uc- 1 SRLF ill 273 fi3' IvIBRARY OF THE University of California. GIFT OF SiX^oj-lj^ ^nx-. I'L^rtr-wJw Class ^^^f^ n'\'!> Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/contractstatutorOObuffrich CONTRACT AND STATUTORY LIENS i:n^ califor:n^ia and their enforcement. THE LAW OF MORTGAGES, PLEDGES, MECHANICS' LIENS, vendors' LIENS, AND OF OTHER CONTRACT AND STATUTORY LIENS; DEALING ALSO WITH THEIR ENFORCEMENT BY AC- TION, BY ACT OF THE LIENOR, OR BY OTHER PROCEEDINGS. BY CHARLES M. BUFFORD. SAN FRANCISCO: BANCROFT-WHITNEY COMPANY, LA.W Publishers and Law Booksellers. 1903. OF THE UNIVERSITY ^ OF P M "^ T 9pyriglit, 1903 BY CHAELES M. BUFFORD. San Francisco: The Filmer Brothers :^lectrotype Company, Typographers and Stereotypers. 1 OSAS Ati Si ), October IJ^, ISOJS. m; r:. C'^ ee 41 ; to the University Libra- ; and Statutory Liens in ccept it with my best 11 prove of sone inter- I of '98, U. C. IV PREFACE. trated by copious notes referring to statutes and decisions. This book has been called ^^Contract and Statu- tory Liens/^ because the phrase is familiar; yet in the pages which follow the term "lien^^ is used in its original sense of a security imposed by operation of law, the broader expression, Encum- brances Created for Security Only, being used to designate both contract and statutory securities. Charles M. Bufford. San Francisco, July 1, 1903. TABLE OF CONTENTS. (Numbers Refer to Pages.) Citations of Statutes ix Introduction 3 PART ONE. MATTERS COMMON TO ALL ENCUMBRANCES FOR SECURITY ONLY. Title 1. Nature of Encumbrances for Security 7 Title 2. Priorities M Title 3. Rights and Duties of Parties 24 Title 4. Special Events Affecting Encumbrances Chapter 1. Death of Owner of Encumbered Prop- erty 38 Chapter 2. Bankruptcy. Article 1. Relationship of Federal and State Legislation to Each Other G4 Article 2. Bankruptcy Under Federal Law. . 80 Article 3.' Insolvency Under State Law 137 Chapter 3. Partition of Encumbered Immovable Property 155 Title 5. Extinction of Encumbrances for Security 162 Title 6. Enforcement of Encumbrances for Se- curity. Chapter 1.' Modes of Enforcement 170 Chapter 2. Enforcement by Judicial Sale, Article 1. Nature of Foreclosure Action. . . . 172 Article 2. Scope of Judicial Authority in Foreclosure Action 176 Article 3. Venue of Actions Against Immov- able Property 187 Article 4. Parties in Actions Against Immov- able Property 192 (V) TABLE OF CONTENTS. Article 5. The Foreclosure Judgment 220 Article 6. Sale of Encumbered Propierty. . . . 238 Article 7. The Deficiency Judgment 29o Article 8. Eedemption from Sale 303 Article 9. Appeal Bonds in Foreclosure Ac- tions 354 PART TWO. ENCUMBRANCES FOR SECURITY CREATED BY CONTRACT. Introductory Propositions 361 Title 1. Contract Encumbrances Dependent on Possession.' (Against Movable Property.) Pledge. Article 1. Nature of Pledge 364 Article 2. Operation of Pledge 379 Article 3. Rights and Duties 394 Article 4. Pledgelender 404 Article 5. Pledgeholder 406 Article 6. Pledge a Cumulative Security... 409 Article 7. Enforcement of Pledge 411 Title 2. Contract Encumbrances Independent of Possession. Chapter 1. Mortgage. Article 1. Nature of Mortgage 417 Article 2. Recordation of Instrument of Mortgage 455 Article 3. Operation of Mortgage 465 Article 4.' Rights and Duties of Parties 522 Article 5. Assignment of Mortgage 585 Article 6. Transfer of Mortgaged Imrjiovable Property 590 Article 7. Extinction of Mortgage 597 Article 8. The Mortgage a Primary Security 607 Article 9. Enforcement of Mortgage Obliga- tion 6J9 Chapter 2. Equitable Lien in Nature of Mort- gage G59, Chapter 3. Trust Deed in Nature of Mortgage.. 657 Chapter 4. Vendor 's Security Q6() TABLE OF CONTENTS. PART THREE. ENCUMBEANCES IMPOSED BY OPERATION OF LAW— LIENS. Propositions Common to All Liens 681 Title 1. Liens Dependent on Possession. (Against Movable Property.) In General 681 Chapter 1. Banker 's Lien 686 Chapter 2. Factor's Lien 687 Chapter 3. Laundryman 's Lien 689 Chapter 4. Liens of Various Trustees 690 Chapter 5. Lien of Vendor of Movable Prop- erty 696 Chapter 6. Lien for Improvement of Movable Property 703 Chapter 7.' Lien of Carrier of Goods 706 Chapter 8. Agistor's and Stable-keeper's Lien.. 70S Chapter 9. Lien of Depositary for Hire 710 Chapter 10. Lien of Finder of Lost Articles.... 712 Chapter 11. Innkeeper 's Lien 713 Chapter 12. Lien of Carrier of Passengers 717 Chapter 13. Sheriff's Lien 718 Chapter 14. Liens Against Trespassing Anin^als. 719 Title 2. Liens Independent of Possession: 1. Against Movable Property. Chapter 1.' Logger 's Lien 765 Chapter 2. Thresher's Lien 771 Chapter 3. Lien in Favor of Owner of Propagat- ing Animal 773 Chapter 4. Liens Established Against Vessels by State Law. Article 1. Federal and State Control Over Liens Against Vessels 776 Article 2.' Maritime Liens Established by State Law 788 Article 3. Nonmaritime Liens Established by State Law 798 Chapter 5. Lien of Corporation on Its Own Stock 803 Viii TABLE OF CONTENTS. Title 3. Liens Independent of Possession: 2. Against Immovable Property. Chapter 1. Lien of Vendor of Immovable Prop- erty 807 Chapter 2. Lien of Purchaser of Immovable Property 822 Chapter 3. Liens for Improvements to Immov- able Propterty (Mechanics' Liens).... 824 Article 1. Preliminary Provisions 82o Article 2. The Improvement Contract 831. Article 3.' The Lien-claim 857 Article 4. Duties of Owner of Liened In- terest 900 Article 5. The Perfected Lien 906 Article 6. Equitable Subrogation to Moneys ' Owing Original Contractor 948 Article 7. Amounts of Liens 959 Article 8. Priority of Improvement Liens Among Themselves 977 Article 9. Improvement Lien a Cumulative Security 970 Article 10. Enforcement of Improvement Lien 981 Article 11. Indemnity Against Liens 989 Chapter 4. Lien for Abating Insect Pest Nui- sances) 993 Chapter^ 5. Liens for Partition Fences 990 Chapter 6." Mining Partner's Lien 1002 Chapter 7. Lien of Alimony 1005 Chapter 8. Judgment Liens 1007 Chapter 9. Tax Liens 1026 Chapter 10. Assessment Liens 1030 Index 1071 CITATIONS OF STATUTES. UNITED STATES. CONSTITUTION. Art. 1, sec. 8 64 Art. 1, sec. 10 06 Art. 3, sec. 2 77S 14th Amend 558, 559, 1048 BANKEUPT ACT of 1898. 1 71, 74, 93 67 84, 85 4a 71 67a 87, 90, 91 4b 72, 77 67b 87, 91 11 113 67d 95 21e 112 67e 101, 105, 107 57g 101 67f 92,93,1019 57h 115, 117 70 112 «0a 99 70a 90 60b 100, 101 70^ 88, 91 •65a 127 CALIFOENIA. CONSTITUTION of 1879. Art. 6, sec. 5 187 Art. 11, sec. 5 233 Article 11, sec. 12 1034, 1035 Art. 11, sec. 13 1038 Art. 13 1035 Art. 13, sec. 1 1034, 1035, 1036 (ix) X CITATIONS OF STATUTES. Art. 13, sec. 4 546, 548, 564, 566, 568, 569 Art. 13, sec. 5 546, 564, 571 Art. 17, sec. 1 20 Art. 20, sec. 15 897 Art. 22, sec. 3 188 CONSTITUTION of 1849. Art. 4, sec. 37 1032 Art. 11, sec. 13 1036 INSOLVENT ACT of 1895. '?,5 152 692 ...147, 150, 151, 152 50 1.50 32 .. 48 .. 59 60 143, 145 378 CODE OF CIVIL PEOCEDURE. 4 .721 667 228, 260, 392 12 ...... .251 669 39, lOlS 78 .187 671 335 .629 39, 299, 1008, 1010, 337 .629 1014, 1016. 338 1029 674 ....1011, 1012, 1015 339 .821 681-709 239, 248 346 .581 681 299, 1021, 1022 347 .581 682 ..247, 249, 260, 1021 360 633, 635 683 263 392 .190 684 405 .782 224, 338, 241, 246, 409 .206 247, 249, 256. 473 .218 685 243, 1021, 1022 537 686 246, 1023, 1024 609, 617, 670, 706, 687 249 820. 688 242, 391 542 391, 520 690 ...499, 683, 829, 830 543 .391 .391 691 293 545 692 250, 252 564 533, , 641 693 ...250, 252, 253, 254 627 .392 694 254, 255, 259 815 .801 816 . .80} 824 . 802 827 . . . . , .802 897 ,1032 900 . . . , .1012, 1013 943 35!) 945 .... ...354 , 356 1183-1203 .832 1183 825, 832, 833, 837, 838, 842, 844, 847, 849, 851, .854, 855, 858, 860, 861, 869, 872, 873, 875, 877, 883, 901, 903, 90 1, 949, 955, 957, 960, 961, 966, 967, 968, 973. 11831^ . . ...833 , 841 1184 . . . . CITATIONS OF STATUTES. 695 261 696 262 698 230, 269, 273 699 269, 273 700-707 3]:) 700 270, 271, 273, 274, 276, 319, 331. 701 40, 329, 333, 349 702 ...309, 311, 313, 338 703 276, 284, 341, 345, 348, 350, 353. 704 342 705 ...329, 333, 336, 345 706 276, 321, 328 707 321, 342, 346 726-728 450 726 204, 210, 221, 223, 226, 229, 233, 235, ' 238, 247, 249, 292, 825, 838, 872, 948, 295, 297, 409, 532, 949, 951, 957, 95S, 607, 608, 609, 613, 963, 965, 966, 967, 614, 616, 618, 621, 970, 975, 980. 623, 627, 628, 643, 1185 825, 867, 870 671. 1186 18, 879, 943 727 292 1187 728 ...177, 244, 245, 255 825, 900, 903, 905, 729 . . .233, 234, 262, 263 908, 909, 910, 913, 744 468, 622 915, 917, 920, 923, 754 156 ' 924, 926, 928, 932. 755 156 1188 940, 041 761 156 1189 767, 774, 922 762 157 1190 981 768 160 1191 769 158 881, 882, 903, 904, 771 158, 159 940, 966. 772 160 1192 786 161 869, .870, 877, 878, 882 787 158 1193 . . .852, 945, 972, 974 813 1194 295,826,977 22, 782, 788, 791, 792, 1195 . . .769, 770, 983, 985 ' 794, 796, 800. 1196 829 814 800 1197 768, 852 CITATIONS OF STATUTES. ^jode of Civil Procedure, Continued. 1505 39, 334, 1023 1506 39, 1019 1539 51 1569 45, 50, 51, 52, 53, 1016. 1570 ....45, 54, 55, 102 i 1582 201 1616 694 1618 694 1700 694 1771 694 1776 694 1856 572 1971 946 1972 946 1214 18, 19 1215 19, 469, 947 1217 17 1227 470 1241 20, 21, 513, 514, 515, 516, 1021. 1242 518 1243- 518 1244 518 1245-1259 517 1479 36 148-5 ' 164 1643 39 1846 408 1852 395, 407 1856 710 1857 711 1861 684, 713, 714 .1862 ..713, 714, 715, 710 1869 712 18'. ) 712 1892 25 1198 1199 1200 173 173, 355 970 1201 89S 1202 348, 851 1203 1469 1* 854,*939, 954 889-896 44 1475 41, 42 1493 1494 61 62 1497 47. 62 1500 38, 41, 61. 1502 . . . . 45, 57, 59, 60, 43 61 1504 4 1019 Civil 721 139 140 141 ... .....1005 ....1005, 1006 1006 146 324 ...... 331-349 .. 456 660-662 .. 715 1006 .396, 398, 804 805 450 489 660 716 660 761 841 660 996 858 445 871 664 1045 438 1046 43S 1047 438 1091 , 947 1107 1170 1213-1215 . 1213 272, 587 457 ..... ....456 10 CITATIONS OF STATUTES. xiil 1893 25 2903 26, 537 1920 02 2904 2^ 2027 68S 2905 163, 164, 599 2127 697, 698 2909-2913 162 2128 698 2909 9, 162' 2144 700 2910 166, 167 2191 717 2911 165, 582, 59S 2204 707 2912 16^^ 2273 694, 695 2913 169 2274 694 2920 419 ^275 693 2921 438 2309 419 2922 419, 632, 653- 2369 387 2923 419, 451 2405 445 2924 426, 445 2514 1002,1003,1004 2925 429 2-517 1002 2926 489 2518 1003 2927 444 2541 541, 544 2928 8 2542 544 2929 52a 2547 546 2930 471 2549 546 2931 621 2792 474 2932 445, 447^ 2831 615 2933 419 2832 477 2934 587, 588 2849 615 2935 588 2850 615 2936 585 2854 593 2937 456 2872 681 2938 602. 2873 682 2939 602 2874 682 29391/2 605 2875 682 2940 603 2876 27 2941 603 2881 7, 681 2947 438^ 2882 682 2948 420 2883 361 1^950 485 2888 468 2952 455, 45^ 2889 534 2955-2973 459 2890 ..8 2955 2891 9 440, 444, 502, 505, 523 2892 25 2956 42a 2897 11 2957 458, 496, 498 2898 15 2958 459 2899 32 2959 461 :^1V CITATIONS OF STATUTES. Civil Cod€j Continued. 2960 463 3008 416 2961 463 3009 400 2962 461, 496 3010 415 2963 464 3011 259, 411 2964 464 3046 807, 810, 823 2965 462, 500 3047 817 2966 ^. .462, 530 3048 810, 823 2967 621 3049 696, 702 2968 519, 520 3050 810, 822, 823 2969 519, 520 3051 2970 521 689, 703, 706, 708, 710 2972 50U 3052 . .684, 703, 704, 705 2986 364 3053 .....! .6S7 2987 365 3054 686 2988 366, 382 ' 3055 791 2989 380 3056 790 2990 378 3057 87, 718 2991 386,389 306O ..790 2992 404, 405 3076 697 2993 406 3077 699 2994 404, 405 3078 699 2995 407 3079 700 2996 406 3080 701* 2997 395, 407 333^ . .392^ 507^ 508, 500 2998 408 3338 392,507,503 2999 ,.401 3432 !..... 363 3000 411 3433 30 147 COOl 413 3439 362 3002 414 3440 3003 414 3004 413 3005 414 3442 ........ ' 362 3006 412 3450 71 3007 399 3471 . 691 83, 140, 141, 367, 374, 382, 385, 442, 804. PENAL CODE. 4 721 534 517 501 378 5372 529 5021/2 .... . . ..329, 527 538 52S CITATIONS OF STATUTES. POLITICAL CODE. 4 721 3717 1026, 1028 19 719, 996 3718 1026, 1027 2432 796 3860 1028 3136-3142 712 4235 922 3493% 1043 4236 922 3627 540 4237 271 3650 1028 4480-4484 456 3716 1026, 1029 CONTRACT AND STATUTORY LIENS IN CALIFORNIA AND THEIR ENFORCEMEISJ^T. THE LAW OF ENCUMBRANCES CREATED FOR SECURITY ONLY. (1) NOTE. In the quotation of many code sections, a system of symbols has been used to indicate the changes which the sections have undergone. The portions of the sections which have been altered or added since its enactment are inclosed within markers pointing toward each other, thus, }- |- . . . . -j ^ ; the legislative year in which the alteration was made being inserted in each marker, thus, [99 \- .,.,-{ 99 -^ . A letter is also inserted in each marker, thus, }■ 93f }►.... ■{ f 93 -\ , to show the nature of the alteration or that an addition was made: ^'f indicating a change merely in phraseology; ^'m," a change in meaning; **n, '' new matter added. In other places brackets are found which inclose the number of a legislative year with the letter '^o'* or ''v^' also inclosed, thus, [97ol, or [73-4v]: ''o,'\ indicating that at the session of the legislature in- dicated there was an omission of substantial matter at that point; and ''v'' that there was a mere verbal omission. (2) INTEODTJOTION. The department of law treated in this hook is characterized by the presence of three fundamental facts: (1) the existence of a legal demand in favor of one person against another; (2) the hypothecation of property as security therefor; and (3) the power of the obligee to cause the property to be appropriated to the satisfaction of his demand. The secured demand may be absolute or contin- gent^ liquidated or unliquidated, and may sound in contract or in tort; but in every case the exist- ence of a demand in favor of one person against another is essential, and the extinction of this de- mand by payment, or in any other way known to law, ipso facto terminates the legal relation herein considered. The hypothecation is always of certain specific property. It may be made with the full consent of the owner, as in the case of a mortgage or pledge ; or the law may itself hypothecate the prop- erty, either because the obligee has performed some service about the property^ or suffered some detri- 1 Mechanic's lien. (3) INTRODUCTION. ment from it^ that gives him a claim against it^ or because the obligee has parted with it in consider- ation of the demand which he has obtained against the obligor and ought not to lose his property if the consideration for it fails^^ or because the ob- ligee has been compelled by law to render personal services to the obligor for which his compensation should be rendered as certain as possible.'* Some- times the property hypothecated belongs not to the obligor^ but to a third person. Thus, a third per- son may mortgage his property for accommoda- tion, or become a pledgelender ; and the law of its own motion hypothecates land as security for _debts incurred for labor or materials bestov/ed upon it by a person under contract with its owner, _or a vessel for the damages which may be caused by it through the negligence of its commander. The third characteristic of this legal relation is the power of the obligee to cause the hypothecated property to be appTopriated to the satisfaction of the secured demand upon default in its perform- ance. Under the common law, indeed, there were certain liens which consisted merely in the right to detain the property, but in California there is in every case an established method for appropri- ating the hypothecated property to the satisfaction 2 Lien against vessel for its tortj lien against tres- passing animal. 3 Vendor's lien. 4 Innkeeper's lien. INIRODUCTION. of the demand. The most general mode of appro- priation, and one in every case available, is a fore- closure proceeding ; thus the rules governing that proceeding occupy a prominent place in this book. The subject of attachments has not been con- sidered in this book. For an attachment on mesne process, although constantly spoken of in the reports as a lien, does not come up to the exact meaning of the term, as an attachment is but a process of court by which certain property is sequestered for the benefit of the creditor, while a lien is a right in or against specific prop- erty. An attachment is a matter of procedure; an encumbrance a property right. An attach- ment creditor is not an encumbrancer for value. PART ONE. MATTERS COMMON TO ALL ENCUM- BRANCES FOR SECURITY ONLY. TITLE 1 NATUEE OF ENCUMBRANCES FOR SE- CURITY ONLY. 1. Encumbrances, how created. 2. Creation of encumbrance does not imply personal obligation. 3. Encumbrance deemed accessory to obligation se- cured. 4. Encumbrance transfers no title. 5. Encumbrance is security for designated purposes only. 1. Encumbrances, How Created. A charge or enciunbrance against specific prop- erty as security for the performance of an obliga- tion is created: (1) by act of the parties; or (2) by operation of law.^ 2. Creation of Encumbrance does not Imply Personal Obligation. The creation of an encumbrance for security 1 See Civ. Code, sec. 2881. (7) 8 ENCUMBRANCES. § 2 only does not of itself imply that any person is bonnd to perform the obligation secured thereby.^ 2 Personal Obligation not Implied.— Civil Code, section 2890: ^'The creation of a lien does not of itself imply that any person is bound to perform the. act for which the lien is a security/' Civil Code, section 2928: ^^A mortgage does not bind the mortgagor personall}^ to perform the act for the performance of which it is a security, unless there is an express covenant therein to that effect/' Moore v. Eeynolds, 1 Cal. 351; London, Paris & American Bank v. Smith, 101 Cal, 415. 419, 35 Pac, 1027. Compare Shafer v. Bear Eiver etc. Min. Co., 4 Cal. 294; Brown v. Orr, 29 Cal. 120. " *^ Liens upon property, where no person is bound to perform the obligation, are common in our law, especially in cases of taxation; and in cases of this, character [that is, of street improvements to be paid for by special assessment in a case where the mu-; nicipal corporation letting the contract for street im* provement was exempted from personal liability],, no personal liability can constitutionally be imposed upon the property owner": Hellman v. Shoulters, 114 Cal. 136, 139, 44 Pac. 915, 45 Pac. 1057. Illustrations.— In the absence of a direct agree- ment to pay the money specified in a mortgage, the mortgage holder is confined to his remedy against the mortgaged property, and can have no personal judgment against the mortgagor: Union Water Co. V. Murphy 's Flat Pluming Co., 22 Cal. 620, 626. A mortgage providing that ^^this conveyance is intended as a conveyance to secure the payment of the sum of five hundred dollars of a certain promis- sory note made by K., October 18, 1894, for five thou- sand two hundred and twelve dollars and eleven cents, which said note is payable to C, or order, and these presents shall be void if such payment be made according to the tenor and effect thereof," does not create any personal obligation to pay the sum of five hundred dollars, but the land becomes the guarantor of the payment of the note to the r§ :3 NATURE THEREOF. 9 3. Encumbrance Deemed Accessory to Obliga- tion Secured. An encumbrance for security only is deemed accessory to the obligation for the performance of which it is a security^ whether any person is bound for such performance or not.^ 4. Encumbrance Transfers No Title. IS^otwithstanding any agreement to the contrary, mo encumbrance for security only, nor contract to I create such encumbrance, transfers any title -to the property affected thereby.* 5. Encumbrance is Security for Designated Pur- poses Only. An encumbrancer cannot require as a condition precedent to the discharge of his encumbrance against the property the performance of any obli- gation the performance of which is not secured by that specific encumbrance.^ extent of the five hundred doHars: Carson v. Eeid, ]37 Cal. 253, 70 Pae. 89. 3 See Civ. Code, see. 2909. This section refers to perfected and subsisting liens, not to the mere right of obtaining a lien (see section 550 below). The thresher ^s lien being a perfected and subsisting lien is thus an incident of the primary obligation — the debt due the laborer: Duncan v. Hawn, 104 Cal. 10, 12, 37 Pac. 626. 4 See Civ. Code, sec. 2888. Also Haber v. Brown, 301 Cal. 445, 452, 35 Pac. 1035. 5 Encumbrance Security for Designated Purposes Only.— Civil Code, section 2891, provides: ^^The exist- 10 ENCUMBRANCES. § 5 ence of a lien upon property does not, of itself, en- title the person in whose favor it exists to a lien upon the same property for the performance of any other obligation than that which the lien originally'' secured. ' ' ^^The general rule is, that the mortgagee cannot require as a condition of redemption the payment of any other debt not a lien upon the land It is argued, however, that as the plaintiff is here seeking the aid of a court of equity, he should be compelled to do equity, but this maxim of equity jurisprudence only applies when the relief sought by plaintiff and the right demanded by defendant belong to or grow out of the same transaction. It has no application where the demand of the defendant is based upon a contract separate and distinct from that which forms the subject of the plaintiff's action'': Mahoney V. Bostwick, 96 Cal. 53, 01, 31 Am. St. Kep. 175, 30 Pac. 1020. TITLE 2. PEIOKITIES. 6. First in point of time generally first in right. 7. Encumbrance generally superior to subsequently acquired interest in same property. 8. Eights of inferior encumbrancer. 9. Superiority of purchase money mortgage. 10. Eelative priority of unrecorded immovable prop- erty mortgages. 11. Operation of encumbrances as respects home- stead. 12. Loggers' liens and liens against vessels outrank others. 13. Priority of encumbrances dependent on posses- sion. 14. Maritime liens preferred in inverse order of time. 15. Tax liens paramount to all others. 6. First in Point of Time Generally First in Right.i Other things being equal, different nonmaritime encumbrances for secnrity only and attachment 1 First in Time, First in Eight.— Civil Code, sec- tion 2897: '*^ Other things being equal, different liens upon the same property have priority according to the time of their creation, except in cases of bottomry and respondentia.^' In adjusting the con- flicting rights of encumbrancers by mortgage and mechanics' lien, the familiar rule, in equity, that (11) 12 PRIORITIES. § 5 liens against the same property have priority as of the time at which they accrue^ against the property. he has the better right who is first in point of time governs: Preston v. Sonora Lodge, 39 Oal. 116, 118. Illustrations.— A. mechanic's lien is preferred to an attachment filed after the mechanic's lien attached: Tuttle V. Montford, 7 Cal. 358. Where certain mechanics' lienors commenced work before the execution of a mortgage upon the same property, and others after its execution, the last cI^^h have a lien upon the property as encumbered by the mortgage, and subordinate to it, while the first class have a lien upon the property as unencumbered an'* superior to the mortgage. The first class would be paid in full, then the mortgage, then the last class: Crowell v. Gilmore, 18 Cal. 370, See, also, Soule v^ Dawes, 7 Cal. 575; Crowell v. Gilmore, 13 Cal. 54; Germania Bldg. etc. Assn. v. Wagner, 61 Cal. 349, 355; Avery v. Clark, 87 Cal. 619, 627, 22 Am. St. Eep. 272, 25 Pac. 919; Pacific etc. Ins. Co. v. Fisher, 106 Cal. 224, 226, 39 Pac. 758. A mortgage of a leasehold, executed as an im- movable property mortgage, is superior to a subsequent attachment levied upon a fixture upon the mortgaged property: Bovce Ice Machine Co. v. Gould, 73 Cal. 153, 14 Pac. "^609. A mortgage is postponed to an attachment levied before its execution: Eiley v. Xance, 97 Cal. 203, 31 Pac. 1126, 32 Pac. 315; Eeilly v. Wright, 117 Cal. 77, 80, 48 Pac. 970. The lien of a person improving a street under sec- tion 556 below, the work being commenced after the recordation of a mortgage upon the land affected; therebv, is postponed to the mortgage: Warren v. Hop-; kins, iio Cal. 506, 511, 42 Pac. 986. A mortgage in movable property is prior to a lien for service afterward rendered upon the mortgaged property (though necessary for its preservation) : Wil- § 7 PRIORITIES. 13 7. Encumbrance Generally Superior to Subse- quently Acquired Interest in Same Property. Other things being equals an encumbrance is superior to every interest acquired in the en- cumbered property from the owner of the en- cumbered interest after the attachment of the encumbrance.^ son V. Donaldson, 121 Cal. 8, 66 Am. St. Eep. 17, 53 Pac. 404. A meclianic^s lien is postponed to a previous vendor ^s lien upon the same property of which the mechanic's lienor had notice: Kuschel v. Hunter (Cal.), 50 Pac. 397, 398A. Where a receiver was appointed at the instance of mortgagees of property, which was subject to prior encumbrances, the receiver's lien is subject to the charge oi the prior encumbrancers: Ephraim v. Pacific Bank, 129 Cal. 589, 592-594, 62 Pac. 177. I'he mere fact that a prior recorded mortgage was made without consideration does not, without proof that it was made to delay or defraud creditors, render it inferior to a mechanic's lien which attached subse- quently to the recordation thereof: Bewick v. Muir, 8?. Cal. 368, 371, 23 Pac. 389. 2 Time of Attachment. — In general, an immovable })roperty mortgage attaches as of the time of execu- tion and delivery, though afterward recorded: Eoot v. Bryant, 57 Cal. 48; Bank of Ukiah v. Petaluma Sav. Bank, 100 Cal. 590, 35 Pac. 170. Compare Walker v. Euffandeau, 63 Cal. 312. As to Time of Attachment of MovaUe Property Mort- gages, see sections 290-294 below. As to Mechanics^ Liens, see sections 578-580, below. 3 Encumbrance Superior to Subsequently Acquired Interest in Property.— The interest of the lessee in property mortgaged at the time of making the lease, the lessee having actual or constructive notice of the mortgage at such time, is dependent for its 14 PRIOlflTIES. § S 8. Rights of Inferior Encumbrancer. No alteration in a superior encumbrarsce can impair in any respect the security of a subordi- nate encumbrancer.^ A superior encumbrance is duration, except as limited by the terms of the lease, upon the enforcement of the mortgage. So long as the mortgage remains unenforced, the lease is valid; but with its enforcement the leasehold interest is determined: McDermott v. Birke, 16 Cal. 580, 589. The purchaser of immovable property affected by a valid, recorded mortgage takes his interest subject, to the mortgage, and any interest in such property derived from the purchaser is likewise subject not- withstanding any agreement between such person and the purchaser to the contrary: Foster v. Bowles, 138 Cal. 346, 71 Pac. 649. Compare, also, Harris v. Foster, 97 Cal. 292, 295, 33 Am. St. Eep. 187, 32 Pac. 246. On the Other Hand, a termor of land under a lease antedating the mortgage, the lease being duly recorded, has an interest paramount to the mortgage which can- not be cut off by the foreclosure action: Enos v. Cook, 65 Cal. 175, 3 Pac. 632. 4 Illustrations. — While a mechanic's lien is pre- ferred to a mortgage made after the commencement of work by the lien claimant, yet the force of the mortgage cannot be impaired by any alteration of the building contract: Soule v. Dawes, 7 Cal. 575; 14 Cal. 247. The enforcement of a mechanic's lieu cannot be postponed in consideration of the payment of interest thereon to the detriment of a subsequent mortgagee: Gamble v. Voll, 15 Cal. 507, 510. Where, as in 1869, there was a difference in the value of legal tender notes and gold, the rights of a subsequent encumbrancer cannot be impaired hj the alteration of the currency in which a prior mortgage was payable from money generally to gold: Belloc v. Davis, 38 Cal. 242, 254-259. (Poett v. Stearns, 31 Cal. 78, wherein the contrary was held, was overruled in Belloc V. Davis.) § 8 PRIORITIES. 15 not^ however^ avoided as against an inferior en- cumbrance against the same property by a mere change in the form of the superior encumbrance, there being no material increase in the burden upon the property.^ 9. Superiority of Purchase Money Mortgage. A mortgage given against any immovable prop- erty at the time of its conveyance to a purchaser as security for the payment of the purchase money thereof has priority over all other encumbrances accruing against such property as security for the obligations of the purchaser and his succes- sors in interest, subject to the operation of the recording laws.^ Where the purchase money was advanced to the purchaser by a third person, a A first mortgage continued by the mortgagor after the execution of a second mortgage upon the same property is postponed thereto: California Bank v. JBrooks, 126 Cal. 198, 59 Pac. 302. See section 394 below. 5 Mere Change in Form of Superior Encumbrance Does not Avoid Same.— Thus a change of an encum- brance from vendor ^s security to purchase money mortgage does not cause the same to be postponed: Stanton v. Quinan, 91 Cal. 1, 27 Pac. 517. « Purchase Money Mortgage has Priority.— Civil Code, section 2898: ^^A mortgage given for the price of real property, at the time of its conveyance, has priority over all other liens created against the pur- chaser, subject to the operation of the recording laws. ' ^ Dillon V. Bryne, 5 Cal. 455, 456. Illustrations.— A mortgage under which money is advanced by a third person to the purchaser of land 1*6 PRIORITIES. I .5 mortgage given to him by the purchaser as se- curity for such advance will be recognized as a purchase money mortgage only when the money was advanced by the mortgagee for the express purpose of paying the purchase price of the prop- erty therewith.'' at the time of the purchase to pay the purchase price is a purchase money mortgage, and has priority over any declaration of homestead thereon made by the purchaser: Lassen v. Vance, 8 Cal. 271, 68 Am. Dec. 322. Where a person in possession of land under a verbal agreement of sale employed a builder to erect a house thereon, and, after work had begun, a deed of the land was given to such person, and at the same time a purchase money mortgage was executed to the vendor, the mortgage is an encumbrance superior to a mechanic's lien filed bv the builder: Guy v. Carriere, 5 Cal. 511. Where a person about to become the purchaser of land mortgaged it to a mortgagee with notice that the j.urchase had not been consummated, and afterward, upon receiving a conveyance of it from the vendor, executed to the vendor a purchase money mortgage, such purchase money mortgage has priority: Mont- gomery V. Keppel, 75 Cal. 128, 7 Am. St. Kep. 125, 19 Pac. 178. The same conclusion was reached in a case where it does not appear that the mortgagee had notice that the sale had not been consummated: Tolman v. Smith, 85 Cal. 280, 285, 286, 24 Pac. 743. Likewise, the interest of a transferee of land which the transferor had not paid for at the time of the transfer, the transferee having actual notice of that fact, is postponed to a purchase money mortgage afterward given by the transferor to the vendor: Stanton v. Quinan, 91 Cal. 1, 27 Pac. -517. 7 Van Loben Sels v. Bunnell, 120 Cal. 680, 684, 53 Pac. 266. § 10 PRIORITIES. 17 10. Relative Priority of Unrecorded Immovable Property Mort^ages.^ An nnrecorcled immovable property mortgage is valid^ as against everyone except (1) a bona fide purchaser or encumbrancer for value of the mortgaged property, or some part thereof, whose conveyance is first recorded ;^^ 8 On validity of immovable property mortgages, see sections 280 and 281, below. On validity and priority of unrecorded movable property mortgages, see sections 288-294 below. Civil Code, section 1217, provides: **An un- recorded instrument is valid as between the parties thereto, and those who have notice thereof. '' Illustrations.— A second mortgage taken with notice of the existence of a prior unrecorded mortgage upon the identical land is postponed thereto: Woodworth V. Guzman, 1 Cal. 203; Wallace v. McKenzie, 104 Cal. 130, 37 Pac. 859. The rights of a purchaser of land whose purchasing agent had actual notice of an unrecorded mortgage upon the purchased property are postponed to such mortgage: De Leon v. Higuera, 15 Cal. 483, 496. 10 Void as Against Bona Fide Purchaser for Value Whose Conveyance First Recorded: Van Eeynegan v. Revalk, 8 Cal. 75; Odd Fellows^ Sav. Bank v. Prouty, 46 Cal. 603, 607; Warnock v. Harlow, 96 Cal. 298, 306, 31 Am. St. Eep. 209, 31 Pac. 166; Bank of Ukiah v. Petaluma Sav. Bank, 100 Cal. 590, 35 Pac. 170; Prouty V. Devin, 118 Cal. 2o8, 260, 50 Pac. 380; County Bank of San Luis Obispo v. Fox, 119 Cal. 61, -63, 51 Pac. 11; Commercial Bank v. Pritchard, 126 Cal. 600, 604, 59 Pac. 130; Farmers' Exch. Bank v. Purdy, 130 Cal. 455, 457, 458, 62 Pac. 738. An averment of the facts necessary to make a per- son a bona fide holder for value is necessary: Evers- don V. Mayhew, 65 Cal. 167, 3 Pac. 641; County Bank ,of San Luis Obisp-o v. Fox, 119 Cal. 61, 64, 51 Pac. 11. Liens— 2 18 PRIORITIES. § 10 (2) a holder of an immovable property improve- ment lien who commenced to furnish work or materials before its recordation without actual notice thereof ;^^ and (3) a holder of a judgment affecting the title, rendered in an action of which the notice of pendency was filed before the recordation of the mortgage. ^^ An assignee of a second mortgage, who took after the recordation of the prior mortgage, has con- structive notice thereof, and is not a bona fide pur- chaser: Mahoney v. Middleton, 41 Cal. 41; Clark v. Sawyer, 48 Cal. 133. See code sections quoted under Lote 12 below. 31 Void as Against Mechanic's Lienor Before Recordation Without Notice.— By section 1186 of the Code of Civil Procedure as enacted in 1872, a mechanic's lien was made superior to a mortgage executed before the time of the attachment of the lien, but of which the mechanic 's lienor had no actual nor constructive notice. The court must find as a fact that the lienor had no notice of the then unrecorded mortgage in order to give a mechanic's lien priority over an unrecorded mortgage. Historical.— For earlier enactments, see Stats. 1850, p. 211, c. 87, sec. 9; Stats. 1855, p. 156, c. 130, sec. 0; Stats. 1856, p. 203 c. 134, sees. 3, 4; Stats. 1862, p. 384, c. 297, sec. 3; and Stats. 1867-68, p. 589, c. 448, sec. 3. These enactments are considered in Ferguson V. Miller, 6 Cal. 402, and Munie v. Eose, 4 Cal. 173. 13 Void Against Holders of Certain Judgments.— Civil Code, section 1214, provides: ^^ Every convey- ance of real property, other than a lease, for a term not exceeding one year, is void as against any sub- sequent purchaser or mortgagee of the same property, or any part thereof, in good faith and for a valuable consideration, whose conveyance is first duly recorded, § 10 PRIORITIES. 19 An attaclimeiit creditor or judgment creditor i? not a bona fide purchaser or encumbrancer for value within the meaning of this section ;^*^ but a purchaser at execution sale, whether the judgment creditor or a third party, is a bona fide purchaser for value, and takes his title sub- ject merely to those encumbrances, easements, and equities to which it was subject in the possession of the defendant in execution, and of which such purchaser had actual or constructive notice at the time of the filing of the certificate of sale, being however protected against all latent claims therein.*^ and as against any judgment affecting the title, unless such conveyance shall have been duly recorded prior to the record of notice of action/^ As amended, m effect March 12, 1895. Section 1215 provides: ''The term 'conveyance,' an used in sections 1213 and 1214, embraces every in- strument in writing by which any estate or interest in real property is created, alienated, mortgaged, or encumbered, or by which the title to any real property may be affected, except wills.'' 13 Attachment Creditor not Bona Fide Purchaser: Bank of Ukiah v. Petaluma Sav. Bank, 100 Cal. 590, Sri Pac. 170. Thus, an attachment is postponed to a deed of the attached property unrecorded at the time the writ of attachmeni; was perfected, but recorded before the sale under the attachment: Hoag v. Howard, 55 Cal. 564. 14 Purchaser at Sale Bona Fide Purchaser: Hunter V. Watson, 12 Cal. 363, 377, 73 Am. Dec. 543; Foor- man v. Wallace, 75 Cal. 552, 17 Pac. 680; Eiley v. Martinelli, 97 Cal. 575, 33 Am. St. Eep. 209, 32 Pac. 576; Duff v. Eandall, 116 Cal. 226, 231, 58 Am. St. 20 PRIORITIES. § 11 11. Operation of Encumbrances as Respects Homestead. A homestead is subject to the operation of liens for improvements to immovable property and of vendors' liens^ and may be sold in satisfaction of the obligations secured thereby ;^^ but cannot bo Rep. 158, 48 Pac. 66; Cady v. Purser, 131 Cal. 552, 559, 82 Am. St. Eep. 391, 63 Pac. 844. 15 Homestead Subject to Mechanics* and Vendors* Liens. — Civil Code, section 1241, in part, provides: '^The homestead is subject to execution or forced sale in satisfaction of judgments obtained 2. On debts secured by mechanics, contractors, sub- contractors, artisans, architects, builders, laborers of every class, materialman's or vendors' liens upon the premises." Section 1241, having been adopted pursuant to the mandate of the constitution (article 17, section 1), that *Hhei legislature shall protect by law from forced sale a certain portion of the homestead and other property of all heads of families,'' is the con- trolling law: Lee v. Murphy, 119 Cal. 364, 372-374, •51 Pac. 549, 51 Pac. 955. ^^The judgment on a debt secured by a vendor's lien, mentioned in section 1241 of the Civil Code, is a judgment in a suit brought to. have a vendor's lien and its amount declared and enforced upon the real property sold and conveyed by the vendor claiming the lien. Such a judgment relates bacjk to the date when the conveyance was made, or when the court of equity decrees the equity of the vendor attached, and if the homestead declaration was filed after that date, declarant cannot avail himself of his home- stead protection against the lien of his vendor": Fitzell V. Leaky, 72 Cal. 477, 485, 14 Pac. 198. Thus, where the lien of a vendor for the purchase money attached before the property was impressed with the homestead character, neither husband nor wife can hold the property except in subordination to the lien: Williams v. Young, 17 Cal. 403. I 11 PRlOlllTJES. 21 affected" by an equitable lien in the nature; of a mortgage unless the instrument whereby the lien is evidenced is recorded before the declaration of homestead is filed>^ The operation of mortgages upon prior and subsequent homesteads is herein- after considered.^'' 12. Loggers' Liens and Liens Against Vessels Outrank Others. Loggers' liens and liens against vessels take preference over all other demands against the same property, except tax and assessment liens. ^^ Historical.— 'Prior to March 9, 1887, homesteads were by section 1241 above, subject to execution or forced sale only in satisfaction of judgments obtained '^on debts secured by mechanics', laborers', or vendors' liens, upon the premises." As the sec- tion omitted from the liens for which the property could be sold that of materialmen, the court, in Eichards v. Shear, 70 Cal. 187, 11 Pac. 607, held that one who furnished materials for the construction of a building on immovable property after it had been impressed with a homestead, could not obtain a lien thereagainst for the materials furnished; and in Walsh V. McMenomy, 74 Cal. 356, 360-361, 16 Pac. 17, the court, per Searles, C. J., Paterson, McKinstry, Sharpstein, McFarland, and Temple, JJ., Thornton, J.^ dissenting, further held that the lien could not be obtained, although the homestead was not declared until after the materials were furnished. 16 Campan v. Molle, 124 Cal. 415, 417, 57 Pac. 208. 17 See sections 315-320, below. IS Stats. 1877-78, p. 747, c. 484, sec. 1: **A person who labors at cutting, hauling, " rafting, or driving logs or lumber, or who performs any labor in or about 22 PRIORITIES. § 13 13. Priority of Encumbrances Dependent on Possession. Where different encumbrances against the same property are of equal rank^ the demand of an en- cumbrancer who holds the property "under an en- cumbrance dependent on possession must be satis- fied before he can be compelled to surrender the possession of the property.^^ 14. Maritime Liens Preferred in Inverse Order of Time.20 Other things being equal, the last of different maritime liens against the same vessel, whether a logging camp necessary for the getting out or transportation of logs or lumber, shall have a lien thereon .... which shall take preference over all other claims. '' Code of Civil Procedure, section 813: ^^ Demands for these several causes constitute liens upon all steamers, vessels and boats, and .... have prefer- ence over all other demands. ^^ 19 As the lien of an encumbrancer whose en- cumbrance is dependent on possession entitles him to the possession of the property, he is also a bailee thereof, and cannot be deprived of the possession until his claims have been satisfied. To deprive him of its possession would cause the loss both of his encumbrance against the property and of his special interest therein. 20 Maritime Liens Preferred in Inverse Order of Time. — In every case the last lien given will super- sede the preceding. The vessel must get on; this is the consideration which controls every other; and not only the vessel, but even the cargo, is sub modi subjected to this necessity: The St. Jago de Cuba, 2li U. S. (9 Wheat.) 409, 418, 6 Law ed. 405. § 14 PRIORITIES. 23 arising by the general maritime law as recognized in the United States or by state law,^^ takes pref- erence over every other maritime and over every nonmaritime lien. 15. Tax Liens Paramount to All Others. Tax and assessment liens created by law as security for the payment of taxes and assessments levied under the sovereign authority of govern- ment constitute charges against the property against which they accrue paramount to every other encumbrance thereagainst.^^ Maritime liens take preference over all prior claims against a vessel, unless for seamen ^s wages or sal- vage: The J. E. Eumbell, 148 U. S. 1, 9, 13 Sup. Ct. Eep. 498, 37 Law ed. 345. 21 Whether Arising "by General or by State Law.— A maritime lien created by state statute has like pre- cedence over a prior mortgage that is accorded a maritime lien recognized by the general maritime law as adopted in the United States: The J. E. Eumbeil, 148 U. S. 1, 17-19, 13 Sup. Ct. Eep. 498, 37 Law ed. 345. 23 Tax and Assessment Liens Paramount. Illustrations. — A tax lien whether antedating a mortgage or not is superior to it: Williams v. Coopier, 124 Cal. 666, 57 Pac. 577. Likewise an assessment lien levied by an irrigation district: Weinreich v. Hensley, 121 Cal. 647-656, 54 Pac. 254. Likewise a street assessment lien: Wilson v. Cali- fornia Bank, 121 Cal. 630, 54 Pac. 119. A tax upon the personalty of a person constitutes a first lien against all his immovable property, para- mount to a mortgage thereagainst executed prior to the levy of the tax: California Loan etc. Co. v. Weis, 118 Cal. 489, 491-495, 50 Pac. 697. TITLE 3. EIGHTS AND DUTIES OF PAETIES. J.6. Kelative rights of encumbrancer in possession and owner of property. 17. Interested person may discharge encumbrance when due. 18. Inferior encumbrancer may in case of necessity satisfy superior encumbrance before maturity. 19. Subrogation of inferior encumbrancer to claim which he is compelled to pay. 20. Subrogation to security canceled by mistake of fact. 21. Eights of superior encumbrancer as limited by rights of inferior encumbrancer. 22. Application of proceeds when securing two obligations. 16. Relative Rights of Encumbrancer in Posses- sion and Owner of Property. The holder of propert}^ by virtue of an encum- brance thereagainst is not entitled to compensa- tion from the owner thereof for any ordinary ex- penses which he incurs respecting it. But the owner must compensate the holder for expenses necessarily incurred by him to preserve the prop- erty from unexpected and unusual injury, unless he surrenders the property to the holder in exon- (24) § 16 RIGHTS AND DUTIES. 25 Dration of this liability^ and must indemnify him for damage caused by defects or vices there- in AYhich he knew at the time of parting with the possession of the property and concealed from the person to whom he transferred the posses- 1 Relative Rights of Encumbrancer and Owner.— Civil Code, section 2892, provides: *' One who holds property by virtue of a lien thereon is not entitled to compensation from the owner iPhereof for any trouble or expense which he incurs respecting it, ex- cept to the same extent as a borrower, under sections 1892 and 1893/' Section 1892: ^^The borrower of a thing for us6 liiust bear all its expenses during the loan, except such as are necessarily incurred by him to preserve it from unexpected and unusual injury. For such expenses he is entitled to compensation from the lender, who may, however, exonerate himself by sur- rendering the thing to the borrower. '' Section 1893: **The lender of a thing for use must indemnify the borrower for damage caused by defects or vices in it, which he knew at the time of lending and concealed from the borrower. '^ In Bank of British Columbia v. Freese, 116 Cal. 9, 14, 47 Pac. 783, where an obligation was secured by the pledge of a cargo of rice, and the pledged property had been exhausted without satisfying the secured obligation; the question arose whether the proceeds of the sale of the pledged propierty had been properly applied, and the court held that reasonable charges for storage, insurance upon the rice while stored, cartage, brokerage, freightage, and customs duties, properly incurred in caring for, pre- serving and selling the rice, are properly deducted from the gross receipts, no question being raised as to the necessity or propriety of these acts. 26 RIGHTS AND DUTIES. § 17 17. Interested Person may Discharge Encum- brance When Due. At any time after an obli^tion secured by an encumbrance against any property becomes due, and before a sale which may have been made of the encumbered property in satisfaction of the secured obligation has become final, any person having an interest in the encumbered property whose interest is affected by the encumbrance, or holding a subordinate encumbrance thereagainst, has a right to satisfy such secured obligation, whereupon the property is discharged from the encumbrance whereby the obligation was secured.^ 18. Inferior Encumbrancer may in Case of Necessity Satisfy Superior Encumbrance Before Maturity.^ Whenever necessary for the protection of his 2 Carpentier v. Brenham, 40 Cal. 221, 237. Civil Code, section 2903: ^^ Every person, having an interest in property subject to a lien, has a right to redeem it from the lien, at any time after the claim is due, and before his right of redemption is foreclosed.'' Section 2904: ''One who has a lien inferior to another, upon the same property, -has a right: 1. To redeem the property in the same manner as its owner might from the superior lien''. . . . But ''a stranger to the title of a mortgagor— one who claims no subsisting interest under him, and who does not act by his authority— has no right to make a tender of the debt or otherwise intermeddle in the relations created by the mortgage": Hazen v. Kicholls, 126 Cal. 327, 329, 58 Pac. 816. • 3 Civil ' Code, section 2904, last clause, provides: § 18 EIGHTS AND DUTIES. 27 interests^ an inferior encumbrancer may satisfy any superior encumbrance or trust deed in the nature of a mortgage^ against the property af- fected by his encumbrance and be subrogated to the benefits thereof. 19. Subrog^ation of Inferior Encumbrancer to Claim Which He is Compelled to Pay. An encumbrancer or cestui que trust under a trust deed in the nature of a mortgage, who is compelled to satisfy a paramount claim against the encumbered property for his own protection, may enforce payment of the amount so paid by him as a part of the claim secured by his own en- cumbrance.^ *^One who has a lien inferior to another, upon the same property has a right: .... 2. To be sub- rogated to all the benefits of the superior lien, when necessary for the protection of his interests, upon satisfying the claim secured thereby." So where a pledgee is compelled to satisfy the lieu of a bailee of the pledged property in order to obtain possession thereof, he will be subrogated to such lien as against a subsequent attaching creditor of the pledgor: Rohrbough v. Johnson, 107 Cal. 144, 150, 40 Pac. 37. 4 This pro/ision applies to a superior trust deed: Swain v. Stockton Sav. etc. Soc, 78 Cal. 600, 12 Am. St. Rep. 118, 21 Pac. 365. 5 Subrogation of Inferior Encumbrancer to Claim Paid by Him: See Civ. Code, sec. 2876. Illustrations.— Sums paid by a mortgagee to extin- guish a reclamation district assessment lien are reasonable expenses chargeable to the mortgagor even 28 RIGHTS AND DUTIES. § 20 20. Subrogation to Security Canceled by Mis- : take of Tact/* «\ A person holding or acquiring any right in Vhen the validity of the lien is contested: Weinreich V. Hensley, 121 Cal. 647, 656, 6o7, 54 Pac. 254. Where the cestui que trust under a trust deed in the nature of a mortgage is compelled to satisfy street assessment liens and taxes against the trust property, he is subrogated to such liens: Sav. etc. Soc. v. Bur- nett, 106 Cal. 514, 536, 39 Pac. 922. Where a mortgage was made by a deed absolute in form, if, while the legal title thus apparently stood in the mortgagee, the mortgagee was obliged to protect his security by paying off other mortgages against the land, equity will give him a lien there- against to the extent of the payments: Combs v. Hawes, 8 Pac. 59/, 598. o Subrogation to Security Canceled by Mistake of Fact. Rationale.— '^ The principle running through all cases of this class is that when the legal rights of parlies have been changed by mistake, equity re- stores them to their former conditions when it can be done without interfering with any new rights acquired • on the faith and strength of the altered Condition of the legal rights, and without doing in- justice to other persons' ': Shaffer v. McCloskey, 101 Cal. 576, 581, 36 Pac. 196. The further principle is also involved in some of the cases that equity will interpose to- prevent a mer- ger where it is apparent from the circumstances that it was not the intention of the grantee that a merger should take place; and where it appears to be for the interest of the grantee that there should be no merger of the lesser estate, such will be presumed to be his intention: Carpentier v. Brenham, 40 Cal. 221, 235, 236; Rumpp v. Gerkens, 59 Cal. 496; Scrivner v. Dietz, 84 Cal. 295, 299, 24 Pac. 171; Davis v. Randall, 17 Cal. 12, 16, 17, 48 Pac. 906; Hines v. Ward, 121 Cal. 115, 53 Pac. 427. § 20 RIGHTS AND DLTIES. 29 The principle of this section is not applicable, however, in cases of mistake of law merely: Guy v. Du Uprey, 16 Cal. 195, 76 Am. Dec. 518, in which the cases of'Carr v. Caldwell, 10 Cal. 380, 70 Am. Dec. 740, and Swift v. Kraemer, 13 Cal. 526, 73 Am. Dec. 603, were disapproved. So a person who advances money upon a voici mortgage without mistake of fact, a portion of which money was used to satisfy a first mortgage upon the same premises, which was thereupon can- celed, is not entitled to be subrogated to the rights of the original mortgagee: Guy v. Du Uprey, 16 Cal. 195, 76 Am. Dec. 518; Brown v. Eouse, 125 Cal. 645, 651, 58 Pac. 267. Compare Brown v. Eouse, 104 Cal. 672, 676, 38 Pac. 507. Illustrations.— A purchaser at a judicial sale held pursuant to the foreclosure of a superior encumbrance upon certain land, without notice of a subsec|uent encumbrance upon the same land, as against the holder of such encumbrance with notice of the superior encumbrance, may assert so much of the superior encumbrance as was satisfied by his pur- chase: Carpentier v. Brenham, 40 Cal. 221. Where the purchaser of land under an executory contract of sale mortgages his interest therein to a third party, and afterward, upon receiving a convey- ance of the property, executes a purchase money mortgage to the vendor in satisfaction of which he subsequently reconveys the property to the vendor, the vendor may, upon the foreclosure of the mort- gage executed to the third party, assert the purchase money mortgage as a superior encumbrance, and a merger will not take place: Hawkins v. Harlan, 68 Cal. 236, 9 Pac. 108. A mortgagee of land who takes a conveyance of the mortgaged land in satisfaction of the secured obligation and thereupon cancels the mortgage, with- out actual notice of the existence of a second mort- gage thereon, as against the second mortgagor with notice of the first mortgage, may assert such mort- gage: Brooks V. Kice, 56 Cal. 428; Eumpp v. Ger- kens, 59 Cal. 576, 580. 30 RIGHTS AND DUTIES. § 20 respect to specific property/ (a) who satisfies, or (b) the purchase money for whose purchase is used in whole or in part to satisfy^ any obligation secured by such property, which security is there- upon canceled of record, without actual notice^ A person who without actual notice of the exist- ence of a second mortgage on certain land pays off the first mortgage and takes in consideration thereof a new mortgage upon the same property may assert the first mortgage, although canceled, as against the second mortgagee: Tolman v. Smith, 85 Cal. 280, 285, 286, 24 Pac. 743. A mortgagee of land who without actual notice of a judgment lien thereon and a sale pursuant thereto satisfies a superior mortgage thereon, which there- upon is canceled, as against the poirchaser at execu- tion sale with notice of the existence of the original m.ortgage at the time of the attachment of the judg- ment lien, may assert the original mortgage: Matzen V. Shaeffer, 65 Cal. 81, 3 Pac. 92. Where, however, the sale is made after the can- cellation of the superior mortgage to a person with- out notice of the equities of the person satisfying the superior mortgage, the purchase will be pro- tected, and the mortgagee may not assert the original mortgage: Eichards v. Griffith, 92 Cal. 493, 28 Pac. 484, 27 Am. St. Eep. 156. A mortgage holder who afterward makes further advances to the mortgagor, and thereupon cancels his mortgage, taking instead a new mortgage for the entire obligation, which mortgage was subsequent to a homestead or trust deed in the nature of a mort- gage upon the same property, as against the home- stead or trust deed, may assert his mortgage to the amount of the original mortgage: Birrell v. Schie, 9 Cal. 104, 107 (trust deed); Dillon v. Byrne, 5 Cal. 455 (homestead) ; Himmelmann v. Schmidt, 23 Cal. 117, 120 (homestead). Compare Van Sandt v. Alvis, 109 Cal. 165, 169, 41 Pac. 1014, 50 Am. St. Eep. 25, § 20 EIGHTS AND DUTIES. 31 wherein it does not appear whether or not the mort- gagee had actual notice of the homestead. •A tenant in common of land who satisfies and cjiuses to be canceled a first mortgage on such land made by the cotenants jointly, without notice that the other tenant had placed a second mortgage on his interest, as against the second mortgagee, may assert the original first mortgage: Shaffer v. Mc- Closkey, 101 Cal. 576, 36 Pac. 196. A mortgagee of land who takes a conveyance of the mortgaged property in satisfaction of the secured obligation, and thereupon cancels the mortgage with- out actual notice of the existence of a judgment lien thereon subsequent to the mortgage, as against the judgment lienor with notice of the first mortgage, may assert such mortgage: Hines v. Ward, 121 Cal. 115, 53 Pac. 427. A purchaser of land who without actual notice of the existence of a judgment lien thereon satisfies and causes to be canceled a prior trust deed thereon, as against the holder of the judgment lien with notice of the deed, may assert the trust deed: Darrough v. Herbert Kraft Co. Bank, 125 Cal. 272, 57 Pac. 983. Where, however, the person who satisfied and caused to be canceled the original mortgage did not take another mortgage, and a third person, relying upon the discharge of the original mortgage, there- after advanced money and received a mortgage upon the same land, the person paying the original mortgage cannot assert it against the new bona fide mortgagee: Persons v. Shaeffer, 65 Cal. 70, 3 Pac. 94. 7 A person only holding or acquiring some right in the property may be subrogated. So a mere volunteer who without any duty pays the debt of another cannot in the absence of fraud, accident, or mistake of fact have the original encumbrance re- instated and himself substituted to the place of the secured creditor whose debt was paid: Guy v. Du Uprv?y, 16 Cal. 195, 76 Am. Dec. 518; Brown v. Eouse, 125 Cal. 645, 651, 58 Pac. 267. 8 Without Actual Notice of the Encumbrance.— Mere constructive notice of the existence of the in- ferior encumbrance, through the recordation thereof, 32 RIGHTS AND DUTIES. § 20 of the then existence of any encumbrance, deed of trust, or homestead upon such property subse- quent to the obligation canceled, as against any holder of such subsequent right therein with notice of his equities, is deemed the equitable assignee of and may assert the superior encum- brance at any time before it is barred by lapse of time. 21. Eights of Superior Encumbrancer as Lim- ited by Rights of Inferior Encumbrancer.