Hohn v. Riverside County Flood Control and Water Conservation Dist.

• Citation: 39 Cal.Rptr. 647,228 Cal.App.2d 605
• Court: California Court of Appeals
• Decision Date: 22 July 1964
• Parties: Jacob J. HOHN et al., Plaintiffs and Respondents, v. RIVERSIDE COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT, Defendant and Appellant. Civ. 7301.

Page 647

39 Cal.Rptr. 647

228 Cal.App.2d 605

Jacob J. HOHN et al., Plaintiffs and Respondents, v. RIVERSIDE COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT, Defendant and Appellant.

Civ. 7301.

District Court of Appeal, Fourth District, California.

July 22, 1964.

Ray T. Sullivan, Jr., Riverside, Riverside County Counsel, for defendant and appellant.

Hennigan, Ryneal & Butterwick and Fred H. Ryneal, Riverside, for plaintiffs and respondents.

RALPH M. BROWN, Justice.*

Appellant appeals from a judgment in favor of respondents quieting title to real property in an action filed on July 22, 1959. Respondents' first amended complaint first sought to quiet title and second, to recover the rental value of appellant's possession of the property. Consideration of the second cause of action was deferred by stipulation until the decision was reached on the first cause of action.

The property involved herein was owned in 1929 by O. L. Berge and Persis Bergen who, on April 1, 1929, executed two notes, one in the amount of $14,000 and the other for $6,000, both secured by a deed of trust in favor of W. A. Van Horn and Maggie A. Van Horn. The $14,000 note and the deed of trust were assigned on May 18, 1929, to Lillian F. Woods and Cecile Woods Lewis as joint tenants, and were thereafter assigned to respondents by written instrument dated February 3, 1950, for a consideration of $3,000. Thereafter, a substitution of trustees under the deed of trust was accomplished by judicial proceedings in Riverside County Superior Court and respondents recorded a notice of default under said deed of trust on January 12, 1956. The property was then sold at a trustee's sale on December 17, 1956, the respondents being the purchasers at said sale for $85,000.

The appellant traced its title through various conveyances from the common source, the first of which was a deed dated April 20, 1929, from the Bergens to F. D. Cornell Company. In 1950 the appellant had acquired an option to purchase the real property which is the subject of this litigation, but it was never exercised. On December 12, 1951, the appellant filed a condemnation action relating to the real property in question in which the respondents were named as parties defendant, and obtained immediate possession of the premises by an order on December 30, 1952. This action was never brought to trial and was dismissed on January 19, 1959. The respondents had sought to compel adjudication of the rights of the parties to these premises and filed a notice to vacate the dismissal, without success, the motion being denied by the trial court on February 20, 1959.

The deed of trust under which the respondents assert their claim of title was, by its terms, security for two promissory notes. The first note dated April 1, 1929, was for $6,000, to mature on October 1, 1929; and the second note of the same date was for $14,000, the latter to mature April 1, 1932. Evidence of ownership was introduced by respondents only as to the $14,000 note, and it does not appear from the record that respondents assert any claim to the $6,000 note, and the explanation as to what happened to it is not clear from the record. It was stipulated between the parties that a common source of title of the appellant and respondents had been established, to wit, through the O. L. Bergens.

Respondents Acquired Entire Legal Title to the Property by Exercising the Power of Sale Upon Default Payment of One of Two Notes Secured by the Deed of Trust.

Appellant claims that respondents, at the most, could assert only a propertional interest in the security of the trust deed because of their $14,000 note and not the $6,000 note, which it claims was not included in the sale.

It is true, as stated in Phelan v. Olney, 6 Cal. 478, 483, that if a part of several notes secured by a mortgage be assigned by the mortgagee, a pro rata portion of the security accompanies the note or notes assigned, and, as the court said in Grattan v. Wiggins, 23 Cal. 16, 30: '* * * it would seem to be but just and equitable that each should be entitled to a pro rata share, upon the principle that equity delights in equality.'

California does hold, however, that the trustee holds the legal title, and it would follow logically from this foundation that upon consummating one sale, the trustee would have no further title capable of being transferred at a later sale.

