Miller v. Bean

SHINN, Acting P. J.

This is an action by the holder of a promissory note secured by deed of trust to recover damages resulting from a breach of a covenant of the trust deed “to protect, preserve and defend said property and the title thereto.' ’ Plaintiff appeals from a judgment of dismissal after order sustaining without leave to amend a demurrer to a fourth amended complaint.

The note was for $2,400, payable to Los Angeles Finance Company, was dated October 9, 1929, and fell due October 9, 1932. It was alleged that plaintiff purchased all right, title and interest of the payee under the trust deed on June 13, 1946, and now is the owner and holder of the note and trust deed. The property which was the subject of the trust deed is certain real property in the county of Tulare. From the complaint it appears that the land was assessed for taxes in the year 1931

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that a tax of $35.78 was levied thereon; and that the tax was not paid. It was not alleged when the land was sold for taxes and deeded to the state, but it was alleged that on or about the 17th day of August,’ 1944, the tax collector of Tulare County gave notice of an intended sale of the property pursuant to section 3691 of the Revenue and Taxation Code, and that on September 9, 1944, said tax collector sold said real property on behalf of the state, as provided by law, to T. J. and Ethel Edmonds. It was alleged that the defendants had notice of said intended sale and failed and refused

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to effect a redemption of the property, that the security of said trust deed was thereby lost, and that plaintiff was thereby damaged in a sum of more than $12,000.

The demurrer was on the general ground and also specified uncertainty in the failure to allege the date when the property was sold to the state, and further uncertainty in that while the complaint alleged that plaintiff had purchased the trust deed security and was the owner of the trust deed and note it was not alleged that the note had been purchased. Neither of these grounds of uncertainty would have warranted the court in sustaining the demurrer without leave to amend. The demurrer also pleaded section 337, subdivision 1 of the Code of Civil Procedure in support of the point that the action was barred by the statute of limitations. This ground of demurrer undoubtedly was the one upon which the ruling was based. The correctness of the judgment therefore depends upon the implied holding of the court that a cause of action arose some time prior to September 9, 1944, when the land was sold by the state to the Edmonds. It is argued by respondent that a breach of the covenant of the trust deed occurred when the 1931 taxes became delinquent, or if not then, when the land was sold to the state for nonpayment of the 1931 tax. This sale normally would have taken place in 1932 and the property would have been deeded to the state in 1937. The action was filed October 2, 1946. We are of the opinion that no cause of action for breach of the covenant arose until the sale was made by the state in 1944 and that the action was commenced in time.