Durst v. Battson

LANGDON, J.

This is an action for an accounting and to enjoin a sale under a deed of trust.

Arcady Apartment Hotel Company, a corporation, made a trust indenture and chattel mortgage in 1927, covering real and personal property, to secure a bond issué, of $1,325,000. The money was used to erect and furnish a hotel on the then

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unimproved real property. A chattel mortgage on the furnishings was executed in August, 1928, confirming the provisions of the trust indenture in this respect. The hotel business was not successful, and delinquencies occurred in payments under the deed of trust. In 1929 the trustee took possession and operated the business. Defaults nevertheless continued, and in 1932 the trustee, in accordance with the provisions of the trust indenture, accelerated the maturities of the bonds. In March, 1934, the hotel company was adjudicated a bankrupt, and plaintiff became its trustee in bankruptcy. In November, 1934, notice of sale was given by defendant, trustee under the deed of trust. Plaintiff then brought this action. The trial court denied an injunction

pendente lite,

and the sale was held on November 16, 1934, at which Aready-Wilshire Company purchased the property for $260,000. A supplemental complaint was then filed by plaintiff to set aside the sale, in which this latter company was joined as a defendant.

The trial court found that the trust indenture and subsequent chattel mortgage were valid instruments covering both the real and personal property; that the sale was proper; and that the sum paid was the fair market value of the property. Judgment was rendered for the defendant, the court holding that plaintiff was not entitled to an accounting or any other relief. Plaintiff appealed on the judgment roll.

The first point urged is that since the indenture provided for payment of the principal and interest in gold coin, and this was impossible under the federal law, only a court of equity could enforce the obligation. This court has held, however, that under such circumstances a sale can be held with payment in ordinary legal tender.

(Pacific States Sav. & Loan Co.