Opinion
Page __
__ Cal.App.2d __ 260 P.2d 801 COCKERELL et al. v. TITLE INSURANCE & TRUST CO. et al. (two cases). DENNY et al. v. TITLE INSURANCE & TRUST CO. et al. Civ. 19677. California Court of Appeals, Second District, First Division Sept. 10, 1953Hearing Granted Nov. 5, 1953.
N. S. Crowley, Bellflower, for appellants.
Morris Lavine, Los Angeles, for respondents Denny.
SCOTT, Justice pro tem.
Plaintiffs and cross-defendants Cockerell and Hinds appeal from a judgment rendered against them and in favor of defendants [260 P.2d 802] and cross-complainants Denny. The dispute relates to certain money in the amount of $6,926.02, deposited in court by the Title Insurance and Trust Co., a corporation, pursuant to order of court based on the cross-complaint in intervention filed by said corporation. Following the deposit, the case was dismissed as to the corporation. The judgment awarded the amount thus deposited to cross-complainants Denny.
The trial court found that on August 28, 1951, the Dennys owned a certain parcel of real estate described in the pleadings; that the Title Insurance and Trust Co., as trustee, sold the property under a second trust deed, the sale being subject to a first trust deed. The sale price of the property thus sold under the second trust deed was $25,950, which was a 'surplus yield' of $6,926.02, in excess of the sum required to satisfy the second trust deed.
The record owners of the property on the date of the sale were Ernest A. Coe and Helen Jean Coe, but they had given an unrecorded deed to the property to the Dennys some time prior thereto. A fourth trust deed from the Dennys to the Coes seems to have been executed August 1, 1950.
A note for $10,983.80, dated September 23, 1948, and secured by a third deed of trust on the same property had been executed by Russ Green and Ethyl Green, husband and wife, who apparently were the owners at that time. The payee of the note and beneficiary under the third trust deed was named as 'Crestmore Co., a Limited Partnership, P. O. Box 365, Fontana'. This third trust deed, of course, was subordinate to the second trust deed under which the property was sold.
The complaint alleged that plaintiffs Cockerell and Hinds, on the date of the sale, were owners of the note secured by the third trust deed by virtue of an assignment by the Crestmore Company, and were therefore entitled to receive the 'surplus yield' as a payment on the unpaid balance of the note which was an amount greater than the amount of the 'surplus yield'.
The trial court found that: 'It is not true that on August 28th, 1951, that the plaintiffs (Cockerell and Hinds) were the owners of the note and deed of trust securing note, executed by Russ Green and Ethyl Green, husband and wife, to Security-First National Bank of Los Angeles, Trustee, in favor of Crestmore Company.'
The burden was upon plaintiffs to establish their case by a preponderance of the evidence. Plaintiff Hinds and defendant and cross-complainant T. E. Denny were the only witnesses at the trial. There was no competent evidence as to the persons constituting the Crestmore Company, a limited partnership, or as to whether there had been compliance with any requirements of law relative to their doing business as such under a fictitious name. Plaintiff testified that 'a party in San Bernardino' had furnished her with information about the Crestmore Company, and stated, 'I know there are three: Paul and Bob Wierman, brothers, and one other woman. I don't know her name just at this minute, but they were checked on as to the company and being in their name'. There was no evidence upon which the trial court could base a finding as to who were partners in the Crestmore Company and what were their respective powers. The note was endorsed on the reverse side: 'The undersigned does hereby assign this note to the account of Rowena F. Cockerell and Jeannie A. Hinds, as of the 27th day of August, 1951. (signed) The Crestmore Co. P. H. Wierman.'
By her testimony plaintiff sought to show that there was a meeting in the office of Paul Wierman in Temple City, in the late evening of August 27, and running over into the morning of August 28--the day of the sale under the second trust deed; that Mr. and Mrs. P. H. Wierman and Robert Wierman, and plaintiff Hinds were present; that the assignment was written upon the note and that she gave some consideration therefor through an escrow. Oral testimony and documentary evidence were presented which were ambiguous and conflicting. Plaintiff's testimony was vague and evasive. The trial court was [260 P.2d 803] justified in considering that much of the evidence offered had no probative value.
