Van Noy v. Goldberg

THOMPSON (R. L.), J.

This is an appeal from a judgment in favor of the defendants in a suit to set aside a trustee’s conveyance of real property which was executed upon foreclosure sale for default in the payments of principal and interest secured by a trust deed. The appellants contend that the trust deed was executed in violation of the California “Usury Law” (Leering’s Gen. Laws 1923', Act 3757, p. 1384), and therefore void.

[606]

The appellants were the owners of lot 3, block “C” of Kurtz and Bradshaw’s subdivision of the Schumacher tract of Los Angeles, California, which was subject to a mortgage of $11,000, upon which lot they had constructed a four-family dwelling flat. The builder of this house was George J. Diebolt. After the completion of the dwelling considerable indebtedness remained unpaid for the security of which a number of mechanics’ liens had been filed. To complete the financing of this structure, R. F. Boyles, the son-in-law of appellants, who held their power of attorney for that purpose, negotiated the execution by appellants of a subsequent note dated September 18, 1925, to George J. Diebolt for $7,000 at eight per cent interest, payable quarterly, secured by a deed of trust on said premises. By the terms of this note the principal became payable in installments of $100 or more on the first day of each month beginning with November, 1925, and continuing to and including September 18, 1926, at which last-mentioned date the whole principal and interest became due. For default in the payment of any installments of principal or interest, the entire unpaid portion became dire at the option of the holder. This note and trust deed was executed subject to the prior mortgage for $11,000. Default in the payment of any installment of principal or interest due upon this first mortgage lien authorized the holder by the terms of the trust deed involved in this litigation, to pay such deferred installments and after demand for repayment thereof, to also declare this entire second note due on that account. This $7,000 note and trust deed were subsequently sold and assigned to the respondent, Ann Goldberg, by Mr. Boyles through a broker by the name of Leon Shevitz for the sum of $6,300, which was paid in cash to the Union Bank and Trust Company of Los Angeles, named in said deed as trustee.

Five payments of $100 each were subsequently made upon this note discharging the installments due thereon only to the first day of March, 1926. On the.first day of August, 1926, appellants were in default of the payment of two quarterly installments of interest aggregating approximately $170; five $100 installments of principal, and about $800 delinquent payments due upon the first mortgage lien. The respondent, Goldberg, made ft fruitless de