^ Where one person has an encumbrance against several pieces of property, and other persons have does not impair the right to be subrogated to the superior encumbrance: Shaffer v. McCloskey, 101 Cal. 576, 580, 36 Pac. 196. *» Rights of Superior Encumbrancer as Limited by Rights of Inferior. See Civ. Code, sec. 2899. Compare, also. Civil Code, section 3433, providing: ^^ Where a creditor is entitled to resort to each of several funds for the satisfaction of his claim, and another person has an interest in, or is entitled to resort as a creditor to some, but not all, of them, the latter may require the former to seek satisfaction from those funds to which the latter . has no such claim, so far as it can be done without impairing the right of the former to complete satisfaction, and without • doing injustice to third persons. ' ' ^^ Whenever one buys land which is subject to a lien, which is also a lien upon other lands belonging to the vendor, the vendee may require the creditor to proceed in the first instance against the latter land, not conveyed by the conveyance. This rule not only applies to a vendee, but to anyone having a substantial and valuable interest in any of the § 21 RIGHTS AND DUTIES. 33 subordinate encumbrances against, or interests in, some but not all such pieces of property, the person having the superior encumbrance, if he can do so without risk of loss to himself, or of ii^- justice to other persons, must, in the absence of a special agreement,*^ resort to the property in the separate parcels of land. It has been applied in favor of judgment creditors, and in fact to almost all the transactions of business in which the rights of creditors, mortgagees, grantees, and lessees are involved before a court of equity ^^ Mack v. Shafer, 135 Cal. 113, 67 Pac. 40. Illustrations.— Where, in order to secure his in- debtedness, a debtor gave a mortgage against certain property of his, and subsequently, after he had re- ceived a further accommodation, gave another mort- gage to secure his indebtedness upon land jointly owned by himself and a third person, and the third l^erson jointly executed this second mortga'ge, the third person, being a surety, may require the mort- gagee to exhaust the land of the principal debtor before recourse is had to his interest: Eaun v. Rey- nolds, 11 Cal. 14, 20. Where one person has a lien against two pieces of property, and another person has a subsequent lien against one of them only, such other person has the right to require the first person to first resort to ,the ])roperty against which he has an exclusive lien: Kent V. Williams, 114 Cal. 537, 542, 46 Pac. 462; Kent V. San Francisco Sav. Union, 130 Cal. 400, 404, 62 Pac. 420. 10 In Absence of Special Agreement.— ''The doc- trine of selling mortgaged property which has been alienated by the mortgagor in the inverse order of alienation is not so unyielding but that it may be controlled by circumstances. A familiar example of this is to be found in cases where in a sale of a part of the premises the grantee has bound himself Liens— 3 34 RIGHTS AND DUTIES. § 21 following order upon demand of any interested person : (1) to the property against which he has an ex- clusive encumbrance; (2) to the property which is subject to the fewest inferior encumbrances ; (3) in like manner inversely to the number of subordinate encumbrances against the sam.e property; and (4) when several pieces of property are within one of the foregoing classes and subject to the same number of encumbrances, resort must be had : (a) to the property which has not been trans- ferred since the superior encumbrance was created, (b) secondly, to the property, which has been so transferred without a valuable considera- tion, and (c) lastly, to the property which has been • transferred for a valuable consideration in the inverse order of transfer. to pay the mortgage ^^: Irvine v. Perry, 119 Cal. 352, 356, 51 Pac. 544, 51 Pac. 949. Illustrations.— Where two parcels of land were covered by a mortgage, and the mortgagor sold them to different pairchasers, each of whom agreed to pay a certain proportion of the mortgage indebtedness, one of them in fact paying, but the other failing to do so, and the mortgagee maintained an action to foreclose his mortgage, the parcel of land the § 22 RIGHTS AND DUTIES. 35 22. Application of Proceeds When Securing Two Obligations.^^ Where certain property is held as security for -two obligations^ one of which is also otherwise secured^ in the absence of a modifying agree- grantee of Avhicli had not paid his pro rata must first he sold: Weyant v. Murphy, 78 Cah 278, 12 Am. St. Eep. oO, 20 Pac. 568. 11 Application of Proceeds When Securing Two Obligations. — The principle underlying this section is stated in Murdock v. Clarke, 88 Cal. 384, 390, 391, 26 Pac. 601, as follows: '^When neither party to the tiansaction makes any application of the payment and there are different debts due from the debtor to the creditor, the law will make the application in such a manner, in view of all the circumstances of the case, as is most in accordance with justice and equity, and will best protect and maintain the rights of both parties. One of the elements underlying the rule for the protection of each party in his rights i«5, that the burden shall be made as light upon the debtor as is consistent with giving the creditor all that the debtor has bound himself to pay. If the creditor, by any application that may be made for him, can receive all for which the debtor is under any cbligation to him, it is but equity that it should be applied in such a mode as will be least onerous to the debtor. On the other hand, when the interest of the debtor cannot be promoted by any particular application of the payment, or when it is a matter of indifference to him in which mode the application is made, the law raises a presumption that the pay- ment was actually received in the way that was of most advantage to the creditor. If the application can be so made as to discharge all the obligations of the debtor without increasing his burden, it will be deemed indifferent to him upon which obligation the payment shall be applied. The principles of this rule find their application in cases where it is held that a payment is to be applied to interest instead 36 RIGHTS AND DUTIES. § 22 ment or of intervening rights of third parties, the encTimbrancer is entitled to have the pro- ceeds of the sale of such property applied in liquidation of the obligation which is most pre- carious by reason of being least secured. ^^ In general, the law will so apply the proceeds of the of principal; to an interest-bearing debt in prefer- ence to one bearing no interest; to the payment of legal interest instead of that which is usurious; to a debt that has matured rather than to one which is not yet due; to the payment of legal items in an account rather than those which are illegal; and, on the other hand, for the purpose of protecting the rights of the creditor, a payment will be applied to the earlier items of an account in preference to later^ ones; to an unsecured debt in preference to one for which he holds security; and when he has more than one security, to that debt for which the secur- ity is most precarious. No specific rule can be laid down that will embrace all the cases that may arise for its application, inasmuch as the infinite variety of human transactions cannot be included within the limits of a formulated rule; and therefore courts must be governed by principles rather than by fixed rules. Tn this state an attempt has been made for the guidance of courts in this matter, but the rules there prescribed are insufficient for all occasions, and do not embrace even the conditions of the present case.'' The rule formulated in the code is found in Civil Code, section 1479, subdivision 3. 12 So where certain logs were held as security for the payment of two notes, one of which was also secured by sureties, the pledgee was entitled to have the proceeds of the sale of the logs credited to the pavment of the note not otherwise secured: California "^Nat. Bank v. Ginty, 108 Cal. 148, 152, 153, 41 Pac. 38. [ § 22 RIGHTS AND DUTIES. 37 sale of encumbered property as will best protect and. maintain the rights of both parties.^** 13 So where four thousand dollars was realized by the sale of encumbered property, the law will apply it first to the payment of interest and afterward to the secured obligation: Haber v. Brown, 101 Cal. 445, 455, 35 Pac. 1035. TITLE 4. SPECIAL EVEI^TS AEFECTIN^G EXCUM- BEANCES. CHAPTER 1. DEATH OF OWNEK OF ENCUMBERED PROPERTY. ARTICLE 1. VALIDITY OF ENCUMBEANCE AGAINST PEOP- EETY OF DECEDENT. 23. Encumbrance not affected by death except when against homestead. 23. Encumbrance not Affected by Death Except When Against Homestead. An encumbrance^ for security only subsisting 1 Encumbrance not Aif acted by Deatli.— Compare Code of Civil Procedure, section 1500: '*No holder of any claim against an estate shall maintain any action thereon, unless the claim is first presented to the executor or administrator, except in the follow- ing case: an action may be brought by any holder of a mortgage or lien to enforce the same against the property of the estate subject thereto, where all re- course against any other property of the estate is (38) § 23 OF DEATH. 39 txpressly waived in the complaint; but no counsel fees shall be recovered in such action unless such claim be so presented.'' Judgment Lien not Extinguished hy DeatJi.—^ ' Other sections of the code [of Civil Procedure besides 671, quoted under section 623, note 2, below, of this book] confirm rather than negative the continuance of the lien after the death of the debtor. Section 669 of the Code of Civil Procedure, in making provision for the entry of a judgment, says: ^If a party die after a verdict or decision upon an issue of fact, and be- fore judgment, the court may, nevertheless render judgment thereon. Such judgment is not a lien upon the real property of the deceased party, but is payable in tlie course of administration on his estate.' And in the title devoted to the estates of deceased persons the same provision is re-enacted: Code Civ. Proc, sec. 1506. It is impossible to resist the effect of this express provision as implying that the judgment in other cases is a lien. If every judg- ment ceased to be a lien upon the death of a debtor, why make special provision that this judgment, ren- dcaed before the death, should not be a lien? * * There is also an apparent recognition of the con- tinuing lien of judgments in section 1643 of the Code of Civil Procedure. In that section, in making provision for the payment of debts, there is given to ^judgments rendered against the decedent in his lifetime' the same prefer- ence against the general assets which is given to mortgages against the particular property covered by the lien of the mortgage. The payment of judg- ments ^in the order of their dates' is the enforce- ment of their liens. ^^And what is more persuasive still, to the same end, is the following provision of section 1505: 'A judgment creditor, having a judgment which was rendered against the testator or intestate in his life- time, may redeem any real estate of the decedent from any sale under foreclosure or execution in like manner and with like effect as if the judgment debtor were still living.' This provision, read in con- nection with the definition of a redemptioner (Code 40 EFFECT ON ENCUMBRANCES. § 23 against any property, unless^ the property is a homestead selected and recorded during the life- time^ and continuing after the death of the Civ. Proc, see. 701, subd. 2), is a recognition of the existence of the posthumous judgment lien. It might be argued that such a provision is unnecessary if the continuance of the judgment lien were an ad- mitted and recognized fact. But the provision is a part of the section which provides that no execution shall issue upon the ordinary money judgment, but that the juclgment must be presented as a claim against the estate; and then as if to give assurance that the judgment loses no other attribute, comes this provision that the right to make a redemption (to which the existence of a lien is essential) re- mains unimpaired. ^^The concurrent provisions of the general prac- tice and of the probate procedure seem to leave no doubt of the intention of the code not to extinguish the lien upon the death of the debtor. '^The only apparent uncertainty arises from the fact that the judgment is required to be paid by the executor or administrator in the course of adminis- tration, and is not enforceable by execution. But this provision is not inconsistent with the continu- ance of the lien; and within the provision itself lies, as we have seen, a quasi recognition of the lien rank- ing it with the recognized lien of the mortgage. ''To look at the consequence of any other conclu- sion than the above is to find additional confirmation for the conclusion. If the judgment debtor could transfer his property and then die, leaving to his creditor the barren remedy of a claim against a de- pleted estate, judgment liens, which have been so much favored by the enactment of 1895, would lose nearly all their value'': Morton v. Adams, 124 Cal. 229, 230, 231, 71 Am. St. Kep. 53, 56 Pac. 1038. Thus, although the owner of the liened property dies before the expiration of two years after the accrual of a judgment lien, the lien continues two § 23 OF DEATH. 41 years (or five, as the case may be) from its inception whether or not execution is levied: Estate of Wiley, 138 Cal. 301, 71 Pac. 441. 2 Unless Encumbered Property is Homestead.— Compare Code of Civil Procedure, section 1475, in part: ''If there be subsisting liens or encumbrances ui>on the homestead, the claims secured thereby must be presented and allowed as other claims against the estate. ^ ' Construing this code provision with section 1500 quoted in the preceding note, the operation of 1500 is limited to encumbrances against other property of the decedent than the homestead; but secured claims against his homestead must be presented; otherwise they cannot be foreclosed at all, whether the fore- closure action was commenced before or after the death of the owner of the homestead: Camp v. Grider, 02 Cal. 20; Wise v. Williams, 72 Cal. 544, '547, 14 Pac. 204; Bollinger v. Manning, 79 Cal. 7, 11, 12, 2 J Pac. 375; Mechanics^ Bldg. etc. Assn. v. King, 83 Cal. 440, 23 Pac. 376; Hearn v. Kennedy, 85 Cal. 55, 24 Pac. 606; Eosenberg v. Ford, 85 Cal. 610, 612, 24 Pac. 779; Sanders v. Eussell, 86 Cal. 119, 122, 21 Am. St. Rep. 26, note, 24 Pac. 852; Perkins v. Onyett, 86 Cal. 348, 24 Pac. 1024; Wise v. Williams, 88 Cal. 30, 33, 25, Pac. 1064; McGahey v. Forrest, 109 Cal. 63, 66- 68, 41 Pac. 817; Hibernia Sav. etc. Soc. v. Thornton, 109 Cal. 427, 50 Am. St. Rep. 52, 42 Pac. 44. 3 Homestead Must Have Been Selected and Re- corded During Lifetime.— ''Section 1475 enumerates the things to be affected by its provisions, viz.: Homesteads 'selected and recorded prior to the death of the decedent,' and by implication excludes all others. It follows that homesteads set apart by the order of the superior court during the pendency of probate proceedings, and which had no existence prior to the death of the decedent, are not included in section 1475, but are left to the control of section 1500 of the same code, and that a prior lien thereon may be enforced without the necessity of presenting the claim secured thereby to the executor or admin- istrator, provided the holder is willing to expressly waive in his complaint, and does waive, all recourse 42 EFFECT O^ ENCUMBRANCES. § 23 owner^ thereof, is^ as distinguished from the obli- gation secured, thereby;, not affected nor im- paired by the death of the owner. But the holder of a demand secured by a subsisting encumbrance against any such homestead belonging to the estate of a decedent must^ when presentation is possible^ present his claim for allowance or rejec- tion,^ and in case of allowance such claim must against any other property of the estate'': Mc- Gahey v. Forrest, 109 Cal. 63, 69, 41 Pac. 817; Brown V. Sweet, 127 Cal. 832, 335, 59 Pac. 774. 4 Homestead Must Continue After the Death.— The principle that a secured demand against the homestead must be presented does not apply, how- ever, when the homestead was selected from the separate property of the wife and was mortgaged to secure the husband's debts, and the husband dies, as in that case the homestead is not a part of his es- tate, and vests in the wife upon his death: Bull v. Coe, 77 Cal. 54, 63, 11 Am. St. Eep. 235, 18 Pac. 808. The same is true concerning a homestead selected by the wife from the separate property of the hus- band without his consent, as it terminates upon his death: Weinreich v. Hensley, 121 Cal. 647, 653, 656, 54 Pac. 2'54- Likewise, where a homestead was declared on mort- gaged community property and before the enforce- ment of the mortgage the wife died, as upon the death the property vested in the huslDand, no pres- entation of the mortgage against the estate of the wife is necessary as a prerequisite to the foreclosure of the mortgage: Bay City Bldg. etc. Asstl. v. Broad, 336 Cal. 525, 69 Pac. 225. 5 Secured Demand Against Homestead Must be Pre- sented.— Code of Civil Procedure, section 1475, in part: ^^If there be subsisting liens or encumbrances on the homestead, the claims secured thereby must be presented and allowed as other claims against the '§ 23 OF DEATH. 43 he paid proportionately with other valid claims against the estate; and the encumbrance can be foreclosed against such homestead merely for such portion of the secured demand as may re- main unpaid after the final distribution of the funds of the estate to the creditors, although the foreclosure action was pending at the time of the death. ^ But where the entire estate is set apart estate. If the funds of the estate be adequate to pay all claims against the estate, the claims so se- cured must be paid out of such funds. If the funds of the estate be not sufficient for that purpose, the claims so secured shall be paid proportionately with other claims allowed, and the liens or encumbrances on the homestead shall only be enforced against the homestead for any deficiency remaining after such payment.'' As amended, in effect April 16, 1880. Rationale. — The purpose of the legislature in pro- viding that secured claims against the homestead must be presented and allowed as other claims against the estate is to preserve the homestead if possible: Camp v. Grider, 62 Cal. 20; Bollinger v.. Manning, 79 Cal. 7, 11, 21 Pac. 375. Thus, a claim against a homestead secured by a judgment lien must be presented: Sanders v. Eussell, 86 Cal. 119, 122, 21 Am. St. Eep. 26, note, 24 Pac. 852. « Must be Presented Even Though Action was Pending at the Death.— Code of Civil Procedure, sec- tion 1502: ^'If an action is pending against the decedent at the time of his death, the 'pilaintiff must i^ like manner present his claim to the executor or administrator for allowance or rejection, authenti- cated as in other cases; and no recovery shall be had in the action unless proof be made of the pre- sentations required. ' ' ^^ Section 1502 of the Code of Civil Procedure sim- ply means that when an action is pending against a decedent at the time of his death, the plaintiff 44 EFFECT ON ENCUMBRANCES. § 23 for the support of the family without adminis- tration^ an encumbrance may be enforced with- out presentation of the secured demand having been first made, although accruing against such a homestead.'' therein is not relieved from the duty of presenting for allowance the claim upon which it is based, when the claim is of that character that he would have been required to make such presentation in order to preserv'j its validity as a claim against the es- tate if such action had not been brought in the life- time of the decedent'': Hibernia Sav. etc. Soc. v, Wackenreuder, 99 Cal. 503, 507, 34 Pac. 219. 7 It seems that in cases where Code of Civil Pro- cedure, section 1469, authorizes the court to assign the entire estate for the use and support of the family, subject to liens and encumbrances, and pro- vides that there must not be any further proceed- iugs in the administration, thus forbidding notice to creditors and the presentation of claims, a mortgage on a homestead might be enforced without presenta- tion: Browne v. Sweet, 127 Cal. 332, 335, 59 Pac. 774. And in Fairbanks v. Eobinson, 64 Ca.l 250, 30 Pac. 812, the general proposition was laid down that a mortgage is not discharged by setting aside the en- tire estate, includir g the mortgaged property, to the minor children of a deceased mortgagor under sec- tion 1469. § 24 OF DEATH. 45 AETICLE 2. PEOOF OF SECUEED DEMAND. 1:4. EncumbranceT may present secured demand for allowance— Effect thereof. 25. Manner of presentation of secured demand. 2Q. Security where claim allowed as unsecured some- times cannot be asserted. 24. Encumbrancer may Present Secured Demand for Allowance— Effect Thereof.^ A creditor of a decedent whose demand is se- cured by an encumbrance against prope]-ty be- 1 **Tlie holder of a claim secured by a mort- gage [against the property of a decedent] has .... two modes in which he may enforce its payment. ^^He may institute an action for its foreclosure under section 1500, in which the amount of his re- covery will be limited to the proceeds of his se- curity, or he may present his claim to the admin- istrator or executor for allowance, and, under section 1569 of the Code of Civil Procedure, receive the amount allowed therefor from the proceeds of a sale made under the supervision of the probate court, and if those proceeds be insufficient therefor, may share equally for the deficiency with the other creditors'^: Visalia Sav. Bank v. Curtis, 135 Cal. 350, 352, 67 Pac. 329. A movable property mortgagee does not waive any right or interest in the mortgaged property by pre- senting a claim for the amount due to the executor of the deceased mortgagor: Mathew v. Mathew, 138 Cal. 334, 71 Pac. 344. See Code Civ. Proc, sees. 1569 and 1570, as cited sections 27, note 1, 28, note 5, and 29, note 8, below. 46 EFFECT ON ENCUMBRANCES. § 24 longing to the estate of the decedent may, with- out affecting or impairing his encumbrance,^ present his demand for allowance or rejection, and in case of the allov»^ance of his claim is en- titled to receive in liquidation thereof as a prefer- ence the value of the encumbered propert}^ less the expenses of its sale, where a sale is made, up to the amount of his claim, and if the encum- bered property is insufficient in value to wholly liquidate his claim, such creditor may share in the liquidation of the residue of his claim the general assets of the estate equally with the gen- eral creditors of the estate. In case the secured demand is rejected, and the claimant thereupon sues and recovers judgment against the estate 2 Encumbrance not Impaired by Presentation of Secured Demand. The presentation and allowance of a claim secured by judgment lien as a valid demand against the estate of a decedent does not impair nor destroy the lien either as against the property of the decedent or against that of a third person to whom the decedent had transferred the property since the accrual of the lien: Morton v. Adams, 124 Cal. 229, 232-234, 71 Am. St. Eep. 53, 56 Pac. 1038. In Morton v. Adams, it was urged that the judg- ment was merged in the allowance of the claim and thus its lien destroyed. But the court pointed out that to so hold ^^ would make the creditor's security retrograde, rather than advance, by the merger, '^ Imt that ^^the essential idea of the merger is a bene- fit to the creditor, to give him a stronger and bet- ter position, '^ and that consequently the judgment was not so merged. § 24 OF DEATH. 47 upon the demand, such judgment establishes the claim with the same effect as though it had been allowed in the first instance, and does not affect nor impair, but merely confirms, the encum- brance whereby it is secured.^ 25. Manner of Presentation of Secured Demand.^ A demand against an estate of a decedent when secured by an encumbrance evidenced in writing is founded on ()oth the encumbrance and the se- cured demand, and if presented must be accord- ingly presented,^ except that a reference to the 3 Estate of Wiley, 138 Cal. 301, 71 Pac. 441 (case of judgment lien). 4 See Code of Civil Procedure, section 1497, second and third sentences: ^^If the claim is founded on a bond, bill, note, or other instrument, a copy of such instrument must accompany the claim, and the original instrument must be exhibited, if demanded, unless it be lost or destroyed, in which case the claimant muSt accompany his claim by his fjffi davit, stating its loss or destruction. If the claim, or any part thereof, be secured by a mortgage, or other lien which has been recorded in the of&ce of the recorder of the county in which the land affected by it lies, it shall be sufiicient to describe the mortgage or lien, and refer to the date, volume, and page of its record.^' Instances where the presentation was held suffi- cient: Consolidated Nat. Bank v. Hayes, 112 Cal. 75, 79, 44 Pac. 469; Moore v. Eussell, 133 Cal. 297, 299, 85 Am. St. Eep. 166, 65 Pac. 624. 5 Where an obligation is secured by a recorded encumbrance, the claim is founded on both instru- ments, and both must be set forth as required, or the security referred to as permitted. A mere 48 EFFECT ON ENCUMBRANCES. § 25 date^ volume and page of a recorded encumbrance msij be substituted^ for a copy of the written evidence thereof. Where such demand is secured by an encumbrance not evidenced in writing, no statement as to the security is requisite to a valid presentation.'' 26. Security Where Claim Allowed as Unsecured Spmetimes cannot be Asserted. Where a demand against the estate of a dece- dent which is in fact secured by an encum- brance evidenced in writing is presented and allowed as an unsecured claim, the holder recital in a note presented that it is secured bv mort- gage does not amount to a presentation of the mort- gage: Bank of Sonoma v. Charles, 86 Cal. 322, 326, 327, 24 Pac. 1019; Perkins v. Onyett, 86 Cal. 348, 349, 350, 24 Pac. 1024; Evans v. Johnston, 115 Cal. 180, 182, 46 Pac. 906; Estate of Turner, 128 Cal. 388, 392, 393, 60 Pac. 967. Compare Otto v. Long, J 27 Cal.' 471, 475, 59 Pac. 895. 6 Reference to Date, Volume and Page May be Substituted. — ^^In the absence of this provision, it would be necessary for the holder of the mortgage to present it in its entirety the same as a claim upon finy other contract, and the failure to present it in the abridged form provided by the statute operates equally as would a failure to present a claim upon any other instrument^' : Estate of Turner, 128 Cal. S8S, 392, 60 Pac. 967. 7 When Encumbrance not Evidence in Writing No Statement Rectuired.— *^The claim [against the estate, although by vendor's lien] was not secured by mort- gage or recorded lien, and therefore, it was not necessary for it to contain any statement as to the claim of lien'': Selna v. Selna, 125 Cal. 357, 361, 362, 73 Am. St. Rep. 47, 58 Pac. 16. § 26 OF DEATH. 49 thereof cannot, after the expiration of the time limited for the presentation of claims, and more than six months after the presentation thereof against the estate, be permitted to amend his claim by asserting his security.^ 8 Estate of Turner, 1^8 Cal. 388, 393, 394, 60 Pac. 967. Liens— 4 50 EFFECT OX encumb:?ances. § 27 AETICLE 3. CONTEOL OF PROBATE COUKT OVEE EN- CUMBERED PROPERTY. 27. I5ale in proper case may be made free of en- cumbrances. 28. Disposition of proceeds of sale. 29. Manner of payment when holder of liquidated en- cumbrance purchases. 27. Sale in Proper Case may be Made Free of Encumbrances.^ . The probate court must, in ease a sale of any of the property of an estate of a decedent which is 1 Code of Civil Procedure, section 1569, in part: *'When any sale is made by an executor or admin- istrator, pursuant to the provisions of this chapter, of lands subject to any mortgage or other lien, which is a valid claim against the estate of the decedent, and has been presented and allowed, the purchase money must be applied, after paying the necessary expenses of the sale, first, to the payment and sat- isfaction of the mortgage or lien. ..... The land is subject to such mortgage or lien until the purcliase money has been actually so applied The pur- chase money, or so much, thereof as may be sufficient to pay such mortgage or lien, with interest, and any lawful costs and charges thereon, may be paid into the court, to be received by the clerk thereof, whereupon the mortgage or lien upon the land must cease. '^ A judgment lien is a lien within this section, al- though execution thereon has not issued: Estate of Wney, 138 Cal. 301, 71 Pac. 441. § 27 OF DEATH. 51 affected by an encumbrance for security, the obli- gation secured by which has been presented and allowed as a valid claim against the estate, be- comes proper, order such property to be sold free and clear of any such encumbrances^^ and upon due disposition being made of the procced'S of the 2 To be Sold Free of Encumbrances which Secure Obligations Allowed as Valid Claims.— By code sec- tion 1569, as quoted above, provision is made for the payment of the amount of an encumbrance which has been presented and allowed as a valid claim against the estate of a decedent from the proceeds of the sale, and it is stated that until this payment has actually been made the encumbrance continues. In this latter statement is doubtless implied the converse, that when the payment has been actually made the encumbrance is discharged. Thus, it is clear that the property is sold free and clear of encumbrances subsisting thereagainst which secure obligations which have been allowed as valid claims against the estate. On the other hannd the trusts and powers therein declared are in full force, it follows that sections 1493 and 1502 of the Code of Civil Procedure, prescribing the time w^ithin which claims must be presented against the es- tate of a deceased person, and section 1500 of the same code, allowing an action for foreclosure of a mortgage, without presentation of such claim, only ^when all recourse against any other property of the estate is expressly waived in the complaint,' have no application to the case before us, and the right of the defendant to execute the powers conferred by the deed, and apply the proceeds arising therefrom to the payment of the debts and charges named in the deed, is not dependent upon a compliance with these sections'': More v. Calkins, 95 Cal. 435, 438, 439, 29 Am. St. Eep. 128, 30 Pac. 583. 62 EFFECT ON ENCUMBRANCES. § 32 the secured demand is enforced by a foreclosure of the security^ the encumbrancer may^ until the encumbrance is merged in the foreclosure judg- ment, recover interest at the conventional rate provided for by the parties, so far as the pro- ceeds of the encumbered property are sufficient to pay the same, although exceeding the rate of in- terest above limited.^ 9 Interest Recoverable When Estate Insolvent. Code of Civil Procedure, section 1494, last sen- tence: 'Mf the estate be insolvent, no greater rate of interest shall be allowed upon any claim after the' first publication of notice to creditors than is al- lowed on judgments obtained in the superior court." Civil Code, section 3920: ^^ Interest is payable on judgments recovered in the courts of this state, at ■the rate of seven per cent per annum, and no greater rate, but such interest must not be compounded in any manner or form." . '*The /claim' referred to in this section [1494] is that which^ by the preceding section, must be pre- sented to the administrator or executor for allow- ance, or be ^forever barred,' and which, when 'al- lowed' and filed in the court, is under section 1497, 'ranked among the acknowledged debts of the es- tate, to be paid in due course of administration.* The rule therein limiting the rate of interest is a direction to the administrator or .executor in de- termining the amount to be 'allowed' by him upon the claim when the estate is insolvent, and which is to be paid out of the general assets of the estate, but has no application to the action of a eourt in a suit for the foreclosure of a mortgage." For an ac- tion for the foreclosure of the mortgage is an inde- pendent pioceeding. Thus, this provision is inap- plicable, and the mortgagee can recover the interest provided for in the mortgage, although the estate was insolvent and the rate of interest contracted for § 32 OF DEATH. 63 exceeded that allowed on judgments: Visalia Sav. Bank v. Curtis, 135 Cal. 350, 3o2, 353, 67 Pac. 329. Historical.— Piohsite Act, sec. 131, in part, provided: ''In case the estate is insolvent, no claim contracted after the passage of this act shall bear greater in- terest than ten per cent per annum from and after the time of issuing letters.'' Under this provision it was held that where the holder of a claim sound- ing in contract and secured by mortgage presents his claim against the estate of the deceased obligor, and the same is allowed and paid in the due course of administration, the estate being insolvent, the claim does not bear more than ten per cent interest: Ellis V. Polhemus, 27 Cal. 349. CHAPTER 2. BANKKUPTCY. AETICLE 1. RELATIONSHIP OF FEDEEAL AND STATE LEG- ISLATION TO EACH OTHEE. 33. Congress may enact uniform bankrupt laws. 34. Scope of federal bankrupt laws. 35. Scope of state insolvent laws. 36. Effect of enactment and repeal of federal laws on state laws. 37. Bankrupt and insolvent defined. 38. Persons embraced within operation of federal bankrupt law. 39. Persons embraced within operation of state in- solvent law. 33. Cong^ress may Enact Uniform Bankrupt Laws. The Congress of the United States has power to enact uniform laws on the subject of bank- ruptcies throughout the United States.^ 34. Scope of Federal Bankrupt Laws. In the exercise of its power to enact uniform^ 1 Const. U. S., art. 1, sec. 8, subd. 4. 2 Law Must be Unif orm.— ' ^ The laws passed on the subject must, however, be uniform throughout (64) § 34 OF BANKRUPTCY. 65 bankrupt laws Congress may, in its legislative discretion, determine the persons to be em- braced^ within the operation of such laws and the effect of bankruptcy upon personal relations and property rights^ throughout the United States,, including the right to impair the obligation of existing contracts.^ the United States, but that uniformity is geographical and not personal'^: Hanover Nat. Bank v. Moyses, 186 U. S. 181, 187, 22 Sup. Ct. Eep. 857, 46 Law ed. 1113. 3 Persons to be Embraced.— '^ The conclusion that an act of Congress establishing a uniform system of bankruptcy throughout the United States is constitu- tional, although providing that others than traders may be adjudged bankrupts, and that this may be done on voluntary petitions, is really not open to discussion^'! Hanover Nat. Bank v. Moyses/ 186 U. S. 181, 187, 22 Sup. Ct. Kep. 857, 46 Law ed. 1113. 4 The provision in the bankruptcy act allowing the bankrupt the exemptions which he is allowed under the particular law of his state does not render the act unconstitutional. ^ '■ The system is, in the con- stitutional sense, uniform throughout the United States, when the trustee takes in each state whatever would have been available to the creditors if the bankrupt law had not been passed. The general operation of the law is uniform, although it may result, in certain particulars, differently in different states'': Hanover Nat. Bank v. Moyses, 186 U. S. 181, 190, 22 Sup. Ct. Eep. 857, 46 Law ed. 1113. 5 Bankrupt Act may Impair Obligation of Con- tracts. — ^^The subject of ^bankruptcies' includes the power to discharge the debtor from his contracts and liabilities, as well as to distribute his property. The grant to Congress involves the power to impair the obligation of contracts, and this the states were forbidden to do": Hanover Nat. Bank v. Moyses, 186 U. S. 181, 188, 22 Sup. Ct. Eep. 857, 46 Law ed. 1113. Liens— 5 66 EFFECT ON ENCUMBRANCES. § 35 35. Scope of State Insolvent Laws. In the absence of federal bankruptcy legisla- tion^ each state has full authority to enact in- solvent laws ; ^ but such laws cannot, except when the obligee voluntarily makes himself a party to the insolvency proceedings/ discharge or impair the obligation of any contract existing at the time of enactment,^ nor of any contract to which a person nonresident^ at the time the obligation « In Absence of Federal Legislation State has Full Authority. — So long as there is no national bankrupt act, each state has full authority to pass insolvent acts binding persons and property within its jurisdic- tion. For each state, so long as it does not impair the obligation of any contract, has the power by general laws to regulate the conveyance and distribu- tion of all property, movable and immovable, within its limits and jurisdiction: Brown v. Smart, 145 U. S. 454, 457, 12 Sup. Ct. Eep. 958, 36 Law ed. 773. 7 Obligee Must Voluntarily Become Party to Pro- ceeding. — ^'If a creditor voluntarily makes himself a x>arty to the proceedings under an insolvent law of a state which discharges the contract, and accepts a dividend declared under such: law, he will be bound by his own act, and be deemed to have abandoned this extraterritorial immunity'': Lowenberg v. Levine, 93 Cal. 215, 221, 28 Pac. 941. A state cannot, by an insolvent law, discharge one of its own citizens from his coji tracts with citizens of other states, unless such iionresidents voluntarily become parties to the proceedings in insolvency: Brown v. Smart, 145 U. S. 454, 457, 12 Sup. Ct. Eep. 958, 36 Law ed. 773. « St^te Cannot Impair Obligation of Existing Con- tract. Const. TJ. S., art. 1, sec. 10, par. 1: ^^No state § 55 OF BANKRUPTCY. 67 ^hall .... pass any law impairing the obligation of contracts. ^ ' *'As the states, in surrendering the power, did so only if Congress should choose to exercise it, but in the absence of congressional legislation retained it, the limitation was imposed on the states that they should pass no ^law impairing the obligation of con- tracts^ ^': Hanover Nat. Bank v. Moyses, 186 U. S. 181, 187, 22 Sup. Ct. Eep. 857. Thus, a state insolvent law, so far as it attempts to provide for the discharge of a party, as to future acquisitions of property, from debts contracted -previously to the enactment of the law, is unconstitu- tional, because violative of the obligation of such contracts: Sturges v. Crowninshield, 17 U. S. (4 Wheat.) 122, 4 Law ed. 118. But insolvent laws providing for the discharge of debts contracted subsequent to their passage do not violate the obligation of contracts: Ogden v. Saunders, 25 U. S. (12 Wheat.) 213, 6 Law ed. 606. HistoricaL—'Under the California Insolvent Act of 3880, a discharge could constitutionally be granted of a debt created in 1878, because the act of 1880 superseded the act of 1852, which also discharged the debts dischargeable under the act of 1880; Hundley v. Chaney, 65 Cal. 363, 4 Pac. 238; Pomeroy V. Gregory, 66 Cal. 574, 6 Pac. 492, 493; Porter v. Imus, 79 Cal. 183, 21 Pac. 729. » State Law Does not Discharge Debt Owing Non- resident. — A state cannot, by its insolvent law, dis- charge one of its own citizens from his contracts with citizens of other states, though the contracts were entered into after the passage of the law, unless the nonresidents voluntarily become parties to the pro- ceedings in insolvency: Brown v. Smart, 145 U. S. 454, 457, 12 Sup. Ct. Eep. 958, 36 Law ed. 773. '^ Insolvent laws of one state cannot discharge the contracts of citizens of other states because they have no extraterritorial operation, and, consequently, the tribunal sitting under them, unless in cases where a citizen of such other state voluntarily becomes a •party to the proceeding, has no' jurisdiction in the case. Legal notice cannot be given, and, conse- 68 EFFECT ON ENCUMBRANCES. § 35 was contracted^^ is a party, nor of any contract made outside the state, although by residents thereof.^^ quently, there can be no legal obligation to appear, and, of course, there can be no legal default'^: Bald- win V. Hale, 1 Wall. (U. S.) 234, 17 Law ed. 531; Thomas v. Crow, 65 Cal. 470, 4 Pac. 448; Rhodes v. Borden, 67 Cal. 7, 11, 6 Pac. 850; Bean v. Loryea, 81 Cal. 151, 153, 22 Pac. 513; Scamman v. Bonslett, 118 Cal. 93, 96, 97, 50 Pac. 272. A judgment of another state is a contract within this provision: Bean v. Loryea, 81 Cal. 151, 154, 22 Pac. 513. '*A nonresident and nonassenting creditor is not bound by the debtor's discharge under state insolvent laws, no matter where the debt originated or was made payable. In other words, the citizenship of the parties governs, and not the place where the contract was made or where it was to be performed' ': Lowen- berg V. Levine, 93 Cal. 215, 219, 28 Pac. 941. That a creditor was a nonresident, and was not affected by a discharge in insolvency, is a fact to be averred and proved: Porter v. Imus, 79 Cal. 183, 185, 21 Pac. 729. But where the contract (a promissory note payable to order) was made between two citizens of this state, and the payee transferred it without indorse- ment to a nonresident, and after the commencement of the insolvent proceedings against the payee in- dorsed it, the title did not pass to the nonresident before the commencement of proceedings and the contract was discharged: Thomas v. Crown, 65 Cal. 470, 4 Pac. 448. 10 Residence at Time of Contracting the Vital Con- sideration.— ^ ^ The court below may have been of opinion that the debtor and creditor, having both been citizens of California at the date of the con- tract, which was made and payable in this state, in an action brought in the courts of this state to en- force such contract, a certificate of discharge of the § 36 OF BANKRUPTCY. 69 36. Effect of Enactment and Repeal of Federal Laws on State Laws. The effect of the exerci&e by Congress of the power to enact uniform bankrupt laws is to sus- pend and supersede the operation of every state insolvent law in respect to all matters embraced within the provisions of the federal law;^^ but a debtor under the insolvent law of this state, enacted before the indebtedness accrued, is a valid defense to the action, even though the creditor had become a citizen of another state after the making of the contract. If this was the theory of the court, its conclusion is not without warrant in law^': Scamman V. Bonslett, 118 Cal. 93, 99, oO Pac. 272. 11 State Law Does not Discharge Contract Made Outside State. — State insolvent acts do not apply to contracts not made within the state, although by residents thereof, when the obligee does n^t partic- ipate in the insolvency proceedings. In this and the previous case ^ ^ it *is considered that the state does not possess a jurisdiction coextensive with the contract over the parties, and, therefore, that the constitution of the United States protects them from prospective as well as retrospective legis- lation '^ Lowenberg v. Levine, 93 Cal. 215, 221, 28 Pac. 941. 12 Federal Bankrupt Law Suspends State Insolvent Law. — ' ' The provision in the constitution of the United States conferring upon Congress the power ^to establish uniform laws on the subjects of bank- ruptcies throughout the United States,' of necessity makes any act of Congress passed upon that subject the supreme law of the land, and it was at a very early day determined that the effect of such action of Congress is to suspend and supersede the operation of any state law of insolvency whenever there is any conflict between the two'^ E. H. Herron Co. v. Superior Court, 136 Cal. 279, 68 Pac. 814. 70 EFFECT ON ENCUMBRANCES. § 36 state insolvent law remains operative in all cases not within the provisions of the federal law/^ and upon the repeal of a federal law an existing state insolvent law again becomes operative, not only as to debts contracted after the repeal, but also as to those contracted during its suspension. ^^ 37. Bankrupt and Insolvent Defined. Under the federal bankrupt law any person the aggregate of whose property, exclusive of any 13 State Law Remains Operative in Cases not Pro- vided for by Federal Law.— 'at is not the right [of Congress] to establish these uniform laws, but their actual establishment, which is inconsistent with the partial acts of the states. If the Bankruptcy Act excepts a class of cases from its operation, either in express terms or by necessary implication, it must be considered that it was the intention of Congress not to interfere in tfiat class of cases with the laws of the several states in reference thereto. The state laws will remain operative in all cases which are not within the provisions of the Bankruptcy Act Each statute is operative within its own jurisdiction, and may be enforced without in any respect in- fringing upon the jurisdiction of the other '^: E. H. Herron Co. v. Superior Court, 136 Cal. 279, 68 Pac. 814. 14 Upon Repeal of Federal Law, State Law Be- comes Operative Again.— ^* The Insolvent Law of "this state was not repealed by the passage of the Federal Bankrupt Law, but the operation of the state law was suspended after the passage and until the repeal of the Bankrupt Law, when it, the state law, again became operative as to debts contracted during such suspension, as well as to other debts contracted after its passage^': Smith v. His Cred- itors, 59 Cal. 267, 268; Boedefeld v. Eeed, 55 Cal. 299; § 37 OF BANKRUPTCY. 71 property which he may have conveyed, trans- ferred, concealed, or removed, or permitted to be concealed or removed, with, intent to defraud, hinder, or delay his creditors, is insufficient, at a fair valuation, to pay his debts is deemed a bank- rupt ; ^^ under the state law any person who is unable to pay his debts from his own means as they fall due is deemed an insolvent.^^ 38. Persons Embraced Within Operation of Federal Bankrupt Law. Any^'' competent natural person (including a partnership as such)^^ who owes any valid debts^^ may avail himself of the benefits of the Lewis V. County Court of Santa Cruz County,- 55 Cal. 604; Seattle Coal etc. Co. v. Thomas, 57 Cal. 197, 200. 15 Bankr. Act, 1898, sec. 1, subd. 15. This pro- vision is commented upon in In re Doscher, 120 Fed. (D. C), 408, 414. 16 Civ. Code, sec. 3450. 17 Voluntary Bankrupts.— Bankrupt Act of 1898, sec- tion 4a: *^Any person who owes debts, except a cor- poration, shall be entitled to the benefits of this act as a. voluntary bankrupt. ^^ IS Including a Partnership as Such.— For the pur- poses of bankruptcy, a partnership is deemed an entity so that the firm may become bankrupt without the parties or all of them being adjudged bankrupt, and proceedings in bankruptcy against a member of a. partnership do not necessarily involve the bank- ruptcy of the partnership: In re Meyer, 98 Fed. 976, 39 C. C. A. 3G8; In re Sanderlin, 109 Fed. (D. C.) 857, 859. 19 Person Must be (1) Competent and (2) Owe Valid Debts.— A minor may be adjudged a bankrupt /2 EFFECT ON EXCUMBRANCES. § 38 bankrupt law as a voluntary bankrupt; and any^^ such person (including a partnership as such) except^^ a wage-earner who works for in respect to debts which are absolutely binding upon him; but as to debts which he may disaffirm upon attaining majority no such adjudication is pos- sible: In re Brice, 93 Fed. (D. C.) 942. ^' In cases wherein the party, although giving evi- dence of insanity, has not been adjudged insane, but remains in possession and control of his property, and his creditors seek his adjudication as a bankrupt, it might be held that the bankruptcy court could rightfully exercise jurisdiction, and could hold the party responsible for his acts laefore the fact of his insanity had been ascertained and established; but, however this may be, it cannot be so held in cases like that now before the court, wherein it appears that, prior to the filing of the petition in bankruptcy on behalf of creditors, the party proceeded against had been adjudged to be insane by a competent court, and a guardian had been put in possession of his property. ' ' '^It would seem clear that a person who, by reason of insanity, is wholly incapable of managing his busi- ness affairs, cannot be held to have intended to violate the provisions of the Bankrupt Act by enter- ing into transactions which, by reason of his mental disability, would not be binding upon him under the rules of the common law'': In re Funk, 101 Fed. (D. C.) 244. An insane person cannot be adjudged a voluntary- bankrupt, not being a qualified person under section 59a: In re Eisenberg, 117 Fed. (D. C.) 786. 20 Involuntary Bankrupts.— Bankrupt Act, section 4b, first sentence: ' ^ Any natural person, except a wage- earner or a person engaged chiefly in farming or the tillage of the soil, any incorporated company, and any corporation engaged principally in manufacturing, trading, printing, publishing, mining, or mercantile § 38 OF BANKRUPTCY. 73 pursuits, owing debts to the amount of one thousand dollars or over, may be adjudged an involuntary bankrupt upon default or an impartial trial, and shall be subject to the provisions and entitled to the bene- fits of this act.'' As amended February 5, 1903. 21 Certain Persons not Subject to Involuntary Bankruptcy Proceedings.— There are three classes of persons excepted from involuntary bankruptcy pro- ceedings: (1) wage-earners, (2) persons engaged chiefly in farming, (3) persons engaged chiefly in the tillage of the soil: In re Thompson, 102 Fed. (D. C.) 287. *^The exemption from involuntary proceedings in favor of wage-earners and persons engaged chiefly in farming or the tillage of the soil is not intended as a means of escape for insolvents whose property was acquired and whose debts were incurred in other occupations recently engaged in. If the right of the creditors to institute involuntary proceedings may thus be defeated by the debtors within the period allowed for the commencement of such proceedings, it could be defeated by a change of occupation made coincidently with the commission of an act of bank- ruptcy, and an insolvent debtor would thus be per- mitted to dispose of his stock of merchandise or other property, distribute the proceeds thereof in such manner as pleased him, immediately become for the time being a tiller of the soil, or a wage-earner 'at a rate of compensation not exceeding fifteen hun- dred dollars per year,' and so avoid the operation of the Bankrupt Act. Such a result is not in accord with the purpose nor within the spirit of the law. .... The excepted occupations are not designed as a refuge for insolvent debtors laden with property and fleeing from other callings": In re Luckhardt, 101 Fed. (D. C.) 807, 809, 810. Jnrisdictional Fact.— The fact that a person against whom a petition in bankruptcy is filed is a wage- earner or a person engaged chiefly in farming or the tillage of the soil is not a personal privilege which can only be set up by the alleged bankrupt, but a jurisdictional fact the contrary of which must 74 EFFECT ON ENCUMBRANCES. § 38 hire at a rate of compensation not exceeding fifteen hundred dollars a year^ a person chiefly engaged in tillage of the soil^ or a farmer, and any corporation principally engaged^^ in mann- be made to appear: In re Taylor, 102 Fed. 728, 42 C. C. A. 1. Wage-earner.— A wage-earner is defined in Bankrupt Act, section 1 (27), as *^an individual who works for wages, salary, or hire, at a rate of compensation not exceeding fifteen hundred dollars per year." Farming— Tillage of the Soil. The phrase ^* engaged principally in farming or the tillage of the soil" cannot be restricted to those only who are engaged in actual labor upon a farm, but the test is whether the person's chief occupation — the pursuit from which he expects to derive his support and income — is farming or something else: In re Drake, 114 Fed. (D. C.) 229, 231, 232. ^^A person engaged chiefly in farming is one whose chief occupation or business is farming. The chief occupation or business of one, so far as worldly pur- suits are concerned, is that which is of principal con- cern to him, of some permanency in its nature, and on which he chiefly relies for his livelihood or as the means of acquiring wealth, great or small" (p. 358). ^'No one should be held exempt from the pro- visions of the Bankrupt Act on this ground [that he is engaged principally in farming] unless it satis- factorily appears that he comes within the excep- tion" (p. 359): In re Mackey, 110 Fed. (D. 0.) 355. The business of farming includes the fattening of cattle and hogs for the market from the products of the farm, and a person engaged in such occupation is a farmer: In re Thompson, 102 Fed. (I>. C.) 287. 22 Certain Corporations Only Subject to Involun- tary Proceedings.— ''Under the Bankruptcy Act the question is, not how extensive the company's powers may be, but in what pursuits the corporation is in fact principally engaged " : In re New York and West- § 38 OF BANKRUPTCY. 75 Chester Water Co., 98 Fed. (D. C.) 711, 714 (a-ffirmed, under the name, In re Morris, 102 Fed. 1004, 43 C. C. A. 91); In re Tontine Surety Co., 116 Fed. (D. C.) 401, 402. See, also. In re Chicago-Joplin etc. Co., 104 Fed. (D. C.) 67. ^'The susceptibility to bankruptcy of a corporation does not depend wholly upon its charter. This is clear, both from the language of the act, which speaks, not of the (corporation ^s charter powers, but of the business in which it is principally engaged, and also from the decided cases. A corporation may have charter power to do that which is not its prin- cipal business, but a corporation can hardly be brought within the scope of the bankrupt act by a principal business which is beyond the authority given bv its charter'^: In re H. J. Quimby Freight etc. Co.,^ 121 Fed. (D. C.) 139, 140. A corporation whose business was gathering in- formation and printing and publishing a book of rat- ings with respect to the standing of merchants is within the act: In re Mutual Mercantile Agency, 111 Fed. (D. C.) 152, 153. The following corporations have been held not sub- ject to involuntary proceedings: A corporation en- gaged principallv in giving theatrical performances: In re Oriental Soc, 104 Fed. (D. C.) 975. A cor- poration engaged in the mutual insurance of its own members: In re (Jameron Town Mut. Fire etc. ins. Co., 96 Fed. (D. C.) 756. A laundry corporation. In re White Star Laundry Co., 117 Fed. (D. C.) 570. A library corporation engaged merely in circulating and loaning books to subscribers and members paying a certain sum monthly: In re Parmelee Library (C. C. A.), 120 Fed. 235. Mamifactv7Hng.—A corporation engaged principally in smelting is engaged in manufacturing: In re Tecopa Mining etc. Co., 110 Fed. (D. C.) 120. Trading— Mercantile Pursuits. ''The proper description of the business of a trader includes both buying and selling, either goods or mer- chandise, or other goods ordinarily the subject- of traffic.'' 76 EFFECT ON ENCUMBRANCES. § 38 facturing, trading, printing, publishing, mining, or mercantile pursuits (banking corporations ex- cepted ),^^ OAving debts to the amount of one thousand dollars or over, may be adjudged an involuntary bankrupt. ''By 'mercantile pursuits' is meant the buying and selling of goods or merchandise, or dealing in the purchase and sale of commodities, and that, too, not occasionally or incidentally, but habitually as & busi- ness '': In re New York and Westchester Water Co., 98 Fed. (D. C.) 711, 714; In re Tontine Surety Co., 116 Fed. (D. C.) 401, 402. See, also. In re Cameron Town etc. Ins. Co., 96 Fed. (D. C.) 756. The words ' ' trading and mercantile pursuits ' ' are to have a restricted meaning, and are not to be so broadened as to cover the whole field of commerce or commercial pursuits: In, re Philadelphia and Lewes Transp. Co., 114 Fed. (D. C.) 403. The term " trader '^ cannot be enlarged beyond its technical legal meaning: In re Surety Guarantee etc. Co. (C. C. A., 7th Cir.), 121 Fed. 73, 75; In re H. J. Quimby Freight etc. Co., 121 Fed. (D. C.) 139, 140-141. "Selling merely the natural products of one's own land .... does not constitute trading or a mercan- tile pursuit, even though some yearly purchases may be made by the seller in order to keep up his regular supply.'' "These terms are restricted, also, to deal- ings in merchandise, goods, or chattels, the ordinary subjects of commerce." Mere "incidental purchases or sales by a person not otherwise a trader, will not make him such." "Thus, the principal business of a water company being merely to convey the water from its source to the consumer cannot be called trad- ing or mercantile pursuit": In re New York and Westchester Water Co., 9^ Fed. (D. C.) 711, 714, 715 (affirmed, under the name. In re Morris, 102 Fed. 1004, 43 C. C. A. 91). A corporation chartered as a common carrier of property or persons, whose actual business was chiefly that of a common carrier, and in less degree that § 38 OF BANKRUPTCY. 