Cockerell v. Title Ins. & Trust Co.

• Decision Date: 24 February 1954
• Citation: 267 P.2d 16,42 Cal.2d 284
• Court: California Supreme Court
• Parties: COCKERELL et al. v. TITLE INSURANCE & TRUST CO. et al. L. A. 22764.

Page 16

267 P.2d 16

42 Cal.2d 284

COCKERELL et al. v. TITLE INSURANCE & TRUST CO. et al.

L. A. 22764.

Supreme Court of California, In Bank.

Feb. 24, 1954.

Rehearing Denied March 25, 1954.

N. S. Crowley, Bellflower, for appellants.

No appearance for defendants and respondents.

Morris Lavine, Los Angeles, for cross-complainants and respondents.

CARTER, Justice.

Plaintiffs and cross-defendants, Rowena F. Cockerell and Jeannie A. Hinds, appeal from a judgment entered against them in an action for declaratory relief.

On August 28, 1951, Ernest A. Coe and Helen Jean Coe, husband and wife, were the record owners of the real property here involved. This property was subject to a first deed of trust dated May 5, 1947, executed by Metropole Holding Co., Inc., a corporation, to Lawyers Title Co., trustee, to secure an indebtedness of $63,000. It was also subject to a second trust deed dated October 16, 1947, executed by Omart Investment Co., Ltd., to Title Insurance and Trust Co., trustee, to secure an indebtedness of $27,500. It was subject to a third trust deed, dated September 2o, 1948, executed by Russ Green and Ethyl Green to Security First National Bank of Los Angeles, trustee, to secure an indebtedness of $10,983.80 in favor of Crestomore Company. Plaintiffs' claim is by virtue of an alleged assignment from the Crestmore Company.

Defendants and cross-complainants, T. E. Denny and Edna Denny, on August 28, 1951, held an unrecorded deed to the property which they had received from Ernest A. Coe and Helen Jean Coe.

On April 26, 1951, foreclosure proceedings in accordance with the provisions of section 2924 of the Civil Code were instituted by the Title Insurance and Trust Company, as trustee, under the second deed of trust. These proceedings culminated in a sale which was held on August 28, 1951. At this sale, the trustee Title Insurance and Trust Company received the sum of $25,950. The balance due, under the deed of trust so foreclosed, including the expenses of sale, amounted to $19,023.98 leaving a surplus yield of $6,926.02. This surplus yield is the subject matter of the controversy between plaintiffs and defendants. Plaintiffs claim as the owners of the third trust deed by virtue of assignment from the beneficiary, Crestmore Company; defendants claim as the owners of the unrecorded deed to the property. Both parties made demands for the surplus yield upon defendant trustee, Title Insurance Company. Defendant trustee answered and cross-complained, and was permitted to deposit with the clerk of the court the surplus funds amounting to the sum of $6,926.02 and the action was ordered dismissed as to it.

The trial court found that defendants, T. E. and Edna Denny, were the owners of the property involved; that there was a surplus yield of $6,926.32 after the foreclosure sale under the second deed of trust; that at the time of the trustee's sale, there was on record a purported third trust deed, executed by Russ Green and Ethyl Green, to Security-First National Bank of Los Angeles, trustee, in favor of Crestmore Company, as well as a purported fourth trust deed executed by T. E. and Edna Denny to Liberty Escrow Company, trustee, in favor of Ernest A. and Helen Jean Coe. It found that the liens, if any, of the third and fourth trust deeds, were extinguished by the foreclosure of the second deed of trust; that it was not true that plaintiffs were the owners of the note and third deed of trust by means of assignment by the Crestmore Company; that it was not true that there was an unpaid balance due plaintiffs on their alleged third deed of trust and note in the sum of $7,049.35. It was also found that Ernest A. and Helen Jean Coe had no right, title, or interest in or to the real property involved, or to the surplus yield; that plaintiffs had no right, title or interest in the surplus yield or the real property; that T. E. and Edna Denny, as joint tenants, were entitled to a judgment for the surplus yield.

