Wolfe v. Lipsy

• Decision Date: 14 January 1985
• Docket Number: No. B005283,B005283
• Citation: 163 Cal.App.3d 633,209 Cal.Rptr. 801
• Court: California Court of Appeals Court of Appeals
• Parties: Rod WOLFE, Plaintiff and Respondent, v. Manuel LIPSY, Defendant and Appellant.

Page 801

209 Cal.Rptr. 801

163 Cal.App.3d 633

Rod WOLFE, Plaintiff and Respondent, v. Manuel LIPSY, Defendant and Appellant.

No. B005283.

Court of Appeal, Second District, Division 7, California.

Jan. 14, 1985.

[163 Cal.App.3d 635] Robert Marc Hindin, Los Angeles, for defendant and appellant.

Frank A. Butler, Santa Ana, for plaintiff and respondent.

THOMPSON, Associate Justice.

Defendant, Manuel Lipsy, appeals from a judgment in favor of the plaintiff, Rod Wolfe, after a court trial. Defendant claims on appeal that: (1) the trial court committed prejudicial error in declaring void a deed of trust placed on real property by one spouse when the property was homesteaded; (2) the trial court erroneously vacated the nonjudicial foreclosure sale and declared void the Trustee's Deed Upon Sale; and (3) the trial court failed to give the required statement of decision.

FACTS

On May 8, 1974, Joseph and Irene Basurto, husband and wife, executed and acknowledged a declaration of homestead on their single family dwelling in Lakeview Terrace, California (hereafter Lakeview Terrace property). The declaration was recorded on May 10, 1974.

On October 20, 1976, Irene Basurto alone encumbered the Lakeview Terrace property by executing and acknowledging a lien contract and deed of trust in favor of Alliance Financial Services to secure the debt created by the purchase of carpeting. The lien contract and deed of trust, contained in one document, was recorded on November 18, 1976, making it a third deed of trust against the Lakeview Terrace property. At no time did Joseph Basurto execute or acknowledge the lien contract and deed of trust (hereafter deed of trust).

Later, the marriage of Irene and Joseph Basurto went sour, and dissolution proceedings were started. An Interlocutory Judgment of Dissolution of Marriage, entered on September 11, 1978, awarded Irene Basurto, inter alia, the Lakeview Terrace property as her sole and separate property. Thereafter, on March 22, 1979, the Final Judgment was entered.

In the meantime, on December 4, 1978, the beneficial interest in the deed of trust was assigned to Richard and Mildred Davis, husband and wife. This assignment was recorded on December 5, 1978. Concurrently with the recordation of the assignment, a substitution of trustee was recorded, showing Property Investment Associates as the new trustee in the deed of trust in place of Continental Auxiliary Company. On December 18, 1978, Milton S. Katz, doing business as Property Investment Associates, recorded a notice of default and election to sell under the deed of trust in favor of the Davises.

Thereafter, while the property was in default under the Davises' deed of trust, on January 23, 1979, Irene Basurto by grant deed, for a valuable consideration, conveyed title to the Lakeview Terrace property to plaintiff, Rodney Wolfe, and his wife, Joan M. Wolfe. However, Wolfe refused to cure the default on the deed of trust, taking the position that the deed of trust as a document was void under Civil Code section 1242 for lack of the signature and acknowledgement of both Joseph and Irene Basurto.

The Trustee's sale of the Lakeview Terrace property was set at 9 a.m. on April 10, 1979, to be conducted at the entrance to 565 Pier Avenue in Hermosa Beach. However, the sale was allegedly postponed several Meanwhile, just prior to the purported trustee's sale on November 29, 1979, the motion of Joseph Basurto to vacate and set aside the Interlocutory Judgment and Final Judgment in the dissolution action involving Irene Basurto was granted on November 2, 1979.

times until November 29, 1979, when the property was purportedly sold at 2 p.m. to the highest bidder, Lipsy. Thereafter, on the same day, the Trustee's Deed Upon Sale conveying title to the property to Lipsy was recorded at 2:27 p.m. in the Hall of Records in downtown Los Angeles.

On December 13, 1979, Wolfe filed this action to quiet title and for damages against Katz, individually and doing business as Property Investment Associates, Richard and Mildred Davis, and others. Later, the complaint was amended to name Lipsy in place of Doe 101.

