Nomellini Construction Co. v. Modesto Savings & Loan Ass'n

PIERCE, P. J.

A summary judgment was entered against plaintiff from which it appeals.

Plaintiff is the holder of a note secured by a

third

trust deed on described real property, also a judgment lien junior to that. The owners defaulted on this, and all prior, secured obligations. The trustee named in the

first

trust deed duly noticed a breach and thereafter noticed a (nonjudieial) sale of the obligations secured by that trust deed. The sale was held at the time and date prescribed in the notice. That notice specified that the sale would be to the highest bidder

for cash.

The highest bidders for cash at the sale were defendants Reeser and Hellbaum. They bid $68,000. Plaintiff submitted a twofold bid: $65,000 plus a cancellation up to $10,000 on account of the obligation secured by the third trust deed and the judgment lien. The trustee accepted the Reeser and Hellbaum bid and rejected plaintiff’s bid.

On this appeal plaintiff claims its bid should have been accepted as the highest bid. In granting summary judgment the trial court held that the trustee had correctly applied the law and had followed the provisions of the first trust deed.

The notice of trustee’s sale provided for sale “at public auction to the highest bidder for cash.”

We hold that the trial court properly granted a summary judgment for defendant. There was no justiciable issue. A bid by a junior lienholder for part cash, part credit—when the cash portion is lower than another cash bid—is a bid lower than the latter and does not comply with the cash bid requirement of the notice of sale.

Superficially, it might appear that whenever a situation exists such as that asserted by plaintiff here it would be to the best intereste of all concerned with the titles and liens that a bidder be permitted to do what plaintiff did here. The effect of the transaction would be—if the assertion plaintiff now makes as to the extent of its junior lien rights is accurate—to pay off the obligation of the senior lienholders in full and to give to the original owner of the property the greatest credit on

all

obligations secured by liens—including those junior to the lien being foreclosed. That postulation overlooks several factors: (1) it “tears up” the contract which the na.rties