Plaintiffs' first contention is that the court erred in denying their motion for judgment on the pleadings. It was argued that the only issues raised in the pleadings were issues of law. In the complaint, plaintiffs alleged their ownership of the note secured by the third deed of trust by virtue of an assignment from the Crestmore Company. This was denied, upon lack of information by the defendants. Plaintiffs contend that a judgment may be rendered on the pleadings if the answer consists of denials on information and belief or for want of information or belief of matters which the defendant is presumed to know, 21 Cal.Jur. 237; Wickersham v. Comerford, 104 Cal. 494, 38 P. 101 and Overton v. White, 18 Cal.App.2d 567, 64 P.2d 758, 65 P.2d 99. No contention is made that the denial contained in defendants' answer '* * * these defendants do not have sufficient information as to the allegation contained therein (as to the fact of assignment) and basing their denial upon that ground, generally and specifically deny the same' is insufficient to raise an issue as to the fact of assignment because it does not follow the wording of the statute, Code Civ.Proc. § 437, which provides for a denial upon lack of information or belief. This type of denial has been held insufficient to raise an issue of ownership. May v. Board of Directors, 34 Cal.2d 125, 208 P.2d 661. However, at the trial plaintiffs treated the question of assignment as an issue, and at the commencement of the trial, introduced in evidence the note bearing on its back the assignment thereof to them. The only evidence as to the assignment was introduced by plaintiff Hinds as will hereafter appear. It is a general rule that where, notwithstanding the fact that the denials in an answer are not as broad as the allegations of the complaint or are otherwise insufficient to put the allegations of the complaint in issue, but the answer is treated as putting the material facts in issue, the plaintiff cannot for the first time on appeal object that such denials were insufficient for any purpose. 3 Cal.Jur.2d, § 149; Adams v. Bell, 5 Cal.2d 697, 56 P.2d 208; Hernandez v. Hernandez, 109 Cal.App.2d 903, 242 P.2d 59. In Aronson & Co. v. Pearson, 199 Cal. 295, 298-299, 249 P. 191, 193, it was said: 'Such a denial will not be held fatally defective upon appeal if it was treated by the parties at the trial as creating an issue, but, since in this case neither party offered any evidence bearing upon the question, there is no ground for holding that it was so treated.' Any objection to the sufficiency of the denial in defendants' answer could have been obviated had proper objection thereto been made in the court below. To hold now that the defective answer raised no issue of fact when it was so treated by all the parties and the court upon the trial below would be 'clearly unjust.'

The situation here is somewhat similar to those cases where issues not raised by the pleadings are litigated at the trial without objection. As stated by Mr. Justice Schauer in Vaughn v. Jonas, 31 Cal.2d 586, at page 605, 191 P.2d 432, at page 444: 'The evidence hereinabove reviewed is consistent with the view that the case was tried on the theory that malice was at issue and that punitive damages were claimed. A party cannot permit an issue to be litigated and on appeal escape the consequences by claiming that such issue was not pleaded. (Slaughter v. Goldberg, Bowen & Co. (1915), 26 Cal.App. 318, 325, 147 P. 90; Boyle v. Coast Improvement Co. (1915), 27 Cal.App. 714, 720-721, 151 P. 25; Hirsch v. James S. Remick Co. (1918), 38 Cal.App. 764, 767, 177 P. 876; Pioneer Truck Co. v. Hawley (1920), 47 Cal.App. 594, 595, 190 P. 1037; McCord v. Martin (1920), 47 Cal.App. 717, 723, 191 P. 89; Avakian v. Noble (1898), 121 Cal. 216, 219, 53 P. 559; 8 Cal.Jur. 893.)'

Moreover it is apparent from the phraseology used in plaintiffs' brief on appeal that they considered the denial technically sufficient. Plaintiffs argue (P. 10) 'Defendants Denny admitted all the facts alleged, except that they denied for lack of information or brlief the alleged assignment of the third trust deed to plaintiffs and the balance which said defendants assumed when they purchased the property from defendants Coe.

'Plaintiffs moved for judgment on the pleadings on the rule that denials on information and belief of facts presumptively within the knowledge of the defendants raised no issue. * * *' It was also stated that 'The defendants, T. E. Denny and Edna Denny, admitted all the allegations of the complaint except that for lack of information or brlief they denied the allegations of ownership of the third trust deed in the plaintiffs and for the same reason denied the alleged balance due thereunder.' (Emphasis added.)

It appears here that defendants did not, presumably, have knowledge as to how plaintiffs' alleged assignor derived title since there is no allegation to that effect in the complaint; nor did they know how plaintiffs themselves derived title since the only allegation concerning it is the statement that they claim by virtue of an assignment from the Crestmore Company which, in turn, claimed under a trust deed executed by Russ and Ethyl Green who were, apparently, strangers to the title. It follows that under the circumstances here prevailing plaintiffs cannot now predicate error on the ruling of the trial court in denying their motion for judgment on the pleadings.

It is next contended that the court erred in finding that plaintiffs were not the owners of the third trust deed and note by virtue of assignment. This is, essentially, a contention that the evidence is insufficient to support the findings of the court in this respect. Mrs. Jeannie A. Hinds, the only one of the two plaintiffs to testify, said that she received the note late in the evening on the day before the foreclosure sale. The note was received in evidence. The note, for $10,983.80, secured by a deed of trust, was made payable to '...