Strutt v. Ontario Sav. & Loan Assn.

• Decision Date: 21 November 1972
• Citation: 105 Cal.Rptr. 395,28 Cal.App.3d 866
• Court: California Court of Appeals Court of Appeals
• Parties: Archie G. STRUTT, Plaintiff and Appellant, v. ONTARIO SAVINGS AND LOAN ASSOCIATION et al., Defendants and Respondents. Civ. 11967.

Page 395

105 Cal.Rptr. 395

28 Cal.App.3d 866

Archie G. STRUTT, Plaintiff and Appellant, v. ONTARIO SAVINGS AND LOAN ASSOCIATION et al., Defendants and Respondents.

Civ. 11967.

Court of Appeal, Fourth District, Division 2, California.

Nov. 21, 1972.

Hearing Denied Feb. 7, 1973.

[28 Cal.App.3d 869] Robert W. Battin, Santa Ana, for plaintiff and appellant.

Kellett, Oksner & Spada, Los Angeles, and Fitzpatrick & Wiley, Pasadena, and D. Joseph Spada, Los Angeles, for defendants and respondents.

OPINION

KAUFMAN, Acting Presiding Justice.

On theories of fraud, negligence and unjust enrichment plaintiff sought damages, compensatory and punitive, against defendants Ontario Savings and Loan Association (hereinafter Ontario Savings) and Ontario Title Service Company, Inc. (hereinafter Ontario Title) for wrongful exercise of a private power of sale in a deed of trust and conversion of personal property. Plaintiff's third amended complaint also sought declaratory relief. From an adverse judgment on all counts following trial to the court without jury, plaintiff appeals.

Pertinent Facts

In April 1965, plaintiff purchased certain real property consisting of several rental units in the City of Costa Mesa, County of Orange. He purchased the property for a total consideration of approximately $36,000 including the assumption of an existing promissory note secured by a first deed of trust in favor of Ontario Savings as beneficiary and Ontario Title as trustee and the assumption of an existing promissory note secured by a second deed of trust in favor of one Ira Livingston. ¹ Until sometime in February 1967, plaintiff occupied one of the units as his residence and he had therein and in and about the property items of personal property.

On December 15, 1966, plaintiff defaulted in making the payments due under the promissory note secured by the first deed of trust and made no payments thereafter. As of that date the unpaid principal balance on the note secured by the first deed of trust was $23,115.41.

Sometime in early February 1967, plaintiff left the environs of Southern California and made a trip to Canada and several states within the United States in an attempt, according to his testimony, to liquidate other assets to provide funds to cure his defaults in payment on the first trust deed note. He did not inform either Ontario Savings or Ontario Title of his departure nor of the alleged purpose of his trip, nor, in fact, did he communicate with either of them in any way.

Pursuant to the terms of the first deed of trust and in compliance with the provisions of section 2924 of the California Civil Code, on February 9, 1967, a notice of default was recorded and thereafter notice of sale was posted and published. A copy of the notice of default and notice of sale was sent by registered mail to plaintiff at his last known address, but, apparently, these were not actually received by plaintiff.

Under the assignment of rent provisions of its trust deed, Ontario Savings gave notice to the occupants of the rental units to pay their rent directly to Ontario Savings as a result of which it received from tenants rents amounting to $665.17 which were applied by Ontario Savings to plaintiff's indebtedness. The rentals thus received by Ontario Savings were found by the court to be 'substantially insufficient to cure the delinquency on the Plaintiff's indebtedness under the first trust deed note . . ..'

On June 1, 1967, pursuant to the provision of the first deed of trust and in compliance with California Civil Code, section 2924, the property was sold by Ontario Title as trustee to Ontario Savings, the only bidder at the sale, for $23,443.40, the amount of plaintiff's indebtedness to Ontario Savings on that date. Subsequently, by grant deed dated July 3, 1967 and recorded September 1, 1967, Ontario Savings sold the property to James Iler for $32,500 ($6,500 cash down payment and a new loan of $26,000). After deduction of the costs of sale, Ontario Savings received a check in the amount of $30,719.65 which left Ontario Savings with a net gain of approximately $6,000. ² On June 1, 1967, the unpaid indebtedness to Livingston secured by second deed of trust ('sold out' by foreclosure on the first trust deed) amounted to approximately $6,000.

