McBain

I dissent. This case involves the question of an equitable lien against a loan account created by the lender. There are on the one hand equitable rights against the borrower which the claimants may assert against funds which the lender acknowledges, or which in fact, are held for the borrower ’s account. (Smith v. Anglo-California Trust Co., 205 Cal. 496, 502 [ 271 P. 898 ].) There also may be equitable rights against the lender which are created by his express or implied representations that the funds will be paid or applied for the account of the claimants. In Pacific Ready Cut Homes, Inc. v. Title Ins. & Trust Co., the court held that the uncontradicted evidence compelled such a conclusion ( 216 Cal. 447, 451 ) ; and in Miller v. Mountain View Sav. & Loan Assn. it was noted: “In setting up this system of making payments appellant [lender] can be charged with inducing reliance on the payments it would make, and respondent can be said to have *848 relied on the payments to be made to its escrow agent by a financial institution, even though he did not then know its identity. The evidence is sufficient to sustain the findings and conclusions of the trial court.” ( 238 Cal.App.2d…

This is an appeal from a judgment entered in an action for declaratory relief determining that certain unpaid subcontractors and materialmen were not entitled to the unexpended balance of a construction loan held by a lender savings and loan association.

In the main, the facts are undisputed. Plaintiffs Robert L. Dodge and Walker Vaughn, partners, doing business under the name of Surrey Farm Developers, OAvned a certain lot in a tract in Santa Clara County. On March 21, 1961 they entered into an agreement with defendants Arthur P. Petersen and Dorothy Petersen to sell the lot to the latter for $7,500. Plaintiffs received a down payment of $100 and a promissory note for the balance secured by a deed of trust on the property. According to the agreement, the sale was subject to the buyers obtaining a construction loan and the sellers were to subordinate their purchase money deed of trust to any such loan. On April 30,1961, plaintiffs received a payment of $900.

Mr. and Mrs. Petersen obtained a $19,000 construction loan from defendant Santa Clara Savings and Loan Association (Santa Clara Savings). This loan was evidenced by a promissory note executed by them in favor of Santa Clara…

This is an appeal from a judgment entered in an action for declaratory relief determining that certain unpaid subcontractors and materialmen were not entitled to the unexpended balance of a construction loan held by a lender savings and loan association.

In the main, the facts are undisputed. Plaintiffs Robert L. Dodge and Walker Vaughn, partners, doing business under the name of Surrey Farm Developers, owned a certain lot in a tract in Santa Clara County. On March 21, 1961 they entered into an agreement with defendants Arthur P. Petersen and Dorothy Petersen to sell the lot to the latter for $7,500. Plaintiffs received a down payment of $100 and a promissory note for the balance secured by a deed of trust on the property. According to the agreement, the sale was subject to the buyers obtaining a construction loan and the sellers were to subordinate their purchase money deed of trust to any such loan. On April 30, 1961, plaintiffs received a payment of $900.

Mr. and Mrs. Petersen obtained a $19,000 construction loan from defendant Santa Clara Savings and Loan Association (Santa Clara Savings). This loan was evidenced by a promissory note executed by them in…