Stockwell v. Barnum

The action is to have set aside and vacated a sale made under a deed of trust by the Title Insurance and Trust Company, a corporation, as trustee, of certain real property. ' Judgment was rendered for defendants. Plaintiff moved for a new trial, which motion was denied. The appeal is from the judgment and order.

On November 10, 1904, Sparkman and wife made their promissory note, whereby they promised to pay to Anna B. Brown and Bettina B. Brown, or order, at the Security Savings Bank of Los Angeles, the sum of $1,800, and delivered the same to said Anna and Bettina B. Brown. The note by its terms bore interest at the rate of ten per cent, payable quarterly, and it was provided in said note that in case of default in the payment of any installment of interest when due the whole sum of principal and interest should become immediately due and payable, at the option of the holder of the note.

For the purpose of securing payment of said note, and interest thereon, Sparkman and wife executed and delivered to the Title Insurance and Trust Company a deed of trust whereby they conveyed to said Title Insurance and Trust Company the legal title to certain real estate.

Said deed of trust was in the form generally used for the purpose of securing indebtedness and, among other things, provided: If default should be made in the payment of principal or any installment of interest when due, as provided in said promissory note, that said Title Insurance and Trust Company, as such trustee, on demand of said Anna B. Brown and Bettina B. Brown, or their heirs or assigns, should sell the real property therein described, or such part or parts thereof as in its discretion it should deem necessary to sell in order to accomplish the objects of the trust.

Sparkman made default in the payment of the installment of interest due upon said note on February 10, 1905, and likewise defaulted in the payment of the installment of interest payable on May 10, 1905.

On June 23, 1905, Anna B. Brown and Bettina B. Bfrowa transferred the note to Elizabeth C. Barnum. On June 26. 1905, Barnum elected to declare the whole amount of the note due by reason of the default in the payment of interest, and demanded of said trustee that it proceed to sell said prop

1. Section 858 of the Civil Code provides: “Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is to be deemed a part of the security, and vests in any person who, by assignment, becomes entitled to the money so secured to be paid, and may be executed by him whenever the assignment is duly acknowledged and recorded.” Appellant contends that the provisions of this section are applicable to the interests of beneficiaries under deeds of trust in the form here used, and that as no assignment acknowledged and recorded as required by this section was made to Elizabeth C. Barnum, therefore no right was vested in her to demand a sale of the property under the terms of the deed. The deed of trust required the trustee, upon default, to sell the propcrt;r, upon demand of the parties to whom the note was made, or their assigns. The note was indorsed upon the back thereof as follows: “Cal., June 23rd, 1905. For value received, we hereby sell, assign, transfer and set over unto Elizabeth C. Barnum, or order, all our right, title and interest, in and to this note, and the moneys due and to grow due thereon with the interest, and in and to the deed of trust securing the same, but without recourse. Anna B. Brown, by Bettina B. Brown, her atty. in fact. Bettina B. Brown”; and the same was delivered to Elizabeth C. Barnum. By this act the Browns transferred to Barnum all the rights secured to them under the provisions of the deed of trust. This transfer, however, did not include any power to sell the real estate. They had no such power; none had been given to them, and hence they could assign none. Such power was, under the provisions of the deed of trust, conferred upon the trustee in whom the legal title to the property was vested and it alone could transfer it in executing the trust. In discussing a statute similar to section 858, the supreme court of Minnesota says: “That the record should correctly show the authority of a mortgagee or his assigns to sell, is important to

The transferee of a negotiable promissory note, payment of which is secured by a deed of trust whereby the title to the property and power of sale in case of default is vested in a third party as trustee, is not an encumbrancer to whom power of sale is given, within the meaning of section 858 of the Civil Code.