Meanwhile, on March 7, 1967, plaintiff was arrested for an alleged violation of section 476a of the California Penal Code (issuing a check without sufficient funds), and on March 24, 1967, criminal proceedings were suspended and proceedings instituted in the Orange County Superior Court under Penal Code, section 1368 to determine plaintiff's 'ability to understand the nature and purpose of the proceedings taken against him and to assist counsel in the conduct of his defense in a rational manner.' On April 20, 1967, the Orange County Superior Court made an order committing plaintiff to Atascadero State Hospital 'for care and treatment until such time as the superintendent shall certify that (he) can assist counsel in his defense.' In the order it was recited that 'the defendant is adjudged and decreed presently unable to assist counsel in his defense.' The word 'insane,' which appeared as part of the duplicated form, was specifically stricken out and the words 'unable to assist counsel in his defense' substituted therefor. Under date of June 15, 1967, the superintendent of Atascadero State Hospital executed a 'Certification of Sanity,' which stated that Mr. Strutt 'is now able to understand the nature of the charges against him and can cooperate rationally with his attorney in his defense. In accordance with Section 1372 of the Penal Code, I hereby certify that said defendant is now sane.' On June 30, 1967, in the Orange County Superior Court, the section 1368 proceedings were terminated and criminal proceedings were reinstituted. The case was remanded to the Municipal Court of the Newport Judicial District for further proceedings, plaintiff was released on his own recognizance, and subsequently, apparently, the charges were dismissed in the interest of justice.

On May 24, 1967, Ontario Savings first became aware that plaintiff was in Atascadero State Hospital when it was contacted by the guardianship division of the Department of Mental Hygiene and advised that the guardianship division was making an investigation of plaintiff's property, including the rental units, to determine what action, if any, should be taken with respect thereto. The guardianship division thereafter completed its investigation and made a determination that plaintiff had no equity in the rental units and that plaintiff's personal property located in and about the real property was reasonably valued at $100. Ontario Savings then paid $100 to the guardianship division for said personal property on behalf of plaintiff and thereafter took possession of the same. No request was received by Ontario Title or Ontario Savings from the Department of Mental Hygiene or anyone else for a postponement of the trustee's sale.

Contentions on Appeal

Originally, in addition to damages, plaintiff sought to invalidate the trustee's sale as well as the subsequent sale to Iler and named Iler as a party defendant. Iler had summary judgment which was affirmed on appeal by this court in Strutt v. Ontario Sav. & Loan Assn., 11 Cal.App.3d 547, 90 Cal.Rptr. 69 (petition for hearing by the California Supreme Court denied November 18, 1970). We there held that, assuming some fraud, imposition or breach of obligation by Ontario Title or Ontario Savings, the trustee's sale was not void but at most voidable; that Iler was a bona fide purchaser for value without notice; and that, as to him, the sales could not be set aside. Thereafter the case proceeded to trial against the remaining defendants with the result as indicated above. On this appeal plaintiff makes the following contentions.

(1) 'California Civil Code section 2924 denies constitutional due process and equal protection on its face under both California and federal law to the extent it permits a creditor to confiscate a debtor's home, furniture and personal belongings without a preliminary hearing.'

(2) 'California Civil Code section 2924 does not grant constitutional due process As applied to a debtor actually known to be incarcerated in a mental institution without a court appointed guardian?' (Original emphasis.)

(3) 'If one of two innocent people must bear a loss--the one with the greatest opportunity to avoid it, should bear it.'

(4) 'The omission of requested material findings requires reversal.'

(5) 'The findings are not supported by substantial evidence that will in turn support the judgment.'

(6) 'The trial court erred in dismissing plaintiff's cause of action for declaratory relief?'

Disposition

Plaintiff's contentions, if properly made, would present questions of grave concern and considerable import. In advancing these contentions, however, plaintiff has largely ignored findings of fact made by the trial court on substantial evidence that all but make unnecessary consideration of the weighty questions presented by plaintiff's view of the case.

Among the findings of fact made by the trial court are the following: 'Plaintiff was under no legal incapacity from the time he purchased the apartment property in April, 1965 until at least after the trustee's sale of the property on June 1, 1967.' 'The reasonable value of all of plaintiff's personal property located in and on said apartment property was $100.00 on June 16, 1967 when Ontario Savings paid $100.00 therefor.' 'Neither Ontario Savings nor Ontario Title exercised any dominion over Plaintiff's personal property until after Ontario Savings had purchased the apartment property and paid on Plaintiff's behalf $100.00 for said personal property.' 'The fair market value of the apartment property at the time of the trustee's sale on June 1, 1967 did not exceed the balances due on the first and second trust deed notes plus the...