Title Insurance & Trust Co. v. Ford

WARD, J.,

pro tem.

This action was brought by plaintiff, as trustee under a deed of trust, to determine the rights of each defendant in a foreclosure proceeding and, in particular, the effectiveness and validity of a notice of default and notice of sale. Defendants Ford answered and filed a cross-complaint praying that the trustee’s sale be enjoined and demanding an accounting from defendant and cross-defendant Davey who in turn answered the complaint and cross-complaint, denying that the Fords had any right to an accounting.

On October 7, 1927, the Fords, as owners of an apartment house, signed a trust deed note for $55,000 payable in installments monthly with provision for acceleration. Shortly after the making of this note, the defendant Davey by assignment acquired the interest as beneficiary. Upon July 12,

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1928, Davey filed a declaration of default, and the next day entered into an agreement with the Fords whereby he was given possession of the property and the right to furnish and operate the apartment. The Fords reserved the right during the foreclosure period to refinance the property with the further stipulation that if they were able to refinance, all moneys over and above costs and operating expenses should be applied to the indebtedness, otherwise all the income derived from the apartment house during the foreclosure period was to remain the property of Davey. On the last day of the foreclosure period," the Fords served upon Davey and the plaintiff a notice to desist from the sale and a demand for an accounting of the income, rental and profits from the property. This was the only written demand ever presented but the subject of approximate income, etc., had been discussed over the telephone by the Fords and Davey. The trustee continued the sale and thereafter instituted this proceeding. The trial court adjudged and decreed that the proceedings for the sale were regular and valid and ordered the sale to proceed.

There is no doubt that the Fords were in default on the eleventh day of July, 1928, the date that the declaration of default was executed and delivered to plaintiff. This is admitted by the terms of the agreement entered into the following day between Davey and the Fords. The acceptance of possession of the property and the income therefrom by the beneficiary Davey, in view of the terms of the contract, did not waive the existing default. If the default was waived then Davey was wrongfully in possession and this could only be rectified by Davey relinquishing possession to the Fords who had admitted the indebtedness and agreed to Davey's possession and management of the income. The acceptance by Davey of the income from the property did not waive the default. The Fords authorized Davey in the agreement to furnish the building and thereafter to operate it. The only way the Fords could repossess the property was tp refinance the property plus furnishings and equipment. The agreement provided: “if we are able to refinance”, etc. The record is silent as to any ability to refinance and hence under the terms of the agreement, the income was the property of Davey. If the income was the property of Davey then the Fords had no right to an