Pittenger v. Home Sav. and Loan Ass'n of Los Angeles

• Decision Date: 10 December 1958
• Citation: 332 P.2d 399,166 Cal.App.2d 32
• Court: California Court of Appeals Court of Appeals
• Parties: Richard M. PITTENGER and Phyllis Pittenger, Plaintiffs and Appellants, v. HOME SAVINGS AND LOAN ASSOCIATION OF LOS ANGELES, a corporation, Title Insurance & Trust Company, a corporation, and Western Mortgage Corporation, a corporation, Defendants and Respondents. Civ. 22898.

Page 399

332 P.2d 399

166 Cal.App.2d 32

Richard M. PITTENGER and Phyllis Pittenger, Plaintiffs and Appellants, v. HOME SAVINGS AND LOAN ASSOCIATION OF LOS ANGELES, a corporation, Title Insurance & Trust Company, a corporation, and Western Mortgage Corporation, a corporation, Defendants and Respondents.

Civ. 22898.

District Court of Appeal, second District, Division 3, California.

Dec. 10, 1958.

Early, Maslach, Foran & Williams, and Darling, Shattuck & Edmonds, Los Angeles, for appellants.

McKenna & Fitting, Los Angeles, for respondent Home Savings & Loan Assn.

Harvey A. Harkness, Los Angeles, for respondents Title Insurance & Trust Company and Western Mortgage Corporation.

SHINN, Presiding Justice.

Plaintiffs appeal from a judgment sustaining defendants' special defense that plaintiffs' action for declaratory and injunctive relief had become moot and presented no actual or justiciable controversy, and decreeing that plaintiffs take nothing against any of the defendants by their amended and supplemental complaint.

Home Savings and Loan Association held the note of plaintiffs for $25,000, secured by deed of trust of Title Insurance and Trust Company, as trustee. The deed of trust contained provisions obligating the trustors to provide and maintain in force fire and other types of insurance as may be required in amounts satisfactory to the beneficiary, and providing further that the insurance policies should be in form and content and in such companies as may be 'satisfactory to the beneficiary.'

Plaintiffs' original complaint herein named Home and the trustee under the deed of trust as defendants; and there can be no doubt that the allegations of said original complaint were sufficient to show that, at and prior to the time of the filing of the original complaint, an actual controversy existed between plaintiffs and the defendant, Home, relating to their respective legal rights and duties under the aforestated provisions of the deed of trust. ¹

The sole point of disagreement was that Home claimed that it had an unrestricted right to select the insurer and form of policy and to reject any other, while plaintiffs claimed that Home did not have the right to reject a proferred policy without good cause and upon reasonable grounds.

Subsequent to the filing of said original complaint and during the pendency of the action, Home, however, sold and transferred the note and deed of trust to defendant, Western Mortgage Corporation, hereinafter called 'Western.' Full value was paid by Western to Home for the note and deed of trust. Further explanation will be made hereinafter as to the status of the litigation and as to a separate agreement, later cancelled, which was entered into between Home and Western at the time of said sale and transfer.

Shortly after its purchase of the loan Western notified plaintiffs that it would accept insurance coverage furnished by plaintiffs in an acceptable amount issued by a carrier satisfactory to Western and plaintiffs thereupon delivered to Western the fire insurance policy written by Fire Insurance Exchange which it had previously tendered to Home. Western accepted said policy, and subsequently Western likewise accepted a broader home owners' policy issued by Fire Insurance Exchange, which policy was provided by plaintiffs in substitution for the aforementioned fire insurance policy.

Plaintiffs filed an amended and supplemental complaint adding Western as a party defendant pursuant to order of court authorizing the filing thereof, and after various proceedings Western and the trustee filed a joint answer and Home filed its separate answer thereto. In addition to various denials and allegations said answers tendered a special defense that the action had become moot and presented no actual or justiciable controversy by reason of the sale and transfer of the note and deed of trust to Western and Western's acceptance of the tendered Fire Insurance Exchange's policies. Defendants thereafter moved for an order that the special defense of mootness be tried before the trial of any other issue. Said motion was granted and the cause went to trial on said special defense.

Evidence was presented by defendants; plaintiffs offered none. The court found, among other matters, that Western had become and was the sole owner of the note and deed of trust, that Home no longer had any right, title or interest thereto or therein, and that Western had accepted all insurance policies tendered by plaintiffs. The court concluded that the action had become and is moot and presented no actual or justiciable controversy. In accordance therewith judgment was rendered that plaintiffs take nothing by their amended and supplemental complaint.

The trial court found that Western had purchased the note and deed of trust with the intention of selling the same to Metropolitan Life Insurance Company in accordance with Western's normal business practice and that Western and Home had entered into a warranty and repurchase agreement providing in part that Western at its option might require Home, or Home at its option might elect, to repurchase the loan in the event Western was prevented from effecting sale to Metropolitan Life; that Western later decided to retain said note and deed of trust for its own account as a company investment and that prior to the trial the aforesaid warranty and optional repurchase agreement was cancelled by mutual written agreement of Western and Home.

Plaintiffs first contend that the declaratory judgment statute required the trial court to determine the rights and obligations of the parties and that it was accordingly error for the trial court herein to dispose of the cause by rendering a judgment which was in essence a judgment of dismissal.

This contention is based on Essick v. City of Los Angeles, 34 Cal.2d 614, 624, 213 P.2d 492, Petersen v. Ridenour, 135 Cal.App.2d 720, 728, 287 P.2d 848, and other similar cases cited therein. The Essick, Petersen and other like cases have no pertinency to the situation presented in the instant case. No defense or issue that the controversy and action had become moot was involved in any of those cases and all that they hold is that where an actual controversy exists the complainant in a declaratory action is entitled to a judgment determining his rights, even though the only determination to which he is entitled may be an adjudication that he has no rights. An entirely different situation is involved where the defense is raised that the matter is or has become moot.

By the express terms of section 1060 of the Code of Civil Procedure the court is only empowered to declare and determine the rights and duties of the parties 'in cases of actual controversy relating to the legal rights and duties of the respective parties.'

It would be an idle action on the part of a trial court to make a declaration of the rights and duties of the parties where the controversy is or has become moot and no actual controversy exists relating to their legal rights...