Opinion
Rehearing Denied Feb. 21, 1941.
Hearing Granted March 28, 1941.
Appeal from Superior Court, Los Angeles County; Clement L. Shinn, Judge.
Action by Joe Goldenberg against Morris Wilner and others, to recover the balance due on a note for which a deed of trust with power of sale had been given as security, wherein defendants filed a demurrer. From an adverse order, the plaintiff appeals.
Reversed with directions.
COUNSEL
Prentiss Moore, Morris C. Schrager, and John M. Dvorin, all of Los Angeles, for appellant.
Harriet Pugh, of Los Angeles, for respondents.
OPINION
McCOMB, Justice.
From a judgment in favor of the defendants predicated upon the sustaining of their demurrer without leave to amend to plaintiff’s complaint in an action to recover the balance due on a note for which a deed of trust with power of sale had been given as security following an exercise of the power of sale, plaintiff appeals.
The material allegations of the complaint filed January 25, 1940, are:
Defendants, September 18, 1928, executed and delivered to plaintiff’s assignor a promissory note maturing two years after September 12, 1928. The note was secured by a deed of trust covering certain real property, which deed of trust conferred a power of sale in case of a default. The maturity date of the note was extended by plaintiff’s assignor until March 12, 1932. Thereafter, a default occurring by reason of the nonpayment of principal after maturity of the note, the beneficiary under the deed of trust delivered to the trustee a declaration of default and demanded a sale. The trustee, pursuant to the provisions of the deed of trust, sold the property described therein on June 15, 1933. The proceeds of the sale were applied to the note, leaving a deficiency, which is the basis of the present action.
Defendants demurred on the ground, among others, that the cause of action was barred by the provisions of section 337, subdivision 1 of the Code of Civil Procedure.
This is the sole question necessary for us to determine:
Did the Moratorium Act of 1935 (Act 5104a, Deering’s 1935 Supplement to the Codes, Laws and Constitutional Amendments of the Constitution of the State of California, p. 1336), the 1937 Act (Chapter V, Statutes of 1937, p. 57), the 1937 Moratorium Act (Chapter 167, p. 460), and the 1939 Moratorium Act (Statutes of 1939, Chapter 86, p. 1045) extend the time provided in section 337, subdivision 1 of the Code of Civil Procedure, which prior to 1933 was four years after the obligation founded upon a writing arose, within which to commence an action to recover a deficiency judgment, when the sale of the property given as security for the payment of the promissory note, upon which the deficiency judgment is sought, was held prior to the enactment of any moratorium legislation, which permitted the trustor either directly or indirectly to obtain a delay in the sale of the security which he had given?
This question must be answered in the affirmative. Prior to 1933 section 337, subdivision 1 of the Code of Civil Procedure provided that a liability founded upon an instrument in writing must be commenced within four years after the obligation arose.
Section 19 of the 1935 Moratorium Act, supra, read as follows:
"19. Statutes of limitations. Whenever the time within which an action may be commenced upon any obligation founded upon a written instrument secured by mortgage, deed of trust or contract of purchase, or founded upon any guarantee of such obligation or any contract of suretyship therefor or any indorsement of such instrument, would expire by virtue by section 337 of the Code of Civil Procedure, or by virtue of the provisions of Chapter I, Statutes of Extra Session of 1934, or by virtue of the provisions of Chapter VII, Statutes of 1935, or any other provision of law, during the period commencing with the effective date of this act and ending on February 1, 1937, such time is hereby extended so as not to expire until the first day of July, 1937."
The first Moratorium Act of 1937, supra, amended section 19 of the 1935 act to extend the time within which an action could be commenced upon an obligation described in such section until October 1, 1937. The second Moratorium Act of 1937 amended section 19 of the 1935 and prior 1937 Moratorium Act to extend the time within which to bring an action upon an obligation described in such section until July 1, 1939, and the 1939 Moratorium Act, supra, by section 20 thereof extended the time within which to bring an action founded upon an obligation described in section 337 of the Code of Civil Procedure until the first day of October, 1941.
The law in California is established that (1) an action to recover a deficiency judgment founded upon a trust deed after sale of the security is an action "founded" upon a deed of trust and that such action is included among those described in the various Moratorium Acts, supra (Everts v. Newhouse, Inc., Ltd., 28 Cal.App.2d 407, 409, 82 P.2d 703); and (2) if the time for commencing of an action for a deficiency judgment has not expired when the Moratorium Acts, supra, were adopted, such action may be commenced within the extended time stated in such acts (Bakersfield, etc., Co. v. McAlpine, etc., Co., 26 Cal.App.2d 444, 450, 79 P.2d 410).
Applying to the facts of the instant case the Moratorium provisions and the rules of law above stated, we find that section 19 of the 1935 Moratorium Act applied to actions such as the one here involved founded upon a deed of trust and that the time within which plaintiff might originally have commenced his action was March 12, 1936. This time was extended by the various Moratorium Acts, supra, to October 1, 1941. Hence, since the present action was commenced on January 25, 1940, it was not barred by the provisions of section 337, subdivision 1 of the Code of Civil Procedure.
There is no merit in defendants’ contention that the act did not extend plaintiff’s time, since he was the assignee of the original obligation, which obligation was for a deficiency judgment on the promissory note, in view of the second rule of law stated above; nor is there any merit in defendants’ contention that the Moratorium Acts were not available to the obligor June 15, 1933, the date of the sale under the powers conferred by the trust deed. It was within the power of the legislature to extend the time within which an action might be filed without making it dependent upon a privilege extended to the obligor (Bakersfield, etc., Co. v. McAlpine, etc., Co., supra, 26 Cal.App.2d page 446, 79 P.2d 410.)
For the foregoing reasons the order is reversed with directions to the trial court to overrule the demurrer and allow defendants a reasonable time within which to file an answer if they be so advised.
WOOD, J., concurred.
MOORE, P.J., deeming himself disqualified, does not participate in the consideration or decision of this case.