Corporation of America v. Bank of America National Trust & Savings Ass'n

JENNINGS, J. The plaintiff instituted this action to recover the principal amount of a certain promissory note executed by the Bank of Italy National Trust and Savings Association on September 16, 1927, together with the interest alleged to be due on such principal amount. The complaint also sought foreclosure of a mortgage on real property which was given to secure payment of the note. From a decree ordering a sale of the mortgaged premises the defendant, Luella Connard Jackson, has prosecuted this appeal.

[473]The following undisputed facts are pertinent to the questions which are here presented: On April 30, 1925, the Bank of Italy was appointed executor of the last will and testament of Arthur'T. Connard, deceased, and entered upon the discharge of its duties as such executor. The defendant, Luella Connard Jackson, was one of the heirs at law of the aforesaid decedent. Prior to April 18, 1927, the Bank of Italy National Trust and Savings Association succeeded to all the rights, duties and obligations of the Bank of Italy and on November 1, 1930, the Bank of Italy National Trust and Savings Association consolidated with the Bank of America of California under the name of Bank of America National Trust and Savings Association. The last-mentioned association succeeded to all the rights, duties and obligations of the Bank of Italy National Trust and Savings Association. On March 16, 1927, the Bank of Italy National Trust and Savings Association, as executor of the will of the aforementioned decedent, filed with the Superior Court of Kern County a petition for leave to borrow a sum of money not to exceed $15,000 and as security for the repayment of such loan to execute a mortgage on certain described real property of the estate of said deceased. The petition was granted by the court, whereupon, on September 16, 1927, the aforesaid executor executed a promissory note in the amount of $12,000, payable to itself one year after date, and to secure payment of the principal and interest of the note it executed a mortgage on the real property of the estate specified in the petition for leave to mortgage to itself as mortgagee. Prior to the commencement of the present action the Bank of America National Trust and Savings Association transferred and assigned the note and mortgage to the plaintiff. The note was not paid upon its maturity and at some time prior to September 16, 1932, the plaintiff filed its complaint seeking foreclosure of the mortgage.

The principal contentions advanced by appellant on this appeal are, first, that the mortgage whose foreclosure is permitted by the decree was void because it was made by the executor of the estate to itself in violation of the strict duty it owed to the estate, and, second, that the mortgage was void because of the lack of notice of the hearing of the petition for leave to execute the mortgage. The second of these contentions will herein be first considered.