Satine v. Koier

Henderson, J., delivered the opinion of the Court. This appeál is from the decree of an equity court enjoining the appellants from foreclosing a deed of trust, ordering that certain trust notes be marked “paid” and the trust released, and awarding compensatory damages to the appellees. In 1956 the R & L Development Corporation, of which Merton I. Berman was an officer, purchased 24 lots from Thomas D. Zibelli, giving back a first deed of trust for $48,000 and cash from the sale of two notes to appellants, secured by a second deed of trust. These notes were for $6,600 each, but were assigned to the appellants at a discount without recourse for $12,000.

R & E Corporation began to develop the property but was unable to keep up the payments due under the first and second trusts, or taxes due on the property. Neither Zibelli nor the appellants attempted to foreclose. Instead, the R & E Corporation, with the knowledge and consent of the lienholders, listed the property for sale with the Conley Company, for whom Earl Watterson was a salesman. Eventually Watterson received a satisfactory offer from the appellees, who stipulated, however, that the property be reconveyed to Zibelli and conveyed to them by him.

Two lots on which sample houses had been built were excluded from the pro ⁴¹⁹ posal. According to Watterson, he agreed to take less commission, Zibelli agreed to yield some interest in arrears, and Berman agreed to pay some interest and to try to persuade the appellants to accept a $7,700 second trust note in place of the $6,600 notes, in order that the deal might go through. A contract of sale was executed on February 18, 1958, by the appellees and Zibelli, calling for a first trust of $47,300 and a second trust of $7,700. On February 19, 1958, the appellants signed a written agreement, referred to in the record as an “addendum”, addressed to the Conley Company, attention Mr. Earl Watterson, reading as follows: “We, John E. Eauritsen and Charles Satine, agree to accept from Koier & Collins, a partnership, it’s [sic] note for $7,700.00 at 6% per annum, secured by a deed of trust on lots 9 thru 16 exclude lot 10 Block ‘q’ and lots 1 thru 16 exclude lot 9 Block ‘T’ Garrett Park Estates, to be subordinated to construction loans at the rate of $350.00 per lot, said subordination to be paid when house is sold or within 12 months from date of note whichever is sooner.

Trustees agree there shall be no release fee.” The two lots excluded were subsequently conveyed to the appellants by R & E Development Corporation. The written agreement was produced at the settlement on May 28, 1958, where the appellees accepted a deed of conveyance from Zibelli. They immediately began development of the property and obtained a construction loan. But the appellants refused to release their second deed of trust for $13,200, or to accept a new deed of trust for $7,700.

This caused the lending corporation to withhold funds, and the work was brought to a halt for some months until winter weather had set in. The appellants took the position that their purpose and intent in signing the agreement dated February 19, 1958, was simply to help the financing of a prospective sale by taking back in part payment of the $6,600 notes, a second trust note from the purchasers. They attempted to explain the conveyance of the two excluded lots to them, as in connection with a release ⁴²⁰ of other claims they had against those houses. The controversy in the instant case turns on the construction and effect of the so-called “addendum”.

The appellants contend that the paper writing is so vague and indefinite as to be unenforceable and that in the absence of an express undertaking to release the old notes, the acceptance of a new one would not necessarily extinguish the old. It is true that the writing does not expressly call for a release, but in the light of all the surrounding circumstances, fully known to the appellants, it is difficult to conceive how the acceptance of