Pomona Mutual Building & Loan Ass'n v. Smith

SHINN, J., pro tem. Plaintiff brought this action as beneficiary under a trust deed of real property given to secure the payment of a promissory note in favor of plaintiff and after default in interest payments, which default matured the principal of the note.

[511]The complaint sought relief by injunction to prevent defendants from collecting rents of the property and for their collection by means of a receivership. Plaintiff applied for the appointment of a receiver but the application was not ruled on by the court. It was alleged in the complaint that on the same day that the note and trust deed were given, the maker thereof, defendant Josephine B. Needham, made a written assignment to plaintiff of the rents of the real property and that her grantee, Lane W. Perry, had taken title to the real property with notice of the assignment and that he was collecting rents in violation of the agreement. Pending trial of the action plaintiff collected certain rents for which defendant Perry sought and recovered judgment» on his cross-complaint, which judgment ordered the return to Perry of rents collected by plaintiff up to the date when plaintiff acquired title to the property by foreclosure of the deed of trust.

Plaintiff’s appeal presents the sole question whether it was entitled to retain the rentals so collected. This question depends, first, upon a construction of the provisions the deed of trust, and, second, upon the effectiveness of the assignment of rentals as against defendant Perry, that is to say, whether as a purchaser of the property he was bound by the agreement made by his grantor.

By the terms of the trust deed the trustor, Josephine B. Needham, was required to make certain payments therein enumerated, namely, taxes, assessments, liens and encumbrances upon the property, premiums upon insurance policies which she was required to take out and keep in force, and she was required to complete in a good and workmanlike manner any building which might be constructed on the property and to pay when due all claims for labor performed and materials furnished therefor, using any funds advanced by plaintiff, for the purpose of erecting a building, in making payment of such claims for labor and material. The trustor further agreed to pay all assessments on stock of plaintiff association owned by her. Following these provisions and other usual terms of a trust deed, the indenture provided as follows: 1 ‘ Should the Trustor fail or refuse to make any payment or do any act, which he is obligated hereunder to make or do, at the time and in the manner herein provided, then the Trustees and/or the Beneficiary, each in his sole discretion, may, without notice to or demand upon the Trus