Read v. Mills Building Co.

SPENCE, J. This is an appeal by defendant from a judgment in favor of plaintiff in an action brought to recover a deficiency judgment on certain bonds issued by defendant.

The bonds in question were secured by a deed of trust and, after default, the trust property was sold by the trustee on August 27, 1936. Plaintiff’s action to recover the deficiency was not commenced until June 17, 1937, being approximately ten months after the time of the sale. Defendant interposed several defenses including the defense that the action was barred by the provisions of section 580a and of subdivision 1 of section 337 of the Code of Civil Procedure. The trial court found that the action was not so barred and entered its judgment in favor of plaintiff.

One of the main questions involved on this appeal is stated by defendant as follows: “Is an action for a deficiency judgment on bonds issued by a corporation and sold to the public and secured by a trust deed which is not commenced within three months after the date of sale under the trust deed barred by section 580a and subdivision 1 of section 337 of the Code of Civil Procedure”? Defendant contends that said question should be answered in the affirmative and we are of the opinion that this contention must be sustained.

Section 580a of the Code of Civil Procedure, relating to actions for deficiency judgments, was enacted in 1933 and provides in part, “Any such action must be brought within three months of the time of sale under such deed of trust or mortgage.” Subdivision 1 of section 337 of the Code of Civil Procedure, relating to actions on obligations founded on instruments in writing, was amended in the same year and the proviso then added reads as follows: “provided that the time within which any action for a money judgment for the balance due upon an obligation for the payment of which a deed of trust or mortgage with power of sale upon real property or any interest therein was given as security, following the exercise of the power of sale in such deed of trust or mortgage, may be brought shall not extend beyond three [142]months after the time of sale under such deed of trust or mortgage”. Said section 580a and certain other sections were reenacted in 1935 for the purposes expressed in section 9 of chapter 650 of the statutes of that year but such reenactment is of no importance in this discussion.

Plaintiff apparently concedes that if there had been no further legislative enactments, said sections would have barred the present action even though the bonds and deed of trust had been executed prior to 1933. (Palo Alto Mutual B. & L. Assn. v. Cook, 17 Cal. App. (2d) 193 [61 Pac. (2d) 499]; Reynolds v. Jensen, 14 Cal. App. (2d) 558 [58 Pac. (2d) 687].) He relies, however, on chapter 614 of the Statutes of 1935 and argues that his action was not barred by the three months’ limitation found in the above-mentioned sections. We will set forth the provisions of said chapter 614 of the Statutes of 1935, omitting only subdivision 2 of section 337, which has no application here. Said chapter reads as follows :