Lancaster Sec. Inv. Corp. v. Kessler

• Decision Date: 24 April 1958
• Court: California Court of Appeals Court of Appeals
• Parties: LANCASTER SECURITY INVESTMENT CORPORATION, a California corporation, Plaintiff and Appellant, v. Howard M. KESSLER, State Mutual Building & Loan Association, a California corporation, State Mutual Building & Loan Association, a California corporation, doing business as State Mutual Savings & Loan Association and Title Insurance and Trust Company, a corporation, Defendants, Howard M. Kessler, State Mutual Savings & Loan Association and Title Insurance And Trust Company, Respondents. Civ. 22532.

Page 634

324 P.2d 634

159 Cal.App.2d 649

LANCASTER SECURITY INVESTMENT CORPORATION, a California corporation, Plaintiff and Appellant, v. Howard M. KESSLER, State Mutual Building & Loan Association, a California corporation, State Mutual Building & Loan Association, a California corporation, doing business as State Mutual Savings & Loan Association and Title Insurance and Trust Company, a corporation, Defendants Howard M. Kessler, State Mutual Savings & Loan Association and Title Insurance And Trust Company, Respondents.

Civ. 22532.

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

April 24, 1958.

Hearing Denied June 17, 1958.

Morris Lavine, Los Angeles, for appellant Lancaster Security Inv. corp.

Lawrence L. Otis, Gilbert E. Harris, James F. Healey, Jr., George R. Pfeiffer, Los Angeles, for respondents, Howard M. Kessler and Title Ins. & Trust Co.

John J. Guerin, Los Angeles, for respondent, Howard M. Kessler.

HERNDON, Justice.

The sole issue presented by this appeal concerns the validity of a foreclosure sale conducted by the trustee under the power of sale contained in a deed of trust. The judgment under review was rendered after a ruling which sustained defendants' objection to the introduction of any evidence. Therefore, we are called upon to decide the purely legal question whether the complaint stated a cause of action, that is to say, whether the facts alleged afforded any legal ground upon which to hold the trustee's sale invalid. Accordingly, the facts will be stated largely in the language of the complaint.

The deed of trust in question, which is conventional in form, was executed on January 19, 1950, by Mr. and Mrs. Eilers, plaintiff's predecessors in interest, to secure their obligation to repay a loan made by defendant State Mutual Building and Loan Association. The parties to the instrument were: (1) the Eilers as borrowers and 'trustors', (2) defendant State Mutual as lender and 'beneficiary', and (3) defendant Title Insurance and Trust Company as 'trustee.'

On April 27, 1953, appellant (plaintiff below) purchased the encumbered real property from the trustors and assumed the obligation secured by the trust deed. According to the complaint, State Mutual 'was notified that said property was transferred to plaintiff and that plaintiff assumed the payment of the obligation under said deed of trust, and was further notified that plaintiff's address was Box 987, Lancaster, California.'

Thereafter, a default occurred whereupon State Mutual executed a declaration of default and election to sell. Pursuant thereto the trustee proceeded to exercise the power of sale. At the trustee's sale held on April 18, 1956, defendant Kessler purchased the property for $3,000. It is alleged that on the date of sale 'there was due and unpaid under said deed of trust * * * a sum less than $2,000' and that 'the reasonable value of said * * * property is between $50,000 and $60,000.' Apart from allegations concerning plaintiff's offers fully to reimburse the purchaser and to pay any and all additional sums that might be deemed equitable, the following is the only other consequential allegation of fact to be found in the complaint: 'That neither the plaintiff, nor any of its officers, received notice of the trustee's sale.' The prayer of the complaint sought a judgment declaring the trustee's sale to be null and void and quieting appellant's title.

It is recited in the judgment that 'counsel for plaintiff having stated no additional facts could be alleged in an amended pleading' defendants' objection to the introduction of any evidence was sustained.

Appellant's major contention appears to be that since the original trustors were entitled to have notice of sale mailed to them at their address as given in the trust deed, and since the beneficiary had been notified of appellant's acquisition of the property, and of appellant's address, appellant, as successor in interest to the original trustors, was entitled 'to specific notice under section 2924b of the Civil Code.'