On September 8, 1983, this matter went to trial only against Lipsy on the first cause of action to quiet title and the third cause of action for damages. Wolfe had earlier dismissed the action against the other defendants, Katz and the Davises, who had in their answer to the complaint disclaimed any interest in the Lakeview Terrace property. After the trial of this matter and its submission to the trial court on September 14, 1983, for decision, the trial court, on September 19, 1983, issued its Memorandum of Intended Decision. The trial court found, inter alia, that: (1) the trust deed placed on the property by one spouse when the property was homesteaded is void; (2) the postponement leading to the foreclosure sale noticed for November 29, 1979, was not properly made; (3) the foreclosure sale of November 29, 1979, was not held at the time noticed; (4) Irene Basurto could transfer only her interest in the property to Wolfe; and (5) Wolfe comes to the court with unclean hands and is not entitled to damages, a good portion of which were caused by the tenant he put in possession. The court decided, inter alia, to vacate the foreclosure sale and to quiet title in Wolfe as to a one-half interest in the Lakeview Terrace property subject to encumbrances. Thereafter, on September 28, 1983, Lipsy requested a statement of decision from the trial court which, on November 16, 1983, adopted its Memorandum of Intended Decision as its statement of decision.

On November 16, 1983, the trial court signed and filed its judgment which provided, inter alia, that the deed of trust executed by Irene Basurto on October 20, 1976, is void, and that title to the interest of Irene Basurto only, in the Lakeview Terrace property subject to encumbrances, is quieted in Wolfe.

DISCUSSION

I NONJUDICIAL FORECLOSURE SALE

Lipsy contends that Wolfe did not plead a cause of action to set aside the trustee's sale, but rather pleaded a cause of action to quiet title. Thus, Lipsy argues the issue of whether or not the trustee's sale of November 29, 1979, was held in compliance with statutory requirements was not properly before the trial court. We disagree.

An action to quiet title commenced after January 1, 1981, is governed by the new quiet title statute. (Stats.1980, ch. 44, p. 109; Code of Civil Proc., § 760.010, et seq.) However, an action for quiet title commenced before that date, which is the case here, is governed by previous law. (Stats.1980, ch. 44, § 18.)

Under Code of Civil Procedure, section 738 (repealed by Stats.1980, ch. 44, p. 109, effective January 1, 1981), a quiet title action is aimed at a person who may be asserting a claim to property, and is framed simply by alleging that the plaintiff is the owner and entitled to possession, and that the defendant claims an interest, adverse to the plaintiff, without right. (Warren v. Atchison, T. & S.F. Ry. Co. (1971) 19 Cal.App.3d 24, 32, 96 Cal.Rptr. 317.) In contrast, an action to remove a cloud on title, under Civil Code section 3412, is aimed at a particular instrument, or piece of evidence. (Ephraim v. Metropolitan In the case at bench, the plaintiff failed to allege the actual invalidity of the apparently valid Trustee's Deed Upon Sale. However, where, as here, the case is tried on the theory that the matters of the postponement of the trustee's sale and the conduct of the sale were in issue, and evidence thereon is received without objection, it is too late, on appeal, to attack the findings. (4 Witkin, Cal. Procedure (2d ed. 1971) Trial, § 336, p. 3138.)

                Trust Co.  (1946) 28 Cal.2d 824, 833, 172 P.2d 501.)   To state a cause of action to remove a cloud, instead of pleading in general terms that the defendant claims an adverse interest, the plaintiff must allege, inter alia, facts showing actual invalidity of the apparently valid instrument or piece of evidence.  (3 Witkin, Cal.  Procedure (2d ed. 1971) Pleading, §§ 537-538, pp. 2184-2185.)
                

Next, Lipsy contends that the trial court erroneously found that the presumption of validity of a sale under a deed of trust was overcome by the evidence.

First, Lipsy argues in support of this contention that there is a presumption that a sale under a deed of trust was conducted regularly and fairly, citing Stevens v. Plumas Eureka Annex Min. Co. (1935) 2 Cal.2d 493, 41 P.2d 927, and Brown v. Busch (1957) 152 Cal.App.2d 200, 313 P.2d 19. We agree with this proposition of law, but conclude that its effect is merely to provide prima facie proof of the particular fact that the sale was conducted regularly and fairly, until contradicted and overcome by other evidence. (See, e.g., Meyer v. Glenmoor Homes, Inc. (1966) 246 Cal.App.2d 242, 272, 54 Cal.Rptr. 786, 55 Cal.Rptr. 502.) This was the concern in both the Stevens case (2 Cal.2d at p. 497, 41 P.2d 927) and the Brown case (152 Cal.App.2d at p. 204, 313 P.2d 19). Generally, the issue of whether or not the facts justify the setting aside of the sale is a question of fact. (Brown v. Busch, supra, 152 Cal.App.2d at p. 204, 313 P.2d 19.) Here, the trial court concluded that the evidence overcame this presumption. In view of the whole record, we cannot say that the facts do not justify this conclusion.

Second, Lipsy argues in support of this contention that the trial court erroneously found that the evidence overcame the presumption of statutory compliance provided by Civil Code section 2924. We disagree.

That section provides in part that a recital in the trustee's deed upon sale of compliance with all requirements of law regarding the mailing, posting, publication, or personal delivery of notice of default and notice of sale is prima facie evidence of compliance with such requirements and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers for value and without notice. (But see ...