Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Kern County Ct. No. CV259265. Sidney P. Chapin, Judge.
Law Offices of Richard J. Papst and Richard J. Papst for Defendant and Appellant.
Law Offices of Robert J. Frakes and Robert J. Frakes for Plaintiff and Respondent.
OPINION
DAWSON, J.
The trial court found that the payor of a promissory note secured by a deed of trust received no consideration in exchange for the note and security. As a result, the trial court declared the note and deed of trust void. The payee under the promissory note appeals, contending the trial court’s findings of fact are not supported by substantial evidence. We conclude the evidence, which included the payor’s testimony that he received no money in exchange for the promissory note, was sufficient to support the trial court’s findings.
Accordingly, the judgment will be affirmed.
FACTS
Plaintiff Vito A. Sasso owned an Italian restaurant located on North Beverly Drive in Beverly Hills, California. Defendant Art Spaeth has been licensed as a real estate agent since the late 1970’s.
In 1990, Sasso, Robert Van Ronkel, and Spaeth became involved in a plan to remodel Sasso’s restaurant. Among other things, the plans included the addition of a dining room with a retractable roof in the back of the restaurant. The cost of the renovations was estimated at approximately $300,000.
Sasso agreed to put the restaurant into the venture for 50 percent ownership and to allow the other 50 percent to be sold to raise the funds needed for the renovation. Sasso and Van Ronkel formed SVR, Inc., a corporation that acted as the general partner of the limited partnership that would own the restaurant. The limited partnership was named 435 North Beverly.
Sasso’s Testimony Regarding Loan
Sasso testified that, near the end of 1990, Spaeth and Van Ronkel told him they had raised over $200,000 selling partnership interests, which was enough to start remodeling the restaurant immediately. In April 1991, Van Ronkel advised Sasso that more money was needed to complete the remodeling and that Spaeth was willing to put up the money.
Sasso testified that Spaeth would lend the money only if it was needed, and there was a possibility that Robert Conte would invest $100,000. This testimony implied that the loan from Spaeth would not be needed if Conte made the investment.
In connection with the arrangement to obtain the loan from Spaeth, Sasso signed a promissory note and a deed of trust to secure the promissory note. The promissory note was dated April 29, 1991, and stated: “FOR VALUE RECEIVED, Vito Sasso … does hereby promise to pay to Art Spaeth …, the principal sum of Fifty Thousand and no 100 Dollars ($50,000.00).” The promissory note also stated that monthly interest payments were due five days before Spaeth’s interest payments were due to Bank of America on his equity credit line.
The deed of trust, dated April 30, 1991, related to a parcel of land that Sasso owned in Kern County.
Sasso testified that he signed both the promissory note and the deed of trust. He further testified that he did not receive any money from Spaeth and that he did not expect to receive anything because (1) Spaeth was to provide money only if it was needed and (2) the money was being raised from other sources. Sasso also testified that he never paid Spaeth any interest.
Sasso testified that he signed an addendum to the promissory note and filled in the date with July 9, 1991; he did not receive any money from Spaeth after signing the addendum; and Conte put up $100,000 that was used for remodeling the restaurant.
Sasso’s certified public accountant testified that his responsibilities involved him in keeping track of Sasso’s bank accounts and that during 1991 he never observed a $50,000 deposit being made into any of those accounts.
Spaeth’s Testimony Regarding Loan
Spaeth testified that he, Van Ronkel and Sasso discussed Spaeth loaning money directly to Sasso personally, and those discussions culminated in Sasso signing and delivering the promissory note for $50,000. Spaeth testified that, in exchange for the note, he delivered $50,000 to Sasso.
Spaeth testified he obtained the funds from a home equity line of credit that was secured by his house. He stated that he had not been issued checks on the home equity line when he first transferred funds to Sasso, so he delivered a counter check or bank draft to Sasso. Spaeth could not recall if he sent Sasso the draft, gave it to him personally, or sent it to the lawyer who drafted the documents. Spaeth also testified that his home equity line was, in fact, charged with the $50,000 disbursement.
Spaeth testified that, after the addendum to the promissory note was signed, Sasso borrowed an additional $50,000 from him. By the time of this additional disbursement in July 1991, Spaeth had received a checkbook for his home equity line of credit. The checkbook was the type that produced a carbon copy of each check written. Spaeth testified that the first check written from the checkbook (No. 0101) was to Sasso for $50,000 and that he thought he left the check in an envelope in Sasso’s office at the restaurant.
The parties have referred to this carbon copy as a “flimsy.”
