Summary
In Van Sandt v. Alvis, 109 Cal. 165 [50 Am. St. Rep. 25, 41 P. 1014], a mortgagor had placed a homestead upon the mortgaged property after the execution of the mortgage.
Summary of this case from Parker v. ToutOpinion
Department One
Appeal from a judgment of the Superior Court of San Joaquin County. Ansel Smith, Judge.
COUNSEL:
The last mortgage was no lien upon the homestead, not being executed and acknowledged by both husband and wife. (Civ. Code, secs. 1242, 2922, 2938; Kennedy v. Gloster , 98 Cal. 143; Watts v. Gallagher , 97 Cal. 51; Hefner v. Urton , 71 Cal. 479; First Nat. Bank v. Bruce , 94 Cal. 79; Ontario State Bank v. Gerry , 91 Cal. 95; Alexander v. Jackson , 92 Cal. 519; 27 Am. St. Rep. 158; Gleason v. Spray , 81 Cal. 220; 15 Am. St. Rep. 47; Gagliardo v. Dumont , 54 Cal. 498; Revalk v. Kraemer , 8 Cal. 66; 68 Am. Dec. 304; Barber v. Babel , 36 Cal. 14; Flege v. Garvey , 47 Cal. 376; Shinn v. MacPherson , 58 Cal. 599; Wood v. Goodfellow , 43 Cal. 188.) The vendor's lien was waived by the mortgage. (Civ. Code, sec. 3046; Avery v. Clark , 87 Cal. 626; 22 Am. St. Rep. 272; Gessner v. Palmateer , 89 Cal. 90.)
Nicol & Orr, and Baldwin & Thompson, for Appellants.
James H. Budd, and J. E. Budd, for Respondent.
The executor had no authority to satisfy the debt due the estate of the decedent without the approbation of the probate court. (Code Civ. Proc., sec. 1588; Mulligan v. Smith , 59 Cal. 225.) Equity will deem the new mortgage simply a change in the form of security, and enforce the first mortgage. (Swift v. Kraemer , 13 Cal. 530; 73 Am. Dec. 603; Shinn v. MacPherson , 58 Cal. 599; Thompson on Homesteads, sec. 359, and cases cited.)
JUDGES: Searls, C. Belcher, C., and Haynes, C., concurred. Harrison, J., Garoutte, J., Van Fleet, J.
OPINION
SEARLS, Judge
[41 P. 1015] This is an action to foreclose a mortgage upon the homestead of the defendants. Plaintiff had a decree of foreclosure adjudging his claim, to the extent of two thousand four hundred and ninety-five dollars and twenty-eight cents, to be a lien upon the homestead and a personal judgment against defendant G. P. Alvis for the residue of indebtedness found due to plaintiff. Defendants appeal from so much of the decree as relates to the lien upon their homestead. The appeal was taken within sixty days after judgment, and the record contains a bill of exceptions.
The facts as admitted by the pleadings and found by the court may be summarized as follows: A. A. Van Sandt, plaintiff's testator, was the owner of certain lands situate in the county of San Joaquin, state of California, which on the first day of October, 1883, he sold and conveyed to the defendant C. P. Alvis, for the sum of five thousand dollars, receiving in payment therefor one thousand dollars in cash and four promissory notes for one thousand dollars each, payable at one, two, three, and four years, with interest at eight and one-half per cent per annum, and if not paid the interest to be added to the principal and draw like interest, and to secure the payment of said several promissory notes said Alvis executed to his grantor, said Van Sandt, a mortgage upon the land so conveyed to him, which mortgage was duly recorded. Thereafter and on the twenty-ninth day of June, 1886, defendant C. P. Alvis made and recorded a declaration of homestead in due form upon the land so conveyed to and mortgaged by him. The defendant Caroline Alvis was and is the wife of C. P. Alvis. A. A. Van Sandt died on the nineteenth day of January, 1887, leaving a last will and testament, and plaintiff is the duly appointed and qualified executrix thereof.
On the 1st of September, 1888, defendant C. P. Alvis, not having paid the promissory notes aforesaid, and being unable to pay the same, applied to the plaintiff herein for an extension of time to pay the same, and agreed that if the time was extended he would pay the same, and thereupon said C. P. Alvis made his promissory note for four thousand dollars, payable to plaintiff as administratrix (executrix), or her order, on or before four years, with interest at eight and one-half per cent per annum, and conditioned as in the former notes, and providing that if the interest was not paid annually the whole sum should become due at the option of plaintiff, and to secure the payment thereof said C. P. Alvis executed to plaintiff a mortgage upon the same premises covered by the first mortgage, and theretofore included in the homestead.
