Cohen v. Bonnell

PULLEN, P. J.

On May 27 1926, Oliver A. Bonnell executed a note for $11,000 to Rosie Newman, secured by a mortgage on certain real property. On July 7, 1932, and after maturity, Rosie Newman assigned this note and mortgage to Mamie Cohen, who brought this suit to foreclose the same. The answer of Bonnell admitted substantially all of the- allegations of the complaint, and by way of counterclaim alleged that Rosie Newman and Bernath Schwartz were indebted to him on a note for $16,615 secured by a second deed of trust and chattel mortgage.

On June 18, 1932, because of default in principal and interest on this note, Bonnell filed notice of default, and on October 14, 1932, the real property described in the second deed of trust was sold at the trustee’s sale for $545.88; thereafter the sum of $150 was realized from the sale of the personal property secured by the chattel mortgage, leaving some $17,000 still due. Bonnell, in his pleading, sought to have this deficiency set off as against the amount due from him to plaintiff herein on the note and mortgage, which had been executed by Bonnell to Rosie Newman and by her assigned to plaintiff herein. This the trial court allowed and rendered judgment accordingly, and appellant now appeals, claiming the right of action against an assignor cannot be used as a basis of counterclaim against an assignee when the cause of action accrued after notice of assignment.

[40]

The record shows that Bonnell received notice of the assignment of his note and mortgage in favor of Newman to Mamie Cohen July 28, 1932. However, on or about June 18, 1932, approximately forty days prior to this notice of assignment Bonnell had given - notice of default to the maker, Bosie Newman.

Appellant claims the set-off could arise only after the sale of the property under the deed of trust, and the deficiency if any, ascertained, and therefore it was not until October 14, 1932, when the property was sold under the deed of trust that respondent’s cause of action for a deficiency could arise.

Section 368 of the Code of Civil Procedure provides that, “In ease of assignment of a thing in action, the action by the assignee is without prejudice to any set-off or other defense existing at the time of or before notice of assignment; . . .” Section 1459 of the Civil Code provides for the transfer of a non-negotiable written instrument by indorsement, which endorsement transfers all of the rights of the assignor subject to all equities and defenses existing in favor of the maker at the time of the endorsement.