A copy of the flimsy for check No. 0101 made payable to Vito Sasso in the amount of $50,000 was admitted into evidence as exhibit D. Also, Spaeth submitted copies of documents related to his equity credit line with Bank of America. Those documents were admitted as exhibit H and did not reflect any draws on the credit line or any payments made by Spaeth on amounts borrowed under the credit line.
Restaurant’s Failure
After the remodeling, the restaurant reopened in April 1992 and was successful. Toward the end of 1992, Conte offered to buy out Sasso’s interest for $300,000. When Sasso declined the offer, Van Ronkel and others stopped coming to the restaurant and Van Ronkel stopped his publicity. As a result, the restaurant started going down fast. Sasso was unable to operate the restaurant profitably and used most of the profits he earned from his Granada Hill’s restaurant to continue operating. About six or eight months later, the restaurant was sold. Escrow on the sale closed in 1993.
After the restaurant closed, Sasso filed for bankruptcy. A November 1993 notice proposing a chapter 13 plan listed Conte as a creditor claiming a debt in the amount of $98,000. The notice did not list Spaeth as a creditor, but stated that Sasso abandoned 20 acres of land in Tehachapi, California. That land was subject to the deed of trust. Sasso testified that he did not know why the plan stated he abandoned the land and that it was done based on his attorney’s advice. Spaeth did not file a claim in the bankruptcy proceeding. He testified that this was because he had been named as a creditor.
In February 1997, Sasso filed a request to convert his chapter 13 bankruptcy case to one under chapter 7. The proof of service attached to the request included Spaeth among the people and businesses that were served with the request. In June 1997, Sasso received an order of discharge in his bankruptcy case.
Land Subject to the Deed of Trust
Sasso testified that he recalled listing the land in Tehachapi for sale in 1993. Sasso identified his signature, dated April 4, 1993, on a listing agreement with Jim Cooper of RE/MAX. The listing price was $94,500. Sasso testified that he did not remember any conversations with Spaeth about the listing. The exhibits introduced at trial included a copy of a January 29, 1993, letter from Cooper to Spaeth, which stated a listing agreement was enclosed and recommended a listing price of $85,000. The land was not sold under the listing.
In 1999, Sasso contacted Spaeth for help with property taxes on the land. Sasso told Spaeth that about $5,000 in taxes was due and that the property could be listed with Spaeth’s company so he would receive a commission on the sale and get repaid the taxes. Spaeth paid the taxes in June 1999. Spaeth also made one or two other payments of taxes on the land.
In 2005, Sasso tried to sell the property and learned that Spaeth was claiming he was owed $220,000 under the deed of trust on the property based on the $100,000 he had loaned Sasso in 1991.
PROCEEDINGS
Sasso filed a verified complaint to quiet title and obtain injunctive and declaratory relief on October 11, 2006. Approximately two weeks later, Sasso filed an amendment to the complaint to add exhibits A through E, which had been omitted inadvertently from the original complaint. Those exhibits were the grant deed, the promissory note, the deed of trust, the addendum to promissory note, and a preliminary title report dated January 13, 2005. The complaint alleged that the deed of trust was void and ineffective because Sasso received no consideration for executing the promissory note. Also, the complaint alleged the promissory note was not enforceable because the applicable statute of limitations had expired and, therefore, the deed of trust that secured the promissory note was unenforceable.
The bench trial began on November 26, 2007, and concluded the next day. The trial court issued a written ruling on December 17, 2007, that stated:
“Based on the total lack of any credible evidence from [Spaeth] that [Sasso] ever received from [Spaeth] any loan funds, or that any such funds were paid to a third party for the benefit of [Sasso], and crediting the testimony of [Sasso] over that of [Spaeth] because of inconsistencies in the testimony of [Spaeth], the court concludes that money was not paid to or for the benefit of [Sasso], and the note and deed of trust are void for lack of consideration.” (Some capitalization omitted.)
Based on this statement, the trial court impliedly found that (1) the flimsy for check No. 0101 was not credible evidence of a transfer of funds and (2) Spaeth’s testimony regarding two payments of $50,000 was not credible.
The trial court filed a judgment on January 24, 2008. The judgment declared the promissory note and deed of trust void for lack of consideration and quieted title in the real estate described in the deed of trust in Sasso.
Spaeth filed a timely notice of appeal from the judgment in March 2008.
DISCUSSION
I. Standard of Review
Spaeth contends that the judgment is not supported by substantial evidence.