2. None of the officers of the trustee were present at the sale, but the property was actually offered and the sale made to respondent Barnum by W. H. Jamison, one of the legal counsel of the trustee, who acted in that behalf by virtue of a general resolution adopted February 3, 1905, by the board of directors of the trustee, authorizing him as one of several others to act in such proceedings for and on behalf of the corporation. Conceding that said resolution purported to

Appellant further contends that, conceding the board of directors might empower its attorney to conduct the sale, such power should have been conferred by a formal resolution adopted by its board after the contingency justifying the sale had arisen. We think it competent for-the managing officer, in the absence of any resolution, to employ one to perform the mechanical act of making a sale in the execution of a trust. There would seem to be no more reason for such formal action in this ease than there would be for like formal action authorizing the delivery of papers held by the corporation in escrow. (Bank v. Stone, 121 Cal. 208 , [ 53 Pac. 634 ].) The making of the sale was not such a corporate act as required formal action of the board of directors. It was neither making nor authorizing a sale of its own real estate. The case of Salfield v. Sutter etc. Co., 94 Cal. 549 , [ 29 Pac. 1105 ], cited by appellant, is not in point, for the reason that formal action of the board was.there held necessary by virtue of the provisions of section 2310 of the Civil Code, which section has no application to the facts under consideration.

3. It is clear that no tender of any amount was made in payment of the note, interest or costs before sale, and the fact that subsequent to the sale and before the execution of the trustee’s deed to the purchaser of the property appellant deposited with the trustee a sum of money sufficient to pay the

4. It is next contended that the sale should be set aside on account of unfair conduct of the trustee. Prior to the execution of the deed of trust Sparkman was indebted to Barnum, and to secure payment of such indebtedness he and his wife executed to Barnum a deed to said property, absolute in form, but intended as a mortgage. This deed was. not filed for record until January 25, 1905. It does not appear that anyone was deterred from bidding by reason of the existence of the deed, or misled into the belief that it was other than a subsequent, mortgage. There was some correspondence between Barnum and the trustee with reference to the purchase of the note from the Browns. A careful inspection of this correspondence, however, does not disclose any unfairness toward appellant upon the part of the trustee, and appellant does not suggest wherein any conduct of the trustee •with reference to this deed, or in connection with the correspondence, prejudiced appellant. (Herbert Kraft Co. v. Bryan, 140 Cal. 73 , [ 73 Pac. 745 ].) Mrs. Barnum specified the amount which she was willing to bid for the property, and requested the trustee to have some one appear and make such bid. One of the officers of the corporation requested an employee thereof to act for her, and in obedience to her instructions he did appear and bid in for her and in her name the property for the amount of the indebtedness and costs. He merely carried out her instructions and in doing this did not in any way represent the trustee. “The trustee may himself make the bid at the instance of the beneficiary, without impairing the validity of the sale. ” (Felton v. Le Breton, 92 Cal. 467 , [ 28 Pac. 490 ].) The conduct of the trustee in giving instructions to Mrs. Barnum does not indicate a desire to act unfairly; on the contrary, as between both parties, it is manifest that the trustee diligently endeavored to impartially perform the duties imposed upon it, and with the utmost fairness toward Sparkman, appellant and Mrs. Barnum.

The property sold for $2,039.25, and the court finds that at the date of said sale its value was $3,500. It is contended that this inadequacy of price, taken in connection with the alleged unfairness of the trustee, constitutes sufficient grounds for

The trustee was under, no duty to make other effort to procure bidders than to advertise the sale in the manner provided in the deed of trust. (Harlin v. Nation, 126 Mo. 27 , [ 27 S. W. 330 ].)

5. After the sale, in a conversation with appellant, Mr. Jamison stated that he thought Mrs. Barnum would let him have the property for what it had cost her. Stockwell thereupon, at Jamison’s suggestion, deposited with the trust company which had acted as trustee a sum of money sufficient to cover' the cost of the property to Barnum. Jamison then wrote to Mrs. Barnum suggesting that she, in consideration of this deposit for her account, quitclaim the property to Stockwell, and stated that he had come to the office intending to redeem and that the sale worked a hardship upon Stock-well. The court held that Jamison in writing this letter had no right to bind the trustee. There was no error in the ruling of the court. It could not bind Mrs. Barnum in any way, and it does not appear that he had any authority to speak for the corporation after the sale. Moreover, it does not purport to be a statement of fact, but rather an expression of opinion,

It is unnecessary to refer directly to other points urged by appellant, as they are sufficiently covered by the foregoing discussion.-

Judgment and order are affirmed.

Allen, P. J., and Taggart, J., concurred.

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on March 10, 1908.