Herbert Craft Co. v. Brian
Before: Temple
Synopsis
Trust Deed.—In an Action to Becover the Balance Due on a note after sale under a trust deed securing it, a claim set up in defendant’s answer that the trust sale was void, and that no suit could be maintained on the note until the security was exhausted, conflicted with a claim, also set up in such answer, that defendant was entitled to the profits realized from a resale of the property which defendant had purchased at the trust sale; and the granting of relief based on one of such claims would exclude the granting of that based on the other.
Trust Deed.—A Deed of Trust to Secure a Debt, With Power of Sale to be exercised after breach of the obligation which it is given to secure, is, in effect, only a mortgage with power of sale, such as is authorized by 'Civil Code, section 2932, and is within the policy of Code of Civil Procedure, section 726, providing that only one action can be maintained to enforce any debt or right secured by a mortgage, and that such action shall be the one therein prescribed, which contemplates a sale and exhausting of the security before any personal judgment can be rendered.
Trust Deed.—The Trustees in a Deed of Trust to Secure a Debt, whb were apparently not interested in the debt at the time of the execution of the deed, subsequently, without the knowledge or consent of the grantors, became shareholders and directors in a corporation which thereafter purchased the debt. The corporation then had the property sold by the trustees, bought it in, and sold it again at a profit. Held, that the sale was voidable at the mere instance of the grantor, or, if affirmed by him, he was entitled to an accounting for the profits of the resale, and to credit therefor as of the time of the resale.
Trust Deed.—The Assignee of a Note Secured by a Deed of trust, who purchases the property at a sale under the deed of trust, cannot deny that the payee of the note, his assignor, accepted the deed of trust- as security for such note.
TEMPLE, J. This action was brought upon a promissory note executed by James M. Bryan and his wife, Dollie L. Bryan. Since the commencement of the action, James M. Bryan has died, and the case is continued against Dollie L. Bryan, as administratrix, and also against her personally. The note was executed by both husband' and wife on the third day of June, 1893, for $10,000, with interest at the rate of nine per cent per annum, compounded annually. In the answer, as one defense, and in a cross-complaint, the defendant avers that on the eleventh day of December, 1893, James M. Bryan and Dollie L. Bryan executed for Herbert Craft, who was the payee in the note, a deed of trust conveying to George H. Craft and E. R. Craft, as trustees, certain lands as security for the payment of the note. The terms of the trust deed are stated in full in the pleadings. It is also charged that the note so secured by the trust deed was duly assigned to the plaintiff, the Herbert Craft Company, which is a corporation, and subsequently thereto, to wit, on the thirteenth day of June, 1896, the said trustees, in pursuance of the trust deed, sold the lands described and conveyed therein and thereby to the Herbert Craft Company for the sum of $10,000. It is averred that thereafter the corporation, acting through George H. Craft and E. R. Craft, sold the said lands to Martha B. Grinnell for $12,500. The defendant seeks an accounting, and claims the right to have the profit made by the Herbert Craft Company credited upon the indebtedness. This suit is brought to recover the sum which remains due on said promissory note after the sale by the trustees giving credit for $10,000, the amount realized from the sale by the trustees.
A feeling of doubt as to the remedy they were entitled to, if any, must have affected defendant’s attorneys when the pleadings were drawn. The facts are apparently stated fully and in detail, and in the answer and cross-complaint the defendant insists that the sale to the Herbert Craft Company is void, and that she, or the estate, is entitled to [925]the profits realized. It is evident that the two demands cannot both be granted. The claim that the sale is void, coupled with the contention that no suit can be maintained upon the note until the security has been exhausted, is in the nature of a plea in abatement. The other is a proposal to affirm the sale to Mrs. Grinnell and a demand for the proceeds of the sale. The court, on motion of the plaintiff, struck out that part of the answer which sets up as matter of defense the facts concerning the trust and also the cross-complaint, and, of course, declined to receive evidence sustaining such defense or the cross-complaint. The questions raised on this appeal are whether such orders are erroneous.
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