Sacramento Bank v. Alcorn
Before: Temple
Synopsis
as security for loans, has been upheld in numerous cases decided since the adoption of the codes, and these decisions have become a rule of property which should not be disturbed, even if erroneous? and, under the maxim of stare decisis, it cannot be considered as open to discussion whether such trusts are for a purpose not authorized by section 857 of the Civil Code, or whether they are void as restraining alienation for a period not dependent upon the duration! of Ufa
Id.—Effect of Trust Deeds—Rights of Trustor.—Under the decisions, trust deeds, though passing the legal title to the trustees, are practically little more than a mortgage, with a power to convey. -They convey no right of possession; and the trustor may remain in possession, and, until the execution of the trust, may sue to recover the possession, even when the trust deed is silent upon that subject. He may file his declaration of homestead, and hold the premises against creditors not secured by the deed of trust or other valid lien. He may devise or transfer the property subject to the trust, and the devisee or grantee acquires a legal estate against all persons except the trustees, and persons lawfully claiming under them. When the purpose of the trust ceases, the estate of the trustees also ceases. None of the incidents of ownership attach to the trust, except that the trustees are deemed to have such estate as will enable them to convey; and the trust, so limited, has all the characteristics of a power in trust.
Id.—Legislative Recognition of Trust Deeds.—The provisions of sections 3617, 3627, and 3629 of .the Political Code upon the subject of taxation, recognize trust deeds as existing property, and sections 674, 2872, and 2924 of the Civil Code impliedly recognize them as an existing mode of securing loans; and if these sections do not themselves constitute an exception to the rule established by section S67 of the Civil Code, they at least recognize and add weight to the judicial construction of that section as authorizing trust deeds with a power of sale for purposes of security. These statutes do not refer solely to trusts for an immediate sale, where debts are due; and the authority given in section 674 of the Civil Code to savings banks to loan money upon such security and to purchase at sale thereunder, implies the contrary.
TEMPLE, J. This action was brought to determine conflicting claims to real property.
In May, 1893, defendant and wife conveyed the property to trustees, to secure a sum of money then loaned by the bank to Alcorn, due according to the terms of a promissory note. The note by its terms became due one year from date. The deed of trust provided that if the debt was paid the trustees should reconvey to the trustors, but if default were made they were authorized to sell after certain designated notice and to convey to the purchaser. The moneys realized were to be appropriated to payment of the debt and certain charges, and the residue, if any, returned to the grantors in the deed. The interest was to be paid annually, and in case of a default in the [382]payment of interest the trustees were authorized to sell. A sale was made on the 28th day of December, 1895, and it is not claimed that the proceedings for a sale, or the deed, are deficient.
Plaintiff claims under the sale, and the questions here arise upon objections made to the introduction of the trust deed in evidence.
But two points are made by appellants, and it seems to be agreed that these questions are properly presented upon the record.
1. The trust was for a purpose not authorized by section 857 of the Civil Code, and the deed is, therefore, void.
2. The trust deed is void because it restrains alienation for a period not dependent upon the duration of life. (Civ. Code, secs. 715, 716, 771.)
-The appeal is supported by very elaborate and forcible briefs, which, if the questions were open for consideration, would challenge and receive serious and careful examination, but we do not think the matter can now be considered open for discussion. Our own records will disclose the fact that trust deeds have been quite frequently used as security for loans. Their validity has been upheld in numerous cases, beginning very soon after the adoption of the code and continuing until the present time. (Bateman v. Burr, 57 Cal. 480; Durkin v. Burr, 60 Cal. 360; Carey v. Brown, 62 Cal. 373; Savings and Loan Soc. v. Deering, 66 Cal. 281; More v. Calkins, 95 Cal. 435; 29 Am. St. Rep. 128; Savings and Loan Soc. v. Burnett, 106 Cal. 528.)
These decisions, which have been uniform, establish a conclusion which has become a rule of property, and however thoroughly we might now be convinced that the rule is erroneous, it should not be disturbed. Doubtless many people have invested their money, relying upon this construction of the law by the highest tribunal of the state, while those who have executed such deeds have done so with the expectation that they would be held valid. Buin and injustice would result from such a decision as is now sought. If the question as to whether the rule of stare decisis shall prevail be one of policy, there is here no balancing of the evil done against a good attained. The result would be evil only.
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