Journigan v. Stenzel

HOUSER, P. J. Prom the record herein, in substance it appears that some time prior to the date on which the action which furnishes the foundation for the appeal herein was commenced, the defendants borrowed $12,000 from plaintiffs, for which sum defendants gave to plaintiffs their promissory note; and as security for said loan and promissory note, made and delivered to a trustee, for the benefit of plaintiffs, de[486]fendants ’ trust deed to certain real property that was improved as a walnut grove, together with a certificate for certain shares of stock in a water company, by reason of which defendants became entitled to and did procure water for the necessary irrigation of said walnut grove. In the course of events, default in the payment of the promissory note having occurred, on demand of plaintiffs, the trustee sold the real property only for a sum considerably less than the amount due on account of the indebtedness represented by the promissory note. Thereafter, plaintiffs commenced the instant action against defendants to recover a deficiency judgment against them for the difference between the amount due on the promissory note and the amount realized by plaintiffs upon the sale of the walnut grove.

On the trial of the action, pursuant to notice theretofore given by defendants to plaintiffs of defendants’ intention so to do, the latter offered to amend their answer to the complaint in two particulars, namely:

(1) That in the “foreclosure" of the trust deed, by causing the real property only to be sold, plaintiffs had violated the agreement made by the parties to the effect that in the event of “foreclosure" the real property and the water stock would be sold together; and that because of such breach of contract, on the sale of said real property, it had not brought the price that would have been received for it, and thereupon have been creditable on the promissory note, that would have been realized had the said provision of the said agreement not been violated by plaintiffs.

(2) That (as in substance was alleged) because after a default judgment against defendants had been taken in the instant action and said judgment thereafter had become a lien upon or against the property of defendants, in consideration of an agreed or stipulated lien to the same legal effect as was created by and in consequence of said judgment, it had been agreed and stipulated by the parties that in order that defendants might appear and defend in the action, the said judgment and default be vacated, but that the said later and stipulated lien would stand as security for any judgment that thereafter might be recovered in the action, “said lien to expire on the entry of judgment either for or against said titenzels’’ (defendants) ;—the said defendants asserted that for the reason that under the provisions of section 726 of the