Bank of America Nat. Trust & Sav. Ass'n v. Stotsky

• Decision Date: 04 April 1938
• Docket Number: 26813.
• Citation: Bank of America Nat. Trust & Sav. Ass'n v. Stotsky, 77 P.2d 990, 194 Wash. 246 (Wash. 1938)
• Court: Washington Supreme Court
• Parties: BANK OF AMERICA NAT. TRUST & SAVINGS ASS'N v. STOTSKY.

77 P.2d 990

194 Wash. 246

BANK OF AMERICA NAT. TRUST & SAVINGS ASS'N v. STOTSKY.

No. 26813.

Supreme Court of Washington

April 4, 1938

Department 1.

Appeal from Superior Court, King County; Calvin S. Hall, Judge.

Action by the Bank of America National Trust & Savings Association against Samuel Stotsky for the deficiency remaining due on a note after the sale of realty securing the note under a trust deed.From a judgment for plaintiff, defendant appeals.

Reversed and new trial ordered.

Ben A Maslan and Philip Tworoger, both of Seattle, for appellant.

Carroll Hendron and E. P. Whiting, both of Seattle, for respondent.

HOLCOMB Justice.

This action was brought to recover a deficiency remaining due on a note after the sale of certain real property situated in California pursuant to a power of sale contained in a deed of trust.

Judgment was entered for respondent upon a directed verdict in its favor, and thereupon appellant appealed.

The facts necessary to present the issues raised are these: On or about December 22, 1927, appellant executed and delivered to the First National Bank of San Pedro, Cal., a certain promissory note in the sum of $11,500, payable to this bank, with interest until paid at 7 per cent. per annum.To secure the payment of this note, appellant, as trustor, also executed and delivered to respondent, as trustee for the above-mentioned bank, a deed of trust on the same date conveying certain real property in the counties of Los Angeles and San Diego, Cal.

The trust deed provides, in part:

'G. 1.Should breach or default be made by Trustor in payment of any indebtedness and/or in performance of any obligation, covenant, promise or agreement herein mentioned, then Beneficiary may declare all sums secured hereby immediately due, and in such case, shall execute and deliver to Trustee a written Declaration of Default and Demand for Sale and shall surrender to Trustee this Deed of Trust, the note and receipts or other documents evidencing any expenditure secured hereby.Thereafter there shall be recorded in the office of the recorder of the county or counties wherein said real property or some part thereof is situated, a notice of such breach or default and of election to sell or cause to be sold the herein described property to satisfy the obligations hereof.

'2.After three months shall have elapsed following such recordation of said notice, Trustee, without demand on Trustor, shall sell said property as herein provided, having first given notice of the time and place of such sale in the manner and for a time not less than that required by the laws of the State of California for sales of real property under Deeds of Trust.

'3.Trustee may postpone sale of all, or any portion, of said property by public announcement at the time fixed by said notice of sale, and may thereafter postpone said sale from time to time by public announcement at the time fixed by the preceding postponement; and without further notice it may make such sale at the time to which the same shall be so postponed, provided, however, that the sale or any postponement thereof must be made at the place fixed by the original notice of sale.

'4.At the time of sale so fixed, Trustee may sell the property so advertised, or any part thereof, either as a whole or in separate parcels at its sole discretion, at public auction, to the highest bidder for cash in United States gold coin, all payable at time of sale, and after any such sale and due payment made, shall execute and deliver to such purchaser a deed or deeds conveying the property so sold, but without covenant or warranty, express or implied, regarding title, possession or incumbrances.Trustor hereby agrees to surrender immediately and without demand possession of said property to such purchaser.The recitals in such deed or deeds of any matters or facts affecting the regularity or validity of said sale shall be conclusive proof of the truthfulness thereof and such deed or deeds shall be conclusive against all persons as to all matters or facts therein recited.Trustee, Beneficiary, any person on behalf of either, or any other person, may purchase at such sale.'

The complaint alleged that on January 17, 1928, the trust deed was recorded in the office of the county recorder of Los Angeles county, Cal., and that on January 24, 1928, this trust deed was also recorded in the office of the county recorder of San Diego county, Cal.The complaint sets forth several California statutes and amendments thereto relating to the steps to be taken in effecting the sale of the security provided for in the trust deed in the event of the default of the trustor.

