Edwards v. Mortgage Securities, Inc.

PAULSEN, J.,

pro tem.

Action to

quiet title. Defendant corporation had judgment and plaintiffs appeal.

The essential and undisputed facts are these: On February 1, 1928, appellants executed a promissory note and deed of trust in favor of respondent for $10,850. The principal of the note was payable three years after date with interest payable quarterly. Respondent was given the option to declare the whole sum of principal and interest immediately due and payable in the event of default in the payment of any instalment of interest. The interest was not paid on June 1, 1928, and on June 7, 1928, respondent recorded a notice of default and election to sell under the trust deed. On June 27, 1928, appellants conveyed the property described in the trust deed to a third party and thereafter it changed hands several times. None of appellants’ successors in interest assumed payment of the indebtedness. On August 13, 1929, respondent, who had taken no steps to effect a sale of the property, recorded a cancellation of its notice of default and election to sell. Appellants had no actual knowledge of any steps or transactions taken or had after they conveyed the property on June 27, 1928. On May 13, 1931, respondent notified appellants that the interest on the note was due; that they were personally liable for any deficiency that might arise in the event of sale, and demanded additional security. Belying upon this representation as to their personal liability, appellants conveyed certain other property to respondent. Subsequently, and after appellants had again defaulted in the payment of interest, said deed of trust was foreclosed by respondent who purchased the property and claimed a deficiency of $5,950.95. On January 4, 1932, appellants made a written demand for a reconveyance of the property given as additional security upon the ground that it had been obtained as the result of the misrepresentation of respondent and that there was no consideration for it. By

[643]

cross-complaint respondent sought to foreclose the lien on the additional security.

In addition to findings covering the foregoing facts, the court found that the representation of respondent that appellants were personally liable for a deficiency was true. Appellants moved to set aside the judgment and have judgment rendered in their favor, but this motion was denied by failure of the court to act upon it within the time required by law.