This contention is untenable. The only requirements of notice of sale essential to the validity of a sale under a power contained in a deed of trust are those expressly and specifically prescribed by the terms of the instrument and by the provisions of the applicable statutes. Ley v. Babcock, 118 Cal.App. 525, 528-529, 5 P.2d 620; Billings v. Farm Development Co., 74 Cal.App. 254, 264, 240 P. 298; Meyer v. Zuber, 92 Cal.App. 767, 772-773, 268 P. 954; Sargent v. Shumaker, 193 Cal. 122-130, 223 P. 464.

As stated in 34 Cal.Jur.2d, § 454, p. 128: 'Not less than 3 months after notice of default is given, the trustee, mortgagee, or beneficiary must give notice of sale, stating the time and place thereof in the manner required for sales of real property on execution. A notice that does not meet the statutory requirements is invalid. But no additional notice need be given. Except where he formally requests notice, the fact that the debtor is not personally notified is immaterial, so long as there is compliance with the conditions prescribed in the statute.' (Emphasis added.)

The same contention as that made by appellant here was rejected in Ley v. Babcock, supra, 118 Cal.App. 525, 528, 5 P.2d 620, 622, in the following language: 'The trial court found that notice was given in full compliance with the terms of the deed of trust and with the provisions of section 692, of the Code of Civil Procedure. It was not at any time necessary that personal notice be served upon the appellants; it is sufficient if the statute and the terms of the turst deed are followed. Witter v. Bank of Milpitas, 204 Cal. 570, 573, 269 P. 614, and cases cited.' (Emphasis added.)

Section 2924 of the Civil Code provides that after other specified procedural steps have been taken in the exercise of a power of sale, the trustee 'shall given notice of sale, stating the time and place thereof, in the manner and for a time not less than that required by law for sales of real property upon execution.' Section 692 of the Code of Civil Procedure specifically prescribes the notice which must be given before the sale of property under execution or under a power contained in a deed of trust. The deed of trust involved in the present case contains the request of the trustors that a copy of any notice of default and a copy of any notice of sale be mailed to them at their given address as provided for in Civil Code, section 2924b. The latter section contains provisions whereby any person desiring a copy of any notice of default and of any notice of sale under a trust deed may file with the County Recorder a request therefor containing certain data as prescribed by the statute.

Appellant expressly concedes that it filed no request for notice under the provisions of section 2924b. The instrument here involved contains no other provisions for notice which would add to the requirements of the statutes. Appellant did not allege, nor does appellant assert on this appeal that it could allege, that there was any failure to give any notice required by the applicable statutes.

Appellant's opening brief betrays a gross misunderstanding of the procedural provisions for the foreclosure of trust deeds by exercise of the power of sale. After calling attention to the fact that the trustee's deed (attached as an exhibit to the complaint) recited publication of the notice of sale once a week during a period of twenty days, appellant quotes a portion of section 2924b requiring (under conditions not present here) publication of the notice of default once a week for at least four weeks. Appellant thereupon draws the obviously false conclusion that the publication of the notice of sale once a week during a period of twenty days was inadequate. The plain language of section 692 of the Code of Civil Procedure is a clear refutation. Furthermore, there was no occasion for any publication of the notice of default in this case because the address of the trustors was set forth in the deed of trust and their request for a copy of the notice was contained therein.

Equally unsound is the contention that the 'due process' clauses of the State and Federal Constitutions entitled appellant to special or personal notice of the trustee's sale. In Scott v. Paisley, 271 U.S. 632, 46 S.Ct. 591, 70 L.Ed. 1123, the appealing plaintiff challenged the validity of a Georgia statute providing for summary enforcement of an instrument in the nature of a trust deed, but known in Georgia as a 'security deed.' Plaintiff in that case, like the appellant here, was successor in interest to the grantor under the security deed. The United States Supreme Court rejected plaintiff's contention that the statute providing for a foreclosure of the plaintiff's...