Generally, “[t]he existence or nonexistence of substantial evidence is a question of law.” (Mau v. Hollywood Commercial Buildings, Inc. (1961) 194 Cal.App.2d 459, 466.) When applying the substantial evidence test, “the power of the appellate court begins and ends with a determination whether there is any substantial evidence, contradicted or uncontradicted, which supports the finding.” (Kimble v. Board of Education (1987) 192 Cal.App.3d 1423, 1427.)
Under this standard of review, evidence is “substantial” if it is “of ‘ponderable legal significance,’ ‘reasonable in nature, credible, and of solid value’ …. [Citations.]” (Grappo v. Coventry Financial Corp. (1991) 235 Cal.App.3d 496, 507.) Consequently, “substantial” evidence is not synonymous with “any” evidence. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.) The substantial evidence test “does not mean we must blindly seize any evidence in support of the respondent in order to affirm the judgment. The Court of Appeal ‘was not created … merely to echo the determinations of the trial court. A decision supported by a mere scintilla of evidence need not be affirmed on review.’ [Citation.]” (Ibid.)
II. Evidence Presented in This Case
A. The Written Instruments
Sasso signed the promissory note, which stated that his promise to pay $50,000 was “for value received.” (Capitalization omitted.) Sasso also signed the deed of trust, which was notarized, and the addendum to the promissory note.
Spaeth argues that these writings meant what they said and that Sasso is presumed to have read and understood the terms of each document. Thus, Spaeth infers that Sasso’s testimony that he believed the instruments were not enforceable is not credible.
Spaeth’s argument regarding the writings and related evidence does not address the affect of Evidence Code section 622. That section provides that “[t]he facts recited in a written instrument are conclusively presumed to be true as between the parties thereto, or their successors in interest; but this rule does not apply to the recital of a consideration.” Under this provision, a recital in a written agreement that consideration was received ordinarily is not binding. (2 Witkin, Cal. Evidence (4th ed. 2000) Documentary Evidence, § 99, p. 221.) Instead, the lack of consideration is a fact that may be proven by extrinsic evidence. (Ibid.; see Code Civ. Proc., § 1856, subd. (f).)
The trial court’s written ruling indicates that it was aware of the foregoing principles and applied them to the evidence presented. Consequently, the trial court did not commit error when it gave little weight to the recital in the promissory note that Sasso’s promise to pay $50,000 was exchanged “for value received.” (Capitalization omitted.)
B. Circumstantial Evidence
Spaeth argues that the circumstantial evidence demonstrated the documents accurately reflected the true nature of his transaction with Sasso. The circumstantial evidence listed by Spaeth is (1) the advance from his home equity line of credit, (2) Sasso’s listing of the property for sale shortly after the promissory note became due, (3) Sasso’s listing Spaeth as a creditor in his bankruptcy petition, and (4) the payment by Spaeth of real estate taxes assessed by Kern County on the property.
Spaeth specifically challenges the trial court’s statement regarding “the total lack of any credible evidence from” him. (Capitalization omitted.) Spaeth contends the documents he introduced were credible and that Sasso’s failure to remember the listing of the property in 1993 and failure to explain Spaeth’s payment of the delinquent taxes in 1999 made no sense. As a result, Spaeth contends, the trial court’s findings were not supported as a matter of law.
We conclude that the trial court’s finding that Sasso received no consideration in exchange for signing and delivering the promissory note, the deed of trust, and the addendum to the promissory note is supported by substantial evidence. Spaeth’s argument points to conflicts in the testimony and to differences in the inferences that could drawn from those documents and the testimony explaining them. We cannot conclude, however, that the evidence is so strong that the only reasonable finding a trier of fact could make is that Sasso lied about Spaeth not paying him or the partnership any money. Sasso’s testimony and inferences that can be drawn from the documents admitted into evidence are sufficient to support the trial court’s credibility findings.
“On review for substantial evidence, ‘“[c]onflicts and even testimony which is subject to justifiable suspicion do not justify the reversal of a judgment, for it is the exclusive province of the trial judge or jury to determine the credibility of a witness and the truth or falsity of the facts upon which a determination depends.”’ (Daly v. Wallace (1965) 234 Cal.App.2d 689, 692, italics deleted, quoting People v. Huston (1943) 21 Cal.2d 690, 693.)” (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 866-867.)
Under these principles, we conclude that the trial court’s findings of fact withstand review under the substantial evidence standard.
DISPOSITION
The judgment is affirmed. Plaintiff shall recover his costs on appeal.
WE CONCUR: LEVY, Acting P.J., HILL, J.