Lineker v. McColgan

California Court of Appeal Oct 31, 1921 No. Civ. No. 2340.Published

Before: Finch

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Holding. The court held that a beneficiary under a trust deed may purchase the mortgagor's equity of redemption at an execution sale for their own benefit and is not required to account for proceeds from a subsequent sale of the property, as the relationship is not fiduciary and the purchase was not prohibited.

Issues

Whether a beneficiary under a trust deed may purchase the mortgagor's equity of redemption at an execution sale for their own benefit.
Whether the beneficiary of a trust deed is required to account to the trustor for proceeds from a sale of the property after acquiring the equity of redemption.
Whether the trial court's findings regarding an account stated between the parties are conclusive on appeal.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The relation between a mortgagee and mortgagor is not fiduciary.”

“A mortgagee in possession does not stand in such a relation of trust or confidence to the mortgagor as that he is prohibited from purchasing, for his own benefit, the title of the latter on an execution sale against him”

“Having acquired the plaintiff’s title by the sheriff’s deed, McColgan was entitled to receive and retain for his own use and benefit all the proceeds of the sale under the trust deed above the indebtedness secured thereby”

FINCH, P. J.

The plaintiff appeals from the judgment herein denying his prayer for an injunction and an accounting.

[772]

While the pleadings are complicated and lengthy, covering forty-eight pages of the printed transcript, the facts essential to a correct understanding of the issues raised on appeal may be briefly stated.

"The plaintiff was the owner of the land described in the complaint, subject to certain encumbrances in the following order of priority:

1. Trust deed to defendant R. McColgan, as security for payment to defendant Daniel A. McColgan of a promissory note for $2,850 and future advances, executed by plaintiff's wife, Norvena E. S. Lineker, prior to her marriage and while she was owner of the land.

2. Attachment liens aggregating $1,241.09.

3. Judgment lien for $1,264.91.

4. Sheriff’s certificate of sale of the land under execution for $1,361.20.

Under the foregoing circumstances, Daniel A. McColgan purchased the sheriff’s certificate of sale and, at the expiration of the year allowed for redemption, received and recorded the sheriff’s deed to the land. On the day that and after the sheriff’s deed was received and recorded, the land was sold under the trust deed to R. S. Marshall for the sum of $14,000. Marshall made the purchase for the use and benefit of the plaintiff pursuant to an agreement between them. In order to make up the purchase price of the land and provide additional money for the plaintiff, Marshall, under agreement with the plaintiff, gave his promissory note to Daniel A. McColgan for the sum of $2,455 and, as security for the payment thereof, conveyed the land to R. McColgan and Eustace Cullinan by trust deed.

The .complaint alleges that prior to the sale under the trust deed the plaintiff demanded of Daniel A. McColgan an account of the moneys due thereunder, but that the latter refused to give it; that the certificate of sale was purchased and the sale under the trust deed was had pursuant to an agreement between plaintiff and said McColgan to the effect that out of the proceeds of the sale McColgan was to retain whatever was due him under -the trust deed and for the purchase of the certificate of sale and also the amount necessary to satisfy the attachment and judgment liens, if such liens were finally adjudged to be valid, and to account

Lineker v. McColgan

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FINCH, P. J.

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