Snyder v. Western Loan & Building Co.

THE COURT.

This cause was taken over upon petition for rehearing. In our former decision (Cal.) [29 Pac. (2d) 172] we held that a trust deed may legally include a provision authorizing the beneficiary to take possession and collect the rents and profits immediately upon default of the trustor. With that conclusion we are presently satisfied. However, in said decision we also held that none of the provisions of the trust deed here involved authorized the beneficiary to pursue such a course. We granted the rehearing solely on the latter point and upon further consideration conclude that the trust deed contains provisions sufficiently definite and comprehensive in their language to authorize the taking of possession and the collection of rents by the beneficiary.

With this introductory statement, we adopt the following portions' of our former opinion, with such additions as will hereinafter appear, as and for our decision in the cause:

[699]

“Appeal by the plaintiffs from a judgment partially in their favor.

“The plaintiffs sought an accounting and a recovery from Western Loan & Building Company, which will be referred to as the defendant, of sums of money alleged to have been collected by them while their were in possession of certain real property owned by the plaintiffs.

“One Henry G. Hill and his wife owned two separate parcels of land in Oakland. One was improved by an apartment building and the other by garages for the use of tenants of the apartment house. On July 8, 1930, the Hills executed a note and deed of trust on the apartment-house property alone with the defendant as beneficiary to secure a loan of $55,000. The trust deed was duly recorded. As a part of the same transaction the Hills also executed a conditional assignment of rents which was not recorded. The latter instrument provided for an assignment of all the rents from the apartment house to the defendant Western Loan & Building Company as further security for the debt. It also vested the defendant with power to appoint an agent to take possession, manage the premises, and collect the rents for the purposes of the assignment.

“On March 16, 1931, pursuant to an exchange agreement, the Hills deeded all of the real property mentioned to the plaintiffs in exchange for real property in Utah. The deed of the Hills to the plaintiffs was duly recorded. Hill continued to operate the apartment house and garages for the plaintiffs, who resided in Coalinga, California, and to make payments under the deed of trust to the defendant. About or prior to July, 1932, the plaintiffs defaulted under the trust deed and on August 1, 1932, the defendant took possession of the apartment house by appointing Hill’s manager its agent for the purpose. From that time the defendant collected the rents from the apartment house and the garages and applied them to the indebtedness under the trust deed. On November 25, 1932, the apartment house was sold pursuant to the deed of trust. The defendant made no application for a receiver, nor was one appointed.