77 of letting teams by the hour, day, or week, with a subordinate business of taking horses to board (the corporation also having bought horses, hay, grain, wagons, harnesses, etc., and now and then sold horses and wagons, but only as an incident of its general business), is not a trader: In re H. J. Quimby Freight etc. Co., 121 Fed. (D. C.) 139. A corporation engaged in the carriage of passen- gers and goods for hire is not engaged in trading or mercantile pursuits: In re Philadelphia and Lewes Transp. Co., 114 Fed. (D. C.) 403. A corporation engaged in buying and selling stocks, bonds, and other securities is not a trader: In r mortgagor, valid as against the trustee and creditors of the mortgagor: In re Josephson, 116 Fed. (D. C.) 404. A pledge of a thing in action being valid, although not accompanied by immediate delivery and actual and continued change of possession (see Civ. Code, sec. 3440; sees. 191 and 201 below), in New York, a pledge of bills receivable where the bills were transferred to the pledgee on the books of the pledgor, and in Wisconsin a pledge of a policy of insurance where the policy remained in the possession of the insurer, were held valid against the trustee in bankruptcy both as against the pledged property and the pro- ceeds thereof: Young, v. Upson, 115 Fed. (C. C.) 192; In re Wittenberg Veneer etc. Co., 108 Fed. (D. C.) 593; same case, McDonald v. Daskam (C. C. A.), 116 Fed. 276. In Ohio an unrecorded movable property mortgage being valid against everybody except creditors who become such during the time that the mortgage is withheld from due recordation, and who during such time obtains a hold on the mortgaged property, is, when the mortgage is subsequently recorded before the adjudication in bankruptcy, valid as against a trustee representing creditors at large: In re Shirley 112 Fed. 301, 50 C. C. A. 252, 6th Cir. A lien reserved by a contracting owner in a build- ing contract, whereby the owner should have a lien on materials actually delivered on the ground as security for the faithful performance of his contract by the contracting owner, is valid against the trustee: Duplan Silk Co. v. Spencer (C. C. A.), 115 Fed. 689. 3 Encumbrance Created by Operation of Law not Affected by Bankruptcy. — The policy and construction of the law on this subject was extensively considered by the circuit court of appeals in the case of In re Emslie, 102 Fed. 291, 42 C. C. A. 350, wherein 84 EFFECT ON ENCUMBRANCES. § 40 lien against such property founded upon a per- sonal judgment obtained against the person ad- judged bankrupt in an action wherein his prop- erty was not sequestered by attachment or other process^ during his insolvency and within four the decision of the district court (97 Fed. 929, 98 Ted. 716, 719-722), which held that a ' mechanic 's lien obtained under the laws of New York within four months of bankruptcy was avoided by the ad- judication of bankruptcy, was overruled. The circuit court of appeals said: **A trustee in bankruptcy cannot acquire a better title than the bankrupt had, except as to property which has been transferred contrary to the provisions of the Bankrupt Act, and takes the estate subject to all liens and en- cumbrances other than those enumerated in section 67. That section denies the privileges of a lien to claims which, for want of record or for other reasons, would not have been valid as against creditors if there had been no bankruptcy, and enumerates the liens and encumbrances which are dissolved by the adjudication of bankruptcy, or can be kept on foot and enforced by the trustee for the benefit of the estate. The latter consist of two classes— liens obtained through legal proceedings against an insolvent debtor with- in four months prior to the filing of a petition in bankruptcy against him, and encumbrances created by the act of the bankrupt within four months prior to the filing of the petition, which are intended to defraud creditors or are void by the laws of the state in which the property is situated. This sec- tion preserves all liens given or accepted for a pres- ent consideration. '' ^'[Mechanics' liens] do not. fall within either of the two classes [above]. ''They are not within the first, because they are not created or obtained through legal proceedings, whether in strict definition or in the ordinary mean- ing of the term. A legal proceeding is any pro- § 40 OF BANKRUPTCY. 85 ceeding in a court of justice by which a party pur- sues a remedy which the law affords him. The term embraces any of the formal steps or measures em- ployed in the prosecution or defense of a suit. In the section [Bankr. Act, section 67] it obviously refers to the use of judicial process, the phraseology being ^levies, judgments, attachments, or other liens ob- tained through legal proceedings.' The filing of a notice of mechanics' lien has no necessary relation to the institution or prosecution of a suit. The filing is essential in order to maintain the action to fore- close the lien, because otherwise the lien does not attach; but it is no more a preliminary step in the 'suit than is the protesting of a note in a suit against an indorser. It is a proceeding of the same kind as filing a chattel mortgage or recording a deed. ^^Such liens are not within the second class, because they are not an encumbrance created by the debtor. They are created by the statute, or by the act of the lienor in filing the statutory notice. The en- cumbrances which are invalidated by the section are those which are ^made or given' by the person ad- judged a bankrupt. They include, not only those specifically mentioned, * conveyances, transfers, and assignments,' but all encumbrances, of whatever form, derived from his contractual act. Unless it can be said that the lien emanates in or is created by the contract authorizing the labor and materials to be furnished, it arises without his act. If it is a creature of the contract, it is supported by the same consid- eration, and, being given for a * present consideration,' is preserved by the section. ^* There are no equitable considerations in favor of the general creditors of a debtor which should defeat a mechanic's lien Statutes giving such liens are designed to enable mechanics and material- men to rely upon the security of the building itself, without looking to the responsibility of the owner. The justice and expediency of giving such claims priority over the debts of general creditors is mani- fested in the legislation of the several states The lien under the New York statute originates in the filing of the notice of lien, while in the Michi- ?.6 EFFECT ON ENCUMBRANCES. § 40 monthis before the filing),^ has the same validity against the trustee in bankruptcy of such owner that it had against each creditor of the owner, respectively, and the owner himself at the time of the filing of the petition; but may be avoided to the amount of the claims of all creditors of the bankrupt who could have avoided it at the time of the filing,^ and when avoidable by the bank- gan statute it originates by the act of furnishing, the labor or materials, and is thus a strictly con- temporaneous lien. We do not discover any substan- tial distinction between the two statutes. In one the lien is not given unless the notice is filed; in the other, although it arises when the labor or materials are furnished, it is lost unless a notice of lien is filed in a specified time. The object of both statutes is the same, and both accomplish practically the same result. In one, the filing of the notice is necessary to perfect the lien; in the other, it is necessary to preserve it. In both, it is wholly optional with the lienor whether he will avail himself, or not, of his right of priority.'^ In the following cases liens arising by operation of law have been upheld. Materialman's lien: In re Georgia Handle Co., 109 Fed. 632, 48 C. C. A. 571; In re Oconee Milling Co., 109 Fed. 866, 48 C. C. A. 703. Logger's lien: In re Kerby-Dennis Co., 36 C. C. A. 677, 95 Fed. 116, 119; 94 Fed. (D. C.) 818. Supply lien arising under the laws of Virginia: In re West" Norfolk Lumber Co., 112 Fed. (D. C.) 759, 765. Laborer's lien arising upon the happening of a certain event: In re Laird. 109 Fed. 550, 556, 557, 48 C. C. A. 538. See, also. In re Slomka, 117 Fed. (D. C.) 688. Landlord's lien conferred in Delaware for the year's rent against the movable property of the lessee upon the leased premises, and attaching upon default § 40 OF BANKRUPTCY. 87 in the payment of any rent: In re Mitchell, 116 Fed. (D. C.) 87. Tax lien: In re Veitch, 101 Fed. (D. C.) 251. Under the Civil Code, section 3057 (see section 476 below), an officer who levies an attachment has a lien on the goods for the amount of his charges; yet in Ke Francis-Valentine Co., 93 Fed. 953, the district court, evidently overlooking this statutory provision, held that where an attachment was dissolved by an adjudication of involuntary bankruptcy within four months of the attachment, the sheriff in whose pos- session the attached property had been may be com- pelled to surrender the same in a summary proceeding. The court said: ^^ The respondent [sheriff] is not en- titled to the possession of the property levied upon by him, as against the trustee in bankruptcy. Whether the respondent is entitled to have the costs incurred by him in the attachment proceedings paid out of the proceeds arising from any sale of the property made to the trustee is a question not nec- essary to be passed upon at this time.'' 4 See note 6 below. 5 Avoidable to Amount of Claims of Creditors Who Could Have Avoided It. Bankrupt Act, section 67a: ^* Claims which for want of record or for other reasons would not have been valid liens as against the claims of the creditors of the bankrupt shall not be liens against his estate.'' *'This language is direct, clear, and free of all ambiguity, and seems to have been chosen by the lawmakers with special reference to statutes relating to fraudulent conveyances, like that of Nebraska. It means that any liens which would not have been valid, if creditors had a right, before bankruptcy, to avoid the same, either for want of record or other- wise, shall not constitute a lien against the estate in bankruptcy": In re Pekin Plow Co., 112 Fed. 308, 311, 50 C. C. A. 257, 8th Cir. Bankrupt Act, sec. 67b: ^^ Whenever a creditor is prevented from enforcing his rights as against a lien created, or attempted to be created, by his debtor, who afterward becomes a bankrupt, the trustee of the 88 EFFECT ON ENCUMBRANCES. § 40 estate of such bankrupt shall be subrogated to and may enforce such rights of such creditor for the bene- fit of the estate/^ Bankrupt Act, sec. 70e: ^^The trustee may avoid any transfer by the bankrupt of his property which any creditor of such bankrupt might have avoided, and may recover the property so transferred, or its value, from the person to whom it v/as transferred, unless he was a bona fide holder for value prior to the date of the adjudication. Such property may be recovered or its value collected from whoever may have re ceived it, except a bona fide holder for value.'' ^'The institution of proceedings in bankruptcy amounts to an effectual sequestration for the benefit of all his creditors of all the property of the bank- rupt, including property transferred by the bankrupt, before proceedings were instituted, in fraud of his creditors. By such a proceeding the creditors * are using the courts of law and their processes for the collection of their debts,' and the creditors thereby make an effectual seizure of the property of the bank- rupt within the true meaning of the decisions of the supreme court of Nebraska The trustee chosen under the act of 1898 becomes the representative of all creditors, and is possessed of their rights to at- tack fraudulent conveyances": In re Pekin Plow Co., 112 Fed. 308, 310, 50 C. C. A. 257, 8th Cir. Any fraud in this case was wholly constructive. In re Eonk, 111 Fed. (D. 0.) 154, 156, was a case under the laws of Indiana which provided that a movable property mortgage must be duly recorded within ten days after its execution, otherwise it is void as against all third parties; from which it follows that a verbal agreement to mortgage movable prop- erty must likewise be void from the outset. So where a verbal agreement to mortgage was made for a pres- ent consideration more than four months before the bankruptcy of the would-be mortgagor, but the mort- gage itself was not executed and recorded until within four months of the bankruptcy, the court held the mortgage void, saying: ^ ' It cannot be successfully maintained that the verbal agreement created a valid lien as against the § 40 OF BANKRUPTCY. 89 claims of the creditors; and, if it did not create a valid lien, then, by the terms of the Bankruptcy Act, it cannot be enforced as a lien entitled to priority over other liens The doctrine contended for by the mortgagee would necessarily invite and inevi- tably lead to the defeat of the Bankruptcy Act. It would be easy in every case where it was desired to thwart the operation of the law and to give a preference to a relative or a friend to make an agree- ment at the time the money was loaned or the credit given for a mortgage to be executed in the future. .... Such agreements, if held valid, would create secret liens upon the bankrupt's property, and would enable him in every case to effect the very objects which it was the purpose of the Bankruptcy Act to prevent. ' ' In South Carolina a movable property mortgage which has never been recorded being void against sub- sequent creditors, secured or unsecured, but valid against antecedent creditors, in case of the bankruptcy of the mortgagor the trustee must apply the proceeds of the sale of the property affected by the mortgage (1) to the claim of subsequent creditors and (2) to the mortgage obligation: In re Cannon, 121 Fed. (D. C.) 582. Illustrations.— An unrecorded movable property mortgage being void as against unsecured creditors becoming such during the time that the mortgage is withheld from due recordation, is void as against the trustee in bankruptcy so far as concerns such credi- tors: In re Leigh, 96 Fed. (D. C.) 806; In re Adams, 97 Fed. (D. C.) 188. See, also. In re Booth's Estate, 98 Fed. (D. C.) 975. Compare City Nat. Bank of Greenville v. Bruce, 109 j^'ed. 69, 70, 48 C. C. A. 236. In Ehode Island a movable property mortgage being void unless recorded within five days, where not so recorded it is not a valid lien against the bank- rupt's property: In re Wright, 107 Fed. (D. C.) 428. In Nebraska an unrecorded movable property mort- gage being void merely against creditors who be- come such during the time that the mortgage was withheld from due recordation, and who during such 90 EFFECT ON ENCUMBRANCES. § 40 time obtained a hold against the mortgaged proyjerty, a mortgage never recorded is void as against a trustee in bankruptcy who represents unsecured creditors only: In re Pekin Plow Co., 112 Fed. 308, 50 C. C. A. 257, 8th Cir. In California a movable property mortgage executed within four months of bankruptcy for a present con- sideration being void as against the creditors of the bankrupt mortgagor as to property purported to be mortgaged which is situate in a county where the mortgage is not recorded, where the trustee in bank- ruptcy takes possession of the mortgaged property (a crop of apples), and sells the same^ without the con- sent of the mortgagee, no action for damages for the conversion of the apples is maintainable against the trustee: Guras v. Porter, 118 Fed. (D. C.) 668. A movable property mortgage void against creditors because of indefiniteness of description of mortgaged property and failure to record is void as against the trustee in bankruptcy: Stroud v. McDaniel, 45 C. C. A. 453, 106 Fed. 493. A mere agreement to pledge tangible goods without a change of possession of the property until within a few days of the bankruptcy is invalid as against the trustee, although the original agreement was made more than four months before bankruptcy: In re Sher- idan, 98 Fed. (D. C.) 406. (For such a pledge is void as against all creditors who become such during any time that the pledged property remains untransf erred.) Conflict of Authority,— There is, however, a conflict of authority on this point, and cases holding that the encumbrance has greater validity against the trustee than against the creditors may be found. But these cases overlook the statement made in In re Pekin Plow Co., 112 Fed. 308, 50 C. C. A. 257, 8th Cir., that the present Bankruptcy Act differs from the act of 1867, sections 67a and 70a of the present act not being found therein, and that therefore the decisions ren- dered on this point under the act of 1869 ' ^ are of lit- tle aid in construing the provisions of the present acf ; but rely upon the decisions under the previous act. § 40 OF BANKRUPTCY. 91 Thus, in In re New York Economical Printing Co., 110 Fed. 514, 518, 49 C. C. A. 133, the court says: ^ ^ The Bankrupt Act does not vest the trustee with any- better right or title to the bankrupt's property than belongs to the bankrupt or to his creditors at the time when the trustee's title accrues. The present act, like all preceding bankrupt acts, contemplates that a lien good at that time as against the debtor and as against all of his creditors shall remain undisturbed. . . . The provisions which have been quoted [i. e., sees. 67a, 67b, and 70e] do not necessarily touch a lien which at the date of the adjudication of bankrupcty was valid as to the bankrupt, and could not then be disturbed by any of his creditors [but which had there been no ad' judication could have been disturbed]." And in other cases the court states that the trustee in bankruptcy takes the property subject to all valid claims, liens, and equities by which the bankrupt would be bound, and cites cases under the national bankruptcy acts of 1841 and 1867 in support thereof: Chattanooga Nat. Bank v. Eome Iron Co., 102 Fed. (C. C.) 755, 759-761; In re Kellogg, 112 Fed. (D. C.) 52, 55. Thus in New York a movable property mortgage being void as against any creditor who obtains a hold upon the property during any of the time that the mortgage remains unrecorded, is nevertheless valid as against the trustee in bankruptcy represent- ing unsecured creditors, although the mortgage was never recorded: In re New York Economical Printing C»^ 1,10 Fed. 514, 518, 49 C. C. A. 133; In re Kellogg, 112 ?t-a. (D. (J.) 52, 55. Although in Kentucky an unrecorded movable prop- erty mortgage is void as against creditors who become such during the time the same is withheld from due recordation without notice thereof, and who obtain a hold on the property during such time, yet a movable property mortgage which was never recorded is valid as against the trustee in bankruptcy where none of the creditors have obtained a valid hold upon the property upon the filing of the petition: In re Sewell, 111 Fed. (D. C.) 791. 92 EFFECT ON ENCUMBRANCES. § 40 rupt at such time may be wholly avoided. A judgment lien founded upon a judgment so ob- tained, within four months before the filing is discharged by the adjudication of bankruptcy, unless the liened property has been sold in satis- faction of the lien to a bona fide purchaser for value without reasonable cause for inquiry.^ In the following case decided under the California laws under the same facts as the New York cases above the same conclusion was reached: In re Stan- dard Laundry Co., 112 Fed. (D. C.) 126; (C. C. A., 9th Cir.), 116 Fed. 476. In the circuit court of appeals the court said that in this case the contest was wholly between the mort- gagee and the trustee in bankruptcy, as * * there was no fraud in fact or in law against the creditors of the bankrupt''; that the trustee in bankruptcy has the same rights as the bankrupt — no more; and that as the bankrupt is estopped from denying the validity of the mortgage, so is the trustee. Cases under the previous bankruptcy law, but none under the present, were cited. The court forgets that the mortgage was wholly void as against all creditors who became such during the time that the mortgage was withheld from due recordation, and that that which is absolutely void cannot become valid under the present bank- ruptcy law against the trustee. Moreover, the Cali- fornia case cited by the court has no reference to movable property, but to an equitable lien on immova- ble property which is governed by entirely different principles. 6 Judgment Lien Founded upon Judgment Ob- tained Within Four Months DischsLrged, Unless Prop- erty Previously Attached. Bankrupt Act, section 67f, provides: *^That all lev- ies, judgments, attachments, or other liens, obtained through legal proceedings against a person who is insol- . vent, at any time within four months prior to the filing § 40 OF BANKRUPTCY. 93 of a petition in bankruptcy against bim, shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the levy, judgment', attach- ment, or other lien shall be deemed wholly discharged and released from the same; .... provided, that nothing herein contained shall have the effect to de- stroy or impair the title obtained by such levy, judg- ment, attachment, or other lien, of a bona fide pur- chaser for value who shall have acquired the same without notice or reasonable cause for inquiry.^' Bankrupt Act, sec. 1, clause 1, provides that '^ ^i person against whom a petition has been filed' shall include a person who has filed a voluntary petition.'* *^In our opinion, the conclusion to be drawn from the language is that it is the lien created by a levy, or a judgment, or an attachment, or otherwise, that is invalidated, and that where the lien is obtained more than four months prior to the filing of the petition, it is not only not to be deemed to be null and void on adjudication, but its validity is recognized. When it is obtained within four months the property is dis- charged therefrom, but not otherwise. A judgment or decree in enforcement of any otherwise valid pre-ex- isting lien is not the judgment denounced by the stat- ute, whicn is plainly confined to judgments creating liens. If this were not so, the date of the acquisition of a lien by attachment or creditor's bill would be entirely immaterial. ^ ^ Moreover, other provisions of the act render it un- reasonable to impute the intention to annul all judg- ments recovered within four months": Metcalf Bros. & Co. V. Barker, 187 U. S. 165, 23 Sup. Ct. Eep. 67, 714, overruling the opinions of the district court (In re Lesser, 100 Fed. 433), and of the circuit court of appeals, holding the contrary. ^* Section 67f avoids certain liens, if created within four months. This is its object. It does not avoid judgments or levies, except so far as they create a lien It releases the property affected by levies, judgm.ents, and attachments, so far as these create a lien. Now, an attachment, in and of itself, and with- out further proceedings creates a lien in Massachu- setts Hence, if the attachment be made more than four months before the petition is filed, the at- 94 EFFECT ON ENCUMBRANCES. § 41 41. Contractual Encumbrance for Present Con- sent Consideration not AffectedJ An encumbrance executed in good faith and not in contemplation of or in fraud upon the bankruptcy act^^ in so far as supported by a present consideration or given to secure future tachment and the lien which it creates are both pre- served, by necessar^^ implication, as against the opera- tion of the Bankrupt Act Where .... the lien is created by the attachment, the judgment and levy create no new or additional lien, but only enforce a lien already existing: In re Blair, 108 Fed. (D. C.) 529, 530. To the same effect, see In re Kavanaugh, 99 Fed. (D.^C.) 928; In re Beaver Coal Co., 110 Fed. (D. C.) 630. Contra: In re Lesser, 108 Fed. (D. C.) ^01; In re Johnson, 108 Fed. (D. C.) 373. But otherwise a judgment lien accruing (or an at- tachment or execution levied) upon any property is dissolved by an adjudication of bankruptcy made against the owner thereof, either in involuntary or in voluntar}^ proceedings, pursuant to a petition filed within four months after the accrual or lew: In re Richards, 96 Fed. 935, 941, 942, 37 C. C. A. 634, 7th Cir., affirming 95 Fed. (D. C.) 258; In re Fellerath, 95 Fed. (D. C.) 121, 122: In re Breslauer, 121 Fed. (D. C.) 910, 914; In re Franks, 95 Fed. (D. C.) 635 (attachment); In re Higgins, 97 Fed. (D. C.) 775 (at- tachment); In re Burrus, 97 Fed. (D. C.) 926, 928 (attachment); In re Vaughan, 97 Fed. (D. C.) 560 (execution). (In the early cases of Re De Lue, 91 Fed. (D. C.) 510, Re Easley, 93 Fed. (D. C.) 419, and Re O'Connor, 95 Fed. (D. C.) 943, the contrary was held in case of voluntary bankruptcies.) Where the property has been sold pursuant to the lien, although a bona fide purchaser for valiTC of the property is protected, the proceeds of the property stand in lieu thereof and may be recovered: In re Kenney, 97 Fed. (D. C.) 554, 557; In re Franks, 95 or THi § 41 OF BANKRUPTCY. '^ UNlVEr':' 95 \ P ^^ Fed. (D. C.) 635 (case of attachmentyS ^eI^~^g&i i^'' re Knickerbocker, 121 Fed. (D. C.) 1004. 7 Contractual Encumbrancer for Present Considera- tion not Affected.— Bankrupt Act, section 67d: '^ Liens given or accepted in good faith and not in contempla- tion of or in fraud upon this act, and for a present con- sideration, which have been recorded according to law, if record thereof was necessary in order to impart no- tice, shall not be affected by this act. ' ' Comment on Statute.— ' ^ The expression *and for a present consideration^ .... shows that this para- graph refers to liens given or accepted within four months preceding the bankruptcy proceedings. Other- wise [that is, in case the lien was given more than four months preceding], if a lien had been given or accepted, even though not for a present consideration, but for an antecedent debt, the lien would be good, un- der all the provisions of the act^': In re Wright, 96 Fed. (D. C.) 187, 189. In Ee Durham, 114 Fed. (D. C.) 750, 753, the court said that the cases hold **that pledges to secure money loaned at the time are valid; that an exchange of a security validly held for a new security, the old one being released, is not a preference; that a fair ex- change of values may be made at any time, notwith- standing insolvency; that an insolvent is not bound to abandon all dealing with his property, provided he does not give preference to antecedent debts, and does not so deal with it as to evidence a purpose to defraud or delay his creditors; and that preferences can only arise in case of antecedent debts.'' s Encumbrance Must be Executed in Good Faith, and not in Fraud of Bankruptcy Act.— In Ee Soudan Mfg.Co.(C. C. A.),113Fed. 804, 806,thecourt says: *^It is equally clear that section 67d[quoted in note 7 above] saves from invalidity the security thus founded upon a present consideration, if ' accepted in good faith and not in contemplation of or in fraud upon this act'; and in the absence of notice which impeaches the good faith of the transaction as so defined, the mortgagee is en- titled to the benefits of his lien, notwithstanding the fraud, if any there was, on the part of the mort- gagor. ' ' 96 EFFECT ON ENCUMBRANCES. § 41 advances which have actually been made^ at the time of the filing of the petition consequent upon which the owner of the encumbered property is adjudged a bankrupt, although accruing within four months of the filing of the petition, has like validity, and may be avoided to like ex- tent as the encumbrances considered in the pre- ceding section. In Stedman v. Bank of Monroe (C. C. A., 8th Cir.), 117 Fed. 237, where the mortgagor was actually in- solvent at the time of executing the mortgage in ques- tion, the court attached importance to the fact that at the time of the execution of the mortgage the mort- gagee did not believe and had no reasonable cause for believing the mortgagor insolvent. 9 Mortgage Must be Supported by Present Consid- eration. — A duly recorded movable property mortgage given for a present consideration by an insolvent debtor within four months is valid: In re Wolf, 98 Fed. (D. C.) 84; Davis v. Turner (C. C. A., 4th Cir.), 120 Fed. 605, 613, 614. A duly recorded movable property mortgage given by a debtor within four months of his bankruptcy in part for a present consideration is valid to the amount of the present consideration: Stedman v. Bank of Monroe (C. C. A., 8th Cir.), 117 Fed. 237; Guras v. Porter, 118 Fed. (D. C.) 668; In re Durham, 114 Fed. (D. C.) 750, 753; In re Eonk, 111 Fed. (D. C.) 154, 156. It is also valid as to amount of future advances agreed to be made and subsequently' advanced: In re Durham, 114 Fed. (D. C.) 750, 753. Same holds good as to a pledge: In re Belding, 116 Fed. (D. C.) 1016; In re Cobb, 96 Fed. (D. C.) 821, 825, 826. A pledge given for present consideration does not constitute a preference: In re Little, 110 Fed. (D. C.) 621, 629, 630. § 42 OF BANKRUPTCY. 97 42. Encumbrances Ag-ainst Exempt Property not Affected. Property, set apart to a bankrupt as exempt under the laws of the state is not thereby released from encumbrances otherwise valid against it, but they retain the. same validity which they would have had irrespective of the proceedings in bankruptcy.*^ Such a mortgage being valid, it follows that where the trustee in bankruptcy took possession of the mort- gaged property (a crop of apples), and sold the same without the consent of the mortgagee, he is liable tor the conversion of the apples: Guras v. Porter, 118 Fed. (D. C.) 668. 10 Encumbrances Against Exempt Property not Af- fected. — ^'AVhen property claimed to be exempt under the provisions of the law of the state is set apart by the trustee and referee, and delivered to the bankrupt, it passes without the control of the court in bank- ruptcy, and parties who claim liens thereon by way of contract, mortgage, or as vendors must assert their rights in a court other than the court of bankruptcy. The act of setting apart the property as exempt does not release the same from liens which are enforceable against it under the provisions of the sta,te statutes. Setting it apart as exempt property declares that the trustee has no right in or title thereto, under the pro- visions of the Bankrupt Act, but in no sense is it an adjudication of the rights of third parties claiming liens thereon by way of mortgages or the like; and all courts other than the court of bankruptcy are at lib- erty to hear and determine rights to sucn exempt prop- erty, the same as though no proceedings in bankruptcy had been instituted'^: In re Little, 110 Fed. (D. C.) 621, 627. Thus while only a creditor who has security for his debt in a nature to be assignable is deemed to be a secured creditor, yet as in Kentucky a homestead is Liens— 7 98 EFFECT ON ENCUMBRANCES. § 43 43. Priorities not Affected. The relative priority of various valid encum- brances against the same property is not affected by an adjudication that the owner of such prop- erty is a bankrupt ;^^ and where the property is sold free and clear of encumbrances, the bankruptcy court has the power to determine how the fund is to be divided among the rival claim- ants thereto. ^^ 44. Contractual Encumbrance to Secure Antece- dent Obligation Deemed Preference.^^ An encumbrance created against any property by the contract of the owner while he is insolvent. assignable, the holder of a claim secured by mortgage against a homestead is a secured creditor, and cannot prove his claim as unsecured (the homestead having been set apart to the bankrupt) , but must enforce Ijis claim against the homestead, and an order directing the mortgagee to prove his claim as unsecured and to share in the general dividends of the estate, only re- taining his mortgage for the balance left unpaid, is erroneous: Fenley v. Poor, 121 Fed. (C. C. A., 6th Cir.) 739. 11 Relative Priority Preserved: In re Falls City Shirt Mfg. Co., 98 Fed. (D. C.) 592. So a supply lien being preferred in Virginia to a subsequent pledge, such priority will be preserved: In re West Norfolk Lumber Co., 112 Fed. (D. C.) 759, 765. 12 The bankruptcy court may determine priorities, the exercise of this power being incidental to the right of disposition of the fund which arises from the sale of the property free from encumbrances: Chaun- cey V. Dyke Bros. (C. C. A.), 119 Fed. 1, 3, 4. 13 Certain Encumbrances Constitute Preferences. § 44 OF BANKRUPTCY. 99 when made, or, where recordation is required, re- corded/^ within four months prior to the filing of a petition consequent upon which the owner is adjudged a bankrupt, so far as given to secure an antecedent obligation, is, in case the encum- Compare Bankruptcy Act, section 60a, first sentence: ''A person shall.be deemed to have given a preference if, being insolvent, he has, within four months prior to the filing of the petition, or after the filing of the petition and before the adjudication, procured or suf- fered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class. ' ' In Pirie v. Chicago Title etc. Co., 182 U. S. 438, 21 Sup. Ct. Eep. 906, 45 Law ed. 1171, the court points out that under Bankruptcy Act, section 60a, any transfer of prop- erty by an insolvent person which will enable any of his creditors to obtain a greater percentage of their debts than other creditors of the same class is a preference (p. 446), and that the word ^ transfer'' includes every means and manner by which property can pass from the ownership and possession of one person to another^ and by which the result forbidden by the statute may be accomplished (p. 444), and thus includes the giving or conveying anything of value — anything which has debt paying or debt securing power (p. 443). In Ee Belding, 116 Fed. (D. C.) 1016, the court says: "A preference is not the less a preference because the bankrupt first gave the creditor, not the property itself, but a lien thereupon, and the creditor subse- quently sold the property, and realized on the lien, in order to pay the debt.^' 14 Bankrupt Act, sec. 60a, last sentence: '^ Where the preference consists in a transfer, such period of four months shall not expire until four months after the recording or registering of the trans- 100 EFFECT ON ENCUMBRANCES. § 44 brancer had reasonable cause to believe that a preference was intended thereby, voidable by the trustee in bankruptcy for the benefit of the estate; ^'"^ but if the encumbranoer did not have reasonable cause for believing that a preference was intended by his encumbrance, such encum- brance has the same validity as though made by a fer, if by law such recording or registering is re- quired/' As amended February 3, 1903. 15 Encumbrance Knowingly Received by Creditor as Preference Within Four Months Voidable.— Bankrupt Act, sec. 60b, first sentence: '* If a bankrupt shall have given a preference, and the person receiving it, or to bo benefitted thereby, or his agent acting therein, shall have had reasonable cause to believe that it was in- tended thereby to give a preference, it shall be void- able by the trustee, and he may recover the property or its value from such "person. ' ' So, where a mortgagee knew that the mortgage was intended as a preference, and that the mortgagor was insolvent at the time of its execution, an immovable property mortgage executed by a bankrupt within four months before the filing of the petition of volun- tary bankruptcy for a consideration accruing before that time is void: Carter v. Hobbs, 92 Fed. (D. C.) 594, 596. Likewise, a movable property mortgage executed ' under similar circumstances to secure an antecedent obligation mav be avoided: McNair v. Mclntyre (C. C. A., 4th Cir.),'ll3 Fed. 113, 114; In re Wolf, 98 Fed. (D. C.) 84. Historical.— A mortgage or lien given after the pas- sage of the act, if otherwise voidable, is not validated by reason of the fact that such encumbrance was given to secure a oona ^de debt created before the passage of the act: In re Nathan, 92 Fed. (D. 0.) 590, 592. As to when tlie act became effective, see par- ticularly. In re Brown, 91 Fed. (D. C.) 358, 359. § 44 OF BANKRUPTCY. 101 solvent person for a valuable consideration/** unless made by the insolvent with intent on his part to hinder or delay or defraud any creditor of hiS;, or unless void against his creditors by the laws of the place in which the encumbered prop- erty is situate, in either of which cases the encum- brancer may, at his option/'' either retain his en- 10 When Intent not Known, Encumbrance Gen- erally Valid. — There is no penalty denounced against such preferences by the Bankruptcy Act. as amended I'ebruary 5, 1903, the intent of the amendment seem- ing to be to validate them, although the fundamental principle of the act that equality is equity is thereby disregarded. 17 Option to Eetain Preference or Prove Claim Against Estate.— Bankrupt Act, section 57g: *'The claims of creditors who have received preferences, voidable under section 60, subdivision b, [see note 15 above], or to whom conveyances, transfers, assign- ments, or encumbrances, void or voidable under sec- tion 67, subdivision e [see sections 46 and 47 below], have been made or given, shall not be allowed unless such creditors shall surrender such preferences, con- veyances, transfers, assignments, or encumbrances.'' As amended February 5, 1903. Where the creditor did not have cause to believe that a preference was intended, he may keep the property transferred to him, whether it be a complete or partial discharge of his debt, but unless he sur- renders his preference, he cannot prove either the debt so preferred, or any other debts owing him. ''His election is between keeping the preference and surrendering it. That is the favor of the law to his innocence, but, aiming to secure equality between him and other creditors, can the law indulge further"? He may have been paid something— maybe a greater percentage than other creditors can be. That is his a-dvantage and he may keep it. If paid a less per- centage, he can obtain as much as other creditors by 102 EFFECT ON ENCUMBRANCES. § 44 cumbrance as a valid security and forego the right to prove any claims which he may hold against the estate of the bankrupt^ or surrender his secur- sur rendering the payment, and an equality of dis- tribution of the assets of the bankrupt secured^': Pirie v. Chicago Title etc. Co., 182 U. S. 438, 447, 21 Sup. Ct. Eep. 906, 45 Law ed. 1171. A pledge made to secure an antecedent obligation within four months of bankruptcy creates a prefer- ence; and, until the preference is surrendered, the balance of the claim in excess of the security cannot be proved: In re Belding, 116 Fed. (D. C.) 1016. Where a mortgagee did not know that the mort- gagor was insolvent, and no intent to give a prefer- ence was present, a movable property mortgage made within four months of the filing of the petition to secure an antecedent obligation cannot be avoided: McNair v. Mclntyre (C. C. A., 4th Cir.), 113 Fed. 113; reversing, same case. In re Sanderlin, 109 Fed. (D. C.) 857, 860. In certain cases the contrary conclusion has been reached, but not on satisfactory grounds. Thus, it has been held that a duly recorded movable property mortgage made within four months of filing a peti- tion to secure an antecedent obligation is void with- out qualification: In re Jones, 118 Fed. (D. C.) 673. And that a duly recorded movable property mortgage made within four months of the filing, so far as given to secure an antecedent obligation, is void: City National Bank v. Bruce, 109 Fed. 69, 72, 48 C. C. A. 236, 4th Cir.; In re Eonk, 111 Fed. (D. C.) 154, 156; In re Durham, 114 Fed. (D. C.) 750, 753. (City National Bank v. Bruce was decided by the same court that subsequently decided McNair v. Mclntyre to the contrary, this decision being made before the case of Pirie v. Chicago Title etc. Co. was decided.) And that a pledge made within four months of bankruptcy to secure an antecedent debt, being a preference, is void, irrespective of the knowledge of the pledgee: In re Cobb, 96 Fed. (D. C.) 821. § 44 OF BANKRUPTCY. 103 ity and prove his claim^^ as an unsecured credi- tor. But any sncli encumbrance when created with- in four months before the filing of the bankrupt petition by the predecessor in interest of the bankrupt in the encumbered property^ the prop- erty being transferred to the bankrupt subject to the encumbrance^ is valid and cannot be avoided, not being deemed a preference.^^ 18 May Surrender Security and Prove Claim.— Where an encumbrancer insists upon proving his claim against the general estate, it would seem that he will be held to have waived his lien: McNair v. McTntyre (C. C. A.), 113 Fed. 113, 114. 3t> Encumbrance Created by Predecessor of Bank- rupt Valid. — If the encumbrance was created by the predecessor in interest of the bankrupt, within the four months, although for an antecedent considera- tion, the bankrupt having obtained the property subject to the encumbrance, the encumbrance is valid as against the creditors of the bankrupt. Thus, a mortgage given by a partnership within four months of the bankruptcy of a partner therein, the mortgage being given in part for an antecedent consideration, is not invalidated at all by the bank- ruptcy of the partner, although, in the meantime, the I firm had been dissolved, and the bankrupt had taken its assets and assumed its liabilities: In re Sanderlin, 109 Fed. (D. C.) 857, 859; same case, McNair v. Mcln- tyre (C. C. A.), 113 Fed. 113. (For the purposes of the bankruptcy law, a partnership is deemed an en- tity.) 104 EFFECT OX ENCUMBRANCES. § 45 45. Contractual Encumbrance when Money Knowingly Used to Confer Preference Void- able. Whenever an insolvent person^ within four months of the filing of a petition consequent upon which he is adjudged a bankrupt^, hypothecates any of his property as security for present or future advances which are intended to be used and are used, in whole or in part, to confer a preference on any creditor of his, and the encum- brancer has notice of the insolvency and of the use intended to be made of such advances, the trustee in bankruptcy may avoid such encum- brance to the amount of the advances actually used to confer preferences.^^ 20 The controlling circumstance under this section is the knowledge by the encumbrancer (1) of the insolvency of the borrower, and (2) of the use in- tended to be made of the advances. For it is clear that under section 41, above, the transaction is valid if the security was accepted in good faith and not in contemplation of or in fraud upon the Bankruptcy Act, and in the absence of notice which impeaches the good faith of the encumbrancer, he is entitled to his security, notwithstanding the fraud of the owner of the encumbered property. If, however, the encumbrancer had notice of the insolvency of the borrower, and of the use intended to be made of the advances secured, the encumbrance is void: In re Soudan Mfg. Co. (C. C. A.), 113 Fed. 804. Where, within four months of adjudication of bankruptcy, a person gave a mortgage on his stock of goods as security for a loan, and the mortgagee § 46 OF BAIS^KRITPTCY. 105 46. When Made to Hinder or Delay or De- fraud Creditors Void. Except as to bona fide purchasers and encum- brancers of the secured obligation for a present fair consideration, an encumbrance made by a person within four months prior to the filing of a petition consequent upon which he is adjudged a bankrupt, with intent on hi© part to hinder or delay or defraud any creditor of his, is void as against the trustee in bankruptcy; and the prop- erty attempted to be so encumbered (except so far as exempt from forced sale by the law of the bankrupt's domicile) remains a part of his es- tate 21 knew that the loan was to be used to pay a pro- ' existing debt, and the loan was, in fact, so used, and the mortgage received an indemnity bond from the party to whom the loan was paid by the mortgagor, upon the bankruptcy of the mortgagor the mortgagee must first enforce the liability on the bond before 4'ecourse to the mortgaged property, if, indeed, such recourse is permissible at all. *'If transactions of this sort are to be permitted, then, instead of the creditor taking the mortgage himself, when a debtor is in failing circumstances, he will get some one else to advance the money, agreeing that the person advancing the money shall suffer no loss, and thereby obtain by indirection a prefer- ence which he would not be able to get if he had scted directly with the debtor, provided, of course, that the debtor, within four months thereafter, be- comes a bankrupt: In re Beerman, 112 Fed. (D. C.) 663, 666. -1 Made to Hinder or Delay Creditors Void.— Bankrupt Act, section 67e, except last sentence: ''That 106 EFFECT ON ENCUMBRANCES. § 47 47. When Declared Void by State Laws Void in Bankruptcy. An encumbrance given by an insolvent person within four montlis before the filing of a petition all conveyances, transfers, assignments, or encum- brances of Ms property, or any part thereof, made or given by a person adjudged a bankrupt under the pro- visions of this act subsequent to the passage of this act, and within four months prior to the filing of the petition, with the intent and purpose on his part to hinder, delay, or defraud his creditors, or any of them, shall be null and void as against the creditors of such debtor, except as to purchasers in good faith and for a present fair consideration; and all prop- erty of the debtor conveyed, transferred, assigned, or encumbered as aforesaid shall, if he be adjudged a bankrupt, and the same is not exempt from execu- tion and liability for debts by the law of his domi- cile, be and remain a part of the assets and estate of the bankrupt and shall pass to his said trustee, whose duty it shall be to recover and reclaim the same by legal proceedings or otherwise for the benefit of the creditors.'' The language is either to hinder or delay or de- fraud. Thus, a mortgage given with intent to hinder and delay creditors, but not to defraud them", is void under this section: In re Platts, 110 Fed. (D. C.) 126, 132. Illustrations.— Morigsiges executed in favor of favored creditors who were not pressing for pay- ment nor asking for a mortgage, the mortgages so executed covering all the property of the mort- gagors, and having been made with the intent that the debtors might thereby force indulgence from their creditors not so secured, are executed with the intent to hinder, delay, or defraud some of the creditors .of the mortgagor: In re Steininger Mercantile Co., 107 Fed. 669, 46 C. C. A. 548. Although an unrecorded immovable property mort- gage is valid in Georgia except as against a subsequent § 47 OF BANKRUPTCY. 107 consequent upon which he is adjudged a bank- rupt, which encumbrance by the laws of the place in which the encumbered property is situate is void against his creditors, is likewise void upon such adjudication of bankruptcy as against hia creditors and the trustee in bankruptcy .^^ contract encumbrancer without notice thereof, or sub- sequent lienor by operation of law, yet where the with- holding of the mortgages from recordation amounted to a fraud upon subsequent creditors (the mortgagor having mortgaged practically all his property, the mortgages having been withheld from recordation with the express intent of sustaining his credit, and he hav- ing subsequently bought a stock of goods on such credit) the mortgage is void under the state law, and upon his bankruptcy will be adjudged void as against his creditors, although recorded coincidently with the filing of the petition in bankruptcy: Clayton v. Ex- change Bank, 121 Fed. (C. C. A., 'sth Cir.) 630, per Shelby and Pardee, Cir. JJ.; McCormick, Cir. J., dis- senting. Movable property mortgage made to hinder or de- lay creditors, being fraudulent, is void as against the creditors and trustee: In re Hughill, 100 Fed. (i). C.) 616; Egan State Bank v. Kice (C. C. A.), 119 Fed. 107 (same case. In re Platts, above). But a parol agreement between a mortgagor and a mortgagee of movable property that the mort- gagor should from time to time deliver the mort- gaged property to a commission house for sale, the net proceeds to be paid by the commission house to the mortgagee, is not an agreement to hinder or de- lay creditors, but an agreement for the application of the proceeds of the sale of the property to the satisfaction of the secured obligation and does not invalidate the mortgage: In re Durham, 114 Fed. (D. C.) 7o0, 754. 22 Bankrupt act, section 67e, last sentence: ^^And all conveyances, transfers, or encumbrances of his 108 EFFECT ON ENCUMBRANCES. f 48 48. Waiver of Exemptions to Encumbrancer In- ures to State When Encumbrance Void. Whenever a person afterward adjudged a bank- rupt has hypothecated any property, waiving ex- emptions, an undetermined portion of which to be selected by him would otherwise be exempt from forced sale, the encumbrance, if for any reason rendered void against the nonexempt en- cumbered property by the subsequent bankruptcy, is likewise avoided as against the exempt prop- erty, and exemptions having been waived, the en- tire property passes to the trustee in bankruptcy for the benefit of the creditors of the banln*upt.^^ property made by a debtor at any time within four months prior to the filing of the petition against him, and while insolvent, which are held null and void as against the creditors of such debtor by the laws of any state, territory, or district in which the property is situate, shall be held null and void under this act against the creditors of such debtor if he be adjudged a bankrupt, and such property shall pass to the assignee, and be by him reclaimed and recov- ered for the benefit of the creditors of the bank- rupt/' 23 In re Schuller, 108 Fed. (D. C.) 591. Tn this case the court said that the decision was simpli- fied by the fact that the property mortgaged was an entire stock of trade none of the goods composing which were exempt until the articles had been specifically selected by the bankrupt. What the rule was where certain items of property were specifically exempted by the statute the court said was not free from difficulty. The decision was placed on either of two grounds, the bankrupt having waived his exemptions: § 49 OF BANKRUPTCY. 109 49. Undisclosed Encumbrance Lost by Indistin- guishable Mingling of Property. Where a trustee in bankruptcy^ without notice that an encumbrance is asserted against certain property of the bankrupt^ sells the property to a bona fide purchaser for value, and the proceeds of the sale are indistinguishably mingled with other funds coming into his possession, the en- cumbrance is extinguished and cannot be en- forced as against the estate of the bankrupt, but the secured demand, when provable, may be proved as an unsecured claim.^^ (1) that the exemption was a personal privilege which not having been set up by the bankrupt could not be set up by his mortgagee; or (2) the mortgage could not be considered to be valid merely against the exempt property, as in such a case, the exempt property being undeter- mined, the mortgage would be void for uncertainty. The court seems to have relied upon either ground as conclusive of the matter — hence, the proposition stated in the text. 2^4 Undisclosed Encumbrance Under Certain Cir- cumstances Lost. — Where certain encumbered mov- able property belonging to the estate of a bankrupt was sold by the receiver in bankruptcy under order of court, together with other property of the bank- rupt for an aggregate sum, without notice of the encumbrance, and the encumbrancer, although hav- ing notice of the sale, did not ask for a separate sale, the encumbrance is lost. ''The court had no kjiowledge that he was assert- ing a lien for the manufacture of these goods, and, as they had passed out of his possession into the custody of the receiver, it was his duty to make 110 EFFECT ON ENCUMBRANCES. § 50 SvMivision 2. Possession of .Encumbered Prop- erty. 50. Encumbrancer in Possession at Time of Fil- ing Petition may Retain Possession. An encumbrancer,^^ or an officer of court for him,^^ who has lawfully come into the actual possession of the property affected by his encum- brance before the filing of a petition consequent upon which the owner of the property is adjudged a bankrupt, may retain possession thereof as seasonable claim to priority of payment. Otherwise he must be held to have taken the risk that the goods might be sold in such a manner that the pioceeds might be indistinguishably mingled with the proceeds of the other property of the bank- rupt'^: In re Klapholz, 113 Fed. (D. C.) 1002. 25 Possession by Encumbrancer Valid Against Ttvls- tee —Rationale.— " A mortgagor, who puts his mort- gagee into actual and unqualified possession of the chattel mortgaged, instead of compelling him to take the formal steps for a foreclosure, is acting in further- ance of the original contract, not making a new one, in the sense that w^ould, in this case, transgress the in- hibition of the bankrupt law as to preferential con- veyances'^: Duplan Silk Co. v. Spencer (C. C. A.), 115 Fed. 689, 694. 26 Possession by Officer of Court Valid Against Trustee. — So a receiver or trustee in bankruptcy pro- ceedings is not entitled to receive the possession of mortgaged property which is in the possession of a re- ceiver appointed by the state court in an action to foreclose the mortgage, but is entitled to any surplus of proceeds which may arise upon the sale of the mortgaged premises pursuant to the order of the state court: Carling v. Seymour Lumber Co. (C. C. A.), 113 Fed. 483, 491. § 50 OF BANKRUPTCY. Ill against the receiver or trustee in bankniptey of the owner, although possession was obtained with- out a new consideration within four months be- fore the filing; and his right thereto may be at- tacked by such trustee or receiver in case the en- cumbrance is void against the receiver or trustee solely in a plenary action^'' in the proper state or federal court. 27 Right of Encumbrancer in Possession cannot be Attacked Summarily.— So where a larm mortgaged a stock of goods which formed part of its estate, and with- in four months thereafter was adjudged a bankrupt, but before the adjudication the goods had passed into the possession of the mortgagee, if the trustee in bank- ruptcy questions the validity of the mortgage, * ' he can attack the same by proper proceedings to that end, or he may redeem the property by payment of the mort- gage liens, or in other ways may perhaps protect the interests of creditors, but he cannot, by summary pro- ceedings, compel the delivery of possession of property by third persons, who hold the same as mortgagees, and whose possession antedates the filing of the pro- ceedings in bankruptcy^': In re Buntrock Clothing Co., 92 Fed. (D. C.) 886. In Ee Cobb, 96 Fed. (D. C.) 821, 823, where certain securities had been pledged and transferred to the pos- session of the pledgee, the contrary conclusion was reached. The court said: **He [the pledgee] could not legally collect, realize on, or cancel the same [i. e,, the pledged property], but, whatever their nature, they must be surrendered to the trustee, who alone is authorized to reduce the same to money, and the rights of claimant to a priority to the proceeds thereof will be duly adjudged and administered in this court. This court alone has jurisdiction.'' And the court held this rule to apply, although the pledge was valid. 112 EFFECT ON ENCUMBRANCES. § 51 51. When Bankrupt in Possession at Time of Fil- ing Petition Trustee Entitled to Possession.^^ The receiver or trustee in bankruptcy is entitled as of right to the possession of all property, encumbered or otherwise, in the possession of the bankrupt at the time of the filing^^ of the peti- tion consequent upon which he is adjudged a bankrupt, and may by summary proceeding ob- tain possession of such property when possession is withheld from him. 38 When Bankrupt in Possession at Time of Filing Petition, Trustee Entitled to Possession.— So where the trustee obtains possession of such property, an en- cumbrancer cannot maintain an action in tort to re- cover possession of the property or the proceeds thereof from the trustee: In re Gutnam, 114 Fed. (D. C.) 1009. 29 At Time of Filing.— The trustee is entitled to the possession of all property in the bankrupt 's pos- session at that time. For ^Hhe filing of the petition is a caveat to all the world, and in effect an attachment and injunction; .... and on adjudication, title to the bankrupt's property became vested in the trustee (sees. 70, 21e [of the Bankrupt Act]), with actual or constructive possession, and placed in the custody of the bankruptcv courf : Mueller v. Nugent, 184 IT. 8. 1, 14, 22 Sup. Ct. Eep. 269, 46 Law ed., 411. ^^The district court has power to ascertain whether, in the particular instance, the claim asserted is an ad- verse claim existing at the time the petition was filed. And according to the conclusion reached, the court will retain jurisdiction or decline to adjust the mer- its' ': Louisville Trust Co. v. Comingor, 184 U. 8. 18, 25, 22 Sup. Ct. Eep. 293, 46 Law ed. 416. I 52 OF BANKRUPTCY. 113 Subdivision 3. Proof of Secured Demand. 52. Proof of Secured Obligation not Necessary. An encumbrancer is not required to prove the obligation secured by his encumbrance^ or the unsecured excess thereof^ if any there be^ as a claim against the estate of the bankrupt^ but without proving the same may keep his encum- brance against the encumbered property in full force and effect and, subject to the control of the bankruptcy court, in a proper case enforce it.