San Gabriel Valley Bank v. Lake View Town Co.

California Court of Appeal Dec 27, 1906 No. Civ. No. 167.Published

Before: Bordwell

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Holding. The court held that the note and mortgage constitute a single contract, and that the mortgage's provisions regarding foreclosure and the sale of property as one parcel support the judgment for the full amount of the debt upon default.

Issues

Whether a mortgagee may foreclose for the full principal amount of a note upon default in interest payments when the mortgage lacks an express acceleration clause.
Whether the complaint's allegations were sufficient to support a judgment for the full debt under the rule of construction favoring the judgment.
Whether water stock described as appurtenant to land is subject to mortgage foreclosure as part of the real property.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The note and mortgage constitute one contract; the latter is incidental and stands as security for the former, and whenever the note, for any reason, becomes due, a right of action of foreclosure is at once available.”

“the mortgage is subject to the construction that it was intended that in case of foreclosure, because of default in payment of interest, the property should be sold en masse and the entire debt paid out of the proceeds.”

Synopsis

The facts are stated in the opinion of the court.

BORDWELL, J.

(pro

tem.)

Action commenced December 17, 1902, to foreclose mortgage on real estate and certain water rights represented by one thousand shares of the capital stock of the Lake View Water Company, appurtenant to the land.

The note, to secure the payment of which the mortgage was given, bears date April 10, 1901, due in five years; it contains the following provisions: “If default be made in the payment of interest for a period of thirty days, then the whole sum, principal, here promised, shall, at the option of the holder of this note, become immediately due, payable and collectible. ’ ’

The mortgage contains certain incidental covenants with respect to taxes, cultivation, etc., and provides that if the mortgagor fails to perform them, the mortgagee may do so, and the expenses so incurred by the mortgagee, with interest, “shall be due and payable by the mortgagor to the mortgagee at the next interest due date thereafter, according to said note,

[632]

and be secured by this mortgage.” It is provided by the mortgage that releases of portions of the property may be had upon making of certain stipulated payments, and there is also contained in the mortgage the following: “In case of default in making payments hereby secured, the mortgagee may cause this mortgage to be foreclosed and . . . the mortgaged premises, which shall, at that time, be subject to this mortgage, shall be treated as one parcel and not as separate or several parcels, and they shall be entitled to be sold as one parcel. . . . The proceeds of such foreclosure sale shall be applied to the payment of the costs . . . also to the then unpaid amount secured by this mortgage.”

The plaintiff alleges, “That no part of the amount promised to be paid by said note has been paid, except that the interest on the principal sum has been paid to the tenth day of April, 1901.” (The date of the note.)

By the prayer of the complaint the court is asked to “ascertain and by its decree determine the amount due plaintiff according to the terms of said promissory note and mortgage herein described,” fix attorney’s fee, direct sale of the property, etc.

San Gabriel Valley Bank v. Lake View Town Co.

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Synopsis

BORDWELL, J.

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