King v. Finch

BARNARD, P. J. This is an action to foreclose a bond indenture in the form of a trust deed which was given under date of September 5, 1928, for the purpose of securing a loan of $60,000, evidenced by certain notes. All of these notes became due September 5, 3933, and each note recited that it was one of a series of 170 notes secured by this deed of trust.

The notes were sold to various people and none of the notes were paid when due. At the time this action was filed, on September 3, 1937, the plaintiff was the holder of certain of these notes, the principal of which totaled $54,400. He brought this action in his own behalf and for the benefit of all other holders of these notes, making the others defendants by reason of the fact that they had refused to join as plaintiffs. All of the other noteholders defaulted or consented to the judgment with the exception of the defendant Una Hansen. With respect to her, the plaintiff reported to the court that he was unable to locate her and asked the court to protect her interest in any decree that should be entered.

The court found in all respects in favor of the plaintiff, including a finding that the plaintiff was the owner and holder of notes secured by this trust deed which totaled $54,400, and that the remaining $5,600 in notes were owned by four people, one of these being Una Hansen who held notes totalling $1600. A judgment was entered in which it was ordered that the real property described in the trust deed should be sold by a commissioner at public auction; that the proceeds of the sale, up to the full amount due, should be paid to the plaintiff; that he should immediately pay to the other noteholders their proportionate share of the proceeds; and that if any of these noteholders should refuse to accept their share within thirty days the respective amounts should be deposited by the plaintiff with the clerk of the court for the benefit of such parties. The judgment further provided for the entry of a deficiency judgment under certain circumstances, with a corresponding provision for the payment to the other noteholders of their proportionate share of any proceeds from such a deficiency judgment or for the deposit in court of such share for .the benefit of any such parties. From this judgment the defendants Finch, who borrowed the original $60,000 and gave the trust deed as security therefor, have appealed.

[833]Appellants’ main contention is that this action could not be brought or maintained by the respondent since he was merely one of the noteholders. In this connection it is argued that the trust deed provides for a sale by the trustee in case of any default, that any action in court that might be brought is limited by the terms of the trust deed to one brought by the trustee, and that to permit the judgment to stand would impair the obligation of the contract which was executed by the appellants. It rather clearly appears from the evidence that the trustee had refused to take any action for the enforcement of the provisions of this trust deed. Under such circumstances general statutory and equitable provisions and rules would probably be effective to sustain the relief here granted. (Lincoln v. Superior Court, 2 Cal. (2d) 127 [39 Pac. (2d) 405]; Curtin v. Krohn, 4 Cal. App. 131 [87 Pac. 243]; Bayer v. Hoagland, 95 Cal. App. 403 [273 Pac. 58]; Lowe v. Los Angeles Suburban Gas Co., 24 Cal. App. 367 [141 Pac. 399].)