Lovett v. Point Loma Development Corp.

• Decision Date: 25 September 1968
• Citation: 266 Cal.App.2d 70,71 Cal.Rptr. 709
• Court: California Court of Appeals Court of Appeals
• Parties: Mack Paul LOVETT, as Executor of the Estate of Paul R. Lovett, Plaintiff and Appellant, v. POINT LOMA DEVELOPMENT CORPORATION, a corporation, et al., Defendants, Silver Gate Savings and Loan Association, a corporation, Intervenor and Respondent. Civ. 8896.

Page 709

71 Cal.Rptr. 709

266 Cal.App.2d 70

Mack Paul LOVETT, as Executor of the Estate of Paul R. Lovett, Plaintiff and Appellant, v. POINT LOMA DEVELOPMENT CORPORATION, a corporation, et al., Defendants, Silver Gate Savings and Loan Association, a corporation, Intervenor and Respondent.

Civ. 8896.

Court of Appeal, Fourth District, Division 1, California.

Sept. 25, 1968.

[266 Cal.App.2d 72] James J. Biggins, Jr., and Smith, Biggins & Crockett, San Diego, for plaintiff and appellant.

Scales, Patton, Ellsworth & Corbett, and Luke R. Corbett, San Diego, for intervenor and respondent.

OPINION

COUGHLIN, Associate Justice.

Plaintiff appeals from an order settling a first report and account of receiver and directing payment of the receipts of the receivership consisting primarily of rents collected. In reality, plaintiff's appeal concerns that part of the order directing the receiver to pay $500 to intervenor's attorneys and, after making other designated payments prescribed by the order, to pay 'all receivership funds remaining in his hands' to intervenor.

Intervenor and plaintiff were the holders, respectively, of first and second deeds of trust against property owned by defendant. Plaintiff brought this action to foreclose the second deed of trust and procured the appointment of a receiver to collect the rents from the property covered by the deeds of trust. The written order of appointment, dated Feb. 17, 1967, presumably prepared by counsel for plaintiff because written on paper bearing their name plate, provided, among other things: (1) Money coming into possession of the receiver should be held subject to such orders as the court thereafter might issue as to its disposition; (2) receiver should, subject to further order of the court, collect the rents from the property; and (3) receiver was 'authorized' to pay all monthly payments on the note secured by intervenor's deed of trust, which was specifically described and declared to be a 'first trust deed superior to the note and deed of trust' held by plaintiff. On Feb. 24, 1967, receiver notified intervenor he was in possession of and collecting rents from the property subject to the deeds of trust; directed attention to that part of the order authorizing him to make payments to intervenor on its deed of trust; and caused a copy of the order to be sent to intervenor. On March 24, 1967, the receiver notified intervenor he had been instructed by the attorneys for plaintiff not to make any payments on the indebtedness secured by intervenor's deed of trust. On April 13, 1967, intervenor, with permission of the court, filed a complaint in intervention alleging it was the owner of the promissory note secured by a first deed of trust upon the property in question; payments upon said note were in default for installments due March 1 1967 and April 1, 1967; its deed of trust provided, among other things:

'That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority * * * to collect the rents * * * of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby * * * to collect and retain such rents * * *. Upon any such default, Beneficiary may at any time, without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents * * * and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby * * *.';

a receiver had been appointed in the action with instructions to take possession of the property and collect the rents; its interest in the property and the rents was prior and superior to any interest of any other party; and it was entitled to have the rents applied to the satisfaction of the indebtedness secured by its deed of trust. On July 24, 1967 the court denied, without prejudice, intervenor's motion for instructions requiring receiver to pay to it the rentals theretofore collected. In due course the receiver filed his first report and account. After a hearing, the court made the order from which this appeal is taken.

Plaintiff, relying upon the rule applied in Carlon v. Superior Court, 2 Cal.2d 17, 20, 38 P.2d 149, asserts a right to the rentals collected by the receiver appointed at its instance free of any claim thereto by intervenor.

The decision in Carlon adopted the general rule that a junior lienholder has a special lien upon rents from the property subject to his lien collected during a receivership procured by him in a suit to foreclose his lien, and a senior lienholder, absent appropriate steps by the latter to have the receivership enure to his benefit, is without prior right to the rents so collected.

The issue in the case at bench is whether the complaint in intervention and subsequent action by the intervenor constituted appropriate steps to cause the receivership to enure to its benefit.

The complaint in intervention stated a cause in equity in the nature of an action for specific...