^^ 30 Proof of Secured Demand not Necessary. In re Goldsmith, 118 Fed. (D. C.) 763, 766. Where a sale of encumbered property was made by the trustee free from encumbrances, the sums realized from the sale and paid to the secured creditor are not dividends so as to compel such secured creditor to make proof of claims in order to be entitled to have his claims satisfied out of the proceeds of the sale. ^^Jf secured creditors elect to rely upon their secu- rity, they are not parties to the bankruptcy proceed- ings at all. There is nothing compelling them to make proof, and they may enforce their liens, if otherwise valid, subject to the power to stay set forth in section II of the acf : In re Goldsmith, 118 Fed. (D. C.) 7b3, 766. Similarly, where a majority in number and amount of the unsecured creditors of a person adjudged bank- rupt desire to enter into a composition agreement with the bankrupt (as provided by law), the secured credi- tors of the bankrupt are not, before the value of their securities have been determined and where they refuse to voluntarily become parties, necessary or proper parties to the composition agreement: In re Kahn, 121 Fed. (D. C.) 412. Liens— 8 114 EFFECT ON ENCUMBKAXCES. . § 53 53. Where Claim by Mistake Proved as Unse- cured, Mistake may be Corrected. A creditor of a bankrupt holding an encnrn- brancG upon property of the bankrupt who, in- advertently^^ or by mistake of law^^ or of fact,^^ 31 Claim Inadvertently Presented as Unsecured may be Amended. — The court may permit a creditor who inadvertently proves his claim as unsecured to amend it by adding thereto a statement of the security, in a proper case: Tn re Falls City Shirt Mfg. Co., 98 Fed. (D. C.) 592, 594; Tn re Wilder, 101 Fed. (D. C.) 104. 33 Mistake of Law may be Avoided.— In Ee Swift, 111 Fed. (D. C.) 503, where a creditor waived his lien, thinking that he had been paid, when he had not been, the district court treated it as a mistake of law, and said: ''That ignorance of the law excuses no one is not a maxim of universal application. Against some mistakes of law a court of bankruptcy will re- lieve. Actual knowledge that bankruptcy proceedings were pending, and constructive notice of their date, of all the language of the act, and of the correct in- terpretation thereof, will not turn an otherwise in- nocent mistake of law into a guilty one 'That the mistake was unreasonable, that he ought to have known better, even if true, does not seem to me to be material, so long as he acted in good faith.'' On ap- peal from the judgment of the district court, the cir- cuit court of appeals in this same case treated the mistake as a mistake of fact, but said in passing: " !t is settled beyond question that parties acting under a mistake of law will not necessarily be held to that mistake by a court of bankruptcy when the result would be to do substantial injustice'': Hutchinson v. Otis (C. C. A.), 115 Fed. 937, 940. 33 Relief from Mistake of Fact may be Granted.— Where a creditor of a bankrupt files a claim against the estate of a bankrupt within the year allowed for the presentation of claims, he may, after the expira- tion of the year, be allowed to amend his claim by as- § 53 . OF BANKRUPTCY. 115 waives the encumbrance or without setting up the same proves his claim against the estate of the bankrupt, may, upon discovering his inad- vertence or mistake, except as against the inter- vening rights of third parties, reassert his encum- brance against the encumbered property. 54. When Obligation Exceeds Property in Value, Creditor may Prove Claim for Ex- cess. Whenever a secured obligation owing by a bank- rupt exceeds the encumbered property in value, the secured creditor may, unless he holds a prefer- ence in the estate of the bankrupt, prove his claim for the unsecured excesis of his demand beyond the value of his security and receive his divi- dends thereon.^^ serting a lien on the proceeds of the sale of certain property in the hands of the trustee, where the first claim was presented under mistake of fact and no in- tervening rights have accrued which would be preju- diced by the correction: Hutchinson v. Otis (C. C. A.), 115 Fed. 937, 941, 942. 34 Creditor may Prove Claim for Excess. Bankrupt Act, section 57h, in part: ''The value of se- curities held by secured creditors shall be determined, .... and the amount of such value shall be credited upon such claims, and a dividend shall be paid only on the unpaid balance. ^^ Secured creditors ''are treated as creditors only for the unsecured excess ^^ of their claims beyond the value of their securities: In re Utt, 105 Fed. 754, 758, 45 C. C. A. 32. 116 EFFECT ON ENCUMBRAXCES. § 55 Subdivision 1. Control of Bankruptcy Court Over Encumbrances. 55. Determination of Value of Encumbered Property. The value of property hypothecated to secure an obligation of a bankrupt must be determined at the discretion of the court, either (1) in any case, by agreement, arbitration, com- promise, or litigation, between the owner of the secured obligation and the trustee in bank- ruptc}% or A creditor of a bankrupt holding a valid vendor's lien upon exempt property of the bankrupt is only entitled to a dividend upon the amount of his claim after deducting the value of his security. The fact that the bankrupt and the creditor agreed that the creditor should share in the general dividend, and only the balance left unpaid should be enforced as a special lien on the exempt property cannot defeat the right of other creditors to insist that his claim, being se- cured, should be allowed only for the amount thereof in excess of the value of the security: In re Little, 110 Fed. (D. C.) 621, 627. ^^If the security is inadequate, he [the secured creditor] may, without enforcing it, have the value ascertained in one of the other ways indicated in the act, and, such value being treated as a credit, have the balance of his claim allowed, and receive his divi- dends thereon'^: In re Barber, 97 Fed, (D. C.) 547, 552. Illustration.— WheTBy in August, 1899, certain collat- erals were assigned as security for an obligation then created, and the pledgee collected certain amounts on the collaterals within four months before the pledgor was adjudged insolvent in February, 1901, such amounts do not constitute preferences, but after de- ducting the value of the collaterals still remaining in the pledgee ^s possession from the amount remaining § 55 OF BANKRUPTCY. 117 (2) in case of an encumbrance created by con- tract^ by converting the property into money according to the termts of the contract of hy- pothecation.^^ unsatisfied, the pledgee may prove up the remainder of the unsatisfied obligation against the estate of the bankrupt pledgor: In re Little, 110 Fed. (D. C.) 621, 629, 630. 35 Determination of Value of Encumbered Prop- erty. Bankrupt Act, section 57h, except last clause: **The value of securities held by secured creditors shall be de- termined by converting the same into money according to the terms of the agreement pursuant to which such securities were delivered to such creditors or by such creditors and the trustee, by agreement, arbitration, compromise, or litigation, as the court may direct. ^ ' In Ee Barber, 97 Fed. (D. C.) 547, 552, the court says: ^*If the security is inadequate, he [the secured creditor] may, without enforcing it, have its value ascertained in one of the other ways indicated in the act, and such value being treated as a credit, have the balance of his claim allowed, and receive his dividends thereon.'' In this case the security was an immovable property mortgage, and thus the proposition is directly afSrmed that the second alter- native given in the section of the text is not ex- clusive although it was a contractual encumbrance. In Ee Browne, 104 Fed. (D. C.) 762, 763, the court, however, distinctly affirms that the second alternative is an exclusive method of determining the value of the security when it is a contractual encumbrance, saying: ^^The court is only permitted to intervene when the agreement between the bankrupt and the creditor fails to provide a method by which the value of the securities may be ascertained — again reserv- ing the question of the court's power in the case of a fraudulent or oppressive conversion The su- pervision of the court is thus confined to the ascer- tainment of value where the bankrupt and his creditor 118 EFFECT ON ENCUMBRANCES. § 56 56. Court will not Administer Property En- cumbered Beyond Its Value. If encumbered property does not exceed in value the obligation of a bankrupt secured there- by^ and nothing can be realized for the unsecured creditors^ the bankruptcy court will not assume the administration thereof, although the property belongs to the bankrupt.^^ have themselves failed to deal with this subject. In such an event the court may direct how the value is to be ascertained, and may choose among the meth- ods of ^agreement, arbitration, compromise, or liti- gation,' supervising and controlling either form of proceeding. ' ' There seems to be no warrant, however, in the stat- utory language for the construction put upon it by the Browne case, and therefore the interpretation given in the BarlDer case is adhered to in the text. 36 Will not Administer Property Encumbered Be- yond Value When Nothing can be Realized.— '^ The trustee is not required to take charge of or sell any portion of the estate that is so heavily encumbered with valid liens that nothing can be realized for the unsecured creditors'' (p. 74). ^'When, as in this case, there is no probability that any sum can be realized for the benefit of the un- secured creditors, then the trustee should not incur costs from which no good result will flow'' (p. 75). ^^It sometimes happens that the lienholders desire to obtain a title from the trustee, either through a public sale made by him, or by a direct convey- ance; and in such cases the trustee can generally obtain some small sum for conveying the title, which will inure to the benefit of the general creditors. In all such cases, he should, however, exact payment of the costs from the lienholders to whom he conveys the title as a condition of such transfer" (p. 75): In re Cogley, 107 Fed. (D. C.) 73, citing cases under Bankrupt Act of 1867. I § 57 OF BANKRUPTCY. 119 57. Court cannot Control Property of Third Person. If property hypotliecated to secure the obliga- tion of a bankrupt does not belong to the bank- rupt's estate^ the bankruptcy court can exercise no control whatever over it.^'' The Bankruptcy Act '^is not framed with any- special view to the enforcement of the securities for the benefit alone of the secured creditors, nor does it seem to contemplate the interference with or any enforcement of such securities by the trustee, or upon his motion alone, except for the purpose of realizing from the property pledged or mortgaged some moneys, which, after discharging the encum- brance, will go into the fund arising from the gen- eral assets, and benefit the unsecured creditors, whether entitled to priority or not'^: In re Barber, 97 Fed. (D. C.) 547, 552. A court of bankruptcy will not order the sale of a bankrupt's immovable property free from liens to which it is subject, unless satisfied of the probability that a sum for the general creditors would be ob- tained by the sale: In re Shaeffer, 105 Fed. (D. C.) 352. Where certain property of a bankrupt was encum- bered and the trustee appeared to have no prospect of any interest in the property for the creditors, the court of bankruptcy will not interfere with the prop- erty: In re Gibbs, 109 Fed. (D. C.) 627; In re HoUo- way, 93 Fed. (D. C.) 638. 37 Court cannot Control Property of Third Per- sons.— In Ee Horton, 102 Fed. 986, 43 C. C. A. 87, cer- tain debts for which a bankrupt was primarily liable were secured by mechanics' liens on the property of a third person who held certain moneys of the bankrupt to indemnify himself against the liens. The lienors commenced actions to enforce their liens, and the trustee in bankruptcy sought to have such actions stayed. The court held that the bankruptcy court 120 EFFECT ON ENCUMBRANCES. § 58 58. In Proper Case Encumbered Property of Bankrupt may be Sold Free of Encumbran- ces. If a trustee in bankruptcy comes into the pos- session^* of encumbered property of the bankrupt^ the value of which exceeds the obligation secured thereby, ^^ and a foreclosure proceeding is not had no power to stay the foreclosure actions, 'although the trustee in bankruptcy was incidentally interested in the amount of the liens which might te established, and said: ^^The fact that a trustee in bankruptcy may be interested in the result of a litigation which is pending between third parties in a state court does not entitle him to have the proceeding in such ac- tion stayed, as between such third parties, and to have the controversy transferred for adjudication to the bankruptcy court.'' 38 Possession of Property to be Sold.— It would seem from section 50 above that the power to sell free of encumbrances could only be exercised when the receiver or trustee was in the possession of the property. The case of In re Waterloo Organ Co., 118 Fed. (D. C.) 904, 905, 906, seems to be somewhat at variance with this conclusion. There the property was in the possession of a mortgagee, but the court held that such possession did not constitute the mortgagee an adverse claimant so as to bar the jurisdiction of the bankruptcy court to determine the validity of the claim of the mortgagee, and thereupon ordered the property to be sold free of encumbrances. In this case, however, the property came into the pos- session of the mortgagee after the filing although be- fore adjudication, and the authority of the court to sell free from encumbrances does not seem to have been questioned. 39 Value of Encumbered Property Should Exceed Secured Obligation. — A court of bankruptcy will not order the sale of a bankrupt's immovable property § 58 OF BANKRUPTCY. 121 necessary to extinguish rights not cognizable in the bankruptcy court which may be claimed by third parties in the encumbered property,'*^ such court^^ may^,'*^ after the adjudication of bank- free from liens to which it is subject, unless satisfied of the probability that a sum for the general credi- tors would be obtained by the sale: In re Shaeffer, 105 Fed. (D. C.) 352. Where there is at least a probable interest for the creditors, the court may adjust and determine liens: In re Gibbs, 109 Fed. (D. G.) 627. See, note 36, above; also, In re Pittelkow as cited in next note. 40 Sale Free of Encumbrances to be Made Only When Foreclosure Unnecessary to Bar Rights of Third Parties. — ''Unless it is apparent (1) that the mortgaged premises in the given cas6 will probably realize upon a sale an amount sub stantially in excess of the mortgage, and (2) that there are no complications, by dower rights, conveyances, or other conditions, which require foreclosure under the mortgage, the power to proceed summarily by sale, including the interest of the mortgagee, should not be exercised. Certainly, if foreclosure is necessary to bar rights which cannot be brought before the court in the bank- ruptcy proceeding, the mortgagee should have leave to that end, on proper showing of cause; otherwise, he would be compelled to bid for the protection of his mortgage interest, without the benefits- of a complete foreclosure '^ In re Pittelkow, 92 Fed. (D. C.) 901, 903. 41 Referee Exercises the Powers of the Court of Bankruptcy for Many Purposes. — ''Thus, the referee in bankruptcy has power to make a sale of property of a bankrupt free from all liens, where the parties had submitted themselves to his jurisdiction, and also to declare the priorities'^: In re Matthews, 109 Fed. (D. C.) 603, 608. 43 Bankruptcy Court Has Power to Sell Free of 122 EFFECT OX ENCUMBRANCES. § 58 ruptc}^,^^ in case the interests of the general creditors would be advanced and those of the secured creditors not injuriously affected there- by/^ due notice having first been given to the secured creditors to be affected;,'*^ sell the property free and. clear of any or all encumbrances, taking care that the rights and priorities of the encum- Encumbrances in Proper Case: In re Piitelkow, 92 Fed. (D. C.) 901, 902, as cited under note 47 below; In re Barber, 97 Fed. (D. C.) 547, 552, as cited under note 46 below; In re Gerdes, 102 Fed. (D. C.) 318, 319, as cited under section 59, note 52 below; In re Gibbs, 109 Fed. (D. C.) 627, as cited under note 39 above; In re Kellogg, 113 Fed. (D. C.) 120, 123, as cited under note 43 below; Southern Loan etc. Co. v. Ben- bow, 96 Fed. (D. C.) 514, 527, 528. Form in Bankruptcy, 43, as established by the United States supreme court, November 28, 1898 (172 U. S. 709, 89 Fed. xlix-1, 32 C. C. A. Ixxiii-lxxiv), contemplates that an encumbrance against property of a bankrupt may be liquidated when it would be for the advantage of the estate of the bankrupt. 43 Power may be Exercised After Adjudication of Bankruptcy.— The court of bankruptcy has undoubted authority, after an adjudication in bankruptcy, to direct a sale of encumbered property by the trustee in bankruptcy free and clear of all liens and encum- brances, and transfer the lien to the proceeds: In re Kellogg, 113 Fed. (D. C.) 120, 123. 44 Interests of General Creditors Must be Ad- vanced, of Secured Creditors not Injured, to Warrant Sale. — ^^ Without deciding the question whether this court has power to sell a bankrupt's real estate dis- charged of liens, and assuming, for present purposes, that such power exists, it is clear that the sale should not be ordered unless the court is satisfied that the interest of the general creditors would thus be ad- vanced, and that the interest of the lien creditors § 58 OF BANKRUPTCY. 123 would not be injuriously affected^ ^: In re Styer, 98 Fed. (D. C.) 290. 45 Encumbrancers Must Have Hearing Before Sale Free from Encumbrances.— ''If the trustee desires to sell the real estate free of liens, without redemp- tion, he must give the lienholders their day in court, because they are entitled to be heard before the prop- erty is discharged from their liens and their liens transferred to the fund arising from the sale thereof. The lienholders, unless they surrender their securities and prove their claims, are strangers to the bank- ruptcy proceedings, and are entitled to have their property rights adjudicated by the courts of the state in the county in which the real estate is situated^': In re Gerdes, 102 Fed. (D. C.) 318, 319. ' ' No sale- can be made, which affects the rights of mortgagees or other lienholders, without notice to them, and 'due opportunity to defend their inter- ests.^ '' "The power to order a sale free of encumbrances ought not to be exercised in any instance unless the court is 'accurately informed as to the facts,' and all parties in interest have opportunity to be heard, and the respective interests are ascertained' ': In re Pittelkow, 92 Fed. (D. C.) 901, 904. "If secured creditors elect to rely upon their security, they are not parties to the bankruptcy pro- ceedings at alP': In re Goldsmith, 118 Fed. (D. C.) 763, 767. Compare General Orders in Bankruptcy, 28, 172 U. S. 662, 663, 32 C. 0. A. xxviii, 89 Fed. xi, xii: "When- ever it may be deemed for the benefit of the estate of a bankrupt to redeem and discharge any mortgage or other pledge, or deposit or lien, upon any property, real or personal, .... the trustee of the bankrupt, or any creditor who has proved his debt, may file his petition therefor; and thereupon the court shall appoint a suitable time and place for the hearing thereof, notice of which shall be given as the court shall direct, so that all creditors and other persons interested may appear and show cause, if any they have, why an order should not be passed by the court upon the petition authorizing such act on the part of the trustee.'' 124 EFFECT OX EXCUMBRANCES. § 58 brancers affected are conserved.^^ The amount secured by the encumbrances liquidated by the sale constitutes a preferred charge against the proceeds thereof,^'' subject, however [unless the 46 Rights and Priorities or Encumbrances to be Conserved. — ''If the conservation of equitable rights require such action, the .... [bankruptcy] court has doubtless the power to order the absolute sale of the property free from and discharged of the encum- brance, taking care of the rights and equities of the secured creditors in the disposition of the moneys real- ized by such sale'': In re Barber, 97 Fed. (D. C.) 547, 552. Where the holders of valid mec^^anics' liens against various portions of the manufacturing plant of a bankrupt objected to the sale of the property in its entirety devested of liens, because all the lienors did not hold liens against the same interest, and it would be impossible to apportion the fund among the lienors, but the court ordered a sale of the prop- erty devested of all liens without prejudice to the rights of lienors, the lienors have a right to rely upon the conditions of the order of sale, and after the sale were entitled to preferred payments of their claims from the proceeds, and the referee should take additional proof, if necessary, as to the respective portions of the proceeds affected by the liens: George Carroll & Bro. Co. v. Young (C. C. A.), 119 Fed. 576, 578, 579. 47 Encumbrance to be Charged Against Proceeds of Sale. ''Sales may be authorized, under proper circum- stances, free and clear from the mortgages, or other liens, by preserving and transferring the claims to the fund thus provided'': In re Pittelkow, 92 Fed. (D. C.) 901, 902. The court of bankruptcy has undoubted authority, after an adjudication in bankruptcy, to direct a sale of the encumbered property by the trustee in bank- ruptcy free and clear of all liens and encumbrances, § 58 OF BANKRUPTCY. 125 sale was made against the protest of the enciim- braneer],^^ to the prior payment of the costs of court and of compensation to the person makiP'^ the sale not exceeding the compensation whicili would be received for making a like sale in a fore- closure action,^^ [and also in case the sale was in-. and transfer the lien to the proceeds: In re Kellogg, 113 Fed. (D. C.) 120, 123. Thus, where property subject to a valid tax lien was ordered sold free and clear of all liens, the tax lien must be discharged from the proceeds of the sale: In re Keller, 109 Fed. (D. C.) 131. 48 When Sale Against Protest of Encumbrancer, Costs not Allowable. — Where an encumbrancer seeks to obtain the proceeds of the sale of the encumbered property which was sold by the trustee without pro- test from him, the costs of the proceeding resulting m the sale of the property will be taxed against the encumbrancer, ^^ because they seek to take advantage of the acts of the bankruptcy court in reducing their securitv, and did not protest against such acts^^: In re Goldsmith, 118 Fed. (D. C.) 763, 768. 49 Costs Of Court and Expenses of Sale First Charge. In In re Utt (C. C. A.), 105 Fed. 754, 757, the court said! ^'The mortgaged property having been sold by the trustee in bankruptcy under the order of the dis- trict court, it is equitable and right that the expenses of the sale, including advertisement, appraisement, if appraisement was required by law, revenue stamps, and compensation to the trustee, not exceeding that of the master in chancery if the sale had been made by him under decree of the state court, should be paid out of the proceeds of the sale.'' Compare the following remark in In re Pittelkow, 92 Fed. (D. C.) 901, 903, 904, which presupposes that such costs are a first charge: *^In a simple case in which the mortgagee and the owner of the equity are before the court, or may be brought in, a sale by 126 EFFECT ON ENCUMBRANCES. § 58 yoked by the encumbrancer of the nsnal commis- sions to the trustee and referee on the sum real- ized by the sale] .^^ In case of such a sale the order of the bankruptcy court, with provision saving the rights of the mortgagee to bid up to the ascer- tained amount of his mortgage without advancing the * money, except for expenses, would be beneficial to all parties and effective/' See In re Goldsmith, cited under note 48. 50 When Sale Invoked by Encumbrancer, Com- missions to be Allowed.— This proposition is open to great doubt. The decision in In re Barber, 97 Fed. (D. C.) 547, is, however, based upon an affirmance of it. In that case the court says: "If a secured creditor refrains from asking or invoking the aid of the court of bankruptcy to enable him, through its officers and its exercise of jurisdiction, to tvirn his securities into cash, then, although the court, for the benefit of the unsecured creditors, should use its equitable powers to the extent of selling the encumbered property free and discharged of the encumbrance, assuming to care for the equitable rights of the secured creditor in the disposition of the moneys arising from the sale, there would seem to be reason for holding that the moneys going to the secured creditor under such circum- stances only came into the case incidentally, as thb result of the effort to realize and obtain other money for the unsecured creditors, and that it should not be regarded as a dividend, or charged with any com- missions^' (p. 552). But "in this case the secured creditors .... in their own interest sought and invoked the aid of the court of bankruptcy in making this sale, whereby they realized upon their security more than they could have expected through foreclosure [as the right of redemption was sold with the property], and without the expense and delay of that remedy The spe- cial fund arising from the security was obtained, not by the action of the creditors converting the security into money according to the terms of the mortgage, and the law in respect to foreclosure, but through the jurisdiction of the court of bankruptcy, invoked for § 58 OF BANKRUPTCY. 127 encumbrancers whose encumbrances were liqui- dated may intervene as of right and claim the proceeds of the sale^ although not theretofore hav- ing been parties to the bankruptcy proceedings.^^ that purpose by the secured creditors, and under the orders and procedure of that court carried into eifect by its officers The payments to the bondhold- ers were their dividends or allotments of the fund produced in the court of bankruptcy through the exe- cution of its orders by its officers upon the motion or request of the secured creditors and the referee and trustee are entitled to commissions on such divi- dends^^ (pp. 553, 554). In Ee Utt, 105 Fed. 754, 759, 45 C. C. A. 32, where however, the point is not necessary to the decision of the court, the court thinks this distinction unten- able, and says: ^^We find no warrant for this dis- tinction in the terms of the statute. It rests on con- siderations of reasonableness and justice, which, if brought to the attention of Congress, might perhaps have led to its express adoption.'^ The question turns on whether or not a payment made by a trustee to a secured creditor from a fund realized from the sale of the encumbered property at the instance of the encumbrancer constitutes a dividend. If it can be held to constitute a dividend, the conclusion in In re Barber is correct; otherwise the opposite statement expresses the law. In Ee Utt the statement found in Ee Ft. Wayne Electric Corp., 94 Fed. (D. C.) 109, and Ee Fielding, 96 Fed. (D. C.) 800, is approved that *^a dividend, within the mean- ing of the law, is declared and paid on unsecured claims onlv^'; while in the late case of In re Gold- smith, lis" Fed. (D. C.) 763, 766, it is also said that a sum realized from the sale of securities and paid to secured creditors cannot be held to be a dividend within Bankrupt Act, sec. 65a, and referees and trustees are not entitled to commissions on such sum. Thus, while the one decided case supports the text, the weight of judicial opinion is against it. 51 Encumbrancer may Intervene and Claim Pro- 128 EFFECT ON ENCUMBRANCES. § 58 59. Encumbered Property of Bankrupt may be Sold Subject to Encumbrances. Although encumbered property of a bankrupt is not in the possession of the referee or trustee in bankruptcy^, the court may sell the same sub- ject to any encumbrances existing thereagainst.^^ ceeds of Sale. — Where pledged property has been sold free from the pledge pursuant to the order of the bankruptcy court, and the proceeds of the sale have been deposited in the registry of the bankruptcy court, the pledgee is entitled to intervene and set up his claim: Fisher v. Cushman, 103 Fed. 860, 867, 43 C. C. A. 381. Where encumbered property is sold free from en- cumbrances, the encumbrancers have a right to come into the bankruptcy court as interveners seeking to subject the fund arising from the sale of the encum- bered property in which they claim a lien to the pay- ment of their indebtedness (without having first come into the action as a creditor to prove up the excess of their claim over their security) : In re Goldsmith, 118 Fed. (D. C.) 763, 768. 52 Sale may be Made Subject to Encumbrances. Where it is for the interests of the creditors at large of a bankrupt that certain mortgaged immov- able property of a bankrupt be administered by the trustee in bankruptcy, subject to the mortgage, al- though the mortgage has been foreclosed and the property levied upon by the sheriff, the court may order the trustee to retain possession of the property, and may enjoin the sheriff, mortgagee and others from selling the propertv in satisfaction of the mort- gage: In re Booth, 96 Fed. (D. C.) 943. '^The trustee may, by order of the court of bank- ruptcy, pay off the encumbrance, or sell the property subject to the encumbrance '': In re liarber, 97 Fed. (D. C.) 547, 552. ^ ^ Courts of bankruptcy have jurisdiction to sell all real ana personal property belonging to the bank- § 60 OF BANKRUPTCY. 129 Stibdivision 5. Enforcement of Encumbrances Against Property of BanJcrupt. 60. Effect of Bankruptcy upon Pending Fore- closure Action. An adjudication of bankruptcy does not of it- self abate a foreclosure action^^ commenced rupt's estate If the real estate be encumbered by liens, the liens may be redeemed, or the property sold subject thereto'^: In re Gerdes, 102 Fed. (D. C.) 318, 319. The trustee in bankruptcy acquires an equity of redemption in encumbered property, and has a right to apply for its sale, without reference to who has possession of the property: In re Matthews, 109 Fed. (D. C.) 603, 607. Form in Bankruptcy 44, 172 U. S. 709, 710, 89 Fed. 1, 32 C. C. A. Ixxiv, contemplates that encumbered prop- erty may be sold under order of court subject to en- cumbrances, when it would be for the benefit of the es- tate. 53 Bankruptcy Does not of Itself Abate Fore- closure Action. — Where a judgment foreclosing a mortgage against property of the bankrupt has been made, and the property advertised for sale before the filing of the petition in bankruptcy, the state court, after the filing, has power to proceed with the sale and the distribution of the proceeds thereof, notwithstanding the commencement ^ pending the sale of the proceedings in bankruptcy: In re Gerdes, 102 Fed. (D. C.) 318. Ordinarily, a secured creditor may, at his option., refrain from invoking the assistance of the court of- bankruptcy, and proceed to collect his debt from the securities by sale, foreclosure, or other procedure conformable to law and to the contract, as if no bank- ruptcy was pending^': In re Barber, 97 Fed. (D. C.) 547, 552. Liens— 9 130 EFFECT ON ENCUMBRANCES. § 60 against property of the person adjudged bankrupt before the filing of the petition in bankniptcy, but the trustee in bankruptcy becomes a proper party in such action.^^ Yet the bankruptcy court may, in a proper case, where it is for the best interests of the creditors at large of the bankrupt, enjoin^^ the prosecution of a foreclosure action commenced against the property of the bankrupt before the filing, unless the encumbered property is in the possessions^ of the encumbrancer or of an officer of court for him. 54 The trustee in bankruptcy becomes a proper party to the action, as the title to the mortgaged property vests in him as of the daj' of the adjudica- tion of bankruptcy: In re Gerdes, 102 Fed. (D. C.) 318, 320. 55 In Proper Case Foreclosure Proceeding may be Enjoined. — Where a judgment foreclosing a mortgage had been rendered, the mortgaged property ordered sold, and the date of the sale fixed before the petition in bankruptcy was filed, the court may nevertheless, in a proper case, enjoin further proceedings in the state court: In re Utt, 105 Fed. 754, 757, 758, 45 C. C. A. 32. Where a foreclosure judgment had been rendered against property of a bankrupt and the property levied upon before the appointment of the trustee, but it seems that the trustee came into the actual pos- session of the property (as the court says that it ^^has power to continue the trustee in possession in a case like this'^), the court may, where it is for the best interests of the creditors at large of the bank- rupt that the mortgaged immovable property be ad- ministered by the trustee in bankruptcy, enjoin the sheriff, mortgagee and others from selling the prop-- erty in satisfaction of the mortgage obligation: In re Booth, 96 Fed. (D. C.) 943. 56 Unless Encumbrancer in Possession.— In Ee San ' § 61 OF BANKRUPTCY. 131 61. Encumbrancer in Possession may Sell if En- cumbrance Valid. An encumbrancer in possession of property af- fected by an encumbrance in his favor which is valid as against the trustee in bankruptcy of the owner of the property, in case the owner is ad- judged a bankrupt, cannot (barring the question of fraudulent or oppressive enforcement) be enjoined from selling the same in satisfaction of his encumbrance thereagainst ;^''' but if the en- Gabriel Sanatorium Co., Ill Fed. 892, 50 C. C. A. 56, at the time of filing the petition in bankruptcy the mort- gagee was out of possession, the possession being held by a fraudulent transferee, but before the trustee was appointed the mortgagee commenced an action in a state court to foreclose his mortgage and caused a receiver to be appointed who took actual posses- sion of the property. The court held that it should not oust the state court from jurisdiction, but allow the trustee in bankruptcy to be made a party to the foreclosure action, thereby affirming the decision of the district court in 95 Fed. 271, and reversing the former decision of the circuit court of appeals in 102 Fed. 310, 313, 42 C. C. A. 369. 57 Encumbrancer in Possession not to be Restrained from Enforcing Encumbrance.— Where a pledgee of property of a bankrupt is about to sell the pledged property, and the pledgee intends to deal fairly with the pledged property and to make an honest effort to sell for the best obtainable prices, the bankruptcy court has no authority to intervene between such creditor and the exercise of his power of sale. Whether or not the court might interfere in the case of a fraudulent or oppressive enforcement is reserved from decision: In re Browne, 104 Fed. (D. C.) 762. Compare the statement in In re Little, 110 Fed. (D. C.) 621, 627, that ^^when property claimed to be ex- 132 EFFECT ON ENCUMBRANCES. § 61 cumbrance is void as against such trustee, the encumbrancer may be enjoined from selling the property.^^ empt under the provisions of the law of the state is set apart by the trustee and referee, and delivered to the bankrupt, it passes without the control of the court in bankruptcy, and parties who claim liens there- on by way of contract, mortgage, or as vendors must assert their rights in a court other than the court of bankruptcy. ' ' Where the stock of goods in trade of a person were mortgaged, and the mortgaged property had passed into the possession of the mortgagee, but greatly exceeded the secured obligation in value, and while the validity of the mortgage was unquestioned yet its effect and extent as covering old and new goods might come in question, the court may enjoin a sale of the property by the mortgagee under Bankrupt Act, sec. 2, clause 7, which provides that the bankruptcy court may * ^ cause the estates of bankrupts to be col- lected, reduced to money and distributed, and deter- mine controversies in relation thereto, except as^ here- in otherwise provided. '^ The court said that a sale by the mortgagee as threatened, would defeat tne right of the trustee to administer the property, and confessedly waste the estate and wrong the general creditors, while in an administration by the trustee the mortgagee's claim will be saved by being left to rest upon the proceeds: In re Ball, 118 Fed. (D. C.) 672. 58 When Encumbrance Void, Sale may be Enjoined. A pledge of all the movable property of a mer- chant when the pledge is deemed an act of bankruptcy constituting a fraudulent preference, the pledgee may be enjoined from disposing of the property under the power of sale vested in him: In re Nathan, 92 Fed. (D. C.) 590, 594. | § 62 OF BANKRUPTCY. 133 62. When Trustee in Possession Bankruptcy Court has Exclusive Control of Property. Where encumbered property has pasised into the possession of a receiver or trustee in bankruptcy, the bankruptcy court has exclusive jurisdiction to determine the validity of all encumbrances claimed thereagainst,^^ and may enjoin the 59 When Trustee in Possession, Bankruptcy Court Has Exclusive Jurisdiction of Property. Where a receiver in bankruptcy took possession of mortgaged property of the bankrupt, the bankruptcy court has jurisdiction exclusive of the state courts to determine the validity of the mortgage and of the se- cured obligation in summary proceedings before the referee in bankruptcy, where an action in the state court to foreclose the mortgage was not commenced until after the receiver had taken possession, although before the trustee had been appointed: In re Kellogg, 113 Fed. (D. C.) 120, 126, 127; 121 Fed. (C. C. A., 2d Cir.) 333, 335-337. As ^Ho mortgages of real estate, where possession of the res is vested in the bankruptcy court, and is held in fact by the trustee, .... there can be no interference with the possession, and no foreclosure proceeaings, where the trustee is an indispensable party, except upon leave of the bankruptcy courf : In re Pittelkow, 92 Fed. (D. C.) 901, 903. The holder of a movable property mortgage against movable property on the premises of the mortgagor with notice of proceedings in bankruptcy against the mortgagor cannot, after the adjudication of bank- ruptcy and before the appointment of a trustee, and without leave of the bankruptcy court, sell the prop- erty at public auction as prescribed by law in satis- faction of the mortgage, and an attempted sale is void: In re Brooks, 91 Fed. (D. C.) 508. In Carter v. Hobbs, 92 Fed. (D. C.) 594, 598, where the encumbered property was in the possession of the 134 EFFECT ON ENCUMBRANCES. § 62 prosecution in a state court of a foreclosure ac- tion against such property.^^ Where, however, the propert}^ does not substantially exceed in value the obligation secured thereby,^^ the bank- trustee, the court thought that it might restrain a se- cured creditor from enforcing his claim in any other court, or might authorize him to litigate his claim se- cured by lien in the state court, but in view of the aoove cases the latter alternative is of doubtful valid- ity. 60 Sale in State Court will be Enjoined.— The bankruptcy court has undoubted authority, after an adjudication in bankruptcy, to stay a foreclosure suit brought against projjerty of the bankrupt in a state court intermediate the time of the filing of the peti- tion in bankruptcy and the adjudication of bank- ruptcy, but after the appointment of a receiver by the bankruptcy court, and after he had qualified and taken possession of the property: In re Kellogg, 113 Fed. (D. . C.) 120, 123; affirmed 121 Fed. (C. C. A., 2d Cir.) 333, 335-337. Sales of encumbered property may be authorized by the bankruptcy court, under proper circumstance, free and clear of the encumbrances, by preserving and transferring the claims of the encumbrancers to the fund thus provided, and the commencement of fore- closure proceedings may be restrained to that end: in re Pittelkow, 92 Fed. (D. C.) 901, 902. Gi Where Obligation Exceeds Property in Value, Court will not Interfere. — Where a mortgagee has ob- tained a judgment of foreclosure and sale in a state court before the institution of bankruptcy proceedings against the mortgagor, and the court' is satisfied that the property will not sell for enough to pay the mort- gage obligation, whether sold by authority of the state court or by the trustee in bankruptcy, and that the mortgagee has no intention to delay the sale unrea- sonably or to prevent the property bringing a fair price, proceedings in the state court will not be stayed: In re Holloway, 93 Fed. (D. C.) 638. § 62 OF BANKRUPTCY. 135 ruptcy court should not enjoin a sale of the prop- erty in a state court unless the bankruptcy court has assumed the administration of the property for the benefit of the estate of the bankrupt, but the court will order the trustee in bankruptcy to intervene in the state court to protect the inter- ests of the estate.^^ 63. Proceedings in Excess of Jurisdiction Cured by Acquiescence. Where a bankruptcy court in excess of its juris- diction enjoins a sale of encumbered property of the bankrupt in a state courts but the encum- brancer acquiesces in such action^ the bankruptcy court may^ with his consent, adjust the various interests claimed in the encumbered property.®^ A court of bankruptcy will not enjoin the prosecu- tion of an action commenced in a state court against the bankrupt after the adjudication of bankruptcy to foreclose a mortgage which appears to be valid and for a greater amount than the value of the mortgaged property, although the claim of the mortgagee is sub- ject to offsets which will reduce the secured obliga- tion to less than the value of the property: In re Por- ter, 109 Fed. (D. C.) 111. See In re Utt, as cited un- der section 63, note 63, below. GiJ In re Porter, 109 Fed. (D. C.) 111. 63 Where a judgment foreclosing a mortgage had been rendered, the sale of the mortgaged property ordered, and the date of the sale fixed before the fil- ing of the petition in bankruptcy, and the district court had enjoined the sale, although there appeared to be nothing for the unsecured creditors, the circuit court of appeals, in Ee JJtt, 105 Fed. 754, 757, 758, 45 C. C. A. 32, said: ^^ Without a clear showing of a sub- 136 EFFECT ON ENCUMBRANCES. § 63 stantial value in excess of the mortgage liens, the ap- plication for an injunction [to prevent a sale in the state courts] ought not to have been entertained, and it is difficult now to understand how such a showing could have been possible. It was, however, a matter within the jurisdiction of the court, and, the writ hav- ing issued, it was at least the privilege of the mort- gagees, instead of appealing from the order, to apply for relief to the bankrupt court." OF BANKEUPTCY. 137 AETICLE 3. INSOLVENCY UNDEE STATE LAW. SuMivision 1, YaUdity of Encumbrance in Case of In- solvency, 64. Bona fide encumbrance for value not affected by insolvency. 65. Encumbrance cannot accrue after commencement of insolvency proceedings. 66. Encumbrance created to confer preference when intent known void. SuMivision 2. Pf^oof of Secured Demand. 67. Secured obligation generally not provable. 68. Although secured claim proved as unsecured, se- curity may, in proper case, be asserted. 69. When obligation exceeds property in value, credi- tor may prove claim for excess. Subdivision 3. Control of Court Over Encumbered Prop- erty. 70. Determination of value of encumbered property. 71. When property exceeds obligation in value, ex- cess inures to assignee. 72. Assignee may dispose of encumbered property. Subdivision J/. Enforcement of Encumbrance Against Property of Insolvent. 73. Foreclosure action not affected by insolvency. 138 EFFECT ON ENCUMBRANCES. § 64 Subdivision 1, Validity of Encumbrance in< Case of Insolvency, 64. Bona Fide Encumbrancer for Value not Af- fected by Insolvency. An encumbrance for security only, created by contract^ against any property in good faith for 1 Contract Encumbrance Otherwise Valid, Valid Against Assignee. Where property was pledged within one month be^ fore the filing of a petition in insolvency against the pledgor as indemnity for a liability, which was after- ward liquidated by the pledgee, the pledgee having no reason to believe that the pledgor was insolvent, the pleage is valid as against the assignee in insol- vency of the pledgor: Haskins v. James, 96 Cal. 258, 31 Pac. 36. A mortgage given to secure present advances, a portion of which were used to discharge a prior mortgage against the same property, the residue being used in the business of the mortgagor, there being* no fraud, is valid as against an assignee in insolvency representing general creditors. The estate of the insolvent constitutes a fund for the payment of the mortgagee, and that estate must be supposed to be enriched just so much by the seven- teen thousand dollars furnished by the mortgagee, and being secured by a specific lien, the mortgagee, like any other lienholder, is entitled to precedence to the extent of his lien over general creditors: Cribble v. Columbus Brewing Co., 100 Cal. 67, 74, 34 Pac. 527. An unrecorded immovable property mortgage being valid against everyone except a bona fide pur- chaser or encumbrancer for value, is valid against an assignee in insolvency who represents general creditors of the insolvent: Farmers' Exchange Bank V. Purdy, 130 Cal. 455, 62 Pac. 738. § 64 OF BANKRUPTCY. l39 a valuable consideration before the filing of a petition consequent nj)on. which the owner of the property is adjudged an insolvent^ or created by operation of law^ and accruing against any property before such filings has the same validity against the assignee in insolvency of such owner that it had against each creditor of the owner, respectively, and the owner himself at the time of such filing, and . is not discharged by a dis- Subjeet to the right to defeat an encumbrance given by section 66 below, an encumbrance made by an insolvent is unassailable under the state law: Priest V. Brown, 100 Cal. 626, 631, 35 Pac. 323. In general, th© rule is that a duly executed mov- able property mortgage made by an insolvent debtor to secure an antecedent debt is valid. ^'The statute was not intended to prevent a debtor, ad- mittedly insolvent, from transferring his property directly to his creditor, either absolutely in pay- ment of his debts, or as security by way of mort- gage' ': Wood V. Franks, 67 Cal, 32, 34, 7 Pac. 50 (a case, however, where insolvency proceedings were not commenced) ; Dana v. Stanford, 10 Cal. 269. The above must be distinguished from cases where the property is assigned in trust for the benefit of creditors, preferences under such circumstances being prohibited, but in the above cases there was no trust, the property being transferred directly to the person to be benefited. 3 '^Section 17 of the Insolvent Act [of 1880] provides that the effect of the adjudication is to dissolve any attachment made within one month next preceding the commencement of the insolvency proceedings, and this designation is equivalent to an express declaration that it does not affect liens of anv other nature' ': Vermont Marble Co. v. Superior Court, 99 Cal. 579, 581, 34 Pac. 326. 140 EFFECT ON ENCUMBRANCES. § 64 charge in insolvency;^ but may be avoided by the assignee to the amount of the claims of all creditors'* of the bankrupt who could have A mechanic's lien is not discharged by an adjudi- cation that the person against whose property the liien has accrued and who is personally liable for the obligation secured thereby is insolvent: Brad- ford V. Dorsey, 63 Cal. 122. a Encumbrance not Discharged by Discharge in Insolvency. — A movable property mortgage against a crop on the homestead of the mortgagor which attaches thereto before the filing of a petition in insolvency by the mortgagor is valid against the mortgagor after his discharge in insolvency: Hall v. Glass, 123 Cal. 500, 505-507, 69 Am. St. Eep. 77, 56 Pac. 336. 4 May be Avoided by Assignee so Far as Avoid- able by Creditors.— The transfers denounced by the Civil Code, section 3440, because not accompanied by an immediate delivery and followed by an actual and continued change of possession of the thing transferred, are declared to be void ''against those who are his creditors while he remains in possession, and the successors in interest of such creditors, and against any persons on whom his estate devolves in trust, for the benefit of others than himself, and against purchasers or encum- brancers in good faith subsequent to the transfer." An assignee in insolvency is a person on whom the estate of an insolvent devolves in trust for the benefit of others within the meaning of the above section. For the estate devolves upon the assignee by operation" of law under the statutes in relation to insolvents for the benefit of others, viz., the creditors of the insolvent: Brown v. Bank of Napa, 77 Cal. 544, 546, 20 Pac. 71; Merrill v. Hurlburt, 63 Cal. 494. The assignee is likewise the successor in interest of the creditors. The creditors cannot sue to recover their debts. The assignee has the right to sue for § 64 OF BANKRUPTCY. 141 avoided it at the time of the filing, and when avoidable by the bankrupt at such time may bo wholly avoided. and recover everything clue to the estate for the benefit of creditors: Brown v. Bank of Napa, 77 Cal. 544, 546, 20 Pac. 71; Merrill v. Hurlburt, 63 Cal, 494. (Tn Lloyd v. Foley, 11 Fed. 410, the United States district court held that an assignee in bank- ruptcy was not embraced in the Civil Code, section S440 above, following the construction given a New York statute by the United States supreme court.) A movable property mortgage being void as against all creditors who become such during any of the time that it is withheld from due recordation is void as against an assignee in insolvency who represents such creditors, although the mortgage was recorded before the filing of the petition iu insolvency: Ruggles v. Cannedy, 127 Cal. 290, 303- 305, 59 Pac. 827, per Henshaw, J., Beatty, C. J., Mc- Farland and Teinple, JJ.; Garoutte, Harrison, and Van Dyke, JJ., dissenting. For an assignee in insolvency has power to main- tain an action to set aside a transaction vitiated by legal fraud. Moreover, while as between the as- signor and his mortgagee the transaction is valid, as between him and his creditors it is void, and the title remains in him. This title passes to the as- signee in insolvency for the benefit of the creditors, and justifies him in maintaining an action in their behalf to reduce the property to possession: Ruggles V. Cannedy, 127 Cal. 305, 59*^ Pac. 827. An executory contract to pledge being similarly void as against creditors is void as against the as- signee in insolvency: Hitchcock v. Hassett, 71 Cal. 331, 334, 12 Pac. 228. Where a movable property mortgage is not re- corded until the property has been subjected to a valid attachment, but the attachment was subse- quently to the recordation dissolved by the filing of a petition in insolvency (the rule being that an 142 EFFECT OX ENCUMBRANCES. § 64 attachment on mesne process is dissolved by the filing of a petition within one month thereafter), the mortgage is not thereby validated against any- one, but the hold on the property obtained by the attachment inures to the benefit of the general creditors of the insolvent: Beamer v. Freeman, 84 Cal. 554, 558, 559, 24 Pac. 169. This conclusion the court reached irrespective of the validity of the mortgage in case of insolvency as against creditors. Where an encumbrance is. void as against certain Creditors, and the property has passed into the pos- session of the encumbrancer, the assignee may maintain an action against such transferee for the conversion of the property in case it is withheld from him: Brown v. Bank of Napa, 77 Cal. 544, 546, 20 Pac. 71. In Perkins v. Maier & Zobelein Brewer}^, 133 Cal. 496, 65 Pac. 1030, the conclusion reached seems to bo in conflict with Euggles v. Cannedy, and Brown v. Bank of Napa, above, unless the creditors repre- sented by the assignee in insolvency were not credi- tors whose claims arose within a period which per- mitted them to attack the mortgage in question. In this case it was held that where nonmortgageable property of an insolvent is covered by a movable property mortgage, the mortgage having been made more than one month before the filing of the peti- tion in insolvency, but the property having been taken possession of * within that time by the mort- gagee, the mortgage is not invalid as against the assignee in insolvency. This case, however, over- looks the fact that a mortgage on nonmortgageable property has no greater validity against third parties than a pledge without a change of posses- sion, or than an unrecorded mortgage of mortgage- able movable property, and that either of these is A'oid as against an assignee representing any credi- tor who becomes such during the time that the property is not transferred or the mortgage re- corded, as the case may be. It is noticeable that this decision was given by the three dissenting judges in Euggles v. Cannedy, which further ren- § 65 OF BANKRUPTCY. 143 65. Encumbrance cannot Accrue After Com- mencement of Insolvency ProceedingSc A purported encumbrance arising against any property after the filing of the petition conse- quent upon which the owner of the property is adjudged an insolvent is void.^ 66. Encumbrance Created to Confer Preference When Intent Known Void.^ An encumbrance created by a person who is insolvent^ or in contemplation of insolvency, ders the decision of doubtful authority. In support of the decision the court says that the mortgagee had the right to take possession, and that his pos- session when taken relates back to the date of the mortgage, but this proposition is clearly erroneous, especially in view of Brown v. Bank of Napa as cited in the preceding paragraph. In respect to the power to set aside transactions which creditors of the insolvent could have avoided, there is a well-defined distinction between the powers of an assignee in insolvency and an assignee for the benefit of creditors. The assignee in insol- vency represents all the creditors of the insolvent, while the assignee for the benefit of creditors is the representative merely of the assignor, and thus can- not avoid transactions which his assignor could not have avoided: Euggles v. Cannedy, 127 Cal. 290, 304, 59 Pac. 827. 5 State Investment and Ins. Co. v. Superior Court of San Francisco, 101 Cal. 135, 142, 35 Pac. 549. For an adjudicationr of insolvency has relation to the time when the petition in insolvency was filed. 6 Stats. 1395, p. 131, c. 143 (Insolvent Act of 1895, sec. 59), in part: ^*If any debtor being insolvent, or in contemplation of insolvency, within one month before the filing of a petition by or against him, 144 EFFECT ON ENCUMBRANCES. § 66 with intent'' to give a preference to any person, when made or filed for record® within one month of the filing of a petition consequent upon which with a view to give a preference to any creditor, or person having a claim against him, or who is under any liability for him, procures any part of his prop- erty to be attached, sequestered, or seized on execu- tion, or makes any payment, pledge, mortgage, as- signment, transfer, sale, or conveyance of any part of his property, either directly or indirectly, abso- lutely or conditionally, to anyone, the person receiv- ing such payment, pledge, mortgage, assignment, transfer, sale, or conveyance, or to be benefited thereby, or by such attachment, or seizure, having reasonable cause to believe that such debtor is in- solvent, and that such attachment, seizure, payment, pledge, mortgage, conveyance, transfer, sale, or as- signment is made with a view to prevent his prop- erty from coming to his assignee in insolvency, or t(8 prevent the same from being distributed ratably among his creditors, or to defeat the object of, or in finy way hinder, impede, delay the operation of, or to evade any of the provisions of this act, such attachment, sequestration, seizure, payment, pledge, mortgage, transfer, sale, assignment, or conveyance, is void^ and the assignee, or the receiver, may recover the property, or the value thereof, as assets of such insolvent debtor; and if such payment, pledge, mort- gage, conveyance, sale, assignment, or transfer is not made in the usual and ordinary course of busi- ness of the debtor, or if such sequestration is made under judgment which the debtor has confessed or offered to allow, that fact shall be prima facie evi- dence of fraud. ^' 7 Insolvent Must Transfer With Specific Intent. - "Unless the insolvent transferred the property with the view or intention to give a preference to some creditor or person having a claim against him, it makes no difference what were the views or motives of the defendants in receiving the property, or what they suspected or believed about the solvency of § 66 OF BANKRUPTCY. 