Cherry v. Home Sav. & Loan Ass'n

• Decision Date: 30 September 1969
• Citation: 81 Cal.Rptr. 135,276 Cal.App.2d 574
• Court: California Court of Appeals Court of Appeals
• Parties: Tom CHERRY, Orrin Wickershim and Rosellen Wickershim, Plaintiffs and Appellants, v. HOME SAVINGS & LOAN ASSOCIATION, a California Corporation, Defendant and Respondent. Civ. 33439.

Page 135

81 Cal.Rptr. 135

276 Cal.App.2d 574

Tom CHERRY, Orrin Wickershim and Rosellen Wickershim, Plaintiffs and Appellants, v. HOME SAVINGS & LOAN ASSOCIATION, a California Corporation, Defendant and Respondent.

Civ. 33439.

Court of Appeal, Second District, Division 4, California.

Sept. 30, 1969.

Hearing Denied Nov. 26, 1969.

Morgan, Wenzel, Lynberg, Stearns & Morris, Los Angeles, for plaintiffs and appellants.

Engman, Holaday, Cooper, Cappai & Wiggins, for defendant and respondent.

DUNN, Associate Justice.

The trial court sustained, without leave to amend, respondent's general demurrer to appellants' first amended complaint. This appeal is taken from the ensuing order of dismissal entered pursuant to the provisions of Code of Civ.Proc. § 581, subd. 3.

The following facts are taken from appellants' first amended complaint: ¹ In 1964 appellants Orrin and Rosellen Wickershim, husband and wife, executed a promissory note secured by a deed of trust on certain real property in favor of respondent, Home Savings & Loan Association. In 1967 appellant Tom Cherry desired to purchase the property from the Wickershims. A contract was proposed under which Cherry was to purchase the property subject to the security interest of respondent and the Wickershims were to remain primarily liable under the deed of trust for all indebtedness due respondent.

Paragraph 12 of the deed of trust provided: 'That if the Trustor shall sell, convey or alienate said property, or any part thereof, or any interest therein, or shall be divested of his title or any interest therein in any manner or way, whether voluntarily or involuntarily, without the written consent of the Beneficiary being first had and obtained, Beneficiary shall have the right, at its option, to declare any indebtedness or obligations secured hereby, irrespective of the maturity date specified in any note evidencing the same, immediately due and payable.'

Pursuant to such provision, appellants Wickershim requested that respondent give its consent to the proposed sale of the property. Respondent refused to consent to the sale unless appellant Cherry would agree to assume, at a higher rate of interest, all indebtedness due respondent by appellants Wickershim. Accordingly, and in order that the escrow might be closed, appellant Cherry and respondent executed a document under which Cherry agreed to assume the promissory note and to pay an assumption fee of $471 and a higher rate of interest on the indebtedness in return for respondent's forebearing to exercise its right to accelerate the indebtedness. Cherry entered into the assumption agreement under protest, the agreement incorporating by reference a letter from appellants' attorney to respondent which stated that the assumption agreement was accepted subject to a declaration of appellants' rights by the Superior Court of Los Angeles County.

The question to be determined is whether the foregoing allegations of the complaint state facts sufficient to support an action for declaratory relief. Appellants contend they do.

While appellants ask us to find that the language of paragraph 12 is ambiguous, we do not find it so; its intent and meaning are perfectly clear and it appears not reasonably susceptible to any meaning other than that respondent's written consent need first be obtained or appellants run the risk of immediate acceleration of the debt. In oral argument, appellants conceded they would have no evidence to offer at trial attaching any different meaning or significance to the language than is apparent on the face of it.

Accordingly, we consider appellants' principal argument, namely, that an unwritten but implied term of the trust deed, and particularly of its paragraph 12, required that respondent act in accordance with concepts of good faith and fair dealing and therefore act reasonably in withholding its consent to any transfer of the property. We were informed in oral argument, and the complaint with its exhibits indicates, that the trust deed loan was for refinancing and was not a purchase money borrowing. As a result, the provisions of Code of Civ.Proc. § 580b do not operate to relieve appellants Wickershim of personal liability under the note for any deficiency. ² If appellants Wickershim sold the property, the purchaser would take it subject to the trust deed but the Wickershims would remain personally liable for a deficiency. The credit and character of the Wickershims for that reason are of some significance to the lender, respondent herein. Appellants point out, however, that if they sold the property to Cherry, respondent would still have the same security as if they had kept the property since the debt would remain, as before, secured by the trust deed and by the Wickershims' personal obligation. Their complaint prayed that the court find that: (1) respondent was obliged to exercise reason in giving or withholding its consent to the transfer; (2) the proposed transfer to appellant Cherry was reasonable, for which reason (3) the assumption agreement, entered into under protest, should be declared a nullity.

It is no doubt the rule that every contract involves an implied covenant of good faith and fair dealing. Comunale v. Traders & General Ins. Co., 50 Cal.2d 654, 658, 328 P.2d 198, 68 A.L.R.2d 883 (1958). Our inquiry relates solely to determining if this implied proviso required respondent to exercise 'reasonableness' in giving or withholding its consent prior to declaring the debt accelerated.

A plaintiff in a proceeding for declaratory relief is not required to allege facts entitling him to a favorable decree; in other words, if entitled at all, he is entitled to a decree whether it be favorable or unfavorable. Sullivan v. San Francisco Art Assn., 101 Cal.App.2d 449, at page 455, 225 P.2d 993, at page 997 (1950) states the following: '(3) Thus, it is well established that when the sufficiency of a declaratory relief complaint is being considered, it is of no consequence whether the plaintiff may be on the right side or on the wrong side of the controversy. The complaint may not be dismissed because the court disagrees, if it does, with the construction which the plaintiff would put upon the instrument involved.' (Also: 'Maguire v. Hibernia S. & L. Soc., 23 Cal.2d 719, 731, 146 P.2d 673, 151 A.L.R. 1062 (1944).)

Pursuant to Code of Civ.Proc. § 1060, a complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a written instrument and requests that such rights and duties be adjudged by the court. Bennett v. Hibernia Bank, 47 Cal.2d 540, 549--550, 305 P.2d 20 (1956); Columbia Pictures Corp. v. DeToth, 26 Cal.2d 753, 760, 161 P.2d 217, 162 A.L.R. 747 (1945). However, the controversy must be a real one; the mere allegation of a disagreement is not sufficient if there is no legal basis for it. There must be an actual, 'justiciable' controversy. Monahan v. Dept. of Water & Power, 48 Cal.App.2d 746, 751, 120 P.2d 730 (1941); Gillies v. La Mesa, etc., Irr. Dist., 54 Cal.App.2d 756, 762, 129 P.2d 941 (1942). The question here presented is one of pure law. No benefit to the litigants would result from a reversal of the order of dismissal and remand of the case for trial, for at a trial the judge necessarily must make the same determination we are asked now to make and from the same undisputed facts. The opinion of this court constitutes a declaration of the rights and duties involved. Haley v. L. A. County Flood Control Dist., 172 Cal.App.2d 285, 292--294, 342 P.2d 476 (1959).

The...