subject to the restrictions and conditions which are set forth in exhibit 0 attached to the complaint, and that the parties understood and agreed that the conveyance would be subject to these.
Unlike most of the cases dealing with restrictions on land, this action is between the contracting parties. The pleading discloses a contract between defendants as promisors, plaintiff Lee as promisee, and plaintiff Girard as the third party beneficiary. The cause of action therefore does not depend upon the effect of the recording statutes or upon whether a covenant runs with the land. The case is not governed by Werner v. Graham,, 181 Cal. 174 [183 P. 945], which dealt with a situation in which there was no privity of contract. The cause of action on the contract is not defeated by plaintiffs’ failure to plead facts showing equitable servitudes binding the entire tract.
There is nothing in the escrow instructions which is inconsistent with plaintiffs’ claim. The escrow instructions are a means of instructing the escrow holder as to the consummation of the transaction, and thus are some evidence of the terms of the transaction; but the written instructions to the bank do not necessarily reflect all of the terms of the agreement between buyer and seller, nor do they invariably supersede the agreement for sale. (Keelan v. Belmont Co., 73 Cal.App.2d 6 [165 P.2d 930].) I do not find any allegation in the complaint that the entire contract between buyer and seller consisted of the escrow instructions. The form of the deed is not prescribed by the escrow instructions. The seller was required to provide a policy of title insurance showing title vested in the buyers free of encumbrances except certain items, one of which was “covenants, conditions, restrictions, reservations, rights, easements of record.” The seller was required to furnish any instruments necessary to induce the title insurance company to issue such a policy. Beyond that, *279the form of the deed was immaterial, so far as the requirements of the escrow instructions were concerned.
It is not necessary to reform the deed in order to enforce the alleged contract. However, the complaint here contains the usual elements of a cause of action for reformation. (See 2 Within, California Pleading, p. 1392.) The instructions say that the seller will “hand” the bank a deed, but the word “hand” obviously indicates delivery of a signed instrument. This is not inconsistent with the allegation of the complaint that both parties employed the bank to act as scrivener. It is a familiar practice for the escrow company to prepare the deed, which the seller then signs and “hands” into the escrow. Under the pleadings the parties intended the restrictions to bind the defendants, and the parties made a mutual mistake in failing to see that their scrivener provided a deed which would memorialize that intention.
This is not to say that plaintiffs are entitled to a forfeiture, or any other relief. If, as defendants contend, the restrictions do not bind the other lots in the tract, there may be a serious problem of failure of consideration which might be a reason for not enforcing the restrictions against defendants. This is a matter of defense. If the case does not justify a forfeiture plaintiffs may be entitled to some other remedy. The alleged restrictions cover a wide variety of matters pertaining to future use of the property. Plaintiffs are entitled to a declaration as to whether any of defendants’ alleged promises are enforceable by injunction or recovery of damages.
A petition for a rehearing was denied April 17, 1963. Piles, J., was of the opinion that the petition should be granted. Appellants’ petition for a hearing by the Supreme Court was denied May 14, 1963.