Capell Assocs., Inc. v. Cent. Valley SEC. Co.

—Plaintiff Capell Associates, Inc. (Capell), an owner of land, sold part of it by contract of sale to S. J. Torre for $221,400 with no down payment. Torre assigned the contract to Golf Club Estates, a corporation. The contract of sale contemplated a subdivision development with subordination of Capell’s purchase money deed of trust to deeds of trust for “construction” loans. Defendant Security Title Insurance Company (Security) was the escrow holder. It was instructed by Capell regarding the provisions of the purchase money deed of trust it was to receive, with Capell as beneficiary, before Capell’s deed was to be recorded. Particularly, it was instructed as to the provisions therein regarding subordination to construction loan deeds of trust. Security inadvertently prepared and, after execution, recorded a purchase money deed of trust violating those instructions. Golf Club Estates borrowed from Sacramento Savings and Loan Association (Savings and Loan). The construction loans were secured by deeds of trust. Homes and other improvements were built with part of the proceeds. The homes remained unsold. The purchase money promissory note became in default. The construction loans…