Trout v. Lane

California Court of Appeal Feb 10, 1932 No. Docket No. 7079.Published

Before: Houser

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Holding. The court held that the defendants waived their right to challenge the complaint's failure to allege notice of dishonor by failing to raise the issue at trial and admitting liability, but further held that the defendants' indorsement of the note did not extend to liability for expenses incurred by the plaintiffs in protecting the security property.

Issues

Whether the failure to allege notice of dishonor in the complaint constitutes a fatal defect when the issue was not raised at trial and liability was admitted.
Whether an indorsement of a promissory note includes liability for expenditures made by the holder to protect the security property under a deed of trust.

Disposition. modified and affirmed

Quotations verified verbatim against the opinion

“the defect in the complaint of which appellants now complain was not only waived by them on trial of the action, but that, even though the point is now urged on appeal, its force is likewise waived by reason of the admission by appellants”

“defendants’ indorsement of the note had the effect of guaranteeing its payment only, and that the said indorsement carried no assumption of liability for expenses incurred by the holder of the note in protecting its security.”

HOUSER, J.

The pertinent facts herein appear to be that defendant Lane executed and delivered to her co-defendants C. J. Powell and Odessa J. Powell (whose married name is now Odessa J. Brown) a promissory note which by its terms was made payable in installments and was secured by a trust deed on certain real property. Some time after its execution said promissory note was assigned by the payees thereof to plaintiffs by an indorsement on said note in the following words:

“For value received we do hereby transfer and assign to Harry D. Trout and Abbie D. Trout, as joint tenants, the within note, together with all rights accrued or to accrue under the Deed of Trust securing the same so far as the same relate to this note, with recourse on us.”

Several of the installments on the promissory note were not paid either when due or at all. Thereupon, in order to protect the security for said note—the plaintiffs theretofore having been compelled to lay out certain moneys for taxes, etc., on the said property—in accordance with the authority provided by the terms of the trust deed, for the purpose of

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procuring payment to themselves of the principal and interest of said note and the said outlay of money by them, at the instance of plaintiffs the trustee named in said deed of trust regularly proceeded to and did sell said property. However, on such sale the property failed to bring money sufficient to meet the total amount owing to plaintiffs, with the result that an action was brought by plaintiffs against defendants for the purpose of recovering a judgment against them for the deficiency represented by the difference between the total debt owing to plaintiffs and the amount realized from the sale of the property. From a judgment rendered in favor of plaintiffs, defendants Powell appeal to this court.

It is urged by appellants that for the reason that the complaint in the action contained no allegation in substance that at a seasonable statutory time the indorsers of the promissory note were notified of the nonpayment of each of the several installments of the promissory note, etc., no cause of action against said indorsers was stated in said complaint, and consequently, as against said indorsers, the judgment should be reversed.

Trout v. Lane

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HOUSER, J.

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