San Jose Safe Deposit Bank v. Bank of Madera

This is an action to foreclose what plaintiff designates as an “equitable mortgage,and judgment went for plaintiff as prayed for. The defendant the Bank of Madera appeals from the judgment and from an order denying its motion for a new trial; and the defendants Charles A. Dworack and Mary Dworack appeal from the judgment.

Under our views of the case it is not necessary to state the facts with much detail or to consider all the points made by appellants. The facts material for the purposes of this decision are these: On March 4, 1893, defendant Charles Dworack, being the owner of the land here .involved, mortgaged it to one Roberts as security for three thousand dollars which said Charles then owed Roberts. Afterwards, on January 10, 1894, he made a second mortgage of the premises to his mother, the defendant Mary Dworack, to secure the sum of eighty-five hundred dollars. Afterwards Roberts commenced an action to foreclose his mortgage. During the pend-ency of that action Charles Dworack made to his mother a deed purporting to convey the land to her. Afterwards the

Appellants contend that the instrument does not constitute a mortgage; that, at most, it either merely assigned her interest as a “redemptioner” under section 701 of the Code of Civil Procedure, which gave the assignee only a right to a sheriff’s deed in the event of no subsequent redemption, or else that her right as a redemptioner merged in the legal title which she held under the deed from Charles, and thus being a successor in interest of the judgment creditor she, or plaintiff as her successor, was simply restored to the estate. But, under our views, this point, and certain other points made by appellants, need not be considered. We will assume, for the purpose of this decision, that said instrument, together with the parol evidence, constituted a mortgage; and so assuming, nevertheless, in our opinion, the mortgage was extinguished at the time of the commencement of this action, and appellants’ plea of the two years provision of the statute of limitations should have been sustained.

We are not concerned here with the statute of limitations as applicable to an instrument similar in its character to that which used to be called a “dry” mortgage,—that is, where the mortgagor incurred no personal liability, where there was no debt in the sense of an obligation that could be enforced, and where the mortgagor had merely the right to remove the lien by payment of a certain sum of money within a certain time, but could not be compelled to do so. In the case at bar it was averred in the complaint that plaintiff advanced “and loaned” to said Mary the said sum of $3,750; that exhibit “E” was made to plaintiff “to secure it in the repayment” of said money, and to “secure the payment by her to it of usual banking interest thereon”; that she has never repaid the plaintiff any part of said money, “and the whole thereof, principal and interest, is still due, owing and unpaid from her to plaintiff”; and the prayer of the complaint is, that it be adjudged that “said Mary Dworack is justly indebted to plaintiff in the sum of $3,750 and interest,” etc., that the mortgaged premises be sold and the proceeds applied to the satisfaction of the amount found due, and that plaintiff “have judgment and execution against said Mary Dworack for whatever deficiency may remain after applying

We have not overlooked the authorities cited by respondent, and have examined many others on the subject. There are decisions in which it has been held, in the absence of statutory provisions to the contrary, that the bar of a debt by limitation is not such a “discharge” thereof as will bar a mortgage securing it. It may be that the general law on the subject is correctly stated in Jones on Mortgages (sec. 899), as follows: “The rule that a discharge of a debt is a discharge of the mortgage has no application where the debt is merely discharged by the statute of limitations, or by discharge in bankruptcy.” But section 2911 of the Civil Code provides as follows: “A lien is extinguished by the lapse of the

time within which, under the provisions of the Code of Civil Procedure, an action can be brought upon the principal obligation.” This language precludes the construction that the bar of the statute of limitations is not á discharge within the rule, and is an answer to the ease of Union Water Company v. Murphy’s Flat F. Co., 22 Cal. 621 , and other cases cited by respondent; although it may be said that in the Union Water Company’s case there was no personal liability. In the first part of the opinion in Newhall v. Sherman & Clay, 124 Cal. 509 , there is some language relied on by respondent which was not necessary to the decision of the case. In that case the action on the mortgage was barred by the four years ’ limitation, and no other question was involved. But in the latter part of the opinion it is said that “whether plaintiff’s cause of action is barred depends upon when the money loaned, for which the mortgage was given as security, was due and payable. It not appearing . . . that any time was given or fixed for the payment of the loan, ‘the presumption would therefore necessarily arise that it was due immediately or

The judgment and order appealed from are reversed.

Henshaw, J., and Lorigan, J., concurred.