145 the maker thereof is adjudged an insolvent, the encumbrancer having reasonable cause to be- lieve that the owner of the encumbered property is insolvent and that the encumbrance is created with intent to prevent the property from being ratably distributed by the assignee in insolvency or to hinder, delay, evade, or defeat the opera- tion of the insolvent act, is void,^ and the as- the transferor: Hass v. Whittier, Fuller & Co., 87 Cal. 613, 2-5 Pae. 917. * But granted the intent of the insolvent to prefer, and knovv^ledge on the part of the transferee of the intent and of the insolvency of the insolvent, the transfer is void as against the operation of the In- solvent Act: Tapscott v. Lyon, 103 Cal. 297, 312, 313, 37 Pac. 225. 8 When Filed for Record Within One Month of riling Petition is Void.— Insolvent Act of 1895, sec- tion 59, last sentence: *'A11 assignments, transfers, conveyances, mortgages, or encumbrances of real estate shall be deemed, under this section, to have been made at the time the instrument conveying or affecting such realty was filed for record in the county recorder's office of the county, or city and county, where the same is situated. '^ This sentence of section 59 refers merely to en- cumbrances, etc., which come within the provisions of the preceding parts of section 59 where the in- tent to give a preference, etc., is present: Farmers' Exchange Bank v. Purdy, 130 Cal. 455, 458, 62 Pac. 738. 9 A Transfer of Property in Contravention of the Provisions of This Section is Absolutely Void.— The transferee is prohibited by law from making the purchase, the insolvent could have no right to sell, and the assignee in insolvency is, as against them, the lawful owner of the property, and derives his right to it from the act participated in by the trans- Liens— 10 146 EFFECT ON ENCUMBRANCES. § 66 signee in insolvency may recover the encumbered property or the valne thereof for the benefit of the estate; and in case such encumbrance is nofc made in the usual or ordinary course of busi- ness/^ that fact is prima facie evidence of fraud/^ Subdivision 2, Proof of Secured. Demand. 67. Secured Obligation Generally not Provable. The holder of a claim against the estate of an insolvent which is secured by a valid encum- brance must exhaust his securities before resort feree and the insolvent, whereby they violated the law. Thus the transferee, having purchased the property from those who had no right to sell it in view of the relative situation of the parties to the transaction, in taking possession of it under the void transfer converted the property unlawfully, and thus his pos- session was wrongful, and no demand for pos- session of the property need be made by the assignee in insolvency as a prerequisite to maintaining an action for the recovery of the property or the value thereof: Cerf v. Phillips, 75 Cal. 185, 16 Pac. 778. 10 Usual or Ordinary Course of Business —lUustra- tioit.— Where a retail merchant, while he is engaged in business as such, and has a large stock of goods exposed for sale in that mode, transfers the entire stock in one trade, such transfer is not, and cannot be, in the usual and ordinary course of his business: Tapscott V. Lyon, 103 Cal. 297, 313, 37 Pac. 225. 31 Is Prima Facie Evidence of Fraud.— *^ The fact that a transfer is not made in the usual and ordi- nary course of business is only prima facie evidence or fraud.'' It is not fraud in law: Bernheim v. Christal, 76 Cal. 567, 18 Pac. 683. § 67 OF BANKRUPTCY. 147 is permissible to the general estate of the insol- vent, so far as this can be done without impair- ing his right to complete satisfaction and with- out doing injustice to third persons.^^ Thus such a claim cannot be proved against the estate except for the excess thereof over the value of the security to be ascertained as provided in sec- tion 70 below, unless the holder thereof trans- fers his security to the receiver or assignee in insolvency (or, where a receiver has not been ap- pointed nor assignee elected, to the sheriff) for the benefit of the estate.^^ The assignee may 3 2 Secured Creditor Must First Resort to Se- curity. Compare Civil Code, section 3433: "Where a cred- itor is entitled to resort to each of several funds for the satisfaction of his claim, and another person has an interest in, or is entitled as a creditor to resort to some, but not all, of them, the latter may require the former to seek satisfaction from those funds to which the latter has no such claim, so far as it can be done without impairing the right of the former to complete satisfaction, and without doing injustice to third persons. '^ Under Civil Code, section 3433, the general cred- itors of an insolvent can compel a secured creditor to first exhaust its securities before it can share the other assets of the insolvent: Welch v. Sargent, 127 Cal. 72, 84, 59 Pac. 319. 13 Secured Claim Provable Merely for Excess.— Insolvent Act of 1895, section 48, in part: "When a creditor has a mortgage, or pledge of real or per- sonal property of the debtor, or a lien thereon, for securing the payment of a debt owing to him from the debtor, he shall be admitted as a creditor only for the balance of the debt, after deducting the value of such property . . . . ; or the creditor may 148 EFFECT ON ENCUMBRANCES. f 67 properly reject any such claim when attempted to be proved against the estate without first so transferring the security.^'* 68. Although Secured Claim Proved as Unse- cured, Security may, in Proper Case, be Asserted. Where a demand against an insolvent which is in fact secured by an encumbrance is proved as an unsecured demand, but is rejected by the assignee in insolvency, the holder thereof may, no third party having been injured by reason of the filing of the rejected claim, thereafter assert his encumbrance ;*^ but such creditor is deemed release or convey his claim to the receiver, if any, or if no receiver then to the sheriff, before the elec- tion of an assignee, or to the assignee if an assignee lias been elected, npon such property, and be ad- mitted to prove his whole debt.'' Where the person personally liable for an obliga- tion secured by a mechanic's lien against his prop- erty becomes insolvent, unless the lienor releases his lien the obligation secured thereby is provable merely for the excess thereof over the value of the encumbered property: Bradford v. Dorsey, 63 Cal. 122. Where a mortgagee has waived all recourse against the parties personally liable, he has no claim which is provable against the estate of the insolvent mort- , gagor: Montgomery v. Merrill, 62 Cal. 385, 393. 34 Assignee may Beject Secured Claim When At- tempted to be Proved.— An assignee, knowing of the existence of security, is justified in rejecting a claim: Perry v. Parrott, 135 Cal. 238, 244, 67 Pac. 144. 15 Where No One Injured, Security may Afterward "be Asserted. — Where the owner of a claim against § 68 OF BANKRUPTCY. 149 to have waived his security if his demand is al- lowed and he takes part in the insolvency pro- ceedings.^^ 69. When Obligation Exceeds Property in Value, Creditor may Prove Claim for Ex- cess. Whenever a secured obligation owing by an insolvent exceeds the encumbered property in value, the secured creditor may, the estate of an insolvent secured by pledge against his property presented to the assignee in insolvency a verified claim, stating that the debt due him from the insolvent and evidenced by its note was wholly unsecured, but the claim was rejected and the claim- ant never took any part in the insolvency proceed- ings, and the position of no person was affected or changed to his injury or detriment by reason of the filing of the rejected claim, the owner may there- after assert his security. The court said in respect to the pledgee: '*Il.is claim having been rejected, no person having suffered loss or detriment by its filing, we experience difiiculty in seeing how it can be said that he has abandoned his right to enforce the security for his debt, which at the time he pre- sented his claim, for aught that appear, he may not have known of, and may afterward have dis- covered '^ Perry v. Parrott, 135 Cal. 238, 244, 67 Pac. 144. 16 Creditor Taking Part in Proceedings Deemed to Have Waived Security.— ^^ If Pitman's [the se- cured creditor's] mistaken or false claim had been allowed, and he had taken part in the proceedings in insolvency, doubtless he woulcl have been held to have waived his security'': Perry v. Parrott, 135 Cal. 238, 244, 67 Pac. 144; 150 EFFECT ON ENCUMBRANCES. § 69 (1) unless such eneumbrance or the obligation secured thereby constitutes a preference, prove his claim for the unsecured excess of his de- mand beyond the value of his security to be de- termined as set forth in section 67 above, and receive a dividend thereon/'' or (2) release his encumbrance and prove his whole claim as an unsecured creditor.^® But an encumbrancer receiving a preference, having reasonable cause to believe that the same was given contrary to the insolvent act, shall not be permitted to prove any part of the obligation secured by his encumbrance until he surrenders his preference.^^ 17 See Insolvent Act of 1895, section 48, in part, as quoted in note 20, below; and as quoted in note 18, second paragraph, below. 18 Insolvent act of 1895, section 48, in part: *'0r the creditor may release or convey his claim to the receiver, if any, or if no receiver then to the sheriff, before the election of an assignee, or to the assignee if an assignee has been elected, upon such property, and be admitted to prove his whole debt "If the property is not sold or released, and deliv- ered up, or its value fixed, the creditor shall not be al- lowed to prove any part of his debt." 19 Encumbrancer Receiving Preference Must Sur- render Same.— Insolvent Act of 1895, section 50: ''Any person who shall have reasonable cauSe to believe that the same was made or given by the debtor contrary t« any provision of this act, shall not prove the debt or claim on account of which the preference was made or given; nor shall he receive any dividend thereon until he shall first have sur- § 70 OF BANKRUPTCY. 151 Subdivision 3, Control of Court Over Encum- hered Property, 70. Determination of Value of Encumbered Prop- erty. The value of property hypothecated to secure an obligation of an insolvent must be determined either (1) by agreement between the encumbrancer and receiver in insolvency, or (2) by the decision of the court, or judge there- of, as to the fair and reasonable value of the property, or (3) by the sale thereof .^o 71. When Property Exceeds Obligation in Value, Excess Inures to Assignee. Whenever encumbered property belonging to the estate of an insolvent exceeds in value the rendered to the assignee all property, money, benefit, or advantage received by him under such preference. ' * ., 20 Insolvent Act of 1895, section 48, in part: I* When a creditor. has a mortgage, or pledge of real or personal property of the debtor, or a lien thereon, for securing the payment of a debt owing to him from the debtor, he shall be admitted as a creditor only for the balance of the debt, after deducting the value of such property, to be ascertained [1] by agreement between him and the receiver, if any, and [2] if no receiver, then upon such sum as the court or a judge thereof, may decide to be fair and rea- sonable, before the election of an assignee, or 152 EFFECT ON ENCUMBRANCES. § 7T obligation of the bankrupt seenred thereby, the assignee in insolvency may (1) release to the secured creditor the full ownership of the encumbered property upon receiving the excess of value thereof over the secured obligation, or (2) sell the property subject to the encumbrance; and in either case the assignee and creditor must execute all instruments and writings necessary or proper to consummate the transaction.^^ 72. Assignee may Dispose of Encumbered Prop- erty. The assignee has power to redeem all mort- gages and conditional contracts, and all valid pledges, and to sattsfy any judgment which may be an encumbrance on any property sold by him, or to sell such property subject to such mort- gage, contract, pledge, or judgment.^^ [3] by a sale thereof, to be made in such manner as the court, or judge thereof, shall direct.'' 21 Insolvent Act of 1895, section 48, second sen- tence: ''If the value of the property exceeds the sum for which it is so held as security, the assignee may release to the creditor the debtor's right of redemption thereon on receiving- such excess; or he may sell the property subject to the claim of the creditor thereon, and in either case the assignee and creditor, respectively, shall execute all deeds and writings necessary or proper to consummate the transaction." 22 Insolvent Act of 1895, sec. d5, subd. 6. § 73 OF BANKRUPTCY. 153 Subdivision ^. Enforcement of Encumbrance Against Property of Insolvent. 73. Foreclosure Action not Affected by Insol- vency. An action to foreclose an encumbrance against property of an insolvent is not stayed (where .personal recourse against the insolvent is waived) by the filing of a petition in insolvency by or against him nor by an adjudication of his insolvency ^^^ and may be maintained without first proving the secured obligations^ against the 23 Where an encumbrancer waives aU recourse against other property of the estate of an insol- vent in his complaint, an action to foreclose his encumbrance is not stayed by an order of the in- solvency court staying all proceedings against the estate: Montgomery v. MerriU, 62 Cal. 385, 393; Bradford v. Dorsey, 63 Cal. 122. Historical.— VndiQv the California Insolvent Act of .1852, an action to foreclose an encumbrance for se- curity only was not abated by the subsequent com- mencement of a proceeding in insolvency' against the mortgagor: Kix v. Mc Henry, 7 Cal. 89; Sharp v. Lum- ley, 34 Cal. 611, 615. Nor was the right to enforce . a judgment lien abated: Isaac v. Swift, 10 Cal. 71, 83, 70 Am. Dec. 698. Under the United States Bankrupt Act of 1867, an action to foreclose a mortgage is not abated by the subsequent commencement of proceeding in bank- ruptcy: Amador Canal etc. Co. v. Mitchell, 59 Cal. 168, 176, 177. 24 May be Enforced Without Proving Secured Ob- ligation.— Where husband and wife duly mortgaged the homestead, and the husband is thereafter ad- judged an insolvent, the mortgage may thereafter 154 EFFECT ON ENCUMBRANCES. § 73 estate of the insolvent; nor is the time within which a foreclosure action might otherwise be brought prolonged thereby .^^ be foreclosed, although a claim was not presented against the insolvent's estate. The provisions re- quiring a mortgage against a homestead of a deceased mortgagor to be presented have no application: Montgomery v. Eobinson, 76 Cal. 229, 18 Pac. 261. i25 Time of Commencing Action not Prolonged.— l^he insolvency of the owner of property affected by $t mechanic's lien and the rendition of an order stay- ing all proceedings against him does not prolong the time within which an action for the foreclosure of the lien may be commenced: Bradford v. Dorsey, 63 Cal. 122. CHAPTER 3. PAETITION" OF ENCUMBERED IMMOV- ABLE PEOPEETY. Subdivision 1. Encumbrancer as a Party in an Action in Partition. 74. Encumbrancer in certain cases only necessary party in action in partition. 75. Procedure when encumbrancer necessary party but not joined. Subdivision 2. Effect of Partition on Subsisting En- cumbrances. 76. Upon partition encumbrance on undivided inter- est becomes charge exclusively on share of owner of interest. 77. Property ordered sold in action in partition to be sold free of encumbrances. 78 Application of proceeds of sale. 79. Deduction to be made from amount paid on such obligation when also otherwise secured. 80. Encumbrancer who purchases may give receipt in payment of part of purchase money. SuMivision 1. Encumbrancer as a Party m an Action in Partition, 74. Encumbrancer in Certain Cases Only Neces- sary Party in Action in Partition. In an action for the partition of immovablo property between the cotenants thereof, tha (155) 156 EFFECT ON ENCUMBRANCES. § 71 holder of an encumbrance against any part there- of is a necessary party in case his encumbrance is recorded at the time of the filing for record of the notice of pendency of the action in parti- tion. But all other encumbrancers are deemed to have been notified of the pendency of the ac- tion by the filing of such notice, and are not necessary parties in the action.^ 75. Procedure When Encumbrancer Necessary Party but not Joined. Whenever^ it appears to the court in which an action in partition is pending by the certifi- cate of the county recorder or county clerk, or by the affidavit or verified statement of any person who has examined the records, that any encum- brancer who is a necessary party in the action 1 See Code of Civ. Proc, sees. 754, 755. Section 754: ''No person having a conveyance of or claiming a lien on the property, or some part of it, need be made a party to the action, unless such conveyance or lien appears of record.'' Section 755: ''Immediately after filing the com- plaint in the superior court, the plaintiff must record in the office of the recorder of the county or of the several counties in which the property is situated, a notice of the pendency of the action, containing the name of the parties so far as known, the object of the action, and a description of the property to be affected thereby. From the time of filing such no- tice for record, all persons shall be deemed to have notice of the pendency of the action.'' 2 See Code Civ. Proc, sec. 761. § 7b OF PARTITION. 157 has not been duly joined as such, the court must either (1) order each such encumbrancer to be made a party to the action by an amended or sup- plemental complaint, or (2) appoint a referee to ascertain, (a) whether or not his encumbrance is a sub- sisting charge against the property, and if subsisting the amount unpaid thereon, (b) the relative priority of such encum- brance to any other encumbrances against the property affected thereby, and (c) whether or not the obligation secured thereby is otherwise secured, and if so se- cured, the nature and extent of the security. In^ case a referee is appointed, the plaintiff in the action in partition must, a reasonable time previous to a day to be set for a hearing, cause such encumbrancer to be notified to appear be- fore the referee at a specified place and time on such day to make proof, by his own affidavit or otherwise, of the amount due or to become due contingently or absolutely on the obligation se- cured by his encumbrance. 3 See Code Civ. Proc, sec. 762, first portion. 158 EFFECT ON ENCUMBRANCES. § 76 SuMiviswn 2. Effect of Partition on Subsisting Encumbrances. 76. Upon Partition Encumbrance on Undivided Interest Becomes Charge Exclusively on Share of Owner of Interest. When^ in an action in partition, property af- fected by an encumbrance against the undivided interest of any party to such action is parti- tioned, the share assigned to such party is pri- marily chargeable with its just proportion of the costs of partition, and subject to such charge, such encumbrance becomes thenceforth a charge exclusively against such share. ^ 77. Property Ordered Sold in Action in Partition to be Sold Free of Encumbrances. The court in which an action in partition is pending must, in case a sale of any of the prop- erty affected by such action becomes proper, or- der the property to be sold free and clear of any encumbrances for security^ existing there- 4 See Code Civ. Proc, sec. 769. 5 Property to be Sold Free of Encumbrances.^ Code Civ. Proc, sec. 771: ' ^ The . proceeds of the sale of encumbered property must be applied .... 3. to satisfy and cancel of record the several liens in the order of their priority." Code Civ. Proc, sec. 787: ''The conveyances [by which ttie property is partitioned] must be recorded in the county where the premises are situated, and shall be a bar against all persons interested in the § 77 OF PARTITION. 150 against; and upon due disposition being made of the proceeds of the sale, such encumbrances are discharged, and, if recorded, must be can- celed of record.^ 78. Application of Proceeds of Sale.'' The proceeds of such sale must be applied un- der the direction of the court to the payment of (1) the proportion of the general costs of the action in partition Justly chargeable to the ' property sold, (2) the proportion of the costs of reference so chargeable,^ and property in any way who shall have been named as parties in the action, and against all such parties and persons as were unknown, if the summons was served by publication, and against all persons claim- ing under them, or either of them, and against all persons having unrecorded deeds or liens at the com- mencement of the action.'' By the former code section quoted provision is made for the payment of the amount secured by the encumbrance out of the proceeds of the sale of the property; by the latter the sale is declared to bar the rights of all encumbrancers in the property, both those who were duly joined in the action in partition and those who were not necessary parties therein. It is clear, therefore, that the code contemplates a sale of the property free and clear of encumbrances, the encumbrances to become charges against the proceeds of the sale. o See Code Civ. Proc, sec. 771, in part, as quoted in note 2. 7 See Code Civ. Proc, sec. 771. 8 The Code language is: ''The costs of the reference.'' But in view of the Code of Civil Pro- 160 EFFECT ON ENCUMBRANCES. § 78 (3) the amounts actually secured by encum- brances against the property sold or any in- terest therein, in the order of priority, sub- ject in each case to the deductions provided for in the succeeding section, and (4) any residue must be distributed among the owners of the property sold according to their respective shares therein. The amount remaining unpaid upon any obliga- tion secured by an encumbrance must be verified by affidavit as a prerequisite to the payment thereof. 79. Deduction to be Made from Amount Paid on Such Obligation When also Otherwise Se- cured. Whenever an obligation secured by an encum- brance against the property sold is also otherwise secured, the court may, in its discretion, order such other securities to be exhausted by the se- cured creditor before a distribution of the pro- ceeds of the sale is made, or may order a just deduction to be made from the amount remaining unpaid upon the obligation secured by the prop- erty sold on account thereof.^ cedure, sectionj 768, which provides for the apportion- ment of the expenses of reference among the various parties to the action, by analogy with the first sub- division of the section, and on general equitable prin- ciples, it seems that only the just proportion of the costs of reference are intended to be charged. 9 See Code Civ. Proc, sec. 772. § 80 OP PARTITION. Ivil 80. Encumbrancer Who Purchases may Give Receipt in Payment of Part of Purchase Money. When an encumbrancer entitled to receive a portion of the proceeds of the sale in liquidation of his encumbrance upon the property sold be- comes a purchaser at the sale thereof, the referee may take his receipt in payment of so much of the purchase money as he will be entitled to re- ceive upon its distribution.^^ 10 See Code Civ. Proc, sec. 786. Liens— 11 TITLE 5. EXTINCTION OF ENCUMBRANCES FOll SECUEITY.i 8.1. Encumbrance extinguished like any other ac- cessory obligation. 82. Extinction by destruction of encumbered prop- erty. 83. Extinction by performance or offer to perform. 84. Extinction by lapse of time. 85. Extinction by sale. 8(5. ExtTaction by wrongful dealing with property. 87. Surrender of property extinguishes encumbrance. 88. Extinction as to third parties by voluntary restoration of property. 89. Partial performance of secured obligation does not release security. 81. Encumbrance Extinguished Like Any Other Accessory Obligation.^ An encumbrance for security is extinguishable in like manner with any other accessory obliga- tion. 1 In Southern Pacific Co. v. Prosser, 122 Cal. 413, 416, 55 Pac. 145, it is said that ''sections 2909-2913 of the Civil Code contain an exclusive enumeration of the means by which liens are extinguished. ' ' This title is founded on these sections. 2 See Civ. Code, sec. 2909, latter portion. (162) § 82 EXTINCTION THEREOF. 163 82. Extinction by Destruction of Encumbered Property. An encumbrance is extinguished by the de- struction of the encumbered property, or by the extinction by title paramount, without the collu- sion of the owner of the encumbered interest, of the interest subject to the encumbrance.^ 83. Extinction by Performance or Oifer to Per- form.'* An encumbrance for security (except perhaps 3 Extinction by Destruction of Encumbered Prop- erty.— Where a contract for the sale and purchase of land is made, the vendor retaining the title as security, and the vendee mortgages his interest, the vendor 'may, upon default of the vendee and his re- fusal upon demand to complete the purchase, declare the contract of sale and purchase at an end and thereby terminate the mortgaged interest and the mortgage; but the vendee cannot before the vendor thus terminates the sale, although in default, by any arrangement avoid the mortgage, nor can his suc- cessor in interest: Houghton v. Allen (Cal.), 14 Pac, G41, 642. '4 Extinction by Performance or Offer to Perform. Civil Code, section 2905, provides: ^^Eedemption from a lien is made by performing, or offering to perform, the act for the performance of which it is a security, and paying, or offering to pay, the damages, if any, to which the holder of the lien is entitled for delay.'' Cross V. Eureka Lake and Yuba Canal Co., 73 Cal. 302, 306, 2 Am. St Eep. 808, 14 Pac. 885. A sufficient tender has the same effect upon all the incidents of an obligation as the performance thereof, So it discharges a pledge and stops the running of interest thereon: Loughborough v. McNevin, 74 Cal. 250, 254, 5 Am. St. Eep. 435, 14 Pac. 369, 15 Pac. 773, 164 ENCUMBRANCES. § 83 in certain cases a mortgage)^ is extinguished by performing or offering to perform the obligation the performance of which is secured thereby, the offer being made with intent to extinguish the obligation/* and paying or offering to pay any damages to which the encumbrancer may be en- titled for delay. Compare Bamhart v. Tulkerth, 73 Cal. 526, 529, 530, 15 Pac. 89. See note 6 below. But where certain property in which several per- sons owned undivided interests was mortgaged by the several owners to secure an obligation of which each was personally liable for a certain portion, the pay^ ment by a part of such persons of the entire mort- gage obligation and the assignment to them- of the evidence of the obligation does not amount to pay- ment of the mortgage between them and the persons who did not pay their portion of the secured obli- gation, but the mortgage is not extinguished and may be foreclosed against them: Ingham v. Weed, (Cal.), 48 Pac. 318, 320A. 5 Except a Mortgage.— It may be that a tender dofes not extinguish a mortgage. See section 376 be- low. But payment after default operates to discharge a mortgage equally with payment at maturity: John- son V. Sherman, 15 Cal. 287, 293, 76 Am. Dec. 481. 6 Intent to Extinguish Obligation.— ' ^ The mode of offering prescribed in the chapter of the Civil Code, headed * Offer of Performance' (section 1485 (it seq.), applies as well to offers of performance whicir operate a redemption (Civ. Code, sec. 2905), as to offers to perform. Such offers must be made with 'intent to extinguish the obligation,' since the lien can be extinguished only by extinguishing the obligation'': Chielovich v. Krauss (Cal.), 11 Pac. 781, in bank, Myrick, J., dissenting. See, also, San- ford V. Savings etc. Soc, 80 Fed. (C. C.) 54, 62, 63. § 84 EXTINCTION THEREOF. 165 84. Extinction by Lapse of Time. An encumbrance for security is extinguished by the lapse of time within which an action can be commenced upon the principal obligation/ ex- cept when, in the case of a mortgage^ the prin- cipal obligation is not in writing ;^ but where the encumbrancer is in lawful possession of the en- cumbered property, he cannot be dispossessed thereof without first performing, or offering to perform, the secured obligation, although such obligation has been barred by lapse of time.^ 85. Extinction by Sale. The sale of encumbered property in satisfac- tion of an obligation secured thereby extinguishes T When Principal Obligation Barred, Encumbrance Extinguished.— Civil Code, section 2911: ^'A lien is extinguished by the lapse of the time within which, under the provisions of the Code of Civil Procedure, an action can be brought upon the principal obliga- tion.'' Vendor's lien so extinguished: California Sav. Bank of San Diego v. Parrish, 116 Cal. 254, 259, 48 Pac. 73. Pledge, — Where a transfer of a benefit certificate in a beneficial order was made for security only^ and the secured obligation is barred by lapse of time, the lien is extinguished, and the pledgee is not en- titled to a recovery upon the certificate: Conway v. Supreme Council Catholic Knights, 131 Cal. 437, 439, 440, 63 Pac. 727. 8 Mortgage, when extinguished by lapse of time: See section 375, below. 9 Encumbrancer in possession cannot be dispos- sessed until secured obligation satisfied: See section? 216, 338, and 353, below. 166 ENCUMBRANCES. § 85 the encumbrance thereagainst by which such obligation was secured. ^^ 86. Extinction by Wrongful Dealing with Prop- erty. An encumbrance dependent on possession is not lost by a failure to comply with a reasonable demand for specification of the amount claimed to be due/^ nor by an honest, though mistaken, claim of ownership of the encumbered property made by the encumbrancer thereof, the claim, however, being afterward abandoned;*^ but, 10 Civil Code, section 2910, provides: ''The sale of any property on which there is a lien, in satis- faction of the claim secured thereby, or in case of personal property, its wrongful conversion by the person holding the lien, extinguishes the lien thereon.'' Thus a judgment lien is extinguished by the sale of the liened property in satisfaction thereof: Pol- lard V. Harlow, 138 Cal. 390, 71 Pac. 454. 11 Failure to Specify Amount Due.— The remedy of claim and delivery is therefore improper, but an action to compel an accounting, and the discharge of the lien upon its satisfaction might be maintained. ''While it would be eminently proper to amend our code so as to require parties claiming specific liens upon personal property dependent on possession to give, upon reasonable demand, a specification of the amount or sum claimed to be due, and for which the lien is claimed, under penalty of a waiver of the lien for refusal, it cannot be said that such is the law in this state'': Sutton v. Stephan, 101 Cal. 545, 548, 549, 36 Pac. 106. 13 Honest Claim of Ownership.— There is this limi- tation however, that if one who claims as owner is § 86 EXTINCTION THEKEOF. 167 otherwise, the retention of the property on any ground inconsistent with the existence of the lien, or other wrongful conversions^ thereof, ex- tinguishes the encumbrance.^^ afterward proved to have but a lien, lie shall not thereafter be deprived absolutely of his lien if his claim was honestly, though mistakenly, entertained and pressed; but before he can be allowed his lien he must abandon the false claim of ownership: Will- iams V. x\she, 111 Cal. 180, 185, 43 Pac. 595; Brittau V. Oakland Bank of Savings, 124 Cal. 282, 288, 71 Am. St. Eep. 58, 57 Pac. 84. 13 Wrongful Conversion.— Compare Civ. Code, sec. 2910, cited note 10 above. Any exercise of dominion over the property of an- other in defiance of the other ^s rights is a conversion thereof: Loughborough v. McNevin, 74 Cal. 250, 255, 5 Am. St. Eep. 435, 14 Pac. 369. A pledge is thereby extinguished: Loughborough v. McNevin, above. 14 Retention.— A lienor who refuses, upon proper demand, to deliver property without setting up his lien thereon, or who bases his refusal upon a claim other than that of lien, is estopped from setting up his lien as a defense in an action to recover possession of the property: Lehmann v. Schmidt, 87 Cal. 15, 20, 21, 25 Pac. 161; Kullman v. Greenebaum, 92 Cal. 403, 407, 27 Am. St. Eep. 150, 28 Pac. 674; Sutton v. Stephan, 101 Cal. 545, 36 Pac. 106; Williams v. Ashe, 111 Cal. 180, 184, 185, 43 Pac. 595; Brittan v. Oakland Bank of Savings, 124 Cal. 282, 287, 288, 71 Am. St. Eep. 58, 57 Pac. 84. '^When a tender is made to a pledgee, and he makes no objection to the amount, but does not surrender the pledge nor accept the tender, the result is to extin- guish the lien and amounts to a wrongful conversion, even though the tender in fact is less than the amount that may be due the pledgee. It is his duty to make known his objections, and, failing to do so, the tender must be deemed to have been the full amount due, and l6iB ENCUMBRANCES. § 87 87. Surrender of Property Extinguishes Encum- brance. An encumbrance dependent on possession is extinguished by the surrender of the property subject thereto.^^ 88. Extinction as to Third Parties by Voluntary Restoration of Property. The voluntary restoration of property to its owner by the holder of an encumbrance for se- curity thereagainst, dependent on possession, ex- tinguishes the encumbrance as to such property, unless otherwise agreed by the parties; and ex- tinguishes it, notwithstanding any such agree- his refusal to surrender the property is a wrongful conversion'': Latta v. Tutton, 122 Cal. 279, 283, 68 Am. St. Rep. 30, 54 Pac. 844. A warehouseman waives his lien for charges by a statement in reply to an offer to pay such charges that such warehouseman has no charges: Blackman v. Pierce, 23 Cal. 508. 13 Surrender of Property Extinguishes Encum- brance. — The lien of a carrier is lost by the surrender of the article subject thereto to a sheriff on attach- ment. And a subsequent resumption of possession of the property under a void judicial sale does not put the lienor in a position to resume his lien: Wingard v. Banning, 39 Cal. 543, 549. A pledgee who surrenders the pledged property to be sold at a void judicial sale and buys it thereat loses the security; and the sale being void, no right to the possession was gained by the purchase thereunder: Latta V. Tutton, 122 Cal. 279, 283, 68 Am. St. Eep. 30, 54 Pac. 844. § 89 EXTINCTION THEREOF. 169 ment, as to creditors of the owner and as to bona fide purchasers or encumbrancers for value.^^ 89. Partial Performance of Secured Obligation does not Release Security. The partial performance of an obligation se- cured by an encumbrance does not extinguish the encumbrance upon any part of the property sub- ject thereto, even if it is divisible.*'' 16 See Civ. Code, sec. 2913; Hewlett v. Flint, 7 Cal. 264; Waldie v. Doll, 29 Cal. 555; Treadwell v. Davis, 34 Cal. 601, 94 Am. Dec. 770; Palmtag v. Doutrick, 59 Cal. 154, 43 Am. Eep. 245. 17 See Civ. Code, sec. 2912. TITLE 6. ENFOECEMENT OF ENCUMBEAN^OES FOE SECUEITY. CHAPTER 1. MODES OF ENFOECEMENT. 90. Modes of enforcement of encumbrances. 90. Modes of Enforcement of Encumbrances. An encnmbrance for security only may, when performance of the secured obligation is due, be enforced: (1) in every case by judicial sale obtained in a foreclosure action, except, perhaps, in case of liens imposed by operation of law where there is another plain and adequate remedy,^ 1 Except Where There is Another Adectuate Remedy. Where an action was brought to foreclose a mortgage, and a subsequent judgment lienor .who was made a party defendant filed a cross-complaint praying for the foreclosure of his judgment lien, and the objection was raised that the judgment lien was not foreclos- able, the court said: ''The enforcement of liens, whether equitable or statutory, is a well-recognized function of courts of equity; and the only distinction in this respect, between the different kinds of liens is, (170) § 90 MODES OF ENFORCEMENT. 171 (2) in cases of pledge and movable property mortgage (and other movable property encum- brances not otherwise provided for by law) , by sale at public auction after actual notice, (3) in each case by any particular mode of sale prescribed by law, and (4) where not otherwise exclusively prescribed by law, by a sale in a mode agreed upon by the parties. that in case of the latter, equity will interpose only where there is no other adequate remedy In this case .... the respondent [judgment lienor] was .... wholly without remedy otherwise than by re- sort to a court of equity The respondent has a specific lien on the property in question, which— so long as the debt is not satisfied— he is entitled to en- force. But were there any doubt of the right of the judgment creditor, in the absence of other remedy, to maintain an independent action to foreclose his lien, there can be none of his right to relief in a suit brought against him to foreclose a prior lien'': Hi- bernia Sav. etc. Soc. v. London etc. Pire Ins. Co., 138 Cal. 257, 71 Pac. 334. CHAPTER 2. EKFOECEMENT BY JUDICIAL SALE. AETICLE 1. NATURE OF FORECLOSURE ACTION. 91. Nature of foreclosure action. 92. Is proceeding in equity. 93. Valid against all persons duly warned. 91. Nature of Foreclosure Action. A foreclosure action is only a proceeding for the legal determination of the existence of an encumbrance, the ascertainment of its extent, the subjection to sale of the property hypothecated, and the application of the proceeds of the sale to the satisfaction of the secured demand.^ 1 Nature of Foreclosure Action Stated: Boggs v. Hargrave, 16 Cal. 559, 563, 76 Am. Dec. 561; San Fran- cisco V. Lawton, 18 Cal. 465, 473, 474, 79 Am. Dec. 187; Savings etc. Soc. v. McKoon, 120 Cal. 177, 180, 52 Pac. 305. See, also, Bostwick v. McJ]voy, 62 Cal. 496, 501, 502. The foreclosure of a mortgage embraces the sale of the property and the execution of the sheriff's deed, as well as the judgment of the court, and is not com- plete until after the expiration of the period of re- demption: Goldtree v. McAllister, 86 Cal. 93, 105, 24 Pac. 801. (172) § 92 NATURE THEREOF. 173 92. Is Proceeding in Equity. An action to foreclose an encumbrance for se- curity is a proceeding in equity.^ Thus a fore- closure action must be commenced in the su- perior court irrespective of the amount of the se- cured demand^ and no party to the proceeding is entitled as of right to a trial by jury.^ When the secured demand amounts to less than three hundred dollars^ such court cannot, in case the encumbrance fails, render a personal judgment But an action to foreclose a mortgage is not the oc- casion for determining the extent of the mortgagor 's interest in the mortgaged property: Eamsbottom v. Bailey, 124 Cal. 259, 262, 56 Pac. 1036. See, also, sec- tion 99, below. By Code of Civil Procedure, sections 1198 and 1199, the usual rules of practice and concerning new trials and appeals are made applicable in actions for the foreclosure of immovable property improvement (me- chanics') liens. For the procedure before the enact- ment of the code, see Stats. 1855, c. 130, sec. 8; Stats. 1856, c. 134, sec. 7, amended 1858, c. 270, sec. 4; Stats. 1861, c. 431; and Stats. 1867-68, c. 448, sec. 10, lirst and fourth subdivisions. 2 Is Proceeding in Eauity.— When the amount of the encumbrance is less than three hundred dollars, the superior court has jurisdiction on the ground that a foreclosure action is a proceeding in equity: Miller V. Carlisle, 127 Cal. 327, 329, 59 Pac. 785. See, also, Brock V. Bruce, 5 Cal. 279. 3 Not Entitled as of Right to a Jury Trial: Curnow V. Blue Gravel Co., 68 Cal. 262, 264, 9 Pac. 149 (case of mechanic's lien). 174 THE FORECLOSURE ACTION. § 92 against the parties personally liable;^ but other- wise may do so.^ 93. Valid Against All Persons Duly Warned.^ A foreclosure action, being a proceeding quasi 4 When Demand for Less Than Three Hundred Dol- lars, No Personal Judgment can be Rendered by the Superior Court. — The substantive ground upon which the jurisdiction of the court rests is not the sum of money involved, but the lien and the equitable remedy of foreclosure, and when the lien fails, the court can render no equitable relief whatever, and the dispute concerning money less than three hundred dollars in amount cannot, under the constitution, engage the at- tention of the superior court: Miller v. Carlisle, 127 Cal. 327, 330, 331, 59 Pac. 785 (case of mechanic's lien) ; Miller v. Carlisle, 127 Cal. 331, 59 Pac. 785. ^^If the court has no jurisdiction to render personal judgment .... on one demand less than three hun- dred dollars in amount, then the aggregation of any number of similar, but independent, demands of differ- ent plaintiffs cannot confer jurisdiction; for, of course, the judgment, if rendered, must be several in favor of each plaintiff'': MiRer v. Carlisle, 127 Cal. 327, 329, 59 Pac. 785. 5 Where the demand is for not less than three hun- dred dollars, although the lien fails, a money judgment may be rendered against a party personally liable by the superior court: Miller v. Carlisle, 127- Cal. 327, 330, 59 Pac. 785. 6 *' While the courts of a state cannot acquire jurisdiction to render a judgment in personam against a nonresident without personal service of summons within the state, still they may, without such service, subject property of the nonresident found within the state to the satisfaction of the claims of her citizens, and may enforce liens thereon in a direct proceeding instituted for that purpose In such a case, the procedure is against the property, and is in its nature in rem. In a proceeding strictly in rem, personal ser- § 93 NATURE THEREOF. 175 in rem/ personal service of summons, though essential to a personal deficiency judgment,® is not essential to the determination of the rights of the various persons in the encumbered 'prop- erty; but every person duly warned of the pro- ceeding in the method prescribed by law, and duly made a party therein, is concluded by tho judgmient rendered therein, and estopped to con- test its validity, although not personally served with summons within the jurisdiction of the state.^ vice is not necessary, but a state may require that, in such a proceeding", notice or warning must be given in a prescribed method to persons claiming interests in the property; and in such event the method prescribed must be followed^': LaFetra v. Gleason, 101 Cal. 246, 248, 35 Pac. 765. See Fallon v. Butler, 21 Cal. 24, 32, 81 Am. Dec. 140. 7 Proceeding Quasi in Rem.— For a further discus- sion of this subject see section 511, notes, below. 8 Deficiency Judgment Against Persons not Person- ally Served with Summons is Void: Anderson v. Goff, 72 Cal. 65, 1 Am. St. Rep. 34, 13 Pac. 73; Blumberg v. Birch, 99 Cal. 416, 37 Am. St. Rep. 67, 34 Pac. 102; Latta V. Tutton, 122 Cal. 279, 282, 68 Am. St. Rep. 30, 54 Pac. 844. 9 Persons Duly Joined Estopped by Judgment: Hutchins v. Ebeler, 46 Cal. 557, 559; Spaulding v. How- ard, 121 Cal. 194, 198, 53 Pac. 563. Thus, as against the heirs of a deceased vendee of certain property upon whose estate there had been no administration, a judgment foreclosing a vendor ^s lien against such property is valid, such heirs having been duly joined as parties in the foreclosure action: Mer- oux V. Weber, 53 Cal. 129. 176 THE FORECLOSURE ACTION. § 94 AKTICLE 2, SCOPE OF JUDICIAL AUTHORITY IN FORECLOS- URE ACTION. 94. Extent in general. 95. Perishable property may be sold pendente lite. 96. Where secured obligation not all due, whole may nevertheless be liquidated in proper case. 97. In absence of intervening equities court may di- rect order of sale. 98. Ambiguity in description of encumbered property may be determined. 99. Paramount title should not be litigated. 100. Homestead claimed by party to action must be litigated. 101. Litigation of subordinate encumbrance in fore- closure action. 94. Extent in General. In a foreclosure action, the jurisdiction of the court over the parties and the subject matter con- tinues until the expiration of the time of re- demption, and extends to a purchaser of the property at the judicial sale thereof.^ 95. Periahable Property may be Sold Pendente lite. A court in which a foreclosure action against 1 Van Loben Sels v. Bunnell, 131 Cal. 489, 492, 63 Pac. 773. § 95 SCOPE OF JUDICIAL AUTHORITY. 177 encumbered perishable property is pending may order the sale of the property pendente lite, and the deposit of the proceeds of sale in court to await the determination of the litigation.^ 96. Where Secured Obligation not All Due, Whole may Nevertheless be Liquidated in Proper Case. Where an action to foreclose an encumbrance which secures an obligation a portion only of which is due at the time of the commencement of action and of the rendition of judgment there- in,^ or to foreclose two or more separate encum- brances against the same property certain of which are not due at such times,^ is prosecuted 3 Perishable Property may be Sold Pendente Lite.— So where a mortgaged steamer was in danger of great deterioration in value during tlie pendency of an ac- tion to foreclose a mortgage therea gainst, the court properly ordered the sale thereof: Toby v. Oregon Pa- cific E.*^ E. Co., 98 Cal. 490, 492, 493, 495, 496, 33 Pac. 550. 3 Code of Civil Procedure, section 728 (Practice Act, section 248), provider: ''If the debt for which the mortgage, lien, or encumbrance is held, is not all due, so soon as sufficient of the property has been sold to pay the amount due, with costs, the sale must cease; and afterward, as often as more becomes due, for principal or interest, the court may, on motion, order more to be sold. But if the property cannot be sold in portions, without injury to the parties, the whole may be ordered to be sold in the first instance, and the entire debt and costs paid, there being a re- bate of interest where such rebate is proper.^' 4 Likewise, where an action was brought for the foreclosure of two m^ortgages, one due and the other Liens— 12 178 THE FORECLOSURE ACTION. § 96 to judgment, while generally only enough of the property can be sold to pay the amount due at the time of the rendition of judgment,^ yet where the encumbered property cannot be sold in por- tions without injury to the parties,® the whole may be ordered to be sold in the first instance, and the various obligations ordered to be satis- fied from the proceeds thereof, there being a re- bate of interest where such rebate is proper. 97. In Absence of Intervening Equities Court may Direct Order of Sale. Where there are no equities of third parties to be considered in determining the order in which not, both against the same property, and the averment and finding was that the property was indivisible, the court may order the sale of the property for the amount of both mortgages: Hawkins v. Hill, 15 Cal. 499, 76 Am. Dec. 499. 3 Where a mortgage secured the payment of a liqui- dated sum of money and the interest thereon, and at the time of rendition of judgment in a foreclosure ac- tion brought thereon certain interest was due and un- paid, but the principal was not due, judgment and sale merely for the interest due* and unpaid can properly be rendered: Hunt v. Dohrs, 39 Cal. 304. Where an action was brought to foreclose a mort- gage which secured two obligations, one of which was not due at the time of the commencement of the ac- tion, but which became due before the rendition of judgment, the judgment can direct the sale of sufficient property to liquidate both obligations: Bostwick v. McEvoy, 62 Cal. 496, 502, 503. 6 Whether or not the property can be sold in parts without injury to the parties is a fact to be found by the trial court: Yoakum v. White, 97 Cal. 286, 289, 32 Pac. 238. § 97 SCOPE OF JUDICIAL AUTHORITY. 179 the sale should be made, the court may direct the encumbered property to be sold in such order as it deems to be for the best interests of the parties to the action.'' Such direction must be founded upon facts shown at the hearing of the fore- closure action, or upon consent of the parties.® In the absence of the finding of such facts and of an agreement of the parties, no direction as to the order of sale can be made by the court.® 7 Court may Make Direction.— *^ It is within the jurisdiction of the court to direct by its judgment that the property be sold in one or several parcels, and the officer making the sale is bound to follow the direc- tions contained in the judgment": Hopkins v. Wiard, 72 Cal. 259, 14 Pac. 687. 8 To be Founded upon Facts Shown or Consent.— The court may make its order upon facts shown at the hearing, or by consent of the parties. But no founda- tion in the pleadings need be laid for the order of court directing the manner of selling the encumbered property: Hopkins v. Wiard, 72 Cal. 259, 14 Pac. 687; Bank of Ukiah v. Eeed, 131 Cal. 597, 601, 63 Pac. 921. So where two separate parcels of land and two dis- tinct species of movable property were hypothecated as security for the same mortgage obligation, the court took testimony for that purpose, and properly found therefrom that a certain order of sale was for the best interests of the parties, and directed the sale to be made in such order: Bank of Ukiah v. Eeed, 131 Cal. 597, 601, 63 Pac. 921. 9 In Absence of Finding or of Agreement.— Where, however, neither the complaint in an action to fore- close a mortgage nor the answer made any averment as to the order in which the parcels should be sold, nor was there any finding as to the order, and the plaintiff asked for the *' usual decree, '^ and the con- clusion of law was *^that the plaintiff have judgment as prayed for in the complaint, ' ' a judgment directing 180 THE FORECLOSURE ACTION. § 98 98. Ambiguity in Description of Encumbered Property may be Determined. When the description of encumbered prop- erty contained in the instrument which evidences the encumbrance is ambiguous or uncertain, the court may, in the foreclosure action, determine what property is in ia.et intended by the parties to be affected by such encumbrance.^^ If the the sale of the property in a certain prescribed order was a departure from the usual form and not war- ranted by 'Hhe finding of the court,'' and as it ap- peared inequitable was set aside: Carmichael v. Mc- Gillivray, 57 Cal. 8; as interpreted in Bank of Ukiah V. Eeed, 131 Cal. 597, 601, 63 Pac. 921. In Jones v. Gardner, 57 Cal. 641, 643, however, it was said that the court is not bound to ascertain at the trial whether it would be *Ho the advantage'' of the mortgagor to have the lots sold separately. It may be the duty of the sheriff to make sale of the lots separately, and it would seem to be the right of the mortgagor to direct the order of the sale; but the mortgagor is not called upon to plead that it would be to his disadvantage to have the land sold in gross, and such a plea creates no material issue. lo Court may Determine Ambiguity in Description, The court may determine what land is in fact covered by a mortgage in the action to foreclose the mortgage. For this is not a question of adverse tit'.o, but merely of applying the description in the instrument to the property. While there does not app»^ar to be any good reason for not settling the matter in the foreclos- ure action, there are weighty reasons why the question should be determined before a sale. If the property should be put up for a sale under a judgment following the exact terms of the mortgage, without first solving the doubt, no person would be able to bid intelligently. The interests of all parties manifestly require that the land called for should, if possible, be ascertained be- § 98 SCOPE OF JUDICIAL AUTHORITY. 181 property affected by the encumbrance is noi so determined^ the purchaser at the foreclosure sale must rely upon the description contained in such instrument, and whether or not he obtains any- thing by his purchase will depend upon the suf- ficiency of the description when tested by the ordinary rules of evidence. ^^ 99. Paramount Title should not be Liquidated. A title*^ to encumbered property claimed to be paramount both to the encumbrance and to fore the sale takes place: Doe v. Vallejo, 29 Cal. 385, 388, 389. 11 Where Property not Determined, Purchaser Must Rely Upon Description in Instrument;; De Sepulveda V. Baugh, 74 Cal. 468, 474, 5 Am. St. Eep. 455, note, 16 Pac. 223. But the sale is not rendered void by a failure to de- termine this matter. Thus, where a mortgage, com- plaint, foreclosure judgment, certificate of sale, and sheriff's deed alike described a large tract of land by- metes and bounds, excepting therefrom certain por- tions by reference to the books in which the convey- ances thereof were recorded, although the judgment record is incomplete and defective, it is not void, and is not open to collateral attack: De Sepulveda v. Baugh, 74 Cal. 468, 5 Am. St. Eep. 455, note, 16 Pac. 223. In Crosby v. Dowd, 61 Cal. 557, it was held that where the property covered by the encumbrance was not determined by the foreclosure judgment the sale was void, and the judgment could be collaterally at- tacked, but this case was expressly overruled in De Sepulveda v. Baugh. 12 Paramount Title cannot be Litigated: San Fran- cisco V. Lawton, 18 Cal. 465, 473, 474, 79 Am. Dec. 187; San Francisco v. Lawton, 21 Cal. 589; Elias v. Ver- 182 THE FORECLOSURE ACTION. § 99 dugo, 27 Cal. 418, 425; Croghan v. Spence, 53 Cal. 18; Marlow v. Barlew, 53 Cal. 456, 461 ; McComb v. Spang- ler, 71 Cal. 418, 423, 12 Pac. 347; Houghton v. Allen, 75 Cal. 102, 105, 16 Pac. 532; Ord v. Bartlett, 83 Cal. 428, 430, 23 Pac. 705; Cody v. Bean, 93 Cal. 578, 579, 29 Pac. 223; Eamsbottom v. Bailey, 124 Cal. 259, 261- 263, 56 Pac. 1036; Williams v. Cooper, 124 Cal. 66Q, 669, 57 Pac. 577; Campbell v. Drais, 125 Cal. 253, 260, 57 Pac. 994; Beronio v. Ventura Co. Lumber Co., 129 Cal. 232, 237, 79 Am. St. Eep. 118, 61 Pac. 958; Mur- ray V. Etchepare, 129 Cal. 318, 61 Pac. 930; Peachy V. Witter, 131 Cal. 316, 320, 63 Pac. 468; Cady v. Pur- ser, 131 Cal. 552, 559, 82 Am. St. Eep. 391, 63 Pac. 844. In Hefner v. Urton, 71 Cal. 479, 12 Pac. 486, how- ever, the court said that in an action to foreclose a mortgage, ' ^ any person who claimed an interest in the controversy adverse to the plaintiff, or who was a nec- essary party to a complete settlement of the question involved, should have been made a party. ' ' Hence an adverse claim.vnt CRunot interveiie in a foreclosure action: Peachy v. Witter, 131 Cal. 316, 320, 63 Pac. 468. So where one of several cotenants mortgages his in- terest, the cotenants cannot intervene in the action to foreclose such mortgage: Hoppe v. Fountain, 104 Cal. »4, 102, 37 Pac. 894. Rationale.— ^ ^ Sueh titles must be settled in a differ- ent action, giving rise, as they generally do, to ques- tions of purely legal cognizance '^ : San Francisco v. Lawton, 18 Cal. 465, 474, 79 Am. Dec. 187; 21 Cal. 589; McComb V. Spangler, 71 Cal. 418, 423, 12 Pac. 347; Ord V. Bartlett, 83 Cal. 428, 23 Pac. 705; Cody v. Bean, 93 Cal. 578, 29 Pac. 223. ^^It is manifest that those claiming either legal or equitable estates adversely to that of the mortgagor are not proper parties to such a proceeding, as they have no interest in the subject matter of the action'': Oroghan v. Spence, 53 Cal. 15. ^^To allow such issues to be litigated in an action to foreclose a mortgage when the sale under the decree carries to the purchaser merely such title as the mort- gagor had would be to sanction a condemned practice § 99 SCOPE OF JUDICIAL AUTHORITY. 183 and confuse litigation '' : Cody v. Bean, 93 Cal. 578, 579, 29 Pac. 223. ''The object of a suit for the foreclosure of a mort- gage is to subject to a judicial sale and vest in the purchaser thereunder the same title or estate in the mortgaged property which the mortgagor had at the time of the execution of the mortgage, and the only necessary or proper parties defendant to such suit are the mortgagor and those who claim an interest in the property derived subsequent to the date of the mort- gage. Titles adverse to that of the mortgagor, or su- perior to that covered by the mortgage, are not proper subjects for determination in the suif : Beronio v. Ventura Co. Lumber Co., 129 Cal. 232, 237, 79 Am. St. Rep. 118, 61 Pac. 958. Illustrations of Claims Which cannot 6e Litigated.— "Where a person mortgaged certain land, which after- ward became subject to a street assessment lien which was foreclosed, the purchaser at the foreclosure sale under the assessment lien is an adverse claimant: Wil- son V. California Bank, 121 Cal. 630, 54 Pac. 119. Where a partner mortgages his interest in the part- nership, and the mortgagee commences a foreclosure action, a person holding a judgment lien against the entire partnership property, though of a later date than the mortgage, is not a proper party: Eamsbottom V. Bailey, 124 Cal. 259, 56 Pac. 1036. A person obtaining title to property under a sheriff's tax sale is an adverse claimant, not a proper party in an action to foreclose a mortgage against the property given by the person whose interest was terminated by the tax sale: Odell v. Wilson, 63 Cal. 159; Williams v. Cooper, 124 Cal. 666, 669, 57 Pac. 577. Where, after the execution of a mortgage, the mort- gagor transfers the mortgaged property and the in- strument of transfer is first recorded, the transferee's title is adverse and superior to that of the mortgagee, and cannot properly be litigated in an action to fore- close the mortgage: Cady v. Purser, 131 Cal. 552, 560, 82 Am. St. Rep. 391, 63 Pac. 844. 