Perry

First Nationwide Savings (FNS) sued Sunrise Trust for unjust enrichment and money had and received. Sunrise demurred to the second amended complaint. The demurrer was sustained without leave to amend. Judgment was entered against FNS.

On appeal, we consider whether a beneficiary (FNS) can recover for unjust enrichment from a nonassuming grantee of a purchase money deed of trust (Sunrise) after the trustee mistakenly reconveys the deed of trust and the grantee sells the property, thereby obtaining all the proceeds from the sale. For reasons we shall explain, we conclude that a cause of action may be stated. Accordingly, the judgment is reversed.

Facts and Procedural Background

In May 1983, Gary Madden borrowed $146,000 from FNS. The loan was evidenced by a written promissory note. Madden used the loan to purchase a single-family residence in Campbell, California. The note was secured by a written deed of trust in which Madden conveyed for the benefit of FNS a power of sale of the single-family residence. The deed of trust was recorded on June 2, 1983.

Madden subsequently sold the property. The purchaser took the property subject to FNS’s deed of trust. In January 1986,…