Miller v. Roach

California Court of Appeal Jul 13, 1936 No. Civ. 1916Published

Before: Turrentine

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Holding. The court held that an exchange of equities in mortgaged property does not constitute an assumption of the mortgage debt by the grantee, and that a mortgagee's extension agreement with a grantee does not create personal liability for the debt absent an express agreement to assume it. Furthermore, the original mortgagor is discharged from liability when the mortgagee grants an extension to a subsequent grantee without the original mortgagor's consent.

Issues

Whether an exchange of equities in mortgaged property implies an assumption of the mortgage debt by the grantee.
Whether an extension agreement between a mortgagee and a grantee creates personal liability for the mortgage debt.
Whether a mortgagee's extension of a mortgage to a grantee without the original mortgagor's consent discharges the original mortgagor's liability.

Disposition. Affirmed in part and reversed in part.

Quotations verified verbatim against the opinion

“Where the transaction is only an exchange of equities in mortgaged lands there is not a sufficient consideration for the assumption of personal liability by the purchaser.”

“Clearly, the plaintiff is not entitled to a deficiency judgment against the defendants Harry F. Weber, Jr., or E. Grace Weber, or either of them.”

“Inasmuch as she had conveyed the property to the Webers prior to the execution of the extension agreement above referred to she was a surety only and as she did not consent to the extension of the mortgage, her liability for a deficiency judgment was discharged on the execution thereof.”

TURRENTINE, J.,

pro tem.

Emma Roach executed a note secured by mortgage on real estate for $5,800 to the plaintiff, Olive Miller. Thereafter, she and the defendants

[429]

Weber entered into “exchange escrow instructions” wherein it was agreed that “for the purpose of effecting an exchange of properties hereinafter described”, which “exchange escrow instructions” was made for the purpose, among other things, of exchanging the property which was the security on the notes and mortgage to the plaintiff. The escrow instructions then set forth “its [the property’s] appraised value and the value of the equity conveyed”. The agreement or “exchange escrow instructions” provided that the property was “subject to: mtg. for $5,800, at 8 per cent quarterly, due about 1928 in favor of Olive Miller. Appraisal value $28,800.00. Value of equity $17,534.67.”- The “exchange escrow instructions” providing for the exchange of the property from the Webers to Roach was in identical form except as to the names, descriptions and figures; the “value of equity” in each instance was substantially the same, any difference being adjusted between the parties. The “exchange escrow instructions” also provided that “assurance of title” should be furnished “with liabilities limited to the respective appraisal values above expressed”. Pursuant to the “exchange escrow instructions” Roach deeded the property to the Webers by deed containing the following provision: “subject to a mortgage of record for $5,800.00 in favor of Olive Miller”. About the time the mortgage fell due, Olive Miller and Mr. Weber of the Webers above referred to executed an agreement as follows:

“This Agreement made between Olive Miller, mortgagee, and Harry F. Weber, Jr., mortgagor. It is understood and agreed between the above parties that the mortgage covering the property recorded in Book 5388, page 319, of official records of Los Angeles County, is hereby extended for a period of three years from October 9, 1928, in accordance with all terms and conditions now provided in said mortgage.

“Olive Miller,

“Harry P. Weber, Jr.”

In 1932, plaintiff instituted this action to foreclose her mortgage, alleging that defendant Weber assumed and agreed to pay the mortgage and seeking deficiency judgment against the Webers in case the sale of the property did not satisfy the mortgage. The judgment so provided and defendants Weber appeal.

Miller v. Roach

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TURRENTINE, J.,

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