Merced Security Savings Bank v. Casaccia
Before: Temple
Synopsis
Mortgage—Foreclosure—Construction of Code.—Section 726 of the Code of Civil Procedure, which provides that there can he but one action, for the recovery of any debt secured by mortgage upon real estate, is a limitation upon the rights which usually pertain to property, and the restriction will not be carried beyond the obvious import of the language used.
Id.—Object of Code Provision—Exhaustion of Security—Personal Action.—The obvious purpose of section 726 of the Code of Civil Procedure is to compel one who has taken a special lien to secure his debt to exhaust his security before having recourse to the general assets of the debtor; and when he has done this, or when without his fault the security has been lost, the policy of the law does not prohibit a personal action.
Id.—Statutory Construction.—A construction should not be given to a statute, if it can be avoided, which will lead to absurd results, or to a ' conclusion plainly not contemplated by the legislature.
Id.—Collateral Mortgages to Secure Indebtedness—Foreclosure.— Section 726 of the Code of Civil Procedure was not intended to prohibit the ordinary transaction of putting up mortgages as collaterals to secure an indebtedness, nor to limit such collaterals to mortgages which can be foreclosed in the same action.
Id.—Separate Actions Upon Collateral Mortgages.—Where a mortgagee has assumed a debt of the mortgagor, for which he has given his personal note to a hank, and has assigned to the hank the mortgage as collateral security for the payment of his note, and at the same time has executed another note to the bank, secured by a mortgage upon land of his own, which was also intended as collateral security for his other note to the bank, the hank, after foreclosing the first mortgage and crediting the proceeds upon the first note, may maintain a separate action for foreclosure of the second mortgage given to secure the principal debt.
Id.—Nature of Action Upon Collateral Mortgage—Enforcement of Principal Debt.—An action to foreclose a mortgage which has been assigned as collateral security for a principal debt, is not an action for the recovery of the principal debt, but to preserve and enforce the security which is a duty imposed upon the creditor by the contract of hypothecation, and the principal debt need not be enforced in such action.
Temple, C. This appeal is upon the judgment-roll. The action was brought to foreclose a mortgage. The answer is a plea in bar.
The court found, among other things, that on the twenty-ninth day of July, 1889, one Flanagan was indebted to plaintiff in the sum of $1,032.07, and to defendant Casaccia in the sum of $600. Casaccia then assumed the debt of Flanagan to plaintiff, and gave his note for the same, which was accepted by the bank. Casaccia at the same time took from Flanagan his note secured by mortgage for $1,632.07 which was then assigned to plaintiff as collateral security for Casaccia’s note for $1,032.07.
At the same time Casaccia executed another note to the bank for $400, secured by a mortgage upon land of his own. This was also intended as collateral security [643]for the note for $1,032.07 from Casaccia to the bank, and is the note and mortgage upon which this suit is brought.
The condition, then, was this: The bank held Casaccia’s note for $1,032.07, as collateral to secure it, a note and mortgage for $1,632.07, executed by Flanagan to Casaccia, and by him assigned to the bank, and a note of $400, secured' by mortgage executed by Casaccia to the. bank.
In May, 1893, the bank, as assignee of Casaccia, commenced an action to foreclose the Flanagan mortgage,, but did not make Casaccia a party to that action.
A decree of foreclosure was obtained; and the property-sold, and after paying costs the sum of $575 was left to. be credited upon the debt of Casaccia to the bank, leaving $808.78 still due.
Appellant claims that plaintiff should have brought suit upon the note for $1,032.07 against Casaccia; and in the same action sought to foreclose the mortgage against Flanagan for $1,632.07, and the mortgage involved in this suit for $400, and that, not having done so, he has waived the security on the mortgage sued on in this action, and perhaps the right to sue on the note for $1,032.07.
This contention is based solely upon section 726 of the Code of Civil Procedure, which provides that there can be but one action for the recovery of any debt secured by mortgage upon real estate. This statute is a limitation upon the rights which usually pertain to property, and the restriction will not be carried beyond the obvious import of the language used." Accordingly, it has been held that a judgment of foreclosure of a mortgage given to secure a promissory note does not bar the right, after sale and judgment for a deficiency, to a suit against an indorser of the note to recover such deficiency. ( Vandewater v. McRae, 27 Cal. 596.)
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