Summers v. Hallam Cooley Enterprices Ltd.

BARNARD, P. J.

In this action to quiet title the plaintiff appeals from a judgment in favor of the defendant bank as trustee. The other defendant, which had owned the land and executed the trust deeds in question, defaulted. For convenience, the defendant bank, as trustee, will be referred to as the respondent. It held a note secured by a trust deed on the property in question which will be referred to as the first trust deed. The appellant held a note secured by a trust deed on the same property which by its terms was made subject to the first trust deed, and which will be referred to as the second trust deed.

On January 7, 1938, the appellant commenced foreclosure as a mortgage of her second trust deed by court action,

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neither the trustee nor beneficiaries of the first trust deed being named as defendants. In the course of that proceeding a certificate of sale was issued to the appellant on April 21, 1941. In the meantime, and on February 10, 1941, the respondent recorded notice of default and election to sell under the first trust deed. After regular proceedings thereunder the property was, on June 10, 1941, sold to the respondent and a trustee’s deed to it was recorded on June 10, 1941. It is conceded that any action on the note secured by the first trust deed had become barred by the statute of limitations. This action was brought on June 30, 1941.

The sole question presented is whether the appellant’s second trust deed took priority over the first trust deed at the time when the note secured by the first trust deed became barred, with the result that the sale under the first trust deed was ineffectual as against the appellant. The appellant admits, as she must, that in this state a power of sale under a trust deed can be exercised after action on the note is barred. She contends, however, that this rule “should apply only against the fee owner, and not against rights of third parties”; that where the rights of third parties are involved a trust deed should be considered as a lien analogous to a mortgage lien; that since it has been held that when the statute of limitations has barred an action on a note secured by a mortgage a junior mortgage takes priority over a first mortgage (citing

Wood