Balfour-Guthrie Investment Co. v. Woodworth

California Supreme Court Mar 30, 1899 No. S. F. No. 1101Published

Before: Harrison

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Holding. The court held that the substitution of a trustee and the subsequent sale of property under a deed of trust were valid, and that a trustee may execute a corrective deed to properly reflect the facts of a sale when the initial deed contained clerical errors.

Issues

Whether the substitution of a trustee was validly authorized by the corporation's board of directors.
Whether the acts of de facto directors are binding on the corporation and third parties.
Whether a trustee's power is exhausted by the execution of an initial deed containing incorrect recitals regarding notice of sale.

Disposition. affirmed

Quotations verified verbatim against the opinion

“until the trustee had made such a conveyance, its power in the premises was not exhausted”

Synopsis

Deed of Trust—Appointment op Substituted Trustee—Corporation— Copy of Resolution op Directors—Validity op Transfer.—Under a deed of trust executed to secure the indebtedness of the grantor to a corporation, which provided that the corporation might by a resolution of its board of directors appoint a substituted trustee in whom the title should vest upon conveyance thereto by the designated trustees, it is not necessary to the validity of the transfer that a copy of such resolution should be annexed thereto.

In.—Evidence op Appointment—I rovision in Deed.—A provision in the deed of trust that a copy of the reso’utlon of the board of directors certified by its secretary should be c.n in ive evidence that the substituted trustee had been duly appointed, does not render such copy the exclusive mode of showing that a substitution had been made, and the resolution may be proved by the records of the corporation.

Id.—Special Meeting of Directors—Presumption of Notice.— Where the resolution was spread at length upon the records of the corporation, and was authenticated by the signature of one purporting to be its secretary, the fact that it was passed at a special meeting of the directors, at which all of them were not present, and that it did not appear that notice of the meeting had been given to all of the directors, does not vitiate the resolution. In the absence of evidence to the contrary, it will he presumed that proper notice was given.

Id.—Finding as to Notice—Sufficiency of Evidence.—Evidence by the secretary that he had given notice of the meeting to each of the directors by sending to them by a messenger written notices, at least twenty-four hours prior to the meeting, in the absence of any evidence to the contrary, is sufficient to authorize the court to find that proper notice of the meeting was given.

Id.—Sale of Lands bv Substituted Trustee—Action to Quiet Title— Election of Directors .—For the purposes of an action to quiet title to lands sold by a substituted trustee appointed by the directors of the corporation secured by a deed of trust, it is Immaterial whether the election of the directors was regular or not, where it appears that they assumed the trust, and became, at least, de facto directors.

Id.—Publication of Notice of Sale—Recital in Deed—Omission of Date—New Deed to Purchaser.—Where the notice of sale by the substituted trustee was in fact properly given, and was correctly recited in general in the deed to the purchaser, but there was a defective omission in the particular recital of the dates of publication, assuming without deciding the Invalidity of the first deed, the powers of the trustee were not exhausted until a valid deed with proper recitals was executed by the purchaser, so as to vest in him all the title with which the trustees were vested; and a new deed to the purchaser from the substituted trustee with correct recitals in every particular, is admit-sible in evidence, in support of the title of the purchaser.

HARRISON, J. The appellant executed a deed of trust of certain lands in the county of Fresno, March 12, 1890, to Robert Balfour and Robert B. Forman, to secure the payment of certain indebtedness to the respondent. The deed of trust provided that, in case of any default in the payment of said indebtedness, the trustees, upon the request of the respondent, should sell the lands, after giving certain notice, and apply the proceeds to the payment of said indebtedness. It was also provided in the deed of trust that the respondent might, by a resolution of its board of directors, appoint other trustee or trustees in place of those named therein to execute the trusts, and that upon a conveyance by the designated trustees to the trustee so appointed, he should be vested with all the estate, trusts, and powers in the premises conferred upon the original trustees. November 22, 1894, the respondent appointed the California Title Insurance and Trust Company as trustee to execute the trusts under said deed, in place of Balfour and Forman, and thereupon Balfour and Forman executed to the said substituted trustee a conveyance of the lands described in the deed of trust. The appellant made default in the payment of his indebtedness to the respondent, and -on January 5, 1895, the respondent requested the substituted trustee to sell the land in accordance with the terms of the deed of trust. Thereupon, after giving the notice required b:y the instrument, the said trustee sold the same at public action to the respondent, and on February 5, 1895, executed to it a conveyance thereof. The respondent entered into possession of the property, and subsequently brought the present action to quiet its title thereto. Judgment was rendered in its favor, and the present appeal is taken therefrom and from an order denying a new trial.

1. The transfer and assignment from Balfour and Forman to the California Title Insurance and Trust Company purported to have been executed in accordance with a resolution of the board of directors of the plaintiff, and had attached thereto a copy of such resolution, certified by the assistant secretary of the plaintiff. When it was offered in evidence the defendant objected, upon 'the ground that no authority for making the assignment was shown; 'that- the assistant secretary was not competent to authenticate the resolution so as to make the transfer [172]effective. It was not requisite, however, to the validity of the assignment that any copy of the resolution should be annexed thereto. The deed of trust provided that tire plaintiff might appoint another trustee by resolution of its board of directors, and “upon such appointment,” and a conveyance to him by -the trustees named in the deed of trust, he should become vested with all the powers vested in the trustees originally named. The subsequent provision in the instrument that a copy of the resolution certified by the secretary should he conclusive' against the grantor that the substituted trustee had been duly appointed, did not render such copy the exclusive mode of showing that the substitution had been made. The plaintiff had offered in evidence its records containing the original resolution adopted by its board of directors for -the appointment of the substituted trustee, and a request for the transfer and assignment to it. This evidence sufficiently established the authority of Balfour and Forman to make the transfer and assignment.

Balfour-Guthrie Investment Co. v. Woodworth

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