Rust v. Hill

California Supreme Court Mar 3, 1941 No. L. A. 17646Published

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Holding. The court held that the Mortgage and Trust Deed Moratorium Acts do not extend the time for a creditor to bring an action for a deficiency judgment when the foreclosure sale occurred before the effective date of the acts. Because the debtor had no opportunity to invoke the moratorium provisions, the creditor is not entitled to the statutory extension of the limitation period.

Issues

Whether the Mortgage and Trust Deed Moratorium Acts extend the time for filing a deficiency action when the foreclosure sale occurred prior to the acts' effective date.

Disposition. affirmed

Quotations verified verbatim against the opinion

“the creditor is not entitled to an extension of the time for bringing an action for a deficiency where the debtor has had no opportunity to invoke the beneficial provisions of the act for the reason that the power of sale was exercised before the act became effective.”

“The provisions of the acts under consideration demonstrate that their primary purpose was to afford relief to debtors by postponement of sales and forfeitures of their interests in real property”

THE COURT.

This is an appeal by the plaintiff from a judgment entered upon an order sustaining the defendants’ demurrer to the complaint with leave to amend, and the plaintiff’s election to stand upon the complaint as filed.

[518]

The plaintiff sued to recover the balance due on a promissory note for $7,600, dated January 1, 1931, and due in three years. The note was secured by a deed of trust on real property of the defendants. Upon default in payment, the real property was sold pursuant to the power of sale in the deed of trust for the sum of $1,000. After application of the proceeds of the sale the deficiency, or balance due on the note, and for which suit was brought, was $8,522.29. The complaint was filed April 1, 1938, and showed that it was filed more than four years after the maturity of the note and more than three months after the sale under the deed of trust.

By their demurrer the defendants pleaded the bar of subdivision 1, section 337, of the Code'of Civil Procedure, which provided for a four-year limitation of actions on “any contract, obligation or liability founded upon an instrument in writing”, and which also provided that the time within which an action for a deficiency may be brought shall not extend beyond three months after the time of sale under a deed of trust or mortgage. The defendants also pleaded in bar the provisions of section 580a of the Code of Civil Procedure, which likewise limited the time to three months within which an action for a deficiency may be commenced following the exercise of the power of sale in a deed of trust or mortgage. The plaintiff contends that the limitation under both statutes was tolled by the provisions of the Mortgage and Trust Deed Moratorium Acts of 1935 (Stats. 1935, pp. 1208, 1214 [Deering’s Gen. Laws, 1935 Supp. Act 5104a]), and 1937 (Stats. 1937, pp. 57, 60; Stats. 1937, pp. 460, 466 [Deering’s Gen. Laws, 1937, Act 5101]).

The defendants contend that the moratorium acts had no application to the facts of this ease wherein it is disclosed that the plaintiff foreclosed his trust deed and sold the property pursuant to the power of sale before the Act of 1935 went into effect. The complaint shows that the real property described in the deed of trust was sold on April 24, 1935. The Moratorium Act went into effect on June 21, 1935, or about two months after the sale. The defendants insist that it was the purpose of the moratorium acts to provide, as an economic necessity, for the postponement of foreclosures under mortgages, deeds of trusts and contracts of purchase affecting real property upon a proper showing for such postponement on the part of the debtor, at the

Rust v. Hill

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THE COURT.

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