The $6,000 note was last in the possession of respondents' predecessors in interest and is claimed to have been destroyed. In Grattan v. Wiggins, supra, 23 Cal. 16, at pages 31-32, it was said:

'It follows, therefore, that Foster had the right to foreclose the mortgage and sell the whole of the mortgaged property, or so much thereof as might be necessary for the payment of that part of the mortgage debt held by him; that the holders of the other notes had no right to require him to pay them a pro rata portion of the proceeds of the sale, and if it required a sale of the whole of the mortgaged property to pay his debt, it would leave nothing upon which they could claim any lien or incumbrance. The interest of the holders of the other notes was not that of subsequent incumbrancers to Foster, but simply as parties having an interest in the same incumbrance upon such portion of the mortgaged premises as might remain after the satisfaction of that portion of the debt held by Foster. They could not properly be designated as the holders of a junior incumbrance, because they claim under the same mortgage, and not by a junior one. They had an interest in a portion of the mortgaged debt; that is, that portion of it held by them, but not in that portion held by Foster. They would have been proper parties as co-plaintiffs with Foster, in the suit to foreclose, so that they could receive any overplus of the proceeds of the sale of the mortgaged property which might remain after the payment of Foster's lebt, but they were not necessary paries in the sense that no decree of foreclosure could be made without bringing them in.'

In volume 34, California Jurisprudence 2d, Mortgages, section 474, at page 155, it is said: 'Even if the trustee should misapply the funds received from the sale, the title of the purchaser would not be affected.'

In Borneman v. Salinas Title Guar, Co., 66 Cal.App.2d 500, at page 503, 152 P.2d 649, at page 651, the court said:

'Assuming, without deciding, that the trustee made a wrongful application of surplus purchase money, that might give plaintiff a right of action against the trustee but it could not affect the title of the purchasers at the trustee's sale.'

Section 473 of volume 34, California Jurisprudence 2d, page 154, states:

'A sale conducted in accordance with the terms of a power of sale in a mortgage or trust deed, on its consummation by a conveyance, confers the absolute legal title on the purchaser. The purchaser obtains not only the fee but also all the incidents, including the right to possession free of all claims on the part of the mortgagor or trustor. His title is free of all claims subordinate to the mortgage or trust deed under which the sale was made, but subject to all prior liens, including liens for taxes.'

Respondents' Superior Title

To establish a prima facie case in a quiet title action, where the plaintiff relies upon a paper title alone, '* * * he must trace his title (1) to the government; or (2) to a grantor in possession at the time of the conveyance to the plaintiff; or (3) to a source common to the chains of title of plaintiff and defendant.' (Ernie v. Trinity Lutheran Church, 51 Cal.2d 702, 706, 336 P.2d 525; 41 Cal.Jur.2d, Quieting Title, § 75, pp. 570-571.)

The stipulations establishing a common source of title of the parties to this lawsuit are sufficient to establish a prima facie case. The issue then becomes a question as to whether respondents or appellant have established a better title from that common source.

In Wagnor v. Blume, 71 Cal.App.2d 94, at page 102, 161 P.id 1001, at page 1005, the court stated:

'* * * where both parties derive title from a common source the burden is placed upon the party having the inferior title from the common source if he relies upon title from another independent source, to prove that the title acquired from the independent source is paramount to the title in the common source; the proof by one party of better title from a common source makes out a prima facie case for him, and the burden of establishing a superior title from some other source is then cast upon the other party.'

Appellant having made no claim to a paramount title derived through an independent source, then respondents must prevail if they had a better title from the Bergens than that held by the appellant. In Santens v. Los Angeles Finance Co., 91 Cal.App.2d 197, 202, 204 P.2d 619, 622, the court said:

'Plaintiff made out a prima facie case, since it was stipulated that Charles E. Holtzman was the owner in fee of the real property described in the complaint, and that he was the common source of whatever right, title or interest the parties or either of them possessed.'

The court thus found that the plaintiff had established a better title from the common source.

The case of Phillips v. Menotti, 167 Cal. 328, 139 P. 796, further illustrates the point that in an action to quiet title where a common source of title is established, plaintiff proves a prima facie case by introduction of a deed to himself from the common grantor, without proof of possession, or further proof as to title in him. There, plaintiff proved a deed to himself from the common grantor while defendant relied upon a previous unrecorded executory contract of sale with the common grantor.

The respondents having shown a clear and unbroken chain of title through the medium of the deed of trust aforesaid from the Bergens to themselves, respondents' title as derived from the Bergens is superior to the appellant's, whose chain of title from the...