Johnson v. Home Owners' Loan Corp.

GRIFFIN, J.

On April 5, 1934, Louis Johnson delivered a real estate mortgage to respondent Home Owners ’ Loan Corporation (for brevity hereinafter called H. O. L. C.) in the sum of $1521.44. On April 13, 1935, Louis Johnson executed a grant deed covering the same real estate to the Angeles Indemnity Corporation (hereinafter called A. I. C.) for the purpose of securing a bail bond. The grant deed, although intended between the parties to be a mortgage, was absolute on its face, and thereafter was recorded in the office of the county recorder of Los Angeles County prior to the commencement of the foreclosure action. On December 19, 1936, Louis Johnson died intestate while in possession of the property, and his heirs, succeeding to his estate, continued in possession. This fact, as well as the fact that the deed was intended as a mortgage, were alleged as being at all times known to H. O. L. C. On April 16, 1938, respondent H. O. L. C. commenced a foreclosure action in the Superior Court of Los Angeles County against the Angeles Indemnity Corporation as record owner of the real estate and Samuel L. Carpenter, Jr., Insurance Commissioner of the State of Cali

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fornia, as liquidator for A. I. C. in liquidation. Neither appellant nor Louis Johnson’s heirs were made parties to that action. Carpenter, for himself alone, filed a disclaimer, and A. I. C. defaulted. The decree of foreclosure was entered May 18, 1938, and the real estate was sold to respondent H. O. L. C. at the commissioner’s sale on June 27, 1938. On June 30, 1939, respondent H. O. L. C. received a commissioner’s deed. June 20, 1939, letters of administration were issued to appellant. June 21, 1939, A. I. C. reconveyed the property to appellant. On the 27th day of June, 1939, this action was commenced to set aside the foreclosure decree and sale thereunder, alleging the above facts.

Appellant contends that the proceedings in the foreclosure suit were absolutely void as to Johnson or his heirs, and they have an absolute legal right, as well as their constitutional right, to insist upon a legal foreclosure against them before their right of redemption can be cut off.

Respondent argues that as the conveyance to the A. I. C. was in the form of a grant deed and any claimed defeasance or interest of appellant in the property was not recorded when the foreclosure proceedings were commenced, it was immaterial whether respondent had actual notice of the grantor’s claimed interest or not; and that plaintiff in the foreclosure action was required to make those persons defendants only whose conveyances or interests appeared of record at the time it instituted its foreclosure suit.