Respondent alleged that appeallant was in default in the payment of principal and interest on the aforementioned note, and that taxes and assessments duly levied upon the property described in the trust deed were delinquent.The complaint also recites that respondent notified the trustee in writing of his default, and that notice of default and election to cause the property described in the deed of trust to be sold to satisfy the obligations of the trust deed was being recorded in the office of the county recorders of Los Angeles and San Diego counties, respectively, and demanded the trustee sell the property mentioned under the terms of the trust deed.The complaint also alleges that notices of the sale of the property at public auction to the highest bidder were posted and published setting forth the date, time, and place of the sale, pursuant to certain California statutes.

On May 8, 1934, respondent, being the highest bidder at the public auction, purchased the real property described in the trust deed situated in Los Angeles county for the sum of $6,800.On the same day, respondent, being the highest bidder, purchased the real property described in the trust deed situated in San Diego county for the sum of $1,700.On May 17, 1934, deeds covering these properties were executed and delivered by the trustee to respondent.It was further alleged that after the above-mentioned sale there remained unpaid upon the note in question $6,131.36, plus interest thereon at the rate of 7 per cent. per annum from May 8, 1934, which sum defendant had refused to pay.Therefore, respondent prayed for judgment against appellant for the sum of $6,131.36, together with interest thereon at the rate of 7 per cent. per annum from May 8, 1934.

Appellant filed an amended demurrer to the complaint on the first four grounds set out in Rem.Rev.Stat. § 259, and also on the ground that the complaint did not state facts sufficient to constitute a cause of action, and that the action had not been commenced within the time limited by law, and especially within the provisions of sections 335 to 337 of the Code of Civil Procedure of California.

Thereafter, appellant answered by a general denial and set up several affirmative defenses.First, that the action was not commenced within the time limited by law and is barred by section 335 of the Code of Civil Procedure of California, since this action arose between residents of California.Second, actions for money judgments for the balance due upon an obligation for the payment of which a deed of trust was given following the exercise of the power of sale must be brought within three months of the time of sale under such deed, under section 337 of the Code of Civil Procedure of California, as amended bychapter 790, p. 2116, of the 1933 Statutes of California and under section 580a, being part of chapter 642, p. 1672, § 4, of the Statutes of California for 1933 of the Code of Civil Procedure of California.Third, respondent orally agreed that in consideration of appellant's not contesting the sale, or making any attempt to redeem the property from the sale, respondent would not seek a deficiency judgment against appellant.It was further averred that relying upon this agreement appellant did not contest the sale under the trust deed nor attempt to redeem the property from the sale.Therefore, appellant prayed that respondent's action be dismissed.

In its reply, respondent admitted the enactment of section 337 of the Code of Civil Procedure of California, but alleged that this statute is not retroactive and is unconstitutional with respect to contracts entered into prior to its adoption, and that at all times mentioned in the complaint section 351 of the Code of Civil Procedure of California, providing the time of one's absence from the state is not part of the time limited for the commencement of the action, was still in full force and effect and that within ninety days after May 8, 1934, appellant left California and took up his residence in the state of Washington.

Respondent also admitted the existence of the statutes of California referred to by appellant, but alleged both of these statutes were inapplicable to the instant case and denied appellant's affirmative defenses.

The trial court entered an order on November 30, 1936, directing a commission to be issued to W. C. Wren for the purpose of taking depositions at Los Angeles, Cal., of L. S. Anderson, J. H. Crosby, and Howard Waterman, residents of California.

A trial by jury was demanded and granted.

At the conclusion of respondent's case appellant moved that the action be dismissed, which motion the court denied.At the conclusion of appellant's case respondent moved the court to direct the jury to return a verdict for respondent in accordance with the prayer of its complaint.

The jury was thereafter instructed to bring in a verdict in favor of respondent to which instruction appellant excepted.

Motions for judgment n.o.v. and for a new trial were made and denied.Judgment was entered for respondent in the sum of $7,408.98 plus...