San Gabriel Valley Bank v. Lake View Town Co.

California Supreme Court Apr 28, 1906Published

Before: Noyes

AI Brief

AI-generated · verify before citing

Holding. The court held that a mortgage and note are to be construed together as a single contract, and where the contract grants the mortgagee an option to accelerate the debt upon default, the filing of a foreclosure complaint constitutes a sufficient election to declare the entire principal due.

Issues

Whether a note and mortgage should be construed together to determine the mortgagee's right to accelerate the debt upon default.
Whether the filing of a foreclosure complaint constitutes a sufficient election to accelerate the debt under the terms of the contract.
Whether a complaint that is uncertain regarding the specific amount due is sufficient to support a judgment if no special demurrer was filed.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The filing of the complaint is, for all the purposes of the case, to be considered sufficient notice of the election, and of the amount claimed as due.”

Synopsis

Mortgage—Construing With Note.—Where a note is secured by a mortgage, the note and mortgage are to be construed together as evidencing the intent and purpose of the parties.

Mortgage—Maturity of Debt.—A note and mortgage securing the same provided that the principal should be paid in five years, that the interest was to be paid semi-annually, and if not paid when due, it should be added to the principal and bear the like interest; but, if default was made in payment of interest for thirty days, then the “whole sum, principal, here promised, shall, at the option of the holder of the note, become immediately due, payable, and collectible.” Held, that, where an action to foreclose was commenced thirty days, after default in payment of interest, the mortgage was subject to foreclosure at plaintiff’s election for the whole amount thereof.

Mortgage—Notice of Election to Declare Due.—Where a mortgage provided that on default for thirty days in interest, the whole sum, principal and interest, should become payable at the option of the holder, the filing of a complaint, after thirty days’ default in interest, seeking to recover the entire debt, constituted a sufficient notice of election by the mortgagee to claim the whole amount as due.

Mortgage—Foreclosure.—An Objection That a Complaint in a Suit to foreclose a mortgage was insufficient for want of facts in that no definite or separate amount was alleged to be due could be taken advantage of by special demurrer, and was waived by defendant’s failure to so object thereto.

Mortgage—Foreclosure—Res Judicata—Conclusiveness.—Where, in a suit to foreclose a mortgage, it was alleged “on information and belief” that M. had an interest in the said “premises or property mentioned” in said mortgage, but that the same was subsequent and subject to the mortgage interest, and M. made default, such default was tantamount to an admission that M.’s interest was subsequent to plaintiff’s, so that after judgment it was too late for him to assert that his rights were not adjudicated.

NOYES, Special Judge. Plaintiff filed complaint for the foreclosure of a mortgage executed by the defendant, the Lake View Town Company. The mortgage was given to secure the payment of a promissory note, likewise made by the said defendant to plaintiff for the sum of $5,000. The mortgage lien covers various subdivisions of land belonging to defendant, together with “one thousand shares of the capital stock of Lakeview Water Company; the said capital stock being in fact, and also mortgaged as, appurtenant to said land, on the plant of one share of the capital stock to each acre of said land.” The stock was evidenced by certificate No. 475, which was owned by the corporation defendant and assigned to plaintiff as pledgee in pursuance of the mortgage contract. The note, or that part of it pertinent to the legal questions here raised, is as follows:

“$5,000. Pasadena, Cal., April 10, 1901.

“Five years after date, excepting as herein otherwise stated, Lake Viéw Town Company, .... promises to pay unto San Gabriel Valley Bank, .... the sum of five thousand dollars, with interest thereon at the rate of ten per cent, per annum, payable semiannually. If interest be not paid when due, it shall be added to, and become a part of, and thereafter bear like rate of interest with, the principal sum. If default be made in the payment of interest for a period of thirty days, then the whole sum, principal, here promised, shall, at the option of the holder of this note, become immediately due, payable, and collectible.”

A copy of this note was inserted in the mortgage and made a part thereof, and the mortgage, in fixing the rights of the [268]parties thereto, provided, inter alia, but with some particularity, that “the mortgagor will, during the life of this mortgage, promptly pay all taxes that may be assessed against said mortgaged property, excepting the taxes upon the interest hereby created, and will pay all assessments that may be levied upon said water stock; that it will keep said land, or a large portion thereof, in reasonable state of cultivation; that it will promptly defend all adverse claims of title to, or lien against, such property. If the mortgagor fails to perform the tax, assessment, or defense covenants above stated, the mortgagee may perform the same and pay the expense of it, and the amount so paid, with interest thereon at the same rate named in said promissory note, shall be due and payable by the mortgagor to the mortgagee at the next interest due date therefor according to said note and be secured by said mortgage.....In case of default in making payments hereby secured, the mortgagee may cause the mortgage to be foreclosed and the mortgaged property sold in manner provided by law in foreclosure cases, ’ ’ etc.

San Gabriel Valley Bank v. Lake View Town Co.

AI Brief

Synopsis

More from California Supreme Court

Related research

AI Brief