184 THE FORECLOSURE ACTION. § 99 the property interest covered by the encum- brance^^ cannot properly be litigated or adjudi- cated upon in an action to foreclose the encum- brance. In such action the claimant may refuse to appear and put his claim in issue, and where the claim is put in issue by him the pleading is demurrable, and in every case the court may re- fuse to adjudicate such claim..^^ 13 Title Paramount Both to Encumbrance and In- terest Covered Thereby.— The doctrine that a para- mount or adverse title cannot be litigated applies only where the tifcle of the claimant is paramount to that of all the parties to the encumbrance. So where a mortgagor held the property by a fraudulent convey- ance from the adverse claimant, but the mortgagee had no notice of the fraud at the time of the execution of the mortgage, but afterward obtained notice, the interest of the claimant was clearly subordinate to the mortgage on the principle of estoppel, and the mort- gagee, having notice of his claim at the time of the commencement of the foreclosure action, must join him as a party necessary to a complete determination of the controversv: Eandall v. Duff, 79 Cal. 115, 122, 19 Pac. 532, 20 Pac. 610. In Peachy v. Witter, 131 Cal. 316, 320, 63 Pac. 468, the court said: **It appears to be the settled law that an adverse claim to the land in opposition to the mort- gagor and mortgagee cannot be tried in the equitable action to foreclose.'' It seems to be difficult to adjust the facts held in the cases of Eamsbottom v. Bailey, and Cady v. Pur- ser, note 12, above, to constitute an adverse or para- mount claim with the principles given in these cases, and those cases cannot be held to be authoritative. 14 Adverse Claimant may Refuse to Appear, etc.— The claimant's ^'adverse claim cannot properly be tried, and he may refuse to appear and put it in issue, or if he does appear and put it in issue, the court may § 100 SCOPE OF JUDICIAL AUTHORITY. 185 100. Homestead Claimed by Party to Action must be Liquidated. A jDarty to a foreclosure action who claims a homestead right superior to the encumbrance sought to be foreclosed, in the encumbered prop- erty, must set up his claim in such action, and the court must adjudicate upon such claim; if not so set up the claim cannot thereafterward be asserted. ^^ refuse to pass upon it In such a case, tlie proper course undoubtedly would be to dismiss the action as to the adverse claimant, or to specify in the decree that it is made without prejudice to his adverse rights'': Ord v. Bartlett, 87 Cal. 428,430,431, 23 Pac. 705. ^^ Whenever it is made to appear that the interest of a defendant is adverse or superior to that covered by the mortgage, the proper action of the court is to dismiss him from the suit": Beronio v. Ventura Co. Lumber Co., 129 Cal. 232, 237, 79 Am. St. Eep. 118, 61 Pac. 958. A demurrer will be sustained to a pleading setting up an adverse title: Ord v. Bartlett, 83 Cal. 428, 23 Pac. 705; Murray v. Etchepare, 129 Cal. 318, 321, 61 Pac. 930. Evidence to show a paramount title is immaterial: Cody V. Bean, 93 Cal. 578, 579, 29 Pac. 223. 15 Question of Homestead Must be Adjudicated.— Where an equitable lien against certain land is fore- closed, a claim of homestead against the liened prop- erty preferred by a party to the foreclosure action must be set up in such action, as the judgment therein is conclusive against such a claim, and the homestead claimant is not entitled to an injunction to restrain the sale of the propertv in satisfaction of the lien: Eucker v. Langford (Cal.), 71 Pac. 1123. In Mabury v. Euiz, 58 Cal. 11, 15, it was held that the question whether or not the encumbered property 186 THE FORECLOSURE ACTION. § 101 101. Litigation of Subordinate Encumbrance in Foreclosure Action. An^® inferior encumbrancer who is made a party or who intervenes in an action to foreclose a superior encumbrance may either (1) affirmatively seek a foreclosure of his own encumbrance, or (2) without a foreclosure ask for an application of any surplus proceeds arising at the fore- closure sale of the encumbered property to the reduction of the obligation secured by his encumbrance. In either case his claim must be adjudicated in the foreclosure action.^'' was subject to a homestead superior to the encum- brance sought to be foreclosed was a proper subject of adjudication in a foreclosure action. IG Inferior Encumbrancer may Seek Foreclosure or Application of Surplus.— ^^ A junior mortgagee, brought into court at the suit of a superior mortgagee, may do one of two things — either aflS.rmatively seek a foreclosure upon his own account, or without foreclos- ure ask for an application of any surplus to the reduc- tion of his own debt'^ Camp v. Land, 122 Cal. 167, 170, 54 Pac. 839. 17 His Claim Must be Adjudicated.— In foreclosure actions, ^Ho make the foreclosure effectual, it is neces- sary for the plaintiff to make all junior lienholders parties; and this implies that their rights, when brought into court, shall be adjudicated' ': Hibernia Sav. etc. Soc. v. London etc. Fire Ins. Co. (Cal.), 71 Pac. 138, 257, 334, 335A. § 102 VENUE THEREOF. 187 AETICLE 3. VENUE OF ACTIONS AGAINST IMMOVABLE PEOPEETY. 102. Foreclosure action must be commenced in county where property situate. 103. Place of trial of actions to foreclose immovable property encumbrances. 102. Foreclosure Action must be Commenced in County Where Property Situate. An^ action for the foreclosure of any encum- brance against immovable property must be com- 1 Foreclosure Action Must "be Commenced in County Where Property Situate.— Consj^tution, article 6, sec- tion 5: ''The superior court [s] .... shall always be open (legal holidays and nonjudicial days excepted), and their process shall extend to all parts of the state; provided, that all actions for the recovery of the pos- session of, quieting the title to, or for the enforce- ment of, liens upon real estate, shall be commenced in the county in which the real estate, or any part thereof affected by such action or actions, is situated." Code of Civil Procedure, section 78: **The process of the superior court shall extend to all parts of the state; provided, that all actions for the recovery of the possession of, quieting the title to, or for the enforce- ment of liens upon, real estate shall be commenced in the county in which the real estate, or any part thereof affected bv such action or actions, is situ- ated.'' 188 THE FORECLOSURE ACTION. § 102 meneed in a county where some^ part of the prop- erty to be affected by the action is situate ; other- The court will take judicial notice of the boundaries of a county, and of the location of lands described by government subdivisions as by township, range, and section, and the legal subdivisions thereof; but it can- not take judicial notice of the locations of lands des- ignated simply by name, or reference to a private sur- vey: Campbell v. West, 86 Cal. 197, 200, 24 Pac. 1000; Faekler v. Wright, 86 Cal. 210, 24 Pac. 996; Scott v.* Sells, 88 Cal. 599, 26 Pac. 350. Historical.— The Constitution of 1879, article 22, sec- tion 3, provided for the transfer of all proceedings pending in the district courts to the superior courts, and gave these courts ''the same power and jurisdic- tion over the proceedings as if they had been in the first instance commenced, filed, or lodged in the supe- rior court.'' Under the Constitution of 1849, actions for the foreclosure of mortgages or other encumbrances against, or for the recovery of the possession of, im- movable property were not required to be commenced in the county where the property was situate. In view of the above provision of the Constitution of 1879, the requirements that certain actions be commenced in the county where the property is situate does not ap- ply to actions pending at the adoption of the constitu- tion either (1) for the recovery of the possession of immovable property (Curnee v. Superior Court, San Jj'rancisco, 58 Cal. 88), or (2) for the foreclosure of liens (Watt v. Wright, 66 Cal. 202, 204, 5 Pac. 91); but such actions may be maintained although com- menced elsewhere. 3 Where Some Part of Property isituate.— Where separate and distinct parcels of encumbered immovable property situate in different counties are covered by the same encumbrance, the encumbrance against all the property may be foreclosed in one action brought iv any county wherein anv part of the property is situ- ate: Murphy v. Superior Court, 138 Cal. 69, 70 Pac. 1070. § 102 VENUE THEREOF. 189 wise any proceedings which may be had or judg- ment rendered are absolutely void.^ 103. Place of Trial of Actions to Foreclose Im- movable Property Encumbrances. When the plaintiff in an action to foreclose an encumbrance prays in his complaint for an in- junction pending the action, or applies pending the action for an injunction, the proper county for the trial is the county in which the defendant or a majority of the defendants' reside at the time of the commencement of the action. In all other cases, an action to foreclose an immovable property encum- brance must be tried in the county in which the subject of the action is situated, subject to the power of the court to change the place of 3 otherwise Proceedings Absolutely Void.— **A court cannot, by any decision that it may make, whether implied or direct, acquire jurisdiction over a subject matter that has been denied to it by the con- stitution, and whenever it appears upon the face of the judgment that it was rendered upon a subject over which the court could have no jurisdiction, such judg- ment has no validity^': Rogers v. Oady, 104 Cal. 288, 292, 43 Am. St. Rep. 100, 38 I'ac. 8t Practice.— When it appears from the description of lands set forth in the complaint that they are not in the county in which the action is commenced, the ac- tion should be dismissed: Fritts v. Camp, 94 Cal. 393, 398, 29 Pac. 867; Rogers v. Cady, 104 Cal. 288, 292, 43 Am. St. Rep. 100, 38 Pac. 81. This rule holds in an action to foreclose a vendor's? lien: Urton v. Woolsey, 87 Cal. 38, 25 Pac. 154. 190 THE FORECLOSURE ACTIOX. § 103 trial as provided by law. Where the immovable property is situated partly in one county and partly in another, the plaintiff may select either of the counties, and the county so selected is the proper county for the trial of the action.^ 4 Place of Trial.— Code of Civil Procedure, section 392: *' Actions for the following causes must be tried in the county in which the subject of the action, or some part thereof is situated, subject to the power of the court to change the place of trial, as provided in this code: (1) for the recovery of real property .... (2) for partition .... (3) for the foreclosure of all liens and mortgages on real property. When the real property is situated partly in one county and partly in another, the plaintiff may select either of the counties, and the county so selected is the proper county for the trial of such action; provided, that in the case mentioned in this subdivision, if the plaintiff prays in his complaint for an injunction pend- ing the action, or applies pending the action for an injunction, the proper county for the trial shall be the county in which the defendant resides or a majority of the defendants reside at the commencement of the action.'' As amended in effect March 19, 1889. The corresponding section of the Practice Act was section 18. See, also, Yallejo v. Randall, 5 Cal. 461; Watts v. White, 13 Cal. 324; Baker v. Fireman's Fund Ins. Co., 73 Cal. 182, 14 Pac. 686 (the mortgagor here being a corporation); Goldtree v. McAlister, 86 Cal. 93, 105, 24 Pae. 801. Unless, however, the cause of action set forth in the complaint falls wholly within the provisions of this sec- tion or is otherwise the subject matter of a local ac- tion, the plaintiff cannot deprive the defendant of his general right to have the action tried in the county of his residence by uniting in his complaint matters § 103 VENUE THEREOF. 191 which form the subject of a local action with matters which form the subject of a personal action. Tho right to have the action tried in the county where the property is located being an exception to the general rule, the conditions under which the exception is claimed must be clearly and distinctly shown: ISmith V. Smith, 88 Cal. 572, 26 Pac. 356. Conversely, where the plaintiff sought to have a deed absolute in form declared a mortgage, and to ob- tain an accounting from, the defendant on the ground that he was a mortgagee in possession, the action is properly brought in the county of the residence of the defendant, although a foreclosure of the mortgage could not there be obtained: Penin. etc. Fishing Co. v. Pac. Steam Whaling Co., 123 Cal. 689, 695-697, 56 Pac. 604. In providing that an action for the foreclosure of a mortgage should be commenced and tried in any county in which any part of the mortgaged property is situated, it was the intention of the legislature that the mortgage should be wholly foreclosed in such county; that is to say, that every judicial, ministerial, and executive official act necessary to effect a foreclos- ure might be performed in any county in which any part of the mortgaged property was situate: Goldtree V. McAlister, 86 Cal. 93, 106, 24 Pac. 801, 192 THE FOKECLOSURE ACTION. § 104 ARTICLE 4. PARTIES IN ACTIONS AGAINST IMMOVABLE PROPERTY.l 104. Indispensable parties. 105. Necessary parties. 106. Proper parties. 307. Certain persons need not be made parties. 108. Right to intervene must affirmatively appear. 109. Holder of interest in property when necessary party, but not joined, not affected by judgment. 110. Encumbrancer when necessary party, but not joined, may redeem. 111. Relief may be granted purchaser when necessary party not joined. 104. Indispensable Parties. In an action to foreclose an encumbrance cre- ated for security only, a person personally liable 1 Parties in Actions Against Immovable Property.— The cases cited in this article are almost entirely cases of actions brought for the foreclosure of mortgages. There can be little doubt, however, that the same rules apply in actions for the foreclosure of all sorts of encumbrances against immovable property, in the ab- sence of special statutory provisions. • That this state- ment holds in actions for the foreclosure of mechan- ics' liens has been expressly held. In Whitney v. Higgins, 10 Cal. 547, 70 Am. Dec. 748, the court said: ''The principles which govern as to parties in those suits [which are brought to foreclose mortgages] apply equally to suits for the enforcement § 104 PARTIES THEREIN. 193 upon the secured obligation against whom a de- ficiency judgment is demanded^ [or who is the of a mechanic's lien'' (p. 553). And again, the court said: '^ Though the lien of mechanics is purely the creature of the statute, a decree for the sale of the premises in its enforcement has the same and no greater effect upon the rights of purchasers and encum- brancers, prior to the commencement of suit, than a similar decree would have upon the foreclosure of a mortgage. If such purchasers or encumbrancers are not made parties, they are, in no respect, bound by the decree or proceedings thereunder. A mortgage, in this state, is only a lien or encumbrance; the estate in the land remains in the mortgagor, and all persons in- terested in the estate at the time the suit is instituted to enforce the mortgage, whether purchasers, heirs, devisees, remaindermen, reversioners, or encumbran- cers, should be made parties, or their rights will not be affected. The same is true as to suits to enforce a mechanic's lien" (p. 551). Historical.— JJndev the Mechanic's Lien Statute of 1856, as amended 1861, a mechanic's lien was enforced by a special statutory proceeding not subject to the rules as to parties of an action to foreclose a mort- gage, hence a mortgagee could not intervene: Van Win- kle V. Stow, 23 Cal. 457, 459, 460. 2 Person Personally Liable Against Whom Defi- ciency Judgment Demanded Indispensable Party.— When a mortgagee asks for an order of sale, and then for a deficiency judgment, the mortgagor has an inter- est not only in the amount of the judgment, but in the conduct of the sale of the property and the amount it sells for, and therefore is a necessary party: Belloc V. Eogers, 9 Cal. 123, 125, 126. Where the plaintiff brings in a party personally lia- ble into a pending action to foreclose a mechanic's lien after the time for commencing a foreclosure ac- tion has elapsed, the owner suff'ers no prejudice there- by, and has no ground tor complaint: Green v. Clifford^ 94 Cal. 49, 52, 29 Pac. 331. Liens— 13 194 THE FORECLOSURE ACTION. § 104 primary debtor],^ and every person beneficially interested in the particular obligation to satisfy 3 Primary Debtor Indispensable Party.— On this point there is a disagreement between the cases, some apparently holding that he is merely a necessary party to a complete settlement of the controversy, but not an indispensable party. IndispensahJe Party.— In Belloc v. Eogers, 9 Cal. 123, 125, the court says that a mortgagor who transfers the mortgaged property with a warranty against the mortgage is an indispensable party in the foreclosure action. In London, Paris, and American Bank v. Smith, 101 Cal. 415, 422, 35 Pac. 1027, where a mortgage was made for accommodation, and an action was com- menced for its foreclosure without joining the primary debtor as a party defendant in the action, the court said: ''It is clear that the surviving partner [the partnership being the primary debtor] is not a neces- sary party in the sense that he is or would be preju- diced by the decree, since it cannot be enforced against him, and would not be concluded by it in an action brought by appellants [the personal representa- tives of the mortgagor] for contribution or reimburse- ment, but he comes within a class of necessary parties, not because of his interest, or that of the plaintiff, but where his presence as a party is necessary to the full protection of the defendants before the court." The court quotes with approval the following state- ment: '' Persons are necessary parties .... where the defendants already before the court have such an in- terest in having them made parties, as to authorize those defendants to object to proceeding without such parties. ' ' In Giant Powder Co. v. San Diego Plume Co., 78 Cal. 193, 200, 20 Pac. 419, it was said that where the original contractor was not made a party in an ac- tion to foreclose a mechanic's lien, the court should order him made a party defendant in order that there might be a full and complete determination of the mat- ters in controversy. § 104 PARTIES THEREIN. 19p By Mechanic's Lien Act, Stats. 1862, p. 384, c. 297, sees. 6 and 7, both contracting owner and original con- tractor were indispensable parties. Under Mechanic's Lien Act, Stats. 1867-68, p. 589, c. 448, sec. 10, fifth subdivision, all persons personally liable and all * ^ lienholders whose claims have been filed for record'' were indispensable parties, and *'ali other persons interestea in the matter in controversy, or in the property sought to be charged with the lien" proper parties. Satisfactory reasons are pointed out in London, Paris, and American Banli v. Smith, 101 Cal. 415, 421, 35 Pac. 1027, why the person primarily liable as well as the owner of the encumbered property are indis- pensable parties, when it is possible to join him. If the foreclosure judgment is paid by the owner of the land, or the land is sold unaer the foreclosure judg- ment, without the primary debtor having been made a party, the owner will have the right to proceed against the primary debtor for reimbursement or con- tribution; but in an action for that purpose the pri- mary debtor would not be bound by the foreclosure judgment, and it could not be used in evidence against him to establish th^ amount of his indebtedness to the owner of the land. The result would be, therefore, not only that the owner of the land in such action would be obliged to establish the amount of the liabil- ity of the primary debtor to him, but if the amount so established should be less than the amount of the fore- closure judgment, the owner of the land would lose the diiference; nor could they m such a case have re- course against the encumbrancer for the difference, as they are bound by the foreclosure judgment, whilst the fact might be that the true amount due the encum- brancer was less than the judgment, but more than their judgment against the primary debtor. Necessary Party.— The following cases hold the pri- mary debtor not indispensable as a party, but merely necessary to a complete adjustment: Where a mortgage is given for accommodation, and a deficiency judgment was not demanded against the person personally liable upon the secured demand, he is not an indispensable party: Kearsing v. Kilian, 18 Cal. 491. 196 THE FORECLOSURE ACTION. § 104 which the foreclosure action is commenced,^ is, except when without the jurisdiction of the The original contractor is not an indispensable party in an action to foreclose mechanics' liens brought by employees of such contractor, but he is merely a proper party. For while such persons could maintain actions against the contracting owner alone to foreclose their liens, the contractor with whom they dealt was alone personally liable to them for any de- ficiency which might arise; thus the practice tends to avoid a multiplicity of actions. This principle applies equally whether the original contract is valid or void: Wood V. Oakland etc. Transit Co., 107 Cal. 500, 502, 40 Pac. 806; Holmes v. Eichet, 56 Cal. 307, 311, 38 Am. Rep. 59; Green v. Clifford, 94 Cal. 49, 52, 29 Pac. 331; Yancy v. Morton, 94 Cal. 558, 560, 29 Pac. 1111; San Francisco Paving Co. v. Fairfield, 134 Cal. 220, 226,. 66 Pac. 255. Where the plaintiff in an action to foreclose a me- chanic's lien brings a party personally liable into the action after the time for commencing a foreclosure action has elapsed, the owner suffers no prejudice thereby, and has no ground for complaint; Green v. Clifford, 94 Cal. 49, 52, 29 Pac. 331. 4 Persons Interested in Obligations Enforced Indis- pensable Parties.— In Tyler v. Yreka Water Co., 14 Cal. 212, 218, the following passage from Story's Equity Pleading is quoted with approval: "All per- sons who have the legal interest in the mortgage, as well as those who have the equitable interest therein, are necessary parties to the bill to foreclose. There can be no redemption or foreclosure unless all the parties entitled to the whole mortgage are before the court. Thus, for example, a person ejititled to a part only of the mortgage money cannot file a bill to fore- close the mortgage as to his own part of the money, but all the other persons in interest must be made parties. So, if the mortgage has been made to a trustee in trust, all the cestuis que trust (or- bene- ficiaries) should be made parties, as well as the trus- tee to the bill to foreclose/' § 104 PARTIES THEREIN. 197 court,^ an indispensable party therein; but a per- son personally liable npon the secured obligation [who is not a primary debtor and]^ against whoia judgment is not demanded is not an indispensable party,^ and the holder of one of several separate 5 Except When Without Jurisdiction of Court.— So where the primary debtor is a nonresident of the state, the action may be prosecuted without making him a party. This exception is founded on the utter im- practicability of making such a debtor a party to the action, as the action must be brought where the prop- erty is situated: London, Paris, and American Bank v. Smith, 101 Cal. 415, 422, 423, 35 Pac. 1027. 6 Person Personally Liable in Proper Case not Indis- pensable Party.— Where a mortgagor sells the mort- gaged property to a third person without warranty, the mortgagor is not an indispensable party in an action to foreclose the mortgage, unless the mortgagee wants a deficiency judgment against the mortgagor, and the grantee of the mortgagor could not complain because the mortgagor was not made a party, as the grantee could not be injured thereby. For as the mortgagee asked no more than the value of the mort- gaged property and sought no personal judgment over against the mortgagor, the latter, having sold his re- maining interest in the property, had no interest in the amount of the judgment or in the sale of the prop- erty. Whenever t^he mortgagee looks only to the mort- gaged property for the satisfaction of the secured ob- ligation, the mortgagor could have no interest either in the amount of the judgment or in the sale of the property: Belloc v. Eogers, 9 Cal. 123, 125, 126. Where a mortgagor conveys the mortgaged prop- erty in his lifetime and no personal deficiency judg- ment is asked, his personal representative is not a necessary partv in an action to foreclose the mortgage: Hibernia Sav. "etc. Soc. v. Herbert, 53 Cal. 375, 378. Where a mortgagor conveys the mortgaged property in his lifetime, and the mortgagee in his complaint in foreclosure expressly waives a deficiency judgment, 198 THE FORECLOSURE ACTION. § 104 obligations secured by the same encumbrance may foreclose his encumbrance without making the holders of the remaining obligations secured thereby parties^ the grantee of the property cannot insist that the mortgagor or his personal representatives be made parties to the foreclosure action: Gutzeit v. Pennie, 98 Gal. 327, 33 Pac. 199. Where the original contractor for an improvement abandons his contract, and the contracting owner com- pletes the work, the contractor is not a necessary party to an action brought to enforce liens for labor and materials furnished after the abandonment of his contract by the contractor: Green v. Clifford, 94 Gal. 49, 53, 29 Pac. 331. 7 Separate Obligation may be Foreclosed Without Making Holders of Other Equal Obligations Parties.— Where a single mortgage secures several separate ob- ligations, in a foreclosure action brought by the holder of one secured obligation, the holders of the other demands are not necessary parties: Tyler v. Yreka Water Go., 14 Gal. 212, 218. This conclusion seems to overlook the fact that the mortgage security might be insufficient, in which case the holders of the secured obligations would have to prorate. Gompare the provision of the Mechanic 's Lien Act, Stats. 1867-68, p. 589, c. 448, sec. 10, fifth subdivision, that ''all lienholders whose claims have been filed for record^' are indispensable parties to an action to fore- close the liens. In the following case, however, the other encum- brancers clearly are not indispensable parties. Where^ several obligations, one of which was preferred to the remainder, were secured by the same mortgage, the holders of the secured obligations are proper parties as coplaintiffs with the holder of the preferred obliga- tion in an action to foreclose the mortgage, so that they could receive any overplus of the proceeds of the sale of the mortgaged property which might remain after the payment of the preferred obligation, but § 105 PARTIES THEREIN. 199 105. Necessary Parties. In such action, every person who holds any subordinate interest^ amounting to an estate of they are not necessary parties in the sense that no foreclosure judgment could be made without bringing them in. They could not insist upon having their claim to this surplus litigated until it was ascertained that there would be a surplus. It is true that their interest in the secured obligation and the mortgage could not be affected by a judgment rendered in a foreclosure action to which they were not made par- ties; still, as that interest only extended to a right to have the surplus proceeds of the sale applied to their debt, it would have made very little difference in this case whether they were made parties or not, for the surplus remaining amounted to only about five hundred dollars: Grattan v. Wiggins, 23 Cal. 16, 31, 32. 8 Person Holding Subordinate Interest Necessary Party. — Thus the transferee of the whole or any part of the propertv is a necessarv party: Haffley v. Maier, 13 Cal. 13; Goodenow v. E^er, 16 Cal. 461, 468, 469, 76 Am. Dec. 540; Boggs v. Hargrave, 16 Cal. 559, 563, 76 Am. Dec. 561; Burton v. Lies, 21 Cal. 87, 91; Carpen- tier V. Williamson, 25 Cal. 154, 161; Skinner v. Bock, 29 Cal. 253; Bludworth v. Lake, 33 Cal. 255, 264, 33 Cal. 265; Porter v. Muller, 65 Cal. 512, 4 Pac. 531; Johnston v. McDuffee, 83 Cal. 30, 23 Pac. 214; Adams V. Hopkins (Cal.), 69 Pac. 228, 231A. The owner of mortgaged premises whose attorney in fact had fraudulently conveyed the property to the mortgagor, the mortgagor having mortgaged the prop- erty to a bona fide mortgagee for value is a necessary party, the mortgagee having received notice of the fraud prior to the commencement of the foreclosure action: Eandall v. Duff, 79 Cal. 115, 119, 19 Pac. 532, 20 Pac. 610. One of two mortgagees who subsequently to the exe- cution of the mortgage receives a conveyance of the mortgaged property is a proper party defendant: Johnston v. McDuffee, 83 Cal. 30, 23 Pac. 214. 200 THE FORECLOSURE ACTION. § 105 When Property a Homestead. —In an action to fore- close a mortgage executed by the husband alone against property claimed as the homestead, the wife is a proper party: Fitzgerald v. Fernandez, 71 Cal. 504, 508, 12 Pac. 562. The wife is a proper party defendant, and if not joined may intervene: Sargent v. Wilson, 5 Cal. 504; Moss V. Warner, 10 Cal. 296; Mabury v. Kuiz, 58 Cal. h, 14, 15. Where a homestead selected out of the comnmnitj" property was mortgaged, and the wife afterward died, her minor children succeeded to her interest therein and became necessary parties in a foreclosure action brought after her death: Johnston v. San Francisco Sav. Union, 63 Cal. 554, 560, 561. Where, subsequently to the making of a mortgage, the mortgagor declared a homestead on the mort- gaged property, and thereafter an action to fore- close the mortgage was begun, the wife is a necessary party to a complete settlement of the controversy. For by the declaration of homestead some part of the husband ^s title (just what portion is not necessary now to be determined) passed from him to his wife; he could no longer mortgage or sell unless she joined with him; she had the right of residence thereon with him and the family during their joint lives, with some rights in case she should survive him. She has a right to question the execution and validity of the mortgage; whether it was barred; whether it had been paid: Hefner v. Urton, 71 Cal. 479, 12 Pac. 486; Stockton Bldg. etc. Assn. v. Chalmers, 75 Cal. 332, 334, 7 Am. St. Eep. 173, 17 Pac. 229; Watts v. Gallagher, 97 Cal. 47, 51, 31 Pac. 626; Brackett v. Banegas, 116 Cal. 278, 283, 58 Am. St. Bep. 164, 48 Pac. 90. The mere fact that a wife executes a mortgage with her husband is sufficient reason for making her a party defendant in an action to foreclose the same: Anthony v. Nye, 30 Cal. 401. Persons not Necessary Parties.— Where the admin- istrator or executor of a deceased mortgagor is made a party, the heirs of the mortgagor are not necessary § 105 PARTIES THEREIN. iiv/i parties. For, by the Code of Civil Procedure, sectioii 1582: ''Actions .... founded upon contracts may be maintained by and against executors and admin- istrators in all cases in which the' same might have been maintained against their respective testators or intestates '': Bayly v. Muehe, 65 Cal. 345, 3 Pac. 467, 4 Pac. 486, in bank, Thornton^ J., dissenting: Collins V. Scott, 100 Cal. 446, 452, 34 Pac. 1085; Hearfield v. Bridges, 67 Fed. (C. C.) 333, 335; 75 Fed. 47, 50, 54, 21 C. C. A. 212; Finger v. McCaughey, 119 Cal. 59, 51 Pac. 13; Dickey v. Gibson, 121 Cal. 276, 53 Pac. 704. A person holding an interest in mortgaged property at one time, but who, before the commencement of the foreclosure action, conveyed all his rights to another person, is not a necessary party therein: In- gham V. Weed (Cal.), 48 Pac. 318, 321A. Averment.— Where a complaint averred that the parties other than the mortgagor who were made defendants then had, or claimed to have, some in- terest in or claim upon the mortgaged premises, or some part thereof, as mortgagees, attaching creditors, or otherwise, which interest and 'claims were all sub- sequent and subject to the lien of plaintiff's mort- gage, the court said: ''The facts stated as to those defendants who were made parties because they had, or claimed to have, some interest in the mortgaged premises are sufficient. The plaintiff was not bound to set forth their interests. The general allegation that they had, or claimed to have, some interest, is all that is required on the part of the plaintiff. And the defendants, if they have any interest, and desire to defend the suit, must set it ouf : Poett v. Stearns, 28 Cal. 226. Where a foreclosure complaint averred that a cer- tain defendant had, or claimed to have, some interest or claim upon the mortgaged premises, or some part thereof, which interest or claim is subject to the plaintiff's mortgage, the court said: "The allega- tion of her claim and interest is in the form univer- sally adopted and long established. The plaintiff is not supposed to know the nature of every person's claim. It is enough that a claim is set up. It is the 202 THE FORECLOSURE ACTION. § 105 inheritance^ in the encumbered property, or any inferior encumbrance^^ against the property, of whose rights the plaintiff has actual or con- dof endant 's business, when thus called upon, to dis- close its nature'': Anthony v. Nye, 30 Cal. 401. In an action to foreclose a street assessment lien, an averment in the complaint that the defendants therein named have, or claim to have, some interest in the premises is sufficient to bind such parties, and the defendants, if they have any, interest in the premises, must set it out if they desire to defend the action: Himmelmann v. Spanagel, 39 Cal. 389, 391. An averment in a complaint to foreclose a mort- gage that a certain person ^'has, or claims to have, some interest or claim upon said premises, which interest or claim is subsequent to and subject to the lien of plaintiff's mortgage," shows sufficient reason for making such person a party defendant in the action. ''The character of his interest is im- material to the plaintiff, and need not be set forth in the complaint If the appellant [such per- son] had desired to protect such interest, he should have appeared and presented it to the court with the grounds upon which he claimed its protection": Sichler v. Look, 93 Cal. 600, 608, 609, 29 Pac. 220. Where a complaint in an action to foreclose a mechanic's lien averred that a certain person had, or claimed, some interest in the encumbered prop- erty, which was subject to the plaintiff's lien, the circumstance that such person had, or claimed, some interest in the land, was, of itself, wholly immaterial except in so far as it showed that he was a necessary party to the action; but the averment that his in- terest was subject to plaintift's lien presented a material issue: Elder v. Spinks, 53 Cal. 293, 294-296, by the court, Crockett, J.; Rhodes, J., dissenting; Sichler v. Look, 93 Cal. 600, 608, 29 Pac. 220. 9 Must be Estate of Inheritance.— For a tenant of a mortgagor is not beneficially interested in the claim secured nor in the title which is hypothecated as security, nor has he succeeded to any portion of § 105 PARTIES THEREIN. 206 the hypothecated estate, and hence is not a necessary party: McDermott v. Birke, 16 Cal. 580, '590. 10 Person Holding Inferior Encumbrance Neces- sary Party.— The holder of a mortgage inferior to a mechanic's lien against the same property is a neces- sary party in an action to foreclose the lien: Whitney V. Higgins, 10 Cal. 547, 70 Am. Dec, 748. ^^The general rule of courts of equity is, that all j^ersons materially interested in the subject matter of the suit ought to be made parties, in order that complete justice may be done, and a multiplicity of fruits avoided; and this requires subsequent encum- brancers, existing at the time of the filing of the bill, to be made parties in a suit for a foreclosure of a mortgage. They are interested in the property, and unless made parties, their rights will not be affected by the decree; and to this extent they are necessary parties' ': Montgomery v. Tutt, 11 Cal. 307, 314. ^ ' The law seems to be pretty well settled, that junior encumbrancers are not necessary [indis- pensable], though proper [necessary], parties to an action to foreclose a mortgage'': Grattan v. Wiggins, 23 Cal. 16, 32. Where encumbered property is also affected by an inferior lien, and an action is commenced for the foreclosure of the superior encumbrance, in order ' ' to make the foreclosure effectual, it is necessary for the plaintiff [superior encumbrancer] to make all junior lienholders parties": Hibernia Sav. etc. Soc. V. London etc. Fire Ins. Co., 138 Cal. 257, 71 Pac. 334. A holder of a judgment lien inferior to a mortgage against the same property is a necessary party in an action to foreclose the mortgage: Alexander v. Green- wood, 24 Cal. 505. The administrator of the estate of a junior mort- gagor is a necessary party in an action to foreclose the superior mortgage against the same property: Ward V. McNaughton, 43 Cal. 159, 161. Right of Necessary Party to Intervene.— In an action to foreclose a mechanic's lien on a ditch, a mortgagee 204 THE FORECLOSURE ACTION. § 105 structive notice at the time of the cominencc- ment of the action/^ and every person acquiring of the ditch subsequent to the lien does not have an absolute right to intervene when the motion to intervene was not made until plaintiff was about to take judgment, but must resort to his remedy by an action to redeem: Hocker v. Kelley, 14 Cal. 164. Siihseqnent Encumbrancers not Indispensable Parties. ' ' That subsequent encumbrancers are prop-er parties, it is clear; that they are necessary parties to a complete adjustment of all interest in the property is equally clear; that the chancellor would be justified in ordering them to be brought in when not made parties, is also clear; but we do not think that they are in all cases indispensable parties to a decree de- termining the rights of the parties before the court as between themselves. The property mortgaged may be insufficient to cover the debt secured; the encum- brances may be so numerous and their claims so large, that the parties possessing the latest liens could, by no possibility, receive any portion of the proceeds of the sale. It would not only be a great inconvenience, but a great hardship, to compel the mortgagee in such case to bring in all such persons who have acquired, without any fault of his, liens upon the property. As the foreclosure suit is pros- ecuted for his benefit, the expense of making the sub- sequent encumbrancers parties must fall upon the estate, and in instances within our experience would have exhausted its entire proceeds. We do not think* then^ that subsequent encumbrancers are indispen-. sable parties. If not made parties, their rights can- not be affected; they are not bound by the decree; their equity of redemption from the purchaser con- tinues, r.nd this they can assert at any time within the period allowed by the statute of limitations: Montgomery v. Tutt, il Cal. 307, 315, 316. 11 Person of Whose Rights Plaintiff Has Notice at Time of Commencement of Action Necessary Party.— Compare Code of Civil Procedure, section 726 (Prac- tice Act, sec. 246, as amended 1868), in part: '*No § 105 PARTIES THEREIN, 205 person holding a conveyance from or under the mort- gagor of the property mortgaged, . or having a lien thereon, which conveyance or lien does not appear of record in the proper office at the time of tho commencement of the action, need be made a partj' ill such action, and the judgment therein rendered, and the proceedings therein had, are as conclusive against the party holding such unrecorded conveyance or lien as if hej had been a party to the action/' Before the enactment of this provision, the rule was that such a person was a necessary party so long as hig instrument of title was recorded before the filing of the notice of pendency was filed. Thus in Davenport v. Turpin, 41 Cal. 100, 102, the court held that where the mortgagor had conveyed the mortgaged property before the commencement of the action to foreclose the mortgage, but the conveyance was not recorded until after the commencement there- of, but before the filing of the notice of the pendency of the action, the transferee was a necessary party. The effect of this enactment was to make such a person a necessary party only when the encumbrancer had constructive notice of his encumbrance. Actual Notice.— It seems that, notwithstanding this provision, actual notice of the rights of the transferee on the part of the encumbrancer would make him a necessary party, for before the enactment of this provision the question of notice was immaterial, and its object seems to have been merely to declare that, unless the encumbrancer had at least constructive notice of the encumbrance, the transferee was not a necessary party. Constructive Notice —Illustrations.— A person hold- ing a subsequent judgment lien against mortgaged property at the time of the commencement of an action to foreclose the superior mortgage is a neces- sary party therein: Alexander v. Greenwood, 24 Cal. 505. The filing of a lis pendens in an action brought by a grantor of a mortgagor against the mortgagor to set aside the conveyance to him is constructive notice to the mortgagee of the interest of the grantor in the 206 THE FORECLOSURE ACTION. § 105 any such right in respect to the encumbered property after the commencement of the action without actual or constructive notice of the pen- dency thereof/^ the constructive notice to be given by the filing of a notice of pendency/^ is a property, and he is, therefore, a necessary party in a foreclosure action subsequently brought by the mortgagee: EandaU v. Duff, 79 Cal. 115, 118, 121, 122, 128, 129, 19 Pac. 532, 20 Pac. 610. 12 Person Acquiring Right After Commencement of Action Without Notice of Pendency Thereof, Necessary Party.— Thus a person without actual or constructive notice of the pendency of the action is a necessary party: Abadie v. Lobero, 36 Cal. 390, 400. Actual Notice. — On the other hancl, a person with actual notice of pendency is bound: Wise v. Griffith, 78 Cal. lo2, 20 Pac. 675; Sharp v. Lumley, 34 Cal. 611, 615. The effect of actual notice is not changed by the requirement as to filing a notice of pendency: Simp- son V. Lumley, 22 Cal. 200, 210, 211. (Notice of pendency— see note 13, below.) Constructive Notice —A person with constructive notice of the pendency is bound: Daniels v. Hender- son, 49 Cal. 242. The wife of a party duly joined, who, after the commencement of the foreclosure action and the filing of a notice of its pendency, claims a homestead in the property involved, is bound by the judgment rendered therein, being a purchaser within the mean- ing of the code provision providing for the filing of a notice of pendency: Boach v. Eiverside Water Co., 74 Cal. 263, 15 Pac. 776; McNamara v. Oakland Bldg. etc. Assn., 132 Cal. 247, 64 Pac. 277. 13 Constructive Notice of Pendency to be Given by Filing a Notice of Pendency.— The common-law rule that the commencement of an action is notice to all the world of its pendency is so modified by the provisions of the Code of Civil Procedure, section 409, § 105 PARTIES THEREIN. 207 necessary party to an adjustment of the various rights claimed in respect to the property and to the passage of a clear title at the foreclosure sale of the property ; but is not an indispensable party to a judgment determining the rights of the par- ties before the court as between themselves. ^^ 106. Proper Parties. Any holder of an obligation already due which is secured by an encumbrance against .any prop- erty superior to the encumbrance to foreclose which the action is commenced/^ any person sec- Practice Act, section 27, that a notice of the pendency of the action must be filed in order to impart notice of the pendency thereof to purchasers and encum- brancers becoming such after its commencement: Bentley v. Mountain Lake Water Co., 13 Cal. 306, 319, 73 Am. Dee. 575; Head v. Fordyce, 17 Cal. 149, 151; Richardson v. White, 18 Cal. 102, 107; Ault v. Gass- away, 18 Cal. 205; Horn v. Jones, 28 Cal. 194, 204; Sharp V. Lumley, 34 Cal. 611, 615. 14 Although Necessary Parties not Joined, Judg- ment may be Rendered Between Parties Before Court. — That subsequent encumbrancers are necessary parties to a complete adjustment of all interest in the property is clear; but they are not indispensable parties to a judgment determining the rights of the piarties before the court as between themselves: Montgomery v. Tutt, 11 Cal. 307, 315; Carpentier v. Brenham, 40 Cal. 221, 235. Where an encumbrancer is not made a party in a foreclosure action, the judgment, while incomplete as to him, is, nevertheless, sufficient in other respects: Ilayward & Co. v. Stearns, 39 Cal. 58, 60. 15 Superior Encumbrancer Whose Obligation is Due Proper Party. — Superior encumbrancers may be 208 THE FORECLOSURE ACTION. § 106 ondarily liable on the secured obligation/^ and any inferior encumbrancer who becomes such af- ter the commencement of the foreclosure action with actual or constructive notice of the pendency thereof ^^'' is a proper party in such action; but made parties for the purpose of liquidating their de- mands and paying them out of the proceeds of the sale: San Francisco v. Lawton, 18 Cal. 4.65, 473, 79 Am. Dec. 187; Croghan v. Spence, 53 Cal. 15; Gutzeit V. Pennie, 97 Cal. 484, 489, 32 Pac. 584; Stockton Sav. etc. Soc. v. Harrold, 127 Cal. 612, 617, 60 Pac. 165; Van Loben Sels v. Bunnell, 131 Cal. 489, 494, 63 Pac. 773. But the obligation secured by the superior encum- brance must be due. ^^A junior mortgagee has a right, in an action to foreclose his mortgage, to bring before the court the holder of a prior mortgage which has matured, and obtain a decree for the sale of the premises and the satisfaction of his own mort- gage after the payment of the amount of the prior mortgage ^^: Gutzeit v. Pennie, 97 Cal. 484, 489, 32 Pac. 584. *^In the exceptional cases, where prior mortgagees are made parties, this is done that the court may order the sale of the whole estate, and thus make a complete title in the purchaser. In such cases the complaint may be treated as in the nature of a bill to foreclose and to redeem from the prior mortgage. If the debt secured by the prior mortgage is past due, it would seem that the prior mortgagee may be compelled to accept the full amount of his claim from the proceeds of the sale of the mortgaged prem- ises, without any interference with" the obligation of his contract^': McComb v. Spangler, 71 Cal. 418, 424, 12 Pac. 347. In Eodgers v. Parker, 136 Cal. 313, 316, 68 Pac. 975, the court doubt whether a superior encumbrancer could be compelled to submit his rights to adjudica- tion in an action to foreclose an inferior encumbrance, but held that as in the case before the court, the su- § lOG PARTIES THEREIN. 209 perior encumbrancer had in fact filed a cross-com- plaint, he must be deemed to have voluntarily submit- ted! himself to the jurisdiction, and was bound by the judgment. Whenever a superior encumbrancer is made a party defendant, it is his right to file a cross-com- plaint to foreclose his encumbrance: Van Loben Sels v.. Bunnell, 131 Cal. 489, 494, 68 Pac. 773. A superior encumbrancer is not, however, a neces- sary party: Carpentier v. Brenham, 40 Cal. 221, 237. Averment and Its Effect.— ''Umler the usual allega- tion in a complaint of foreclosure, that a defendant other than the mortgagor claims' some interest in the premises, and that such interest is subsequent and subordinate to that created by the mortgage, any prior interest held by such defendant is not affected by the judgment therein. Such an averment is not material to the plaintiff's cause of action, nor is it an issuable fact, and whether the court rendered judgment upon the default of the defendant, or upon an issue created bv his denial of this averment, without setting forth the character of his interest, anv prior interest held bv him ia not affected by such judgment'': Beronio v. Ventura Co. Lumber Co., 129 Cal. 232, 238, 79 Am. St. Rep. 118, 61 Pac. 958. See, also. Elder v. Spinks, 53 Cal. 293, 294-296, and Sichler V. Look, 93 Cal. 600, 608, 29 Pac. 220, as cited under section 105, note 8, at end. Insufficient Averment. — An averment that a claim is ''subordinate'' to a mortgage is but a legal con- clusion, and the averment of fact upon which that conclusion depends — that the claim was subsequent to the mortgage — negatives any claim that it was prior thereto: Beronio v. Ventura Co. Lumber Co., 129 Cal. 232, 238, 79 Am. St. Eep. 118, 61 Pac. 958. 16 Person Secondarily Liable Proper Party.— An indorser of a note secured by mortgage is a proper party defendant in an action to foreclose the mort- gage: Hubbard v. University Bank of Los Angeles, 125 Cal. 684, 58 Pac. 297. 17 In Certain Cases Inferior Encumbrancer Proper Liens— 14 210 THE FORECLOSLRE ACTION. § lOG an adverse claimant to the encumbered property is never a proper party.*^ 107. Certain Persons Need not be Made Parties. 'No person holding any right in respect to the encumbered property of which the plaintiff has neither actual nor constructive notice at the time of the commencement of the action/^ nor ac- Party. — An inferior encnmbrancer who becomes such after the comm en cement of an action to foreclose a superior encumbrance, but with actual notice (Mont- gomery V. Byers, 21 Cal. 107), or constructive notice (Eichardson v. White, 18 Cal. 102; Ault v. Gassaway, 18 Cal. 205), thereof y is a proper party therein. 18 Adverse Claimant not a Proper Party: See sec- tion 99, and notes above. 19 See Code Civ. Proc, sec. 726, Practice Act, sec. 246, as amended 1868, in part as quoted under section 105, note 11, above. Illustrations.— A grantee of a mortgagor, who be- comes such before the action to foreclose the mort- gage is commenced, but whose conveyance is not recorded until after the commencement, is bound by the foreclosure judgment, although not made a party to the action: Daniels v. Henderson, 49 Cal. 242, 248; Henderson v. Grammar, 53 Cal. 649; 66 Cal. 332, 335, 5 Pac. 488; Breedlove v. Norwich etc. Ins. Co., 124 Cal. 164, 166, 56 Pac. 770. Where a mortgagor transfers the mortgaged prop- erty, but the conveyance is not recorded, the trans- feree is not a necessary party in a foreclosure action thereafterward brought by the mortgagee, and the proceedings in such action are conclusive against him: Aldrich v. Stephens, 49 Cal. 676. Where an inferior mortgagee brought an action to foreclose his mortgage, and joined as party defendant the superior mortgagee in order to liquidate his claim, the judgment therein rendered is binding upon an assignee of the superior mortgagee whose assign- § 107 PARTIES THEREIN. 211 quiring any right in respect thereto after the commencement of the action^ but with actual or constructive notice of the pendency thereof,^^ is either a necessary or a proper party to a com- plete determination of the various rights claimed in respect to the property; and the judgment in the foreclosure action is conclusive against such person.^^ Where, however, a person who is a necessary or proper party in a foreclosure action, or who holds a right of record in respect to the encumbered property, is not duly joined as a party therein, a successor .in interest of such per- son is in no respect affected by the foreclosure judgment unless himself actually made a party in the action.^^ 108. "Right to Intervene must Affirmatively Ap- pear. Any person who seeks to intervene in a fore- closure action must affirmatively show, before in- tervention is permissible, that his right in respect to the encumbered property is such as can be ment was unrecorded, although not made a party: Spaulding v. Howard, 121 Cal. 194, 198, 53 Pac. 563. 20 See section 105, notes 12 and 13, above. SI See cases cited under note 19, above. -2 Successor in Interest of Party not Joined not Bound by Judgment.— Where a grantee of a mort- gagor who is a necessary party is not joined, the filing of a notice of pendency does not operate as notice to a subsequent grantee of the first grantee: Jeffers v. Cook, 58 Cal. 147, 152. 212 THE FORECLOSURE ACTION. § 108 properly litigated and adjudicated -upon in the foreclosure action.^^ 109. Holder of Interest in Property When Nec- essary Party, but not Joined, not Affected by Judgment. A person holding any interest in encumbered property which is covered by an encumbrance to foreclose which an action is commenced, if a necessary party in the foreclosure action but not made a party therein, is in no wise affected^^ by and may collaterally attack^^ any judgment ren- 23 Peachy v. Witter, 131 Cal. 316, 320, 63 Pac. 468. 24 Such Person not Affected by Judgment: Mont- gomery V. Tutt, 11 Cal. 307, 315, 316; Kirkham v. Dupont, 14 Cal. '559, 564; Alexander v. Greenwood, 24 Cal. 505, 512; Oarpentier v. WiHiamson, 25 Cal'. 154, 161; Carpentier v. Brenham, 40 Cal. 221, 234; Jeffers v. Cook, 58 Cal. 147. This is likewise true in an action to foreclose a ntechanic's lien: Whitney v. Higgins 10 Cal. '547, 551, 70 Am. Dec, 748. Thus an order directing the sale of the interest of a necessary party who was not . joined in the action is erroneous: Porter v. Muller, 65 Cal. 512, 513, 4 Pac. 531; Woodward v. Brown, 119 Cal. 283, 307, 63 Am. St. Eep. 108, 51 Pac. 2. Thus the rights of a noncontracting owner of prop- erty affected by a mechanic's lien, when not made a party in the action to foreclose the. lien, cannot be affected bv the judgment rendered therein: March v. McKoy, 56 Cal. 85, 87. 25 Such Person may Collaterally Attack Judgment: Montgomery v. Tutt, 11 Cal. 307, 315, 316; Horn v. Jones, 28 Cal. 194, 203; Carpentier v. Brenham, 40 Cal. 221, 237. § 109 PARTIES THEREIN. 213 dered therein; and cannot be dispossessed^^ by the purchaser at a judicial sale held pursuant to the judgment. But any such person, upon seek- ing relief against the cloud arising from the fore- closure proceedings, must, as a prerequisite to se- curing such relief, be prepared to liquidate his proportion of the secured obligation, although such obligation has been barred by lapse - of tinie.27 110. Encumbrancer When Necessary Party, but not Joined, may Redeem.^^ An encumbrancer, not made a party in a f ore- The judgment cannot, however, be attacked by a person duly joined: Hutchins v. Ebeler, 46 Cal. 557. Nor by a person who by section 107 above, need not be joined as a party: Spaulding v. Howard, 121 Cal. 194, 198, 53 Pac. '563. 26 Such Person Cannot be Dispossessed.— That .i writ of assistance cannot be issued against a neces- sary party in a foreclosure action, who was not duly joined as such, see section 161, below. Nor can the purchaser at the judicial sale maintain an action to recover the possession of the land from such person: Ault v. Gassaway, 18 Cal. 205. 27 Such Person Seeking Relief from Cloud Must Do Equity: Johnson v. San Francisco Sav. Union, 75 Cal. 134, 143, 7 Am. St. Eep. 129, 16 Pac. 753. A necessary party defendant in a foreclosure action* as a wife of a mortgagor when the mortgage is against the homestead of a married homestead claim- ant, when not duly joined may maintain an action against the purchaser to remove a cloud from her title (McMillan v. Eeynolds, 11 Cal. 372, 379); or an action to recover possession (Watts v. Gallagher, 97 Cal. 47, 31 Pac. 626). 28 Encumbrancer may Redeem.— '^ The considera- '214 THE FORECLOSURE ACTION. § 110 closure action in which he is a necessary party, or his successor in interest, may at any time be- fore his encumbrance is extinguished by lapse of tlon of the proper parties to a suit of foreclosure, and the effect of the decree upon the rights of per- sons interested in the mortgaged estate, clearly establishes the title of the plaintiff [a purchaser at foreclosure sale in a foreclosure action brought by an inferior encumbrancer who was not a party to the action to foreclose the superior encumbrance] to redeem. The principles which govern as to parties in those suits apply equally to suits for the enforce- ment of a mechanic's lien. The mortgage under which plaintiff claims was placed upon the premises before suit was brought; the mortgagees, as subse- <[iient encumbrancers, were necessary parties to the suit; not being mad o such parties, they wero not bound by the decree or sale under it; the plaintiff, by his purchase, took the title as it existed in the mort- gagor, at the date of the mortgage; his position in court, therefore, is that of the owner of the legal title, subject to the mechanic's lien'': Whitney v. Higgins, io Cal. 547, 553, 70 Am. Dec. 748. ^'The law seems to be pretty well settled, that junior encumbrancers are not necessary, though proper, parties to an action to foreclose a mortgage. .... They have a right to redeem the prior mort- gage, and if they are not made parties to the action to foreclose the mortgage, that right of redemption still remains unaffected by the decree and sale under it": Grattan v. Wiggins, 23 Cal. 16, 32. See, also, Montgomery v. Tutt, 11 Cal. 307, 315, 316; Frink v. Murphy, 21 Cal. 108, 112, 81 Am. Dec. 149; TuoHimne Eedemption Co. v. KSedgwick, 15 Cal. 515, 527, 529. IllKStratiGns,— Where a person holding a mortgage on certain property subsequent to a mechanic's lien thereon was not made a party defendant in an action to foreclose the mechanic's lien, he is entitled to maintain an action to redeem: Gamble v. Voll, 15 Cal. 508, 510. Jdi.