Cormerais v. Genella

California Supreme Court Jul 1, 1863Published

Before: Cope, Crocker, Norton

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Holding. The court held that an instrument containing a power of sale is a mortgage, not a trust deed, and that the power of sale is a cumulative remedy that does not preclude judicial foreclosure. Furthermore, the court held that the 1861 amendment to the Practice Act did not prohibit courts from rendering personal money judgments in foreclosure actions prior to the sale of the mortgaged property.

Issues

Whether an instrument with a power of sale constitutes a mortgage or a trust deed.
Whether a power of sale in a mortgage precludes a judicial foreclosure action.
Whether the 1861 amendment to the Practice Act prohibits personal money judgments in foreclosure suits before the sale of the property.

Disposition. affirmed

Quotations verified verbatim against the opinion

“This is clearly a mortgage, with an ordinary power of sale”

“The power of sale contained in the mortgage is a mere cumulative remedy, and does not in the least affect the right to foreclose in chancery.”

Synopsis

Appeal from, the Fourth Judicial District.

The action was upon an instrument executed by the appellant, Joseph Genella, to the respondent Henry Cormerais, and was commenced August 6th, 1861. The appeal is upon the pleadings and the judgment. The complaint, so far as it bears upon the questions raised, shows: That April 2d, 1855, the defendant, appellant, Genella, being indebted to French, Wells & Co., of which firm the plaintiffs, respondents French & Wells, are the surviving partners, in $10,000 ; to the plaintiffs the Boston and Sandwich Glass Co., in $15,000 ; and to the plaintiffs Jarvis & Comierais, in $15,000, made and delivered to them respectively his promissory notes for the said amounts respectively, payable in twelve months from date, and in order to secure the payment thereof, according to their tenor, agreed with the said Boston and Sandwich Glass Co., French, Wells & Co., and J. D. Jarvis & Comierais, to convey the premises hereinafter mentioned to said Comierais, as trustee for and on behalf of the said parties, and made and delivered, at or about the same time, to said Comierais (one of the firm of Jarvis & Comierais) his indenture of mortgage upon a certain lot of land in San Francisco, whereby, after reciting his indebtedness upon the notes, and his said agreement to convey the premises to said Comierais, as trustee for and on behalf of said French, Wells & Co., the Boston and Sandwich Glass Co., and Jarvis & Comierais, he bargained, sold, etc., the premises to said Comierais: with the proviso, however, and upon the express condition, that if he should pay the said several sums of money when they became due, according to the true intent and meaning of the said notes, then said indenture of mortgage should be void; and if default should be made in the payment of the said sums of money, or either of them, or of the interest, etc., then it should be lawful for the said Cormerais, his executors, administrators, or assigns, upon four months’ notice of his or their intention so to do, to enter into and upon, all and singular, the said mortgaged premises, and to sell and dispose of the same, and all benefit and equity of redemption of said Genella, his heirs, executors, administrators, or assigns therein, at public auction, according to law; and out of the money arising from such sale, to retain the principal and interest which should then be due on the said promissory notes, with the costs and charges of advertising and sale, rendering the overplus of the purchase money, if any, to said Genella, his heirs, etc.; which sale so to be made, should forever be a perpetual bar, both in law and equity, against said Genella, his heirs and assigns, and all other persons claiming or to claim the said premises by, from, or under him or them, or any of them, etc.

That up to June 16th, 1858, Genella had paid on account of the interest, $4,756 48, leaving still due the principal sums amounting to $40,000, besides a large arrear of interest. That prior to that time, Cormerais gave to Genella the four months’ notice specified in the mortgage, and on that day he and Genella entered into a written agreement (set forth at large in the complaint), reciting that whereas Genella had given to Cormerais a certain mortgage, which was recorded, etc., and the conditions of the mortgage had been broken by the non-payment of the moneys therein specified, and Cormerais had given the four months’ notice, etc., and Genella had agreed that if Cormerais would suspend and postpone the sale, Genella would pay the mortgage debt in installments of $5,000 each every six months ; therefore they agreed, the said Cormerais to suspend and postpone the sale from six months to six months, so long as the installments should be regularly paid, and Genella to pay said mortgage debt in installments of $5,000 at the times specified; and if he should fail to pay any one, that Cormerais might proceed to sell said mortgaged premises, at public auction, as in said mortgage deed is provided. That Genella paid the first installment, but failed to pay any other, or any money upon said notes, or either of them, leaving due the whole of the principal sums and a large arrear of interest; concluding with the usual prayer.

Crocker, J. delivered the opinion of the Court—Cope, C. J. and Norton, J. concurring. This action was brought in the District Court to foreclose an instrument claimed to be a mortgage. The plaintiffs recovered judgment, and the defendant appeals to this Court.

The first ground of error is that the complaint does not state facts sufficient to constitute a cause of action, and therefore the Court below erred in overruling the demurrer filed by the defendant setting up that ground. Upon this point the defendant contends that the instrument sued on is not a mortgage, but a conveyance of the fee in trust, and that therefore this action cannot be maintained to enforce it.

The complaint sets forth that the defendant executed to French, Wells & Co. his note for $10,000; to the Boston and Sandwich Glass Company for $15,000, and to Jarvis & Cormerais for $15,000, and to secure the payment of said notes, he executed to said Cormerais a mortgage whereby he granted, bargained, sold, aliened, released, conveyed, and confirmed to the said Cormerais, Ms heirs and assigns, certam property therein described, with the proviso, however, and upon the express condition that if the said Genella should well and truly pay said notes and the Mterest thereon, then the said indenture of mortgage should be void, and if default should be made m the payment of the same, then it should be lawful for [124]the said Cormerais, his executors, administrators, or assigns, upon four months’ notice of his or their intention so to do, to enter upon the mortgaged premises and to sell and dispose of the same, and all benefit and equity of redemption of said Genella, his heirs, executors, administrators or assigns therein, at public auction, according to law, and out of the proceeds of the sale to retain the principal and interest then due on the notes, with the costs of the sale, rendering the overplus, if any, to said Genella ; which sale so to be made should forever be a perpetual bar both in law and in equity against said Genella, his heirs and assigns, and all other persons claiming or to claim the said premises under him or them. This is clearly a mortgage, with an ordinary power of sale—an instrument in common use in many States, especially those having special laws, regulating the mode and manner of conducting sales under them. It has all the usual conditions and provisions of a common mortgage, with the addition thereto of a power of sale vested in the mortgagee. It differs entirely from the class of instruments known as trust deeds, one of which was the subject of litigation in Koch v. Briggs (14 Cal. 262.) The provision respecting a sale by the mortgagee is not mandatory or exclusive in its character. It provides merely that if default be made it shall be lawful for the mortgagee to sell the mortgaged premises at public auction, according to law, the latter clause evidently copied from some form in use in a State having laws regulating such sales. In this State we have no such special statute, and it may be doubtful, perhaps, whether under this provision, any sale of the property could be made, “ according to law,” except a regular judicial sale, under a decree of foreclosure rendered by some competent Court. It is clear that there is nothing in the instrument forbidding a sale under a judicial decree; and the mortgagee has his election to foreclose in that way or under the power of sale vested in him by the mortgage. It is decidedly for the benefit of all parties that the mortgage should be foreclosed in the former mode rather than the latter. In that way there is no doubt of the right of the mortgagor, or parties holding under him, to redeem the property within six months after the sale, as provided by the statute. If the latter mode should be adopted, a doubt might arise whether such right of redemption

Cormerais v. Genella

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