Plaintiff accepted and recorded the new mortgage, received the promissory note, satisfied the former mortgage of record, and delivered to said defendant the four old promissory notes. Defendant Caroline Alvis, the wife of the other defendant, had full knowledge of all the facts, acts and representations of her husband in procuring an extension of the time of payment of said first notes and consented thereto, but did not unite with her husband in the execution of the mortgage of 1888 upon the homestead.
The interest not having been paid upon the last-mentioned note, plaintiff elected to consider the whole amount due, and instituted this action in 1891, at which time three of the original promissory notes of 1883 were barred by the statute of limitations as against Caroline Alvis, and the court so found, and decreed the fourth note which was not thus barred to be a lien upon and secured by the mortgage upon the homestead.
From the foregoing statement of facts it appears that no new indebtedness was sought to be created or secured by a lien upon the homestead. The indebtedness on account of the purchase price of the homestead, which was secured by the original mortgage thereon, was in part about to become barred by the statute of limitations, was at the request of the defendant C. P. Alvis extended at the same rate of interest and a new mortgage executed upon the same property.
As to the first mortgage which was executed by C. P. Alvis at the date of his purchase of the premises to secure a portion of the purchase price thereof, no homestead could thereafter be carved out of the property so as to impair the rights of the mortgagee. (Montgomery v. Tutt , 11 Cal. 190; Civ. Code, sec. 1241, subd. 4.) The first mortgage was, therefore, a valid lien upon the premises; prior in time and superior to the homestead claim.
The question in the case at bar relates not to the power of the husband to encumber the homestead without the joint action of the wife, but is this: Was the execution of the new note and mortgage the creation of a new encumbrance, or simply a change of the form of the old encumbrance?
Swift v. Kraemer , 13 Cal. 530, 73 Am. Dec. 603, was a case in which one Revalk, an unmarried man, owned a lot of [41 P. 1016] land upon which there were two mortgages, one of which for fifteen hundred dollars was held by Kraemer. Revalk married in 1857, and thereafter executed another mortgage, in which his wife did not join, upon the property previously covered by the two mortgages, and which in the interim had become a homestead of Revalk and wife. Kraemer had paid off one of the prior mortgages and satisfied the other, which constituted (except as to five hundred dollars) the consideration of the last mortgage.
The release of the old mortgages and the execution of the new one were on the same day. The court said: "But as to the debts secured by the original mortgage to Leck and Fontacelli and Kraemer, we regard the cancellation of the old mortgages and the substitution of the new as contemporaneous acts. It was not creating a new encumbrance, but simply changing the form of the old. A court of equity, looking to the substance of such a transaction, would not permit a release, intended to be effectual only by force of and for the purpose of giving effect to the last mortgage, to be set up, even if the last mortgage was inoperative. It would not permit Revalk to take Kraemer and Eisenhardt's money and apply it in extinguishment of a prior encumbrance, and then claim that the property should neither be bound by the new mortgage or the old," etc. (Citing Dillon v. Byrne , 5 Cal. 455; Birrell v. Schie , 9 Cal. 106; Carr v. Caldwell , 10 Cal. 380; 70 Am. Dec. 740. See, also Tolman v. Smith , 85 Cal. 280.)
The case of Barber v. Babel , 36 Cal. 11, was one upon all fours with the case at bar, except that there the original note and mortgage were barred by the statute of limitations at the time of suit brought to foreclose, and the court held that as the original mortgage was barred, and as the wife had not joined in the execution of the second mortgage, no recovery could be had.
Sawyer, C. J., in his opinion at page 23 of the report, refers to and quotes from Swift v. Kraemer, supra, with apparent approval, and places the decision upon such bar of the first note and mortgage and the invalidity of the second mortgage.
It is very evident in the case at bar the first mortgage was only released to give effect to the second one, and in a court of equity the defendants should not be heard to say that the second mortgage is void by reason of not being executed by the wife, and at the same time to successfully contend that the release of the first mortgage extinguished it.
The complaint states the whole facts of the transaction, sets out both the mortgages, and asks that they be decreed to constitute but one security.
Under such circumstances the court below was justified in holding as it did in substance: 1. That the second mortgage upon the homestead was void as against the wife by reason of her not having joined in such mortgage; 2. That the first mortgage, having been satisfied only for the purpose of giving effect to the second one, will in equity be deemed to be and remain in force until the demand secured thereby is barred, etc.; 3. That one of the notes secured by the first mortgage not being barred at the date of suit brought, a foreclosure upon the homestead could be decreed as to that note only.
That part of the judgment appealed from should be affirmed.
For the reasons given in the foregoing opinion the judgment appealed from is affirmed.