George Wesley Stone and Hildegarde Stone v. Jack W. S. Farnell, and Elisabeth Patee Farnell

This is an appeal from a judgment entered for plaintiffs in an action based on fraud in the sale of residential real property. The District Court, sitting without a jury, awarded plaintiffs $15,000 in damages, ordered the cancellation of a second deed of trust on the property, and denied the defendants recovery on their counterclaim for “foreclosure, as a mortgage, of said deed of trust.” Jurisdiction is grounded on diversity of citizenship, 28 U.S.C.A. § 1332 (a).

This litigation arose out of the sale by appellants, Mr. and Mrs. Stone (herein sometimes called vendor’s), to appellees, Mr. and Mrs. Farnell (herein sometimes called vendees), of improved real property located on Mulholland Drive in Beverly Hills, California, in December, 1953. The agreed consideration was $38,000, $6,500 of which was paid in cash, with the Farnells assigning a third party’s note in the face amount of $5,250, and executing their own promissory notes in the sum of $15,083.64 and $11,166.36 (secured by first and second trust deeds, respectively), for the remainder. This property consisted of a main residence, guest house, carport, cesspool and septic tank, swimming pool, walks, driveway, landscaping…