Pete L. BAKER and Ethel Baker, husband and wife, Appellants,
Samuel LEIGHT, bda Leight Realty, and Orland Fiandaca, Appellees.
Rehearing Denied June 5, 1962.
[91 Ariz. 113] Warren R. Brock, Tucson, for appellants.
William Gordon, Tucson, for appellee Leight.
Silver, Silver & Ettinger, by Jack A. Ettinger, Tucson, for appellee Fiandaca.
HENRY S. STEVENS, Superior Court Judge.
This cause was tried in Pima County and resulted in a directed verdict for the defendants at the close of plaintiffs' evidence. Mr. and Mrs. Baker (appellants) were the plaintiffs below and the buyers in the real estate transaction in question. They believe that they are not required to complete the purchase contract and they elected to rescind.
Appellee Fiandaca, a defendant below, is the owner and seller of the real estate in controversy. Appellee Leight, the other defendant, is a duly licensed real estate broker who negotiated the transaction in question.
On October 21, 1958, the buyers turned over to the broker a $6,000 good faith deposit[91 Ariz. 114] and signed a document partly printed and partly in longhand, which document carries the title, 'Deposit receipt and agreement.' On the face of the document the printed portion recites that the broker 'as agent of the seller, * * * has this day sold to the above named purchaser, subject to acceptance by the seller and to marketable title as evidenced by a standard form of Owner's Title Insurance Policy issued by a qualified Title Insurance Company * * *.'
The document further provides: 'In the event title to said property as herein agreed to be conveyed is found by Title Insurance Company to be unmarketable as shown above, at time of closing sale, the earnest money shall be returned to purchaser.'
With reference to the good faith deposit it is provided, '* * * after delivery of preliminary report of title insurance to this agent or if an escrow agent be designated herein, then to such escrow agent * * * all funds and instruments necessary to such closing * * *.' The name of the Tucson Title Insurance Company was written in in the blank space in relation to that particular company which was to be employed as the escrow agent.
In longhand on the face of the agreement the following words were inserted:
'Property to be sold on contract for sale. Purchasers to assume existing first mortgage
of approximately $52,000, payable at approximately $518.39, including 7% interest, * * *.'
After the broker and the buyers signed, the matter was presented to the seller who made the following modification, among others:
'5. The purchaser is to assume the legal obligation for the first mortgage.'
This and other modifications were accepted by the buyers.
The evidence established that up to this point none of the parties, including the broker, had personal knowledge of the actual language contained in the mortgage referred to. An escrow was opened. Tucson Title made a preliminary search and advised the parties. At that time they first became personally aware of the fact that the mortgage contained the following clause:
'16. It is expressly understood and agreed that this mortgage shall become due and payable forthwith at the option of the Mortgagee if the Mortgagors shall convey away the said premises or if the title thereto shall become vested in any other person or persons in any manner whatsoever.'
This mortgage was a matter of record in the County Recorder's office for some months prior to the execution of the aforesaid deposit receipt and agreement.
When the buyers learned of this clause, they declined to go ahead with the transaction,[91 Ariz. 115] it being the opinion of the buyers that this clause was incompatible with the longhand language of the contract ...