There was evidence, for example, that if any consideration was paid for the note and third trust deed it was not paid direct by plaintiffs to any representative of the Crestmore Company but was paid into an escrow which was actually opened on August 29, 1951, the day after the sale had been completed under the second trust deed. The escrow instructions said that the delivery of some trust deed (presumably the third trust deed) was 'not the concern of this escrow'. But a letter signed by P. H. Wierman at about the same time states: 'This will certify that Rowena F. Cockerell and Jeannie A. Hinds are the beneficiaries of an escrow in which the assignment of a third trust deed (identifying it) to their account in progress and they have full right and title to said third trust deed and all benefits from such from this day on. (signed) P. H. Wierman, Crestmore Company.'
If the third trust deed had been delivered out of escrow, as claimed, it could not have been placed in escrow for plaintiffs as beneficiaries, and yet, aside from the escrow instructions, the only document relating to the said trust deed signed by anyone purporting to be connected with the Crestmore Company and identifying it with particularity indicates that the third trust deed was part of the escrow transaction.
Plaintiff Hinds had known for a month and a half before the sale under the second trust deed that it was to take place at ten o'clock the morning of August 28, 1951. She waited until late the evening before and the early morning hours of the very day of the sale. The trial court's conclusion that the acts of the parties and the documents they signed did not result in transferring to plaintiffs any title to the note and third trust deed on or before August 28, 1951, is warranted by the record before us.
This still leaves the problem of the unpaid note signed by the Greens, secured by the third trust deed, and the lien thereby created which remained unsatisfied.
'Liens inferior to the lien of the mortgage foreclosed attach to the surplus proceeds of sale in the same order and relative priority which they held with reference to the premises before the foreclosure, and must be paid in that order, unless some equitable right demands a different order of payment, as in the case where one creditor can found a claim to preference on his superior vigilance and activity, or unless one entitled to the surplus has either expressly or impliedly waived his rights.' 59 C.J.S., Mortgages, § 800, page 1531; see also Porter v. Muller, 112 Cal. 355, 44 P. 729; Windt v. Gilleran, 135 Cal. 94, 66 P. 970; Union Water Co. v. Murphy's Flat Fluming Co., 22 Cal. 620; Withington v. Shay, 47 Cal.App.2d 68, 73, 117 P.2d 415, 119 P.2d 1; 18 Cal.Jur. 638, Sec. 843; 37 Am.Jur. 250, Sec. 874.
The cross-complaint of the Dennys does not name the Crestmore Company as a cross-defendant. It makes no claim that the note secured by the third trust deed has been paid or the lien extinguished. There was a 'finding' by the trial court as follows: 'It is true that the lien, if any, of said third and fourth trust deeds, above described, were extinguished by the foreclosure of the said second deed of trust aforesaid.'
The failure of the Dennys to seek any relief as against Crestmore Company suggests that they agree that the note and third trust deed securing it have passed into the hands of plaintiffs and cross-defendants Cockerell and Hinds. On appeal it is intimated that some legal disability of the partnership or of the partners would have invalidated any attempt of Crestmore Company to enforce its claim and that this disability would adversely affect any persons to whom they might assign it. This issue was not raised by the cross-complaint.
Cross-complainants Denny's pleading and proof were not sufficient to support a judgment awarding them the 'surplus yield'.
Amended pleadings by all parties should be permitted raising issues requiring determination and joining as defendants or cross-defendants any additional parties asserting [260 P.2d 804] any claim to the money on deposit. When the case is at issue it can be retried with all witnesses and evidence produced which are required to satisfy the trial court.
Pursuant to Rule 26a, Rules on Appeal, the respective parties will bear their own costs on appeal.
Judgment reversed with direction to the trial court to permit all parties to file amended pleadings and to bring in any additional necessary parties. Appellants and respondents to bear their own respective costs on appeal.
WHITE, P. J., and DORAN, J., concur.