Opinion
Rehearing Denied July 12, 1940
Hearing Granted Aug. 15, 1940
Appeal from Superior Court, Los Angeles County; Robert W. Kenny, Judge.
Action on note by Richmond A. Rust against Frank P. Hill and wife. From a judgment dismissing the complaint, plaintiff appeals.
Judgment reversed and cause remanded with instructions.
COUNSEL
Elmer P. Bromley and H.E. Lindersmith, both of Los Angeles, for appellant.
Marcus Muskat, of Los Angeles, for respondents.
OPINION
YORK, Presiding Justice.
On January 1, 1931, respondents executed a promissory note for $7,600 payable three years after date, and coincidentally therewith they executed a deed of trust on real property given as security for the payment of said note. Pursuant to the express powers of sale contained in the deed of trust, the trustee named therein on April 24, 1935, sold at public auction for the sum of $1,000 the real property covered by said instrument. This amount was credited upon the obligation leaving an unpaid balance of $8,522.69. By the instant action instituted on March 30, 1938, it is sought to recover judgment for such unpaid balance, together with interest and costs of suit.
The court sustained respondents’ demurrer which alleged a failure to state a cause of action for the reason that it appeared upon the face of the complaint that the cause of action therein pleaded was barred by the provisions of subdivision 1 of section 337, and of section 580a, Code of Civil Procedure, which require that any action to recover a balance due on an obligation for which a deed of trust or mortgage with power of sale has been given as security, following the exercise of the power of sale, "must be brought within three months of the time of sale under such deed of trust or mortgage."
This appeal is prosecuted from the judgment dismissing the complaint.
It is contended by appellant that the time specified by said sections of the Code of Civil Procedure, supra, has been extended to July 1, 1939, in so far as the action in the instant case is concerned, by the mortgage and trust deed moratorium statutes of 1935 and 1937. Section 19 of the Mortgage and Trust Deed Moratorium of 1935 reads as follows: "Whenever the time within which an action may be commenced upon any obligation founded upon a written instrument secured by mortgage, deed of trust or contract of purchase, or founded upon any guarantee of such obligation or any contract of suretyship therefor or any indorsement of such instrument, would expire by virtue of section 337 of the Code of Civil Procedure, or by virtue of the provisions of Chapter I, Statutes of Extra Session of 1934, or by virtue of the provisions of Chapter VII, Statutes of 1935, or any other provision of law, during the period commencing with the effective date of this act and ending on February 1, 1937, such time is hereby extended so as not to expire until the first day of July, 1937." (Stats.1935, p. 1214, effective June 21, 1935.)
By an amendment to said section 19 of the 1935 moratorium statute, the time within which such actions therein delineated might be commenced was extended to October 1, 1937 (Stats.1937, p. 60, § 9, effective Jan. 29, 1937); and by section 19 of the Mortgage and Trust Deed Moratorium of 1937, the time was further extended to July 1, 1939. (Stats.1937, p. 460, effective May 5, 1937.)
In support of his contention, appellant cites the decision in the case of Bakersfield Home Building Company v. J.K. McAlpine Land & Development Company, 26 Cal.App.2d 444, at page 450, 79 P.2d 410, at page 413, in which it was stated: "There is nothing in the suggestion that the extension of time granted by the legislation under discussion [moratorium statutes] to creditors is inapplicable to actions brought to recover balances due after the sale of the land by which the obligation was originally secured, and the application upon the debt of the proceeds. The extension has to do, by the express language of each of the moratorium statutes involved, with actions ‘founded upon a written instrument secured by mortgage, deed of trust or contract of purchase’, etc. An action to recover a deficiency judgment is manifestly ‘founded’ upon the instrument secured by the mortgage, deed of trust, contract of purchase or other contract whereby the security is given, although the amount of the deficiency that the holder is entitled to recover may not be susceptible of ascertainment until the security has been exhausted; and therefore it is not competent until that time to bring an action to recover it. Since, however, such an action is on the instrument secured (though not on the instrument that affords the security) such action is definitely included among those to which the moratorium privilege is expressly extended. The circumstance that the statutory extension has no application to obligations originally unsecured is immaterial.
"It is our view, then, that the time for commencing the present action was, before it had expired, extended by the moratorium legislation above discussed, first to October 1, 1937, and then to July 1, 1939, and therefore that the action was brought in time." (Emphasis added.) To the same effect, see, also, Everts v. Newhouse, 28 Cal.App.2d 407, 82 P.2d 703, decided by this court and in which a hearing was denied by the Supreme Court on November 14, 1938.
Respondents urge in their brief that they are "unable to agree with the decision arrived at in the case of Bakersfield Home Building Company v. J.K. McAlpine Land & Development Company, Ltd., supra" for the reason that the court in arriving at its decision did not take into consideration the rules of law established by the previous cases of Reynolds v. Jensen, 14 Cal.App.2d 558, 58 P.2d 687, and Palo Alto Mutual Building & Loan Ass’n v. Cook, 17 Cal.App.2d 193, 61 P.2d 499.
As a matter of fact the court in the Bakersfield case, supra, not only considered both of the cases referred to by respondents, but discussed them in the following language excerpted from the opinion therein (26 Cal.App.2d at page 451, 79 P.2d at page 414):
"According to its minutes, the trial court in sustaining the demurrer relied on Palo Alto Mut. B. & L. Ass’n v. Cook, 17 Cal.App.2d 193, 61 P.2d 499, in which the facts were similar to those in the instant case. Palo Alto Mut. B. & L. Ass’n v. Cook did not reach the Supreme Court. There the sale under the deed of trust occurred on September 4, 1934, and the action to recover the deficiency was commenced on April 8, 1936. No question respecting the effect of the 1934 moratorium statute (Statutes of Extra Session of the 50th Legislature c. 1, approved September 15, 1934, St.1935, p. 1) or of any subsequent moratorium legislation appears to have been raised or discussed there. It is likewise true that no question of the applicability of any moratorium statute was discussed in Reynolds v. Jensen, supra. Manifestly, therefore, neither of these cases argues anything against the conclusions which we have reached. Alferitz v. Borgwardt, 126 Cal. 201, 202, 207, 58 P. 460. In this case it was holden that a decision failing to note the effect of a statute did not amount to a construction of such statute. See, also, Mersfelder v. Spring, 139 Cal. 593, 595, 73 P. 452."
In sustaining the demurrer in the instant case, the trial court apparently relied upon the cases of Reynolds v. Jensen and Palo Alto Mut. B. & L. Ass’n v. Cook, supra, which were cited in support thereof. In this connection, it should not be overlooked that the decision in the Bakersfield case upon which appellant relies was not rendered until after the trial court made its ruling sustaining the demurrer herein.
In the Bakersfield case the promissory note and deed of trust there involved were executed on October 28, 1930; notice of default was recorded on January 30, 1936, the sale of the real property under the provisions of the deed of trust took place on February 9, 1937, and the action for deficiency was commenced on September 10, 1937.
For the reasons stated, the judgment appealed from is reversed and the cause remanded to the trial court with instructions to overrule the demurrer to the complaint and allow the respondents (defendants) proper time in which to answer.
We concur: DORAN, J.; WHITE, J.