^ .'^^s-H IH ,v . § 110 PARTIES THEREIN. • 2l5 time^^ maintain an action to cause the superior encumbrance to be discharged upon the satisfac- Where a judgment lienor is not made a" party to an action to foreclose a superior mortgage against property covered by the judgment lien, the judg- ment lienor ^s rights are not affected by the judg- ment foreclosing the mortgage: Alexander v. Green- wood, 24 Cal. 505, 512. In Brown v. Winter, 14 Cal. 31, where a second mortgagee not made a party in an action to fore- close the first mortgage afterward foreclosed his mortgage and bought the property at the judicial sale, and then brought an action to eject the pur- chaser at the foreclosure sale under the first mort- gfige, the court held that the action to eject would not lie, because the purchaser of the property at the sale under the first mortgage obtained a title to the property superior to that of the purchaser at the sale under the second mortgage. It is clear that whatever are the equities of the inferior mortgagee and the purchaser at the sale under the second mortgage, they are held in subordination to those obtained by the purchaser under the first mortgage. 29 Action must be Commenced Before Inferior En- cumbrance Extinguished by Lapse of Time.— In sev- eral cases where the second mortgagee brought an action to redeem from the first mortgage, it is said that it must be brought within four years, but fails to state when the four years begin to run: Grattan v. -Wiggins, 23 Cal. 16, 33; Cunningham v. Hawkins, 24 Cah 409, 410, 8o Am. Dec. 73; Siter v. Jewett, 33 Cal. 92, 95; Arrington v. Liscom, 34 Cal. 365, 369, 94 Am. Dec. 722. In Carpentier v. Brenham, 40 Cal. 221, where the action was commenced more than four years after the maturity of the first mortgage, but less than four years after the maturity of the second mortgage, there is no intimation that the action to redeem is barred. It is clear then, that the time is measured from the maturity of the encumbrance whose owner is bringing the action to redeem. 21^ THE FOEECLOSUEE ACTION. § 110 lion thereof,^^ in which action he may show that the claim of the superior encumbrancer is ex- aggerated or fraudulent or without consideration, or any kindred fact which will increase the fund with which to satisfy his encumbrance.^^ The purchaser of the encumbered property at a sale in satisfaction of the superior encumbrance is deemed the assignee of so much of the pbligation which was thereby enforced as was satisfied by his purchase.^^ 111. Relief may be Granted Purchaser When Necessary Party not Joined.^^ Where a necessary party defendant in a fore- closure action is not duly joined^ the court may, 30 To be Discharged upon Its Satisfaction.— The amount to be paid in satisfaction is the amount of the superior encumbrance, together with interest, ccjsts and taxes: Kirkham v. Dupont, 14,Cal. 559, 566. 31 Carpentier v. Brenham, 40 Cal. 221, 236, 237, 239. 33 Relief may be Granted Purchaser When Neces- sary Party not Joined: Boggs v. Hargrave, 16 Cal. 559, 565, 566, 76 Am. Dec. 561; Barnard v. Wilson, 66 Cal. 251, 5 Pac. 237; Goodenow v. Ewer, 16 Cal. 461, 470, 76 Am. Dec. 540; Heyman v. Lowell, 23 Cal. 106; Kreichbaum v. Melton, 49 Cal. 50, 55, 56; Al- drich V. Stephens, 49 Cal. 676; Jeffers v. Cook, 58 Cal. 147. In Abadie v. Lobero, 36 Cal. 390, 401-403, where this doctrine is doubted, it was held that a mere statutory redemptioner or assignee of the certificate of sale is not entitled to obtain an order without notice to the original plaintiff vacating the original judgment, and substituting himself as plaintiff, and § 111 PARTIES THEREIN. 217 to file a supplemental complaint against the parties omitted from the original action. ^^ Courts of equity are ever readj to grant relief from sales made upon their decrees, where there haa been irregularity in the proceedings, .... provided application be made to them in the suits in which such decrees are entered, within a reasonable time, and the relief sought will not operate to the preju- dice of the just rights of others. The nature and ex- tent of the relief in such cases are matters resting very much in the sound discretion of the court. As a general rule, the purchaser will be released, and a resale ordered, or such new or additional proceedings directed as may obviate the objections arising from those originally taken, when the consequences of the mistake are such that it would be inequitable, either to the purchaser or to the parties, to allow the sale t(' stand. But when the relief is sought in one ac- tion, from a mistake of law as to the effect of a judgment in another action, there would seem to be no just reason why the ordinary rules as to mistake of law should not apply ^': Goodenow v. Ewer, 16 Cal. 461, 470, 471, 76 Am. Dec. 540. See, also, Boggs v. Hargrave, 16 Cal. 'o59, 565, 566, 76 Am. Dec. 561; Heyman v. Lowell, 23 Cal. 106; Bernheim v. Cerf, 123 Cal. 170, 55 Pac. 759. In Brackett v. Banegas, 116 Cal. 278, 284, 58 Am. St. Bep. 164, 48 Pac. 90, in department, referring to the Goodenow and Boggs cases, the court said; *' Courts of equity will not, save in exceptional cases, in a separate action relieve a party from errors of law, but will grant such relief in the original action upon motion or supplemental bill. In this case, how- ever, the mistake is not one of law, but of fact. The mistake consisted not in the legal effect of the home- stead, but in its existence. In such a case, the orig- inal decree having been void for want of jurisdiction of the court below, to enter it without the presence of the wife, or what is the same thing, such service upon her as required her to appear and defend, if any defense she had, no good reason is perceived why an independent action may not be had to adjust the eqiuties of all the parties. ^ ' 218 THE FORECLOSURE ACTION. § HI at any time within six months after judgment is rendered,^^ upon the application of a purchaser id the judicial sale and after notice to the plain- tiff, set the judgment and sale aside, authorize a supplemental pleading to be filed, direct any nec- essary party to be brought in, and make such other orders as will mete out exact justice. In Aldrich v. Stephens, 49 Cal. 676, and Bernheim V. Cerf, 123 Cal. 170, 55 Pac. 759, and possibly others, relief from a mistake of fact was granted in the original action; and in the Aldrich case it was held that where, through defective proceedings, as failure to duly serve summons, a necessary party is not joined, the relief must be sought by supplemental pro- ceedings in the original action, and not by instituting a new action. Where through mistake of law a necessary party is not joined, relief must be sought in the original suit: Boggs V. Hargrave, 16 Cal. 559, 566, 76 Am. Dec. 561. 33 Relief must be Sought Within Six Months.— Code of Civil Procedure, section 473, in part: "The court .... may also, upon such terms as may be just, relieve a party or his legal representative from a judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise, or excusable neglect; provided, that application there- for be made within a reasonable time, but in no case exceeding six months after such judgment, order, or proceeding was taken." In Brackett v. Banegas, 99 Cal. 623, 625, 627, 34 Pac. 344, the court, in depart- ment, says that under this provision '^a party in whose favor judgment has been rendered is entitled to relief the same as though the judgment had been rendered against him By declaring that it [the time] shall in no case exceed six months after the judgment was taken, it [the legislature] precluded the court from exercising this power in any case, unless the application therefor shall be made within six months after the judgment was made." § 111 PARTIES THEREIN. 219 Thus where the purchaser did not discover the mis- take of fact until twelve months after judgment, he cannot obtain relief in the original action: Brackett V. Banegas, 99 Cal. 623, 34 Pac. 344; 116 Cal. 278, 282, 283, 58 Am. St. Eep. 164, 48 Pac. 90. But where a mistake of fact was discovered two months after judgment, the purchaser may have the sale set aside and the case restored to the calendar for trial: Bernheim v. Cerf, 123 Cal. 170, 55 Pac. 759. Before the enactment of the six months' limitation, the court held that the relief must be sought within a reasonable time. In Heyman v. Lowell, 23 Cal. 106, and Barnard v. Wilson, 66 Cal. 251, 5 Pac. 237, the time was held unreasonable. ^^0 THE FORECLOSURE ACTION. AETICLE 5. THE FOEECLOSUEE JUDGMENT. Subdivision 1, Requisites of Judgment. 112. General requisites of judgment. 113. Provision as to deficiency judgment. 114. Provision protecting rights of subsequent encum- brancers. 115. Specified kind of money sometimes to be re- quired in payment. 116. Provision when land situate in two counties. 117. Movable property may be taken into custody. 118. Paramount title generally not affected by judg- ment. Subdivision 2. Special Sales Officer. 119. Sale may be made by duly sworn commissioner. 120. Compensation of commissioner. 121. Elisor may be appointed in case of disability of commissioner. Subdivision 3. Effect of Judgment', 122. Encumbrances of actors merged into judgment. Subdivision Jf. Action to Enforce Judgment. 123. Action to enforce judgment maintainable. Subdivision 5. Judgment not Leviable. 124. Judgment not leviable. § 112 THE JUDGMENT THEREIN. 221 Subdivision 1. Requisites of Judgment, 112. General Requisites of Judgment.^ A judgment whereby an encumbrance is fore- closed must contain: 1 General Requisites of Judgment.— Code of Civil Procedure, section 726, provides: ''In such action the court may, by its judgment, direct a sale of the encumbered property (or so much thereof as may be necessary), and the application of the proceeds of the sale.'' Eeferring to the foreclosure judgment, the court, in Leviston v. Swan, 33 Cal. 480, 483, said: ''All that it need or should contain is a statement of the amount due the plaintiff— a designation of the defendants who are personally liable for the payment of the debt, and a direction that the mortgaged premises, or so much thereof as may be necessary, be sold according to law and the proceeds applied to the payment of the expenses of sale, the costs of the action, and the debt. "Nothing further is required. All else is minis- terial, and is expressly regulated by the statute, which is not made clearer or more binding by being copied into the judgment. There is, under our system, no master in chancery— no master's report— and no con- firmation of the sale by the court. That mode of procedure is wholly foreign to our system." This decision is approved in Ontario Land etc. Co. V. Bedford, 90 Cal. 181, 185, 27 Pac. 39. "In the ordinary action of foreclosure, the judg- ment need only determine the amount of the debt, the defendant who is personally liable therefor, and direct a sale of the mortgaged lands and an application of their proceeds to satisfy this amount, with such provision for the rights of the defendants among themselves as may be presented in the case": Sichler v. Look, 93 Cal. 600, 610, 29 Pac. 220. Where a mortgagee brought an action to foreclose his mortgage making a second mortgagee a party defendant, and the second mortgagee set up his mort- 22^ THE FORECLOSURE ACTION. § 112 (1) a statement of the amonnt owing upon each obligation secured by the encumbrance fore- closed to each secured creditor whose claim was adjudicated and established in the action,^ gage, the demand secured thereby being due, the court could and should have ascertained not only the amount due on the obligation secured by the first mortgage, but also the amount due from the mortga- gor to the second mortgagor on the demand secured by the second mortgage, and by its foreclosure judg* ment have directed a sale of the mortgaged premises or so much thereof as should be necessary, and the application of the proceeds of the sale to the pay- ment of the costs and expenses of sale, nnd the amount, due, first, to the plaintiff on his first note and mortgage, and, secondly, of the amount due to the defendant second mortgagee on the second note and mortgage, and further directing, in the event that the sheriff's return should show the proceeds to be insuflSLcient, and a balance to remain due on either or both of the amounts found due by the foreclosure judgment, that judgment be docketed for said balance against the defendant so found personally liable for the debt, which under the law would have become a lien on such real estate as the judgment debtor might have in the county, and on which an execution might have been issued as in other cases: Brown v. Willis, 67 Cal. 235, 236, 7 Pac. 682. Historical.— ^TSiCtiee Act, sec. 246, as enacted 1851, provided: ^^In an action for the foreclosure and satis- faction of a mortgage of real property, or the sat- isfaction of a lien or encumbrance upon property, real or personal, the court shall have power by its judgment to direct a sale of the property, or any part of it; the application of the proceeds to the payment of the amount due on the mortgage, lien, or encumbrance, with costs, and execution for the balance. ' ' This section was amended by an act of April 28, 1860, and again by an act approved May 8, 1861 (p. 306), so as to conform substantially to the present 112 THE JUDGMENT THEREIN. Qp provisions of the Code of Civil ProceaSty, y^^^on 726, first, second, and fourth sentences. Particular Provisions of Judgment.— In a ^ proper case, as where one of two entirely distinct obligations to different parties secured by encumbrances against the same property is foreclosed, the court may, by its judgment, save from the sale to be made there- under the other encumbrance against the property to be sold: Stockton Sav. etc. Soc. v. Herrold, 127 Cal. 612, 620, 60 Pac. 165. Likewise, the rights of adverse claimants should generally be saved from the operation of the fore- closure judgment: See sec. 99 and notes, above. A provision in a foreclosure judgment *'that the defendant .... and all persons claiming or to claim under him, .... be forever barred and foreclosed of and from all equity of redemption and claim in and to said mortgaged premises," is immaterial under our system of procedure. ''Its insertion is due to the conservatism of the profession, which hesitates to adopt a reform in procedure, and prefers to adhere to the forms which were used under a different svs- tem'': Sichler v. Look, 93 Cal. 600, 609, 29 Pac. 220. 2 Amount Due on Each Secured Demand to be Stated. — Where three mortgages executed by one mortgagor, each given to secure a separate obligation and each upon different property, are foreclosed in the same action, a general judgment for the aggregate of the amounts due on the three mortgages and for the sale of all the property as though covered by one mortgage is unauthorized; but there should be an ad- judication in the judgment of the amount due on each secured obligation and a separate sale of the property hypothecated by each mortgage, each for the particular amount due on such mortgage: Taylor V. Ellenberg, 128 Cal. 411, 414, 60 Pac. 1034. Also, to the same effect, see Home Loan Associates v. Wil- kins, 66 Cal. 9, 4 Pac. 697. In rendering a judgment foreclosing a mechanic's lien, which judgment provides for a personal defi- ciency judgment, it is necessary for the court to as- certain and determine the amount for which the defendant was liable to the plaintiff, so that when 224 THE FORECLOSURE ACTION. § 112 (2) a description of the property to be sold in satisfaction of the amounts so adjudged to be owing^^ and (3) a direction that the encumbered property, or so much thereof as may be necessary, be sold^ and the proceeds applied in accordance with the principles herein provided.^ The direction for the sale of -the encumbered property is not of itself a warrant to any officer to make the sale; but as a prerequsite to a valid s'ale a writ of sale must be issued as hereinafter provided.^ the sheriff ^s return comes in it might be seen whether there was a deficiency of proceeds or not: Hines v. Miller, 126 Cal. 683, 685, 59 Pac. 142. 3 Description of Property.— In case of the fore- closure of a mortgage, the description may or may not follow the description in the mortgage: De Se- pulveda v. Baugh, 74 Cal. 468, 16 Pac. 223, 5 Am. St. Eep. 455, note, in which Crosby v. Bowd. 61 Cal. 558, 602, is overruled. See, also, section 98 above. What Property to he Subjected to Sale.— In case of a mortgage, the judgment must order a sale of the interest described in the mortgage and complaint as being mortgaged, not of any greater or less interest than that mortgaged: Schwartz v. Palm, 65 Cal. 54, 2 Pac. 735. So where the instrument of mortgage described the interest mortgaged as '^one undivided fourth inter- est in certain property, to order the sale of the entire interest of the mortgagor in the property, is erroneous: Schwartz v. Palm, 65 Cal. 54, 2 Pac. 735. 4 Proceeds, How Applied: See sec. 163, below. 5 Judgment is not in Itself a Warrant of Sale. See Code of Civil Procedure, section 684, as amended 1874, in part: ^^When the judgment requires the sale § 112 THE JUDGMENT THEREIN. 22,6 of property, the same may be enforced by a writ reciting such judgment or the material parts thereof, and directing the proper officer to execute the judg- ment, by making the sale and applying the proceeds in conformity therewith.'' The case of Heyman v. Babcock, 30 Cal. 367, de- cided before the enactment of this code provision, contains a statement of the law, which with certain limitations still remains applicable. The court says: ^^The first question for consideration is whether it is necessary that an execution or order of sale issue to the sheriff, to authorize him to make a sale of the mortgaged premises under a decree of foreclosure and sale of the character of the one presented in this case. ^^The only order respecting the sale contained in the decree is that the mortgaged premises 'be sold according to law.' No directions are given as to the time, place, terms, or manner of sale; nor is the duty of making the sale committed by the decree to the sheriff. ^^The sheriff does not bear any such relation to the court that he must take notice of its orders and judg- ments, and without process execute and carry into effect those that require the aid of a ministerial offi- cer. The general rule is that process is the authority of the sheriff, and no reason is given why in the case of a decree of foreclosure, and especially in one that is devoid of all directions as the one before us, an exception should be found to the rule ^'No express provision is found in the Practice Act prescribing the mode of making a sale of the mort- gaged premises under a decree of foreclosure, but the courts have, in a great number and variety of cases, acted upon the assumption .... that the sheriff acts under and by virtue of an order of sale issued upon the decree It is very evident that the practice we have mentioned has too long been adopted, and too uniformly been acquiesced in, to be now changed by the court on the ground that it was not fully authorized by that act Liens— 15 226 THE FORECLOSURE ACTION. § 113 113. Provision as to Deficiency Judgment.^ Where any parties to a foreclosure action are also personally liable for the payment of the se- cured obligation, the foreclosure judgment must also designate the parties so liable therefor, and make such provision concerning the rights among ''The order of sale (and in many cases a certified copy of the decree will be sufficient for that purpose) is as essential to a recovery as the decree or the sheriff ^s deed. ^' o The Deficiency Judgment.— The provision of Code of Civil Procedure, section 726, that ''if it appear from the sheriff ^s return, or from the commissioner's report, that the proceeds are insufficient, and a bal- ance still remains due, judgment must then be dock- eted by the clerk in the manner provided m this code for such balance against the defendant or defendants personally liable for such debt, and it becomes a lien upon the real estate of such judgment debtor, as in other cases in which execution may be issued," authorizes a personal deficiency judgment whenever it does not appear that the encumbrancer was to look to, the encumbered propertv exclusively: Leviston v. Swan, 33 Cal. 480, 484; Hibberd v. Smith, 50 Cal. 511, 518. Before the amendment to Practice Act, section 246, by which it was amended to read substantially as above, the court reached the same conclusion in regard to the deficiency judgment: Moore v. Rey- nolds, 1 Cal. 351, 353; Eollins v. Forbes, 10 Cal. 299; Rowland v. Lieby, 14 Cal. 156; Chapin v. Broder, 16 Cal. 403, 420. A foreclosure judgment may properly state the amount due upon the secured obligation, and the per- sons personally liable therefor. It is not necessary to wait until after the deficiency of proceeds is deter- mined to exist by the sale of the property for the rendition of a personal judgment against the per- sons personallv liable: Cdrmerais v. Genella, 22 Cal. 116, 125-127. V § 113 THE Judgment therein. 227 themselves of the owners of the property and the persons personally liable as may be presented in the case/ and must provide that in case the pro- ceeds of the sale of the property are insufficient to satisfy the secured obligation, a personal judg- ment for the deficiency be docketed against the persons determined to be personally liable there- for.^ 7 As to Provision Concerning Rights of Owners of Property and Persons Personally Liable.— The judg- ment may direct a deficiency judgment to be en- tered against a grantee of a mortgagor who has as- sumed the payment of the mortgage obligation: San Francisco Paving Co. v. Fairfield, 134 Cal. 220, 226, ^ Cal. 426, 429; Cowell v. Buckelew, 14 Cal. 640, Compare BeHoc v. Eogers, 9 Cal. 123, 127. 11 Historical. — Before the amendment to Code of Civil Procedure, section 684, adopted in 1874 (see note 14 below), the judgment might be enforced by a certified copy of the judgment being placed in the hands of the sheriff for execution. • In Southern California Lumber Co. v. Ocean Beach Hotel Co., 94 Cal. 217, 222, 223, 28 Am. St. Eep. 115, 29 Pac. 627, the court, referring to the foreclosure judgment, said: "Such a writ, under the chancery system, was not carried into effect by a writ of exe- cution, but a certified copy thereof was furnished to § 127 SALE OF PROPERTY. 247 the master as his authority for making the sale, and the master was at liberty to exercise his discretion in regard to the time and place at which the sale should be made This practice prevailed in many parts of this state until the amendment of 1874 to section 684 of the Code of Civil Procedure! .... In 1874, by an amendment to section 684 of the Code of Civil Procedure, authority was for the first time given for the issuance of anything in the na- ture of process for the pmrpose of enforcing a judg- ment directing a sale of real property. '' Thus in Leviston v. Swan, 33 Cal. 480, 484, the court says: ^^ Under our system the sheriff is fur- nished with a certified copy of the judgment. Armed with his process, he proceeds to sell the mortgaged property in the mode and manner and at the place designated in the Practice Act for the sale of real estate under judicial process, and makes a return of his proceedings as in a case of an execution upon a money judgment. If it appears from the return that the amount due the plaintiff has not been fully paid by the sale, the clerk then ^dockets the judgment, for the balance due, against those defendants named in the judgment as being personally liable for the pay- ment of the debt, without any further order from the court.'' Since the amendment to section 684 of the code, the practice of issuing the certified judgment is er- roneous: Newmark v. Chapman, 53 Cal. 557. 33 Writ must be Issued in Name of People, etc.— Compare Code of Civil Procedure, section 682, in part: ^^The writ of execution must be issued in the name of the people, sealed with the seal of the court, and subscribed by the clerk, and be directed to the sheriff.'' This code section seems to be in some degree ap- plicable to the writ for the sale of encumbered prop- erty, in view of the provision of section 726 of the Code of Civil Procedure, as follows: ^"If the court appoint a commissioner for the sale of the property, he must sell it in the manner provided by law for the sale of like property by the sheriff upon execu- "248 THE FORECLOSURE ACTIOX. § 127 sealed with the seal of the court, subscribed by the clerk, and directed to the sheriff of any county in the state^^ or to the commissioner; and m,ust^^ recite the foreclosure judgment or the material parts thereof, and require the sheriff or commissioner to execute the judgment by making the sale and applying the proceeds in conformity therewith. tion; and the provisions of chapter 1, title 9, part 2, of this code (sections 681 through 709) are hereby made applicable to sales made by such commissioner, and the powers therein given and the duties therein imposed on sheriffs are extended to such commis si oner. " In Newmark v. Chapman, 53 Cal. 557, where the process issued was held erroneous, although not void, the court said: *^The process under which the mort- gaged property was sold \yas only a copy of the judg- ment issued and attested by the clerk. It did not conform to sections 682 and 684 of the Code of Civil Procedure, as it did not purport to have been issued in the name of the people, nor was it directed to the sheriff, nor did it direct him to execute the judg- ment.^' Thus in this case the court recognized the applicability of the portion of section 682 above quoted to the writ for the sale of encumbered prop- erty. In Spaulding v. Howard, 121 Cal. 194, 197, 53 Pac. 563, however, the court doubted whether the writ of sale need be subscribed by the clerk, and said: ' ' The findings are that the court . ordered the land included in the Ely and Griffin mortgage to be sold by the sheriff of Lake county, in which county it was found that the decree had^ been duly docketed and recorded; that *an order of sale was duly issued out of the superior court of Yolo county, under seal of said court, upon said judgment and decree and re- citing the same, directed to the said sheriff of Lake § 127 SALE OF PROPERTY. 249 county, commanding him,' etc. The sheriff, under the Code of Civil Procedure, proceeds with the sale by virtue of the decree and such direction as the court may give : Code Civ. Proc, sec. 726. The pro- ceeding follows by analogy sales upon execution, tut not necessarily so. The power to sell comes from the statute and the decree. However, the court found that an order of sale was duly issued upon the decree, and, if the law required it to be certified or attested by the clerk, it will be presumed that this was done.'' The net result of this case, then, is merely to express certain doubts, but not to impair the validity of the observations in the Newmark case above quoted. The provisions of section 682 subsequent to those quoted above seem to have no applicability to fore- closure sales, as the subject matter of the remainder of the section, so far as applicable to such sales, is covered by the provision of section 684 quoted in note 14 below. Thus, in Hibernia Sav. etc. Soc. v. Behnke, 121 Cal. 339, 342, 53 Pac. 812, the court held that ^Hhe provision of section 682 that an execution for money shall state *the amount actually due thereon' does not apply to such order of sale. The sheriff is directed by such judgment to sell the lands, or so much thereof as may be necessary to satisfy the plaintiff's claim." So the writ of sale is not vitiated by failure to refer to the amount that had been actu- ally paid upon the foreclosure judgment. 13 Must "be Directed to Sheriff of Any County in State. — Code of Civil Procedure, section 687, pro- vides: '^ Where the execution is against the property of the judgment debtor, it may be issued to the sher- iff of any county in the state. Where it requires the delivery of real or personal property, it must be is- sued to the sheriff of the county where the property, 01' some part thereof, is situated. Executions may be issued, at the same time, to different counties." 14 Must Recite Foreclosure Judgment, etc.— Code of Civil Procedure, sec. 684, as amended in effect July 1, 1874, provides, in part: ''When the judgment re- quires the sale of property, the same may be enforced 250 THE FORECLOSURE ACTION. § 128 Subdivision 2. Notice of Sale, 128. Manner of Giving Notice.^^ Before selling any property under a writ of sale, the sheriff, commissioner, or elisor must give notice^^ thereof as follows: by a writ reciting such judgment, or the material parts thereof, and directing the proper officer to execute the judgment by making the sale and applying the proceeds in conformity therewith." 15 See Code Civ. Proc, sec. 692, except last clause. 16 Sheriff must Give Notice.— The judgment cred- itor has no right to direct the sheriff as to the paper in which a notice of sale of immovable property should be published. For it is clear that code sec- tions 692 and 693 (sections 128 through 131 hereof) ''enjoin upon the sheriff both the duty and the responsibility of posting and publishing the notices of sale as prescribed, which injunction necessarily implies the duty and responsibility of selecting the places where the notices are to be posted, and the newspapers in which they are to be published, since they are not specified. He is required to post the notices in three public places in the township, etc., and to publish them in some newspaper in the county once a week under heavy penalty, besides his respon- sibility for all damages. The penalty and respon- sibility are inconsistent with the alleged authority of the plaintiff [mortgagee] to dictate the places or papers in which the notices are to be published; and consistent only with his duty and power to determine and select the places and newspapers in which to publish the required notices. Moreover, the require- ment of notice of sales on execution is quite as much for the benefit and protection of the defendant [mortgagor] as for the plaintiff; and the defendant, if not insolvent, ultimately pays the expenses of publication": Northern Counties Investment Trust § 128 SALE OF PROPERTY. 251 (1) in case of perishable property, by posting written notice of the time and place of sale in three public places of the township or city where the sale is to take place, for such time as may be reasonable considering the character and condition of the property ; or (2) in case of other movable property, by post- ing a similar notice in three public places ia the township or city where the sale is to take place, for not less than five^'' nor more than ten days; or (3) in case of immovable property, by posting a similar notice, particularly describing the prop- erty, for twenty days, in three public places of the township or city where the property is situ- ated, and also where the property is to be sold, and publishing a copy thereof, once a week for the same period, in some newspaper published in the county if there is one. (Lim.) V. Cadman, 101 Cal. 200, 204, 205, 35 Pac. 557. 17 At Least Five Days' Notice.— Where a notice of sale of personal property was posted on February 20tli, and the sale was made as advertised on Febru- ary 25th, this amounts to five days' notice under the Code of Civil Procedure, section 12, providing that the time within which any act provided by law is to bo done is computed by excluding the first and in- cluding the last day. Or, ^^if the rule of section 12 does not apply to the case, it might well be argued that the first day of posting is not excluded iu determining the length of the notice' ': Bellmerly v. «mith, 136 Cal. 3, 68 Pac. 97. 252 THE FORECLOSURE ACTION. § 129 129. Notice must Specify Kind of Money Re- quired in Payment. Whenever the Judgment under which the prop- erty is to be sold is made payable in a specified kind of moaey or currency, the several notices must each state the kind of money or currency in which bids may be made at such sale, which must be the same as that specified in the judgment.^^ 130. Penalty for Selling Without Notice.^^ An officer selling any encumbered property without the notice required by sections 128 and 129, the sale being executed by the transfer of the property and the payment of the purchase price,^^ forfeits five hundred dollars to the ag- 18 See Code Civ. Proc, sec. 692, last clause. As to provision of the judgment in this respect, see section 115 above. 19 Penalty for Selling Without Notice: See Code Civ. Proc, sec. 693 (Practice Act, sec. 222), first clause. Strict Construction.— An action under this section being to enforce a penalty or forfeiture, the clause must be strictly construed, and the plaintiff's case must clearly come within the statute: Askew v. Eb- borts, 22 Cal. 263. Thus, in Van Loben Sels v. Bunnell, 131 Cal. 498, 493, 63 Pac. 773, the court holds that where the sheriff in good faith gave an erroneous notice of a foreclosure sale by reason of the contradictory mandate of the court, it would be unjust to impose upon him the statutory penalty imposed for making a sale without giving proper notice. 20 Sale must be Executed.— ' ^ The party is not injured or ^aggrieved' unless it appears that, by § 130 SALE OF PROPERTY. 25.3 grieved^^ party, in addition to his actual dam- ages. This is an exclusive remedy for a sale without due notice.^^ means of the sale, without notice, he has been deprived of his property. Unless the sale is per- fected by a transfer of the title, the debtor has suffered no injury, and is not 'aggrieved' within the intent and meaning of the statute. It is the fact that the party has been injured or damaged by the sale of his property by an officer without notice that entitles him to the forfeiture' ': Askew v. Ebberts, 23 Cal. 263. So where a purchaser at a defectively advertised sale did not pay the purchase money, and no certifi- cate of purchase was ever issued to him, and where the officer later discovering that the notice was defective, again duly advertised and sold the prop- erty, the judgment debtor has no cause of action to recover the penal sum: Askew v. Ebberts, 22 Cal. 263. 21 Purchaser can Never be Aggrieved Party.— Where the officer sells without due notice, the pur- chaser cannot be aggrieved party. If notice of the sale has been defectively given, or has not been given at all, it does not prejudice the right which the pur- chaser has acquired. Questions, therefore, appertain- ing to the notice, as well as all others which relate to irregularities, are between the officer selling and the persons interested in the property sold or in the judgment. They are the only parties aggrieved; and from any injury resulting from such irregularities they are the only parties entitled to the remedy given by code section 693: Kelley v. Desmond, 63 Cal. 517. 23 Is Exclusive Remedy: Smith v. Eandall, 6 Cal. 47, 50, 65 Am. Dec. 475. Compare, however, Van Loben Sels v. Bunnell, as quoted under section 144, note 51, below. 254 THE FORECLOSURE ACTION. § 131 131. Penalty for Defacing Notice of Sale. A person willfully taking down or defacing the notice of sale posted by the officer, if done before the sale or the satisfaction of the judgment (if satisfied before ^ale), forfeits ^ye hundred dol- lars.^^ Subdivision S. Mode and Conduct of Sale. 132. Sale to be Made at Auction — Time and Limits of Sale. The^^ sale must be made at auction^^ to the highest bidder, between the hours of 9 in the 33 See Code Civ. Proc, sec. 693, second clause. 24 Code of Civil Procedure, section 694, first sen- tence (Practice Act, sec. 223), provides: ^'All sales of property under execution must be made at auction to the highest bidder, between the hours of nine in the morning, and five in the afternoon. '' The sale of the property is to be conducted as an ordinary sale of property under judicial process: Leviston v. Swan, 33 Cal/480, 484. Where the foreclosure judgment does not contain any provision as to the mode or place of sale of encumbered property, the sale must be made in con- formity with the code provisions: Ontario Land etc. Co. V. Bedford, 90 Cal. 181, 185, 27 Pac. 39. 25 At Auction.— ^^ The sale by the sheriff is at auction, and the rule of auction sales that the bidder may withdraw 'his bid at any time before the ham- mer falls, applies to a sale by the sheriff'^: Hibernia Sav. etc. Soc. v. Behnke, 121 Cal. 339, 342, 53 Pac. 812. A sheriff has no right to sell at private sale, nor to authorize anyone else to do so: Sheehy v. Graves, 58 Cal. 449, 455. § 132 SALE OF PROPERTY. 255 morning and 5 in the afternoon. As soon as sufficient of the encumbered property has been sold to pay the amount to liquidate which the writ for the sale of the property was issued, to- gether with costs, the sale must eease.^^ A re- fusal by the officer to postpone the sale at the request of the judgment debtor is not, of itself, an abuse of discretion.^''' 133. Property, How Offered for Sale .^s Movable property capable of manual delivery must be sold within view of those who attend the sale, and in such parcels as are likely to bring the highest price. Unless otherwise ordered by the court,^^ each known lot or parcel of immovable property must 26 See Code of Civil Procedure, section 728, as quoted under section 125, note 8, above— especially the first clause thereof. Also see section 96, above. Compare Code of Civil Procedure, section 694 v'Practice Act/ 223), second sentence, which provides: *^ After sufficient property has been sold to satisfy the execution, no more can be sold.'' 27 Refusal to Postpone not Abuse of Discretion: Connick v. Hill, 127 Cal. 162, 166, 59 Pac. 832. 28 See Code of Civil Procedure, section 694, latter part. This section is applicable to sales under a fore- closure judgment when the judgment is silent as to the manner or order in which the separate parcels shall be sold: Ontario Land etc. Co. v. Bed- ford, 90 Cal. 181, 185, 27 Pac. 39; Marston v. White, 91 Cal. 37, 40, 27 Pac. 588. Compare County Bank V. Goldtree, 129 Cal. 160, 163, 164, 61 Pac. 785. 20 Sale is Subject to the Order of the Court.— The court has full authority to direct, by its judgment, 256 THE FORECLOSURE ACTION. § 133 first be offered for sale by itself,^^ but in default of purchasers,^^ or with the consent of the owner^^^ the whole may then be sold in mass or otherwise at the discretion of the officer. that the property be sold in one or several parcels, and the officer making the sale is bound to follow the directions of the court. Code of Civil Procedure, section 684, quoted section 127, note 14, above, is the controlling provision: Hopkins v. Wiard, 72 Cal. 259, 262, 12 Pac. 687; Meux v. Trezevant, 132 Cal. 487, 490, 64 Pac. 848. 30 Parcels to be Sold Separately. Rationale.— ^^ Many persons might be disposed to bid for separate parcels of a particular tract, who have neither the wish nor the means to acquire the whole tract. Such sales are, therefore, generally con- demned as tending to the sacrifice of the property of the debtor, and his consequent oppression'': San Francisco v. Pixley, 21 Cal. 57, 59. In considering a sale of property subject to redemp- tion, the court said that an additional reason why, in such a case, a separate sale of the property should be ordered, is found in the fact that under our statute such sales are made subject to the right of the owner to redeem. The exercise of this righ^ would be wholly destroyed by an order directing the mortgaged property to be sold together, as it would then be impossible to discover the price at which a particular part was sold, or the amount necessary to redeem it: Kaun v. Keynolds, 11 Cal. 14, 20. 31 In Default of Purchaser, may be Sold in Mass. ''But while the rule declared by the code, as above, '8 controlling, and should be strictly followed, still, '.t cannot be held to" apply where each distinct parcel Is first offered fox sale separately, and no bids are received. In such case, the property may then be offered and sold as a whole, and the sale will be upheld, unless other reasons appear for setting it aside'': Marston v. "White, 91 Cal. 37, 40, 27 Pac. § 133 SALE OF PROPERTY. 257 Any portion of immovable property claimed by a third party must upon his demand be sold sep- arately. Subject to the order of the court,^^ the judg- ment debtor, if present at the sale, may direct the order in which any property consisting of several known lots or parcels or of articles which can be sold to advantage separately shall be sold;^^ and such direction must be followed. 588; Hibernia Sav. etc. Soc. v. Behnke, 121 Cal. 339, 53 Pac. 812; Connick v. Hill, 127 Cal. 162, 164, 59 Pac. 832. 32 Sale in Mass, by Consent of Owner.— The owner may, by parol, waive a sale of the lands in parcels^ and give authority to sell in mass: Hudepohl v. Liberty Hill etc. Min. Co., 94 Cal. 588, 591, 592, 28 Am. St. Eep. 149, 29 Pac. 1025. Likewise, a sale in mass will be upheld, where the debtor, by misleading the officer with a false de- scription, or by withholding information, causes him to make such sale in good faith: Smith v. Eandall, ♦ G Cal. 47, 51, 65 Am. Dec. 475. 33 The Judgment Debtor may Direct the Order in Which the Property Shall be Sold.— In Connick v. Hill, 127 Cal. 162, 165, 59 Pac. 832, in discussing the tjpplication of this section to a sale at foreclosure made by a commissioner under an order of sale which did not direct the manner in which the sale should be made, the court said: ^^It nowhere appears in the affidavits, or record, that the forty-one lots were 'known lots or parcels.' It does appear that the appellant [mortgagor] requested the sale of forty- one different descriptions, but it does not follow that these forty-one different descriptions were forty- one different 'known lots or parcels.' They may all have constituted one known lot or parcel. In a mo- tion to set aside a sale on this ground, i^-. mup+ be Liens— 17 258 THE FORECLOSURE ACTION. § 134 134. Sale in Mass of Separate Parcels Some- times Voidable.^^ A sale in mass of property consisting of several known lots or parcels, or of articles which can he sold to advantage separately, which was made in disregard of the requirements of section 133 and appears to have heen less heneficial^^ either to the creditor or the debtor than would a sale in separate parcels have heen, is voidable and will, on timely application,^^ be set aside; but other- wise cannot be avoided. made clearly to appear that the land consisted of several ^ known lots or parcels.' " Compare Meux V. Trezevant, 132 Cal. 487, 64 Pac. 848. 34 Sale in Mass of Separate Parcels Sometimes Voidable: San Francisco v. Pixley, 21 Cal. 57; Vigoureux v. Murphy, '54 Cal. 346, 351; Hudepohl v. Liberty Hill etc. Min. Co., 94 Cal. 588, 591, 28 Am. St. Eep. 149, 29 Pac. 1025; Orton v. Brown, 113 Cal. 561, 568, 45 Pac. 835 (relating to the sale of movable property); Meux v. Trezevant, 132 Cal. 487, 489, 64 Pac. 848. See, also. Blood v. Light, 38 Cal. 649, 654, 99 Am. Dec. 441; Hibberd v. Smith, 67 Cal. 5^/, 565, 56 Am. Kep. 726, 4 Pac. 473, 8 Pac. 46. 35 It must Appear that the Method of Sale Adopted was Less Beneficial.— Thus the mere fact that several separate tracts of land were sold together by the sheriff does not constitute a cause of action: Eiddell v. Harrell, 71 Cal. 254, 262, 12 Pac. 67; Hude- pohl V. Liberty HiU etc. Min. Co.,. 94 Cal. 588, 591, 28 Am. St. Eep. 149, 29 Pac. 1025. 36 Application Must be Timely.— An application made after the lapse of more than three years is not timely: Vigoureux v. Murphy, 54 Cal. 346, 352. Applicationy Hotv AInde.—ln San Francisco v. Pix- ley, 21 Cal. 57, 60, the court said that when the orig- w § 135 SALE OF PROPERTY. 259 135. Person Conducting Sale cannot Purchase. ^N'either the officer holding the writ nor his depnty can become a purchaser or be interested in any purchase at such sale.^'' 136. Judgment Creditor may Purchase. A judgment creditor may purchase at his sale of property affected by his encumbrance with the same effect as any third person^^^ the authoriza- tion of the court to purchase having, in case of the sale of pledged property, been first oh- tained.^^ inal parties alone are involved, this sale should be set aside by motion in the original proceedings, but when the rights of third parties have intervened by a new action. In Browne v. Ferrea, 51 Cal. 552, the court said that the remedy is by motion to set aside the sale on notice to the judgment creditor, sheriff and pur- chaser at the sale. In Orton v. Brown, 113 Cal. 561, 4.5 Pac. 835, such notice was given. 37 See Code of Civil Procedure, section 694, third sentence, providing: '^Neither the officer holding the execution, nor his deputy, can become a purchaser, or be interested in any purchase at such sale.'' 38 Judgment Creditor may Purchase: Hunter v. Watson, 12 Cal. 363, 377, 73 Am. Dec. 543; Foorman V. Wallace, 75 Cal. 552, 554, 17 Pac. 680; Felton v. Le Breton, 92 Cal. 457, 466, 467, 28 Pac. 490. 30 Authorization in Case of Pledged Property must be Obtained. — Civil Code, section 3011, pirovides: *^ Instead of selling pledged property as hereinbefore provided, a pledgee may foreclose the right ,of redemption by a judicial sale, under the direction of a competent court; and in that case may be author- ized by the court to purchase at the sale. '^ ^6t$ THE FORECLOSURE ACTION. § 137 137. Kind of Money Specified must be Eeqnired in Payment. The officer must refuse payment in any other kind of money or currency than that specified in the writ of sale, and upon collecting the specified money or currency must pay to the party entitled thereto the same kind received by him. The neglect or refusal so to do renders him liable on his* official bond to the judgment creditor in three times the amount of the money collected.^^ Thus a pledgee of a note secured by mortgage, who causes the mortgage to be foreclosed, may purchase at the judicial sale of the mortgaged property, and, in the absence of fraud, takes an absolute title there- to: Kelly V. Matlock, 85 Cal. 122, 129, 24 Pac. 642; McArthur v. Magee, 114 Cal. 126, 130, 45 Pac. 1068. 40 See Code of Civil Procedure, section 682, fourth subdivision, which provides: '^If it [the writ of execution] be issued on a judgment made pay- able in a specified kind of money or currency, as provided in section 667, it must also require the sheriff to satisfy the same in the kind of money or Currency in which the judgment is made payable, and the sheriff must refuse payment in any other kind of money or currency; and in case of levy and sale of the property of the judgment debtor, he must refuse payment from any purchaser at sach sale in any other kind of money or currency than that specified in the execution. The sheriff, collecting money or currency in the manner required by this chapter, must pay to the plaintiff or party entitled to recover the same, the same kind of money or currency received by him, and in case of neglect or refusal so to do, he shall be liable on his official bond to the judgment creditor in three times the amount of the money so collected. ' • § 138 SALE OF PROPERTY. 261 138. Liability of Purchaser Who Refuses to Pay Purchase Money. If the purchaser refuses to pay the amount bid by him for property struck off to him at a sale, either (1) the officer may again sell the property at any time to the highest bidder, and may re- cover the amount of any loss occasioned there- by, with costs, from the bidder so refusing, ia any court of competent jurisdiction,^^ or (2) the officer, or in the event of his refusal to act any person entitled to the proceeds of the sale, may maintain an action against the pui-- chaser for the recovery of the amount of his bid.42 41 Officer may Sell Again.— Code of Civil Pro- codiire, section 695, provides: ''If the purchaser re- fuses to pay the amount Did by him for property struck off to him at a sale under execution, the officer may again sell the property at any time to the highest bidder, and, if any loss be occasioned thereby, the officer may recover the amount of such loss, with costs, from the bidder so refusing, in any court of competent jurisdiction.^' As amended, in effect, July 1, 1874. This is not an exclusive remedy against a purchaser who refuses to pay the amount of his bid: Meherin V. Saunders, 131 Cal. 681, 689-691, 63 Pac. 1084, per Beatty, C. J., Van Dyke, Temple, and Henshaw, JJ.; McFarland, Garoutte, and Harrison, JJ., dissenting. 43 Officer or Person Entitled may Recover Amount of Bid: Meherin v. Saunders, above. 262 THE FORECLOSURE ACTION. § 139 139. May Thereafter be Disqualified to Bid. The officer may, in his discretion, thereafter reject any subsequent bid of a purchaser who has refused to pay.^^ Subdivision ^. Report of Sale. 140. Officer must File Written Report.^ Within thirty days'*^ after the sale, the officer who conducts the same must file with the clerk of the court in which the action is pending a verified report and account of the sale, together 43 See Code Civ. Proc, sec. 696. 44 Code of Civil Procedure, section 729, second sentence, new provision in effect Marcli 9, 1893, provides: '^Within thirty days after such sale, the commissioner must file with the clerk of the court in which the action is pending a verified report and account of the sale, together with the proper affidavits, showing that the regular and required notice of the time and place of the sale was given, which report and account shall have the same force and effect as the sheriff's return in sales under ex- ecution. ' ' 45 Within Thirty Days After the Sale.— The time is directory. In Southern California Lumber Co. v. Ocean Beach Hotel Co., 94 Cal. 217, 224, 28 Am. St. Eep. 115, note, 29 Pac. 220, the court said: ^^The same reasons which uphold the validity of a sale by the sheriff after the return day of the writ, where the levy was made in its lifetime, uphold a sale in cases where no levy is required. Having a right to subject the property to sale for a satisfaction of the judgm.ent, the time within which it may be done is directory, and under the control of the court. The court has at all times such control of its process as to prevent it from becoming a source of injury, but, in the absence of some showing that injury has re- § 140 SALE OF PROPERTY. • 263 with the proper affidavits, showing that the regu- lar and required notice of the time and place of the sale was given, which report and account shall have the same force and effect as the sher- iff's return^^ in sales under execution. Stibdivision 5. Finality of Sale. 141. Sale Presumed to be Final. A sale of encumbered property made by an officer of court under the mandate thereof is pre- sumed to be final.^'' suited from a delay in making the sale, it should not bp set aside merely because it was not made before the return day of the writ. '^ This decision was rendered before the enactment of code section 729, as above, but the time for the report was set by the court. There seems no reason why the same reasoning should not apply under the code. 46 The Sheriff's Return.— Compare Code of Civil Procedure, section 683, which provides: ^^The execu- tion must be made returnable at any time not less than ten nor more than sixty days after its receipt by the sheriff, to the clerk with whom the judgment- roll is filed. When the execution is returned, the clerk must attach it to the judgment-roll. If any real estate be levied upon, the clerk must record the execution and the return thereto at large, and certify the same under his hand as true copies, in a book to be called the * Execution- book,' which book must be indexed with the names of the plaintiffs and defendants in execution, alpha- betically arranged, and kept open at all tipies during office hoars, for the inspection of the poiblic, without charge. It is evidence of the contents of the orig- inals whenever they or any part thereof may be destroyed or mutilated.'' 47 Hopkins v. Wiard, 72 Cal. 259, 263, 14 Pac. 687; Connick v. Hill, 127 Cal. 162, 165, 59 Pac. 832. 264 THE FORECLOSUBE ACTION. § 142 142. Inadequacy of Price not Ground for An- nulling Sale. [Where the property is redeemable from the sale]/^ mere inadequacy of price is not a suffi- cient ground for annulling such sale.^^ 48 Each of the cases where the rule was stated was a case in which the property was redeemable. 49 Inadequacy of Price is a fact which is admitted ill evidence to establish, in connection with other cir- cumstances, fraud in the officer making the sale, but is never of itself sufficient to annul a sale, and cer- tainly would not be sufficient under our law, which provides for the redemption of the property sold: Smith v. Eandall, 6 Cal. 47, '52, 65 Am. Dec. 475; Central Pacific E. E. Co. v. Creed, 70 Cal. 497, 501, 11 Pac. 772; Connick v. Hill, 127 Cal. 162, 165, 166, 59 Pac. 832. See, also, May v. Hatcher, 130 Cal. 627, 630, 63 Pac. 33. In Thomas v. San Diego College Co., Ill Cal. 358, 366, 43 Pac. 965, however, the court thought that *^a court may set aside or refuse to confirm a, sale where special circumstances have prevented competition, and assurance is given that upon a^ resale a better price can be obtained, sufficient to justify the delay and additional expense.'' Moreover, in Haynes v. Backman (Cal.), 31 Pac. 745, where it was shown that the mortgaged property was sold for a very inadequate price, that the deputy having charge of the sale had been asked to bid in the mortgagee's absence, but had failed to do so, that the purchaser was aware of the mortgagee's intention to bid, and that the mortgagee would be unable to collect the deficiency from the mortgagor, the sale was set aside (apparently on the ground of the mort- gagee's excusable neglect), upon his application made the next day after the sale. The court said: *'It is true, it has been held that mere inadequacy of price will not justify a court in setting aside a sale where all the proceedings are regular and free § 143 SALE OF PROPERTY. 265 143. Nor is Mere Reduction of Amount of En- cumbrance upon Appeal. The mere reduction by the appellate court o£ the amount adjudged to be owing upon an obli- gation secured by an encumbrance which has been foreclosed is not sufficient ground for set- ting aside a sale of the encumbered property which had been made in satisfaction of the se- cured obligation.^^ from fraud or mistake. Still, in numerous cases upon this subject, that fact figures as an important factor. Here the attorney [of the mortgagee] had left with the deputy sheriff his bid. Such course is not unusual, and, if the deputy was unwilling to accept the bid in that form, he ought to have in- formed the attorney of such fact, in which case, very likely, knowing that he might be detained, he would have had some person present to bid for him. Set- ting aside the sale so promptly will harm no one except a purchaser who insists upon an unfair ad- vantage obtained by this excusable neglect on the part of the plaintiff ^s attorney, while the client will be irreparably injured if the sale i« allowed to stand.'' 50 Mere Reduction of Amount on Appeal not Ground. — Where a party appealed from a foreclosure judgment, but filed no stay bond, and the property v/as sold to the mortgagee, the court, considering whether such sale should be set aside, said: '^Upon the reversal of a [money] judgment, a sale to the plaintiff of the defendant's property for the satis- faction of the judgment in whole or in part, will be set aside. The reason for this rule is that, as the plaintiff' 's claim to have the property sold depends upon the judgment^ the reversal of the judgment destroys this claim, and takes away all right to retain the defendant's property. ^^The reason of the rule ceases, however, when a judgment directing the sale of specific property, as 266 THE FORECLOSURE ACTION. §144 144. Relief of Party Injuriously Affected by Ir- regularity in Sale. A party to the action, or a third person holding an interest in the property sold, who has been in- juriously affected by an irregularity in the sale of the property, may, upon application to the court, cause the sale to be vacated.^^ in the case of a foreclosure of a mortgage to satisfy a lien thereon, is afterward modified on appeal by merely reducing the amount of the lien without changing that portion which directs a sale of the property. In such a case, unless the defendant [owner of the encumbered property] tenders to the plaintiff [encumbrancer] the amount which the judg- ment, as modified, declares he is entitled to receive from the sale of the lands, together with the costs incurred upon the original sale, it should be made to appear that there was som-e unfairness in the sale, or that the property would, upon a resale, bring a larger amount than at the first sale, before he could claim a right to have the sale set aside ^^: Barnhart V. Edwards, 128 Cal. 572, 576, 577, 61 Pac. 176. But the reversal of the judgment on appeal is suffi- cient ground • for setting the sale aside: Cowdery v. London and San Francisco Bank, Lim., Cal., June 15, 1903. f>i Relief of Party Injuriously Affected by Irreg- ularity in Sale.— '^Whether a motion to vacate a sale of property made in execution of a judgment, on ac- count of some irregularity on the part of the officer m^aking the sale, should be granted, rests very largely in the discretion of the court before whom the mo- tion is made; and it is immaterial whether such irreg ularity consists in disregarding the provisions of the statute for making the sale, or in failing to observe and follow some express direction in the judgment. A party to an action cannot claim an absolute right to have such sale vacated unless he shall show that he has sustained some injury by reason of the irreg- § 145 SALE OF PROPERTY. 267 145. Relief of Purchaser when Sale Null, A purchaser who, after his purchase, discovers that he did not ohtain the interest subjected to sale by reason of a failure to obtain jurisdiction of the subject matter or of the parties, or other cause, may, on petition to the court, be released from his purchase and cause the sale to be va- cated.s2 nlarity. Even if the judgment contain express direc- tions as to the form and manner of the sale, if the parties to the action consent that the officer may dis- regard these provisions, they will not afterward be permitted to object to such disregard. A stranger will not be permitted to intrude himself into the controversy, unless he shall very clearly show that he has some interest in the property sold, and also that, by reason of the manner in which the sale was con- ducted, he will be injuriously affected if the sale is permitted to stand^': Humboldt Sav. etc. Soc. v. March, 136 Cal. 321, 68 Pac. 968. Where a foreclosure action was grossly irregular, and a party to the action was injured thereby, the sale may be set aside where the motion to set aside was made before the expiration of the time of redemption: Van Loben Sels v. Bunnell, 131 Cal. 489, 492, 493, 63 Pac. 773. Where, in a mortgage, foreclosure judgment, writ of sale, and notice of sale the land was erroneously described through mutual mistake, and an action was brought to reform the mortgage and other in- struments, ^^it is in the power of the court of equity, after having reformed the mortgage and proceedings down to the sale, to direct a new notice and sale, if justice requires if: Busey v. Moraga, 130 Cal. 586, 588, 589, 62 Pac. 1081. 52 Boggs V. Hargrave, 16 Cal. 559, 564. Com- pare the case of Branham v. Mayor and Common Council of San Jose, 24 Cal. '585, 608, where relief was denied the purchaser. 268 THE FORECLOSURE ACTION. § 145 Where^ however, the purchaser obtains the in- terest specifically subjected to sale, but by mu- tual mistake of fact a part of the property was omitted from the description of the property contained in the writ of sale, and the deed fol- lowed the writ, the purchaser is not entitled to maintain an independent action to correct the mistake.^^ Rationale.— While the purchaser takes the risk that the interest sold him may not constitute a valid title, he nevertheless is entitled to receive the interest specifically subjected to sale, as it is for that interest he m-akes his bid and pays his money: Boggs v. Har- grave, 16 Cal. 550, 564, 76 Am. Dec. 561. See, also, Code Civ. Proc, sec. 708, which safeguards the pur- chaser at execution sale; but the second sentence of this section, at any rate, does not seem to be ap- plicable in foreclosure cases. 53 Hull V. Calkins, 137 Cal. 84, 69 Pac. 838. Quivey v. Baker, 37 Cal. 465 (see section 245, be- low), in which a sheriff's deed was reformed, differs from this case in two essential respects: (1) There was no mistake as to the property intended to be sold or as to that in fact sold, the property being pointed out to the bidders on the ground, though the property was sold under a mistaken description; but here the mistake ^^was not in describing the prop- erty to be sold, but in omitting to provide for the sale of a part of the property that might have been sold.'' (2) In the Quivey case, the mistake occurred originally in the mortgage and from that was carried into the foreclosure proceedings, and "this fact ''fur- nished the ground of the decision, the court saying, equity ' will not only go back to the original error, and reform it, but will administer complete justice by cor- recting all subsequent mistakes which grew out of and were superinduced by the first '; but here there was no mistake in the trust deed, but merely a mistake of § 146 SALE OF PROPERTY. 269 Subdivision 6. Delivery of Property and Certifi- cate of Sale. 146. Movable Property Capable of Manual De- livery to be Delivered to Purchaser. When the purchaser of movable property capable of manual delivery pays the purchase money, the officer making the sale must deliver to the purchaser the property, and, if desired, execute and deliver to him a certificate of sale.^* 147. Certificate of Sale of Other Movable Prop- erty to be Given Purchaser. When the purchaser of any movable property not capable of manual delivery pays the purchase money, the officer making the sale must execute and deliver to the purchaser a certificate of sale.^^ 148. Certificate of Sale of Immovable Property to be Given Purchaser. Upon a sale of immovable property, the ofli- cer must give the purchaser a certificate of sale, containing (1) a particular description of the property sold; the judge sup^erinduced by the mistake of the at- torneys^' of the trustee, in the production of which the trustor in no way participated: Hull v. Calkins, 137 Cal. 84, 69 Pac. 838, 840. 54 See Code Civ. Proc, sec. 698, first sentence. 55 See Code Civ. Proc, sec. 699, first sentence. 270 THE FORECLOSURE ACTION. § 148 (2) the price bid for each distinct lot or parcel; (3) the whole price paid; and (4) in case the sale was made subject to re- demption^ a statement to that effect; and if the judgment under which the sale has been made is payable in a specified kind of money or currency, the certificate must also specify the kind and state that the redemption can only be effected in such specified kind of money or currency.^^ 149. Certificate of Sale Evidence of Title. The certificate of sale is evidence that the title of the property sold has become vested in the purchaser — conditionally where redemption is allowable, otherwise unconditionally ; and when in the case of immovable property, the title is or becomes absolute, the certificate is evidence of the right of the purchaser or his assignee to a deed/'*'' 150. What Equivalent to Assignment of Certifi- cate. A deed of the property described in the cer- tificate of sale made by the certificate holder be- 56 See Code Civ. Proc, sec. 700, Practice Act, sec. 229, in part. The last clause of the fourth subdivision was added by the amendment of April 27, 1863, to the section of the Practice Act. 57 Foorman v. Wallace, 75 Cal. 552, 556, 17 Pac. 680; Eiley v. Martlnelli, 97 Cal. 575, 583, 33 Am. St. Kep. 209, 32 Pac. 576. r § 150 SALE OF PROPERTY. 271 fore the sheriff's deed is given^ whether before or after the expiration of the time of redemption, is equivalent to an assignment of the certifi- cate.^^ 151. Duplicate Certificate of Sale of Immovable Property must be Filed.^*^ The officer must file a duplicate certificate of sale^^ of immovable property in the office of the recorder of the county; and the recorder must record the same as prescribed by law. 58 Deed by Purchaser Ectuivalent to Assignment of Certincate: Green v. Clark, 31 Cal. 591, 594, 595 (where the deed was made before the expiration of the time of redemption) ; Ward v. Dougherty, 7'5 Cal. 240, 244, 245, 7 Am. St. Rep. 151, 17 Pac. 193 (where the deed was made subsequent thereto); Leonard v. rivnn, 89 Cal. 535, 539, 23 Am. St. Eep. 500, 26 Pac. 1097. In Page v. Rogers, 31 Cal. 293, 305, the court says: '^If a sale of the purchaser's interest after the time for a redemption expires operates as an assign- ment of the sheriff's certificate of sale, a sale before the time expires must have the same operation.'' 59 See Code Civ. Proc, sec. 700, last sentence. Also Pol. Code, seq. 4237. 60 Insufacient Duplicate Certilcate.— Where the certificate originally recorded erroneously stated a cer- tain person to be the purchaser, and an amended certifi- cate was afterward recorded, in which the date of the sale was stated as that upon which the amended certificate was made, conceding that the officer could make the amended certificate after several months, and that redemptioners or other parties were called to look for additional certificates of sale, as an ex- amination of the record would not in this case have shown the amended certificate to refer to the sale, 272 THE FORECLOSURE ACTION. § 152 152. When Filed, Certificate Imparts Notice. The^^ filing of the duplicate certificate of sale by the ofiicer imparts constructive notice of the interest in the property acquired by the pur- chaser under it, which notice continues after the expiration of the time of redemption [at least for a time reasonable for procuring a sheriff^s deed]«2 The^^ purchaser is also protected against all rights in the property of which he had neither actual nor constructive notice at the time of such filing. as the date thereof was not correctly stated, the amended certificate would not be notice to anybody: Fekin etc. Co. v. Kennedy, 81 Cal. 356, 22 Pac. 679. "^ 61 Page V. Eogers, 31 Cal. 293, 309-321; Foorman V. Wallace, 75 Cal. 552, 557, 558, 17 Pac. 680. Nor does filing it in an unusual place in the office of the recorder render the filing insufficient, so long as the duplicate is safely kept and preserved: Page v. Eogers, 31 Cal. 293, 307-309, Shafter, J., dissenting. 62 At Least for Time Reasonable for Procuring Sheriff's Deed.— In Page v. Eogers, 31 Cal. 293, 317, this question is discussed, but not determined, al- though it is intimated that culpable delay might vitiate the notice. It was, however, determined that a mere delay of a year and ten days was not un- reasonable. 63 This follows from the fact that the certificate of sale is an instrument, whereby an interest or title is created within the meaning of the recording acts: See Civ. Code, sec. 1107; Foorman v. Wallace, 75 Cal. 552, 556, 557, 17 Pac. 680; Eiley v. Martinelli, 97 Cal. 575, 583, 32 Pac. 576, 33 Am. St. Eep. 209; Duff V. Eandall, 116 Cal. 226, 231, 58 Am. St. Eep. 158, 48 Pac. Q6. For the term "instrument^' means a writ- § 153 SALE OF PROPERTY. 273 Subdivision 7. Operation of Sale. 153. Sale Extinguishes Secured Obligation Pro Tanto. A sale of encumbered property extinguishes, so far as satisfied, each obligation secured by the property ordered to be sold.^^ 154. Sale Vests Encumbered Property in Pur- chaser. The sale vests in the purchaser,^^ or, where ten paper, signed and delivered by one person to another, transferring the title to, or creating a lien on, property, or giving a right to a debt or a duty: Hoag V. Howard, 55 Cal. 564; Foorman v. Wallace, 75 Cal. 552, 555, 556, 17 Pac. 680. 64 Central Pacific E. R. Co. v. Creed, 70 Cal. 497, 500, 11 Pac. 772; Reynolds v. London etc. Ins. Co., 128 Cal. 16, 19, 20, 21, 79 Am. St. Rep. 17, 60 Pac. 467. Contra, National Bank v. Union Ins. Co., 88 Cal. 497, 508, 509, 22 Am. St. Rep. 324, 26 Pac. 509, over- ruled in Reynolds v. London etc. Ins. Co., above. 65 Sale Vests Property in Purchaser.— In case of sale of movable property, see Code of Civil Procedure, sections 698 and 699, last sentence in each providing: ''Such certificate conveys to the purchaser all the right which the debtor had in such property on the day the execution or attachment was levied.'* In case of immovable property, see Code of Civil Procedure, section 700, in part, providing: ''Upon a sale of real propierty, the purchaser is substituted and acquires all the right, title, interest, and claim of the judgment debtor thereto; and when the estate is less than a leasehold of two years* unexpired term, the sale is absolute. In all other cases, the property Liens— 18 274 THE FORECLOSUHE ACTION. § 154 redemption is allowable^ in a redemptioner who redeems from him, such interest in the property sold as belonged to all parties whose rights in is subject to redemption/^ Practice Act, section 229, as amended May 15, 1862, provided substantially the same. The purchaser comes in, so far as title is concerned, as successor by operation of law of the person whose title is sold, and not by independent title: Le Eoy v. Kogers, 30 Cal. 229, 235, 89 Am. Dec. 88. Thus prior to the entry of a foreclosure judgment, the mortgagor holds the title to the mortgaged prop- erty subject to the lien of the mortgage, and after the judgment is entered he holds it subject to the lien of the judgment; but after the sale he has only the right of redemption, while the purchaser has the entire beneficial interest in the prop'erty, subject to be defeated by a redemption from the sale: Eeynolds V. London etc. Ins. Co., 128 Cal. 16, 20, 79 Am. St. Eep. 17, 60 Pac. 467. Historical.— Tra^etiee Act, 229 (now Code Civ. Proc, sec. 700), as enacted 1851, and until the amendment of May 15, 1862, in part, provided: '^Upon a sale of real property, when the estate is less than a leasehold of two years' unexpired term, the sale shall be absolute. In all other cases, the real property shall be subject to redemption, as pro- vided in this chapter.'' McMillan v. Eichards, 9 Cal. 365, 70 Am. Dec. 655, was decided while this provision was in force; and the court holds: ''The estate remains in the mort- gagor until a consummation of the sale by convey- ance" (p. 412). ''The title remains in the mort- gagor until conveyance executed. Until then the purchaser has no .legal estate in the premises, but only a right to an estate which might be perfected by conveyance" (p. 415). Other cases, many of them decided after the amendment of 1862, say that the title passes upon the consummation of the sale by the sheriff's deed, § 154 SALE OF PROPERTY. 275 and that meanwhile the purchaser has a mere lien: Knight V. Fair, 9 Cal. 117; Montgomery v. Tutt, 11 Cal. 190, 192; People v. Mayhew, 26 Cal. 65'o, 660; Baber v. McLellan, 30 Cal. 135; Page v. Eogers, 31 Cal. 293, 300; Swain v. Stockton Sav. etc. Soc, 78 Cal. 600, 604, 12 Am. St. Eep. 118, 21 Pac. 365; Leon- ard V. Flvnn, 89 Cal. 535, '540,' 23 Am. St. Eep. 500, 26 Pac. i097. Likewise in Pacific Mut. Life Ins. Co. v. Beck (Cal.), 35 Pac. 169, 170B, it is said that the pur- chaser at foreclosure sale has the rights of an owner only when he becomes entitled to a deed (a state- ment subject to important qualifications). In accordance with this view, it was said in Mc- Millan V. Eichards, 9 Cal. 365, 415, 70 Am. Dec. 655, note, that redemption could be made at any time before title passed by the conveyance. In other cases, some recent, as Foorman v. Wal- lace, 75 Cal. 552, 556, 17 Pac. 680, fhe court takes an intermediate view and holds that the owner of the property sold retains the mere dry legal title, as dis- tinguished from the equitable title. In Pollard v. Harlow, 138 Cal. 390, 71 Pac. 454, the court for the first time clearly pioints out the change in the law wrought by the amendment of 1863. The court says: ''The case of Haskell v. Manlove, 14 Cal. 54, and the previous case of Knight v. Fair, 9 Cal. 117, and McMillan v. Eichards, 9 Cal. 412, 70 Am. Dec. 65'5, note, involved the construction of section 229 of the Practice Act, prior to the amendment of April 27, 1863 [May 15, 1862], which materially changed the law, and has" been carried into the codes. The case of Page v. Eogers, 31 Cal. 301 et seq., was subsequent to the amendment, but the transactions involved were of prior date thereto, and what is said by the court must be regarded as applying to the case before it; and the remark will apply to the case of McMinn v. O'Connor, there cited. In later cases, the court, following Haskell v. Manlove, and ether cases under the old law, sometimes refer to the title of the purchaser as 'equitable,' but in none of them was the question involved or considered, or 276 THE FORECLOSURE ACTION. § 154 the change of the law by the amendment of 1863 remarked upon: Simpson v. Castle, 52 Cal. 649, and Eobinson v. Thornton [102 Cal. 680, 34 Pac. 120]. Nor do we think that under the law as amended, the title of the purchaser can be so regarded. ^'The language of section 700, Code of Civil Pro- cedure, is that upon the sale of the property 'the purchaser is substituted to and acquires all the right, title, interest, and claim of the judgment debtor thereto; which is to say, unequivocally, that he acquires the legal, as well as the equitable, title. The only qualifications are that (when not a lease- hold of less than two years' unexpired term), the property shall be 'subject to redemption'; that a deed shall be subsequently given (Code Civ. Proc, sec. 703), and that pending the time for redemption the possession shall remain with the defendant: Code Civ. Proc, sec. 706. But no one of these qualifica- tions is inconsistent with the vesting of the legal title in the purchaser. With regard to the first, the case is simply the familiar one of a legal title, defeasible upon the happening of a condition subse- quent; and as to the second, the deed gives 'to the purchaser no new title to the land purchased by him, but [is] merely evidence that the title has become absolute': Eobinson v. Thornton [102 Cal. 680, 34 Pac. 120]. Nor is the continued possession of the lan^l by the judgment debtor any more incompatible with tiie existence of the legal title in another than in the ordinary case of a tenant and his landlord. "We therefore have but little doubt that, under the provisions of the code as they now ex,ist, the purchaser of real estate at execution sale acquires the legal title to the land, subject to defeasance by the happening of the condition subsequent. But with- out passing definitely on this point,- it will be suffi- cient to hold " On a petition for rehearing in bank, Shaw, J., said, February 24, 1903: "In denying a rehearing in this ease I desire to say that that part of the opinion to the effect that the purchaser of land at sheriff's sale or commissioner's sale acquires the legal title § 154 SALE OF PROPERTY. 277 respect thereto were duly litigated in the fore- closure action and ordered to he sold hy the fore- closure judgment^^^ together with every appur- to the land, must be taken coupled with the qualifica- tions stated in the immediate context. It is enough, for the purposes of the decision of the case, to say that such purchaser acquires a qualified title which is sufiicient to, and does, carry with it the right to redeem from another sale. To hold thus does not make it necessary to also hold that the sale devests the judgment creditor of his right to redeem from another sale. The right may exist in both.'' 60 Vests in Purchaser Rights of All Parties Whose Rights Were Litigated and Ordered to be Sold. — The rights of subsequent purchasers or en- cumbrancers of the mortgaged property, made par- ties in the foreclosure action, are cut off by the judicial sale of the property: Shores v. Scott Eiver Co., 21 Cal. 135; Grattan v. Wiggins, 23 Cal. 16, 35. The judgment and all proceedings in an action to foreclose a mortgage are conclusive against a trans- feree of the property not of record, such transferee not being a necessarv party: Breed] ove v. Norwich Union Fire Ins. Co., 'l24 Cal. 164, 166, 56 Pac. 770. See, also, Daniels v. Henderson, 49 Cal. 242, 248. The sale does not affect the rights of necessary parties not joined in the action: See sec. 109, above. Where the issue is raised by a foreclosure com- plaint that the interest or right which certain par- ties to the action claim is subsequent to and subject to the encumbrance to foreclose which the action is brought, if the persons so impleaded fail to appear and set up their interests, whatever interest they have which is in fact subsequent to the encumbrance litigated will be foreclosed by the judgment: Poett v. Stearns, 28 Cal. 226; Anthony v. Nye, 30 Cal. 401; Himmelraann v. Spanagel, 39 Cal. 389, 391; Sichler V. Look, 93 Cal. 600, 608, 609, 29 Pac. 220. ^'It has been stated in several cases that the effect of a sale under a judgment in foreclosure is to 278 THE FORECLOSURE ACTION. § 154 tenance of such interest,^'^ subject, however, where redemption is allowable, to the right of possessions^ of such property during the period of redemption by the person entitled to posses- transfer to the purchaser the title of the mortgagor as it existed at the date of the mortgage, and that in an action for its foreclosure the rights of defend- ants which were acquired subsequent to its date are extinguished by such sale These expres- sions in reference to the effect of a sale under fore- closure were, however, but the statement of a gen- eral principle in which only the ordinary facts and the usual conduct of the parties were to be con- sidered, but are inapplicable in the consideration of an unusual state of facts or conduct, as where the mortgagee fails to record his mortgage until after a third person has acquired an interest in the land. It would be a harsh rule of procedure to hold that the foreclosure of a mortgage which the statute had declared to be void would extinguish the interest of such third pierson'^: Cadv v. Purser, 131 Cal. 552, 559, 82?. Am. St. Rep. 391, 63 Pac. 844. 07 With Appurtenances Thereof: Hungarian Hill etc. Co. V. Moses, 58 Cal. 168, 174; Clyne v. Benicia Water Co., 100 Cal. 310, 34 Pac. 714. Compare Farmer v. Ukiah Water Co., 56 Cal. 11; Dixon V. Schermeier, 110 Cal. 582, 585, 586, 42 Pac. 1091. So an amount of water conducted to property in a pipe or channel is transferred by the sale: Clyne v. Benicia Water Co., 100 Cal. 310, 34 Pac. 714. But where the purchaser of mortgaged premises at foreclosure sale disclaims to the mortgagor any interest in certain nursery stock on the premises, the mortgagor may, after the expiration of the period of redemption, enforce his right tO remove the nursery stock: Wallace v. Dodd, 136 Cal. 210, 68 Pac. 693. 68 Eight of Possession not Changed: See sec. 167 below. § 154 SALE OF PROPERTY. 279 sion before the sale, and subject also in such case to be defeated by a redemption.^^ 155. Sale Extinguishes Rights of Subordinate Encumbrancers Therein. '< The sale extinguishes the rights of every sub- ordinate encumbrancer in the property affected by the encumbrance which was foreclosed; sav- ing, to such encumbrancer, when a necessary party but not duly joined, the right to refund the pur- chaser his purchase money with interest and nec- essary expenditures at any time before his en- cumbrance is extinguished by lapse of time and to thereupon be subrogated to the rights of such purchaser.''^ 156. Sale does not Affect Paramount Claims Thereto. The sale does not affect rights in the encum- bered property held by persons claiming title ad- 69 Where Redemption Allowable Title Subject to be Defeated.— Where redemption is allowable, the title passes to the purchaser, but the sale is a con- ditional one, which may be defeated by the payment of a certain sum by certain designated persons within a certain limited time: Page v. Eogers, 31 Cal. 293, 301; Central Pacific R E. Co. v. Creed, 70 Cal. 497, 500, 11 Pac. 772; Tilley v. Bonney, 123 Cal.. 118, 124, 55 Pac. 798; Breedlove v. Norwich Union Fire Ins. Co., 124 Cal. 164, 166, 56 Pac. 770; Eeynolds v. Lon- don etc. Ins. Co., 128 Cal. 16, 20, 21, 79 Am. St. Eep. 17, 60 Pac. 467. 70 See sec. 110, and notes, above. 280 THE FORECLOSURE ACTION. § 156 verse''^ or an interest paramoimt'^^ to that of the owner of the interest subject to the encumbrance in controversy in the action, in which the sale was ordered, unless their claims were 71 Interest of Adverse Claimant not Affected by Sale. — A foreclosure sale made in an action to fore- close a mortgage does not affect an adverse claimant of the mortgaged property. It merely has the effect of transferring the interest of the mortgagor to the jmrchaser— a transfer with which the adverse claim- ant is not concerned. As against a judgment creditor of the adverse claimant, the effect of the foreclosure is simply to transfer the title of the mortgagor to the purchaser as of the date of the mortgage: Eamsbottom v. Bailey, 124 Cal. 259, 262, 50 Pac. 1036. See, also, sec. 99 and notes, above. 73 Paramount Interest not Affected by Sale.— If the title of a party defendant in a foreclosure action is a paramount one, it will not be affected by a foreclosure, whether he appears or not: Murray v. Etchepare, 129 Cal. 318, 321, 61 Pac. 930. A sale of mortgaged premises under a judgment entered against a party made a party because claim- ing some interest or right in respect to the mortgaged premises, which is subsequent to and subject to the mortgage to foreclose which the action was brought, will be limited in its effect to the rights acquired therein by such claimant subsequent to the mortgage, irrespective of the character of the averment. If the claimant has any interest in the mortgaged prem- ises paramount to the mortgage it will not be affected bv the judgment or the sale thereunder: Sichler v. Look, 93 Cal. 600, 609, 29 Pac. 220. A familiar example of a paramount interest is one transferred by a mortgagor of the property before the execution of the mortgage by him. Where the averment is made by a foreclosure com- plaint that the interest or right which certain parties § 156 SALE OF PROPERTY. 281 with the consent of the parties and of the court litigated and adjudicated in the foreclos- ure action and found to be covered by the en- cumbrance foreclosed;''^ nor are the rights of any- superior encumbrancer in respect to the prop- erty affected^ except where such encumbrancer was properly made a party in the action and his rights adjudicated in order that the obligation to the action claim is subsequent and subject to the encumbrance to foreclose which the action is brought, and such parties defendant do not defend, any prior interest which may be held by them is not affected by the judgment: Beronio v. Ventura Co. Lumber Co., 129 Cal. 232, 238, 79 Am. St. Eep..ll8, 61 Pac. 958. Illustrations. — A surviving wife owns an un- divided half interest in a probate homestead, and each minor child has a proportionate undivided share of the other half, subject to the right to occupy the homestead by the widow during her life and by each child during minority. So, where a surviving wife mortgages her interest, in case of foreclosure the purchaser will obtain the property subject to the right of occupancy in the minor children: Hoppe v. Foun- tain, 104 Cab 94, 101, 37 Pac. 894; Hodge v. Norton, 133 Cal. 99, 65 Pac. 123. Or if a child who has reached majority mortgages his interest, and the mortgage is foreclosed, the pur- chaser takes subject to the right of occupancy by the wife during her life, and by any minor children: Moore v. Hoffman, 125 Cal. 90, 73 Am. St. Eep. 27, 57 Pac. 769. The mortgage is a waiver by the mortgagor of the right of occupancy, but cannot- terminate the rights of the other parties: Hodge v. Norton, 133 Cal. 99, 101, 65 Pac. 123. 73 Unless the Claim was Litigated and Adjudi- cated.— See a discussion of this point under section 99, and notes above. 282 THE FORECLOSURE ACTION. § 156 secured by his enenmbrance might be liquidated from the proceeds of the sale, in which case his rights are determined by the sale.''^ 157. Effect of Purchase by One Person Inter- ested in Secured Obligation at Request of Another. Where a person who owns some interest in or right to an obligation secured by an encum- brance causes the encumbered property to be sold in satisfaction of his demand, and at the in- stance of another person also holding some right in respect to the secured obligation purchases the encumbered property at the sale made to liquidate the encumbrance, as between him and the person at whose instance he purchased th'3 property, the purchase is not absolute, and he is not liable to the latter person for the propor- tion of the purchase price due him, but he holds the legal title to the property as trustee for the 74 Eights of Superior Encumbrancer, How Af- fected.— In MeComb v. Spangler, 71 Cal. 418, 424, 12 Pac. 347, the court says: ''The decree can have no effect upon the rights of persons having priority, whether they are made parties to the action or not. .... In the exceptional cases where prior mort- gagees are made parties, this is done that the court may order a sale of the whole estate, and thus make a complete title in the purchaser. In such cases the complaint may be treated as in the nature of a bill to foreclose and to redeem from the prior mortgage." As to when a prior encumbrancer is a proper party in a foreclosure action, see section 106 above. § 157 SALE OF PROPERTY. 283 latter person^ who is entitled to have the trust property converted into money and the proceeds ratably proportioned;''^ but nnder other circum- stances^ except in case of frauds a sale to such a person is absoluteJ^ S'uMivision 8. Title of Purchaser of Immovable Property. 158. Purchaser Entitled to Deed When Title Ab- solute. When the title of the purchaser of immovable property or of his successor in interest by as- signment or by operation of law becomes abso- lute/'' the person in whom the title has thus be- 75 This IS true where one of two persons jointly interested in an obligation secured by an encum- brance at the request of the other person purchases the property at the foreclosure sale thereof in satis- faction of such secured obligation: Hardin v. Dickey, 123 Cal. 513, 515, 516, 56 Pac. 258. Where a mortgagee pledges the note secured by his mortgage, and the pledgee, at the request of the mortgagee, purchases the land at the foreclosure sale thereof, the pledgee becomes the trustee of the land, and entitled to hold the legal title thereto until the pledgor satisfies the obligation .owing him, or causes the land to be sold under judicial process and the proceeds applied to the satisfaction of the pledgee's interest in the secured demand: Hoult v. Eamsbottom^ 127 Cal. 171, 59 Pac. 587. 76 Kelly V. Matlock, 85 Cal. 122, 129, 24 Pac. 642. 77 As to when title becomes absolute, see section 183 below. But where* a valid redemption is made from the fc 284 THE FORECLOSUKE ACTION. § 158 come absolute''^ is entitled to receive a deed''^ thereof from the officer making the sale, or where such officer is dead, absent from the state, or in any wise disqualified, from the person who succeeds him in office.^^ The execution of the deed confers no new title to the property upon purchaser, the sheriff has no power to execute a con- veyance to the purchaser: Hershey v. Dennis, 53 Cal. 77,^ 80. 78 The Person in Whom the Title Has Become Absolute is Entitled to the Deed.— Thus, a deed given to the purchaser after he assigns the certificate of sale is void as between the parties: Green v. Clark, 31 Cal. 591, 594, 595; Ward v. Dougherty, 75 Cal. 240, 244, 245, 7 Am. St. Eep. 151, 17 Pac. 193. 79 Is Entitled to Receive Deed.— Code of Civil Procedure, section 703, fourth sentence, provides: ''If no redempition be made within twelve months after the sale, the purchaser, or his assignee, is en- titled to a conveyance; or if so redeemed, whenever ... . the time for redemption has expired, the last redemptioner, or his assignee, is entitled to a sheriff ^s deed.'' 80 Sheriff's Successor may Execute Deed.— Stats. 1858, p. 95, c. 121, sees. 1 and 3 provide: Sec. 1. ''Where lands have been or may hereafter bo sold by a sheriff, or other authorized officer, for taxes, or under an execution or order of sale, and the pur- chaser or his assigns may be entitled to a deed, and the sheriff, or other .officer, who made the sale, is dead or absent from the state, or in any wise dis qualified, it shall be lawful for the successor of said sheriff, or other officer, to make such deed to such purchaser, his assignee or assignees, in the same man- ner and with the same effect, as if made by the officer making such sale.'' Sec. 3. "Such deeds, so made as aforesaid, shall have the same force and effect as evidence as if made by the officer making such sale." § 158 SALE OF PROPERTY. 285 the recipient thereof^ but is merely evidence that the title has become absoliite.^^ 159. Deed Prematurely Made Void. A deed made by the officer before the sale has become absolute in consequence of the expira- tion of the period of redemption is void.^^ 160. Confers Eight of Possession. From the time the officer^s deed is given^ the recipient thereof is entitled to the possession of . the property described therein.^^ Thus the statute of limitations on a possessory action for the property commences to run against the re- cipient of the deed from the time of the delivery of the deed to him.^^ 81 Deed Merely Evidence: Eobinson v. Thornton, 302 Cal. 67'o, 680, 34 Pac. 120; Duff v. Eandall, 116 Cal. 226, 230, 58 Am. St. Eep. 158, 48 Pac. 66; Breed- love V. Norwich Union Fire Ins. Co., 128 Cal. 16, 20, 79 Am. St. Eep 17, 60 Pac. 437; Pollard v. Harlow, 138 Cal. 390, 71 Pac. 454. 82 Gross V. Fowler, 21 Cal. 392; Bernal v. Gleim, 33 Cal. 668, 675; Moore v. Martin, 38 Cal. 428, 438; Hall V. Yoell, 45 Cal. 584, 588; Perham v. Kuper, 61 Cal. 331; Phillips v. Hagart, 113 Cal. 552, 557, 54 Am. St. Eep. 369, 45 Pac. 843. The sheriff has no power to execute it before then, ' and it is void, not voidable: Gross v. Fowler, 21 Cal. 392. 83 Kldd V. Teeple, 22 Cal. 255; Leonard v. Flynn, 89 Cal. 535, 542, 23 Am. St. Eep. 500, 26 Pac. 1097; McDonald v. McCoy, 121 Cal. 55, 73, 53 Pac. 421. 84 Jefferson v. Wendt, 51 Cal. 537; Leonard v. Flynn, 89 Cal. 535, 542, 23 Am. St. Eep. 500, 26 Pac. 1097. 286 THE FORECLOSURE ACTION. § 161 161. Writ of Assistance Issuable Against Parties to Action.^^ As against the parties to a foreclosure action whose rights were foreclosed by the judgment rendered therein and other persons bound there- by,^^ but not as against third parties^^'' at any time after having obtained the officer^s deed, the recipient thereof may, after the presentation of the deed to the occupant, the making of a de- 85 If a writ of assistance is improperly issued or executed, the court can, on summary motion, set aside the writ or service thereof, and restore the possession of the property: Skinner v. Beatty, 16 Cal. 156. 86 That the writ is issuable against parties to the action and those bound thereby, see Frisbie v. Fo- garty, 34 Cal. 11. See, also, Montgomery v. Mid- dlemiss, 21 Cal. 103, 107, 81 Am. Dec. 146, as cited under note 88, below. 87 Writ cannot be Issued Against Stranger to Action. — On a motion for a writ of assistance, ques- tions of equitable cognizance between strangers to the foreclosure action, who are in possession of the property involved, and the applicant for the writ cannot be litigated: Henderson v. McTucker, 45 Cal. 647; Daniels v. Henderson, 49 Cal. 242, 247 j Enos v. Cook, 65 Cal. 175, 178, 3 Pac. 632. Illustrations.— A. writ cannot issue against a neces- sary party not joined as such in the foreclosure ac- tion: Burton V. Lies, 21 Cal. 87, 92; Steinbach v. Leese, 27 Cal. 295. Where a partner mortgages his interest in part- nership property, and a receiver of the partnership in posse;5sion of the property was not joined as a praty in the foreclosure action, a writ of assistance cannot issue against him: Autenreith v. Hassenauer, 43 Cal. 356. k § 161 SALE OF PROPERTY. 287 mancl for the possession of the property which was sold under the writ of sale, and a refusal to surrender the possession of the property,^^ with- Where a mortgagor declares a homestead on the mortgaged property, his wife is a necessary party in the foreclosure action, and the court will not grant a writ of assistance even against the husband alone, as it would be against the policy of the law to aid in separating the family, and to remove the husband, leaving the wife on the premises, and subject him to punishment as for a contempt if he should return to visit her or supply her with food: Hefner v. Urton, 71 Cal. 479, 12 Pac. 486. Where after the execution of a mortgage by a husband the wife declares a homestead upon the mort- gaged property, and after the husband ^s death an ac- tion is brought to foreclose the mortgage, in which the surviving wife is not made a party in her individual capacity, but merely in her representative capacity as executrix, a writ of assistance cannot issue against her individually: Stockton Bldg. etc. Assn. v. Chalmers, 75 Cal. 135, 7 Am. St. Eep. 173, 17 Pac. 229. Where the property affected by an encumbrance is in the possession of an adverse claimant, the foreclos- ure judgment cannot order the purchaser to be put into possession, as the right to the possession must be litigated with the adverse claimant in a separate pro- ceeding: San Francisco v. Lawton, 21 Cal. 589. 88 Must First Present Deed, Demand Possession, and be Refused the Same.— ^^ All that is requisite to obtain the writ, as against the parties and those claiming with notice under them after the commencement of the action, is to furnish to the court proper evidence of the presentation of the deed to them, and a de- mand of the possession, and their refusal to sur- render '': Montgomery v. Middlemiss, 21 Cal. 103, 107, 81 Am. Dec. 146. Also Horn v. Volcano Water Co., 18 Cal. 141; Montgomery v. Byers, 21 Cal. 107; Cali- fornia etc. Sav. Bank v. Graves, 129 Cal. 649, 651, 62 Pac. 259. In Sichler v. Look, 93 Cal. 600, 610, 29 Pac. 220, the 288 THE FORECLOSURE ACTION. § 161 out other preliminary,^^ obtain a writ of as- sistance to place himself in possession. This is not, however, an exclusive remedy in cases where it is applicable, but the person entitled to pos- court says: *^For the purpose of procuring a writ of assistance without delay, in case it may be required, it is expedient to include a provision [in the fore- closure judgment] that it may issue without further notice, as this is but a part of the execution of a judgment for foreclosure. ^ ' Historical. — In certain early cases it was held that unless the foreclosure judgment contained a direction to deliver possession, a preliminary order for such de- livery must be made before the writ of assistance could issue: See Montgomery v. Tutt, 11 Cal. 190; Skinner v. Beatty, 16 Cal. 156. But in Montgomery V. Middlemiss, 21 Cal. 103, 106, 107, 81 Am. Dec. 146, the court says: ''It is urged by the respondent, in support of the order refusing the writ of assistance, that the decree did not contain any direction to de- liver the possession [of the encumbered property] to the purchaser, and that no preliminary order for such delivery was made by the court We have come to the conclusion that the preliminary order may be omitted even where no direction for the delivery of possession is contained in the decree. The legal effect of the decree is the same without the direction." Evidence upon Which Writ may 6e Issued.— Bvidenee of the facts requisite to the issuance of a writ of as- sistance can properly be furnished by affidavit: Cali- fornia etc. Sav. Bank v. Graves, 129 Cal. 649, 651, 62 Pac. 259. But it is not sufficient for the applicant for the writ to produce the sheriff ^s deed alone, but he must pro- duce the judgment and writ also, they being essential to a valid deed (section 162 below) : People v. Doe, 31 Cal. 220. 89 Without Other Preliminary: See Montgomery v. Middlemiss, as cited in previous note, third paragraph. § 161 SALE OF PROPERTY. 289 session may resort to an independent possessory action.^® 162. Muniments of Title of Purchaser at Judi- cial Sale. The^^ title of the purchaser at foreelosnre sale is founded upon 00 Not Exclusive Remedy: Dickey v. Gibson, 121 Cal. 276, 279, 53 Pac. 704. ^'The remedy by writ of assistance is merely cumu- lative, and does not, if a failure to use it occurs, pre- clude the plaintiff [purchaser at the foreclosure sale] from bringing an action in ejectmenf : Trope v. Kerns (Cal.), 20 Pac. 82, 83. 01 Title of Purchaser Founded upon Certain Papers. ^'The title of a purchaser at a sale of real prop- erty on execution rests upon the judgment, execution, sale, and sheriff ^s deed. Eegularly the deed should recite the recovery of the judgment, the name of the judgment creditor or creditors, and of the judgment debtor or debtors, the issuing of execution on the judgment, and the levy and sale thereunder. The judgment and execution go to the sheriff's power to sell, and to his power to recite a sale, and to his power to give a deed also, and therefore the recitals are not admissible to prove the sheriff's authority to sell or his authority to recite a sale. To hold other- wise would be to reason in a circle. The power to sell, to recite, and to deed, having its origin in the judgment and execution, must be proved by a produc- tion of both under the rule of best evidence; but when the power has been so proved, the sheriff be- comes, so to speak, the accredited historian of the acts under it. He may narrate his proceedings on the back of the execution and return it into court, and, with or without that, he may issue a certificate to the purchaser, and both the certificate and return, if made, would, within the limits of the authority delegated to him, be evidence against all persons of the facts Liens— 19 290 THE FORECLOSURE ACTION. § 162 (1) a foreclosure judgment in full force at the time of the sale^^^ stated or recited therein. As already remarked, it is also the, official duty of the sheriff to make a like statement or recital in his deed, and it follows that a recital so made must be entitled to the same effect as an instrument of evidence as all the authorities concede to be due to the official return on the execution if one be made'': Hihn v. Peck, 30 Cal. 280, 287, 288. * * The power of the sheriff to make the deed pri- marily depends upon a valid judgment and execution, and that the execution and judgment are void can al- ways be shown by the debtor in defending against an action for possession. It has been held that a recital of those matters in the deed is not even evidence of the fact of their existence, and that their production in evidence is absolutely necessary to support the deed, or no title is shown'': Phillips v. Hagart, 113 Cal. 552, 556, 54 Am. St. Eep. 369, 45 Pac. 843. The purchaser *^is only required to show a sale, and the authority of the officer to mak-e it; the judgment and execution prove the latter, and the deed the former. He is bound to see that there is a judgment which is not void, and an execution which is regular upon its face": Blood v. Light, 38 Cal. 649, 653, 654, 99 Am. Dec. 441. In sales by sheriffs it is only necessary to prove their power to sell by producing the judgment and execution: Sim son v. Eckstein, 22 Cal. 580, 590. 03 Judgment must be in Full Force at Time of Sale.— One who deraigns title to property through a sale under an execution must show, not only the exe- cution and the sale, but also a valid judgment in sup- port of the execution. Unless there is a valid judg- ment in existence, neither the plaintiff himself nor the sheriff has any authority to deprive the defendant of his property. Even though there was a judgment in existence at the time the writ was issued, yet, if it has been vacated or satisfied before any sale is made under the execution, the power to make the sale has also been destroyed. A different rule obtains when I § 162 SALE OF PROPERTY. 291 (2) a writ of sale directed to the officer mak- ing the sale, this being his authority essen- tial to a valid sale,^^ and (3) a deed made by the proper officer and recit- ing the recovery of the judgment, the name of every judgment debtor, of every judgment creditor, the issuing of the writ of sale, and the sale thereunder. Whenever these papers are regular on their face, the title of the purchaser cannot be overthrown by collateral attack upon them.®* the judgment is vacated or appealed from after a sale of property under its authority. In such a case the bona fide purchaser is not affected even by a reversal of the judgment: Bullard v. McArdle, 98 Cal. 355, 357, 358, 35 Am. St. Eep. 176, 33 Pac. 193. A party in ejectment relying on a sheriff ^s deed must introduce not only the deed, but the judgment and execution by virtue of which the property was sold. The sheriff ^s deed is not admissible in evidence without first introducing the judgment which is tne authority for the sheriff to sell. An execution, without a judgment, gives the sheriff no authority to sell: Schuyler v. Broughton, 65 Cal. 252, 253, 3 Pac. 870. 93 Writ of Sale Prerequisite to Valid Sale. *'The order of sale .... is as essential to a recov- ery as the decree or the sheriff ^s deed; and the re- cital in the deed is as incompetent proof of the order of sale as of the decree '': Heyman v. Babcock, 30 Cal. 367, 370. ^'The party relying on a sheriff ^s deed must produce not only the judgment and the sheriff's deed, but also the execution under which the property was sold'': Quirk V. Falk, 47 Cal. 453, 455. 94 When These Papers Regular Sale cannot be Collaterally Attacked: Mayo v. Foley, 40 Cal. 281; 292 THE FORECLOSURE ACTION. § 163 Subdivision 9. Proceeds of Sale, 163. Application of Proceeds of Sale. The proceeds of the sale of the encumbered property must be applied (1) to the payment of the costs of court and expenses of sale,^^ (2) to the satisfaction in the order directed by the court of any secured and judicially estab- lished obligations,^^ and (3) any surplus remaining must be paid to the person whose property was sold under order of the court, unless otherwise directed by the court.^^ Eeeve v. Kennedy, 43 Cal. 649; Kelley v. Desmond, 63 Cal. 517. It is the policy of the law to uphold judicial sales when collaterally attacked; and if the officer has au- thority to sell, the sale will be upheld, notwithstanding any irregularity in the exercise of his power by him: Blood V. Light, 38 Cal. 649, 654, 655, 99 Am. Dec. 441; Hibberd v. Smith, 67 Cal. 547, 565, 566, 56 Am. St. Eep. 726, 4 Pac. 473, 8 Pac. 46. 95 Code of Civil Procedure, section 726, in part, provides: '*In such action the court .may, by its judgment, direct a sale of the encumbered property (or so much thereof as may be necessary), and the application of the proceeds of the sale to the payment of the costs of court, and the expenses of the sale, and the amount due plaintiff, including, where the mortgage provides for the payment of attorneys^ fees, such sum for such fees as the court shall find reason- able, not exceeding the amount named in the mort- gage." As amended, in effect February 26, 1901. 96 Disposition of Surplus.— Code of Civil Procedure, section 727, provides: *^If there be surplus money re- § 163 SALE OF PROPERTY. 293 Where a receiver is properly appointed in the foreclosure action^ expenses incurred by him for work and materials essential to the operation and preservation of the encumbered property must be liquidated before the proceeds of the sale are applied to the satisfaction of the secured obligations.^'' 164. When too Much Paid Encumbrancer, Ac- tion for Eecovery Sometimes Maintainable. Where, after the commencement of a fore- closure action, certain payments were duly made in liquidation of the secured obligation, but the encumbrancer took a default judgment and failed to credit such payments, the person whose prop- maining after the payment of the amount due on the mortgage, lien, or encumbrance, with costs, the court may cause the same to be paid to the person entitled to it, and in the meantime may direct it to be deposited in court. ' ' See, also, Code of Civil Procedure, section 691, in part, providing: ^^Any excess in the proceeds over the judgment and accruing costs must be returned to the judgment debtor, unless otherwise directed by the judgment or order of the court.'' Where a mortgagee foreclosed his mortgage in an action in which a receiver was appointed, and pur- chased the mortgaged property for the full amount of the secured obligation and costs, he is not entitled to the moneys in the receiver's possession, but they be- long to the mortgagor: Pacific Mutual Life Ins. Co. v. Beck (Cal.), 35 Pac. 169, 170A. 97 Atlantic Trust Co. v. Woodbridge Canal etc. Co., 86 Fed. (C. C.) 975. But claims for services rendered to the receiver in the construction of an ad- 294 THE FORECLOSURE ACTION. • § 164 erty was sold may thereafter maintain an action against the encumbrancer to recover back the amount so paid but not credited.^^ dition to the irrigation system against which the mortgage which was being foreclosed subsisted, the ad- dition never being completed, are not so preferred. 98 Maddux v. County Bank, 129 Cal. 665, 79 Am. St. Kep. 143, 62 Pac. 264. § 165 DEFICIENCY JUDGMENT. 295 AETICLE 7. • THE DEFICIENCY JUDGMENT. 165. Personal judgment to be docketed in case of deficiency. 165. Personal Judgment to be Docketed in Case of Deficiency.^ When the sheriff^s, commissioner's, or elisor's report shows that the proceeds of the sale are insufficient to satisfy the secured demand, or 1 Code of Civil Procedure, section 726, in part, provides: ''If it appear from the sheriff's return, or from the commissioner's report, that the proceeds are insufficient, and a balance still remains due, judgment must then be docketed by the clerk in the manner provided in this code for such balance against the defendant or defendants personally liable for such' debt, and it becomes a lien upon the real estate of such judgment debtor, as in other cases in which execution may be issued. ' ' As amended, in effect Feb- ruary 26, 1901. Code of Civil Procedure, section 1194, last clause, relating to actions for the foreclosure of mechanics' liens, provides: ''Whenever, in the sale of property subject to the lien, there is a deficiency of proceeds, judgment may then be docketed for the deficiency in like manner and with like effect as in actions for the foreclosure of mortgages.'' A judgment providing that "if the amount derived from the sale of the said property be not sufficient to pay each of the plaintiffs in full, then upon the com- ing in of the return of the sheriff of said county on 296 THE FORECLOSURE ACTION. § 165 upon a direction of the court in case the encum- bered property is found by proper proof to be valueless,^ a judgment for the amount still re- the said sale the clerk docket the judgment for such deficiency against the defendants'^ is in conformity with this provision, and does not provide for a per- sonal judgment except in case of deficiency: Hines v. Miller, 126 Cal. 683, 59 Pac. 142. See, also, Painter V. Painter, 98 Cal. 625, 626, 627, 33 Pac. 483. Before the amount of the deficiency is ascertained, the deficiency judgment is a mere contingent provi- sion: Chapin v. Broder, 16 Cal. 403, 422. A deficiency judgment, when docketed, cannot be con- sidered a new and independent judgment: Bowers v. Crary, 30 Cal. 621, 624. ''A docketed deficiency judgment has, no doubt, un- der our code, a somewhat peculiar character. It is not expressly made part of the judgment-roll. And as held m Bowers v. Crary, 30 Cal. 622, it cannot be considered an entirely new and independent judgment. But it differs from the docketing of an ordinary money judg- ment in this, that it makes definite and certain what, in the decree of foreclosure, was a mere contingent provision (Chapin v. Broder, 16 Cal. 423); while in other cases the docketing has only the effect of estab- lishing a lien for an amount already ascertained and declared in the judgment'': Leviston v. Henninger, 77 Cal. 461, 463, 19 Pac. 834. Historical,— 'Prsieiice Act, sec. 246, as enacted 1851, provided: '^In an action for the foreclosure or satis- faction of mortgage of real property, or the satisfac- tion of a lien or encumbrance upon property, real or personal, the court shall have power by its judgment to direct a sale of the property, or any part of it; the application of the proceeds to the payment of the amount due on the mortgage, lien, or encumbrance, with costs, and execution for the balance." By an amendment of April 28, 1860, this section was remodeled, and the provision as to the deficiency § 165 DEFICIENCY JUDGMENT. 297 judgment, as modified by the amendment of May 8, 1S61, made to read: ^^If it shall appear from the sherijff^s return that there is a deficiency of such proceeds, and a balance still due to the plaintiff, the judgment shall then be docketed for such balance \- 61n 1- against the defendant, or defendants, per- sonally liable for the debt -| n61 \ , and shall, from the time of such docketing, be a lien upon the real estate of the judgment debtor, and an execution may thereupon be issued , by the clerk of the court, \- 61n \- in like manner and form ■{ n61 -j , as upon other judgments [ 61f )■ to collect such balance, or deficiency, from the property of the judgment debtor ^f61-j.'' Afterward this sentence was somewhat modified, but not in material respects, and became a portion of section 726 of the Code of Civil Procedure. It was finally modified in 1901, to read as above set forth. 2 When Encumbered Property Valueless.— In Toby V. Oregon Pac. E. E. Co., 98 Cal. 490, 495, 33 Pac. 550, the court thought that where the encumbered property had been destroyed, as, for instance, a mortgaged steamship lost by perils of the sea, the court could order a deficiency judgment to be levied without go- ing through the useless form of ordering a sale and awaiting the return of the sheriff. ''It is true that the statute provides for docketing a personal judgment for the balance shown to be due by the return of the sheriff. Doubtless this language is used because it is the usual manner by which the application of the pri- mary fund and a deficit remaining is ascertained, but, atter all, it is the existence of these facts which en- title the plaintiff to a personal judgment against the defendant, and where they exist and can only rea- sonably be ascertained by other means, they are not to be ignored because made apparent in a different way. ' ' And in Eedlands Hotel Assn. v. Eichards, 125 Cal. 569, 571, 572, 58 Pac. 152, the court said that ''under the equitable construction thus given to the statute, it may be that the court, upon proper proof that plaintiff's mortgage was valueless because the prop- erty was insufficient to pay and discharge the prior mortgage, could have found that fact and directed a 298 THE FORECLOSURE ACTION. § 165 maining due and unsatisfied must then^ be docketed by the clerk in the manner provided by law against each defendant named in the judg- ment as personally liable therefor ; which amount thereupon becomes from the time of the docket- ing,^ as in other cases in which execution may deficiency or personal judgment against the defend- ants, without selling the mortgaged property; but it must be apparent from the reasoning of that case that the commissioner had no such power.'' 3 The deficiency judgment cannot be docketed un- til it is ascertained by the oflS.cer's report that a balance is due: Cormerais v. Genella, 22 Cal. 116, 125-127; Hunt v. Dohrs, 39 Cal. 304. Where an action is brought merely to foreclose a mechanic's lien, although the owner is personally lia- ble, a personal judgment is only obtainable when the liened property is no longer available for the satisfac- tion of the secured demand: Central Lumber etc. Co. V. Center, 107 Cal. 193, 197, 198, 40 Pac. 334. Historical.— It would seem that under the law as it existed before the amendment of 1860 to Practice Act, 246 (see note 1, above), the deficiency could not be docketed without the further action of the court, except where there was a personal judgment formally entered as well as a foreclosure judgment : See Eollins V. Forbes, 10 Cal. 299, and Rowland v. Leiby, 14 Cal. 156. 4 Becomes Lien Merely from Time of Docketing.— The deficiency judgment does not become a lien until the amount thereof is ascertained and fixed by the sale of the property, nor until it is docketed, and then only for the deficiency: Culver v. Rogers, 28 Cal. 520, 526; Boyd v. Desmond, 79 Cal. 250, 257, 21 Pac. 755; Carpenter v. Lewis, 119 Cal. 18, 22, 50 Pac. 925. Historical.— Before the amendment of April 28, 1860, to Practice Act, section 246, the deficiency judg- ment could be docketed at the time of the rendition of the foreclosure action. Nevertheless, where an or- § 165 DEFICIENCY JUDGMENT. 299 issue, a lien^ against the immovable property of such judgment debtor. A docketed deficiency judgment does not constitute a lien against the property which was sold unless it was purchased dinary foreclosure judgment was rendered, and pro- vision for the issuance of an execution in case the proceeds of the sale of the encumbered property were insufficient to satisfy the secured obligation, although the judgment was docketed at the time of the rendi- tion thereof, the judgment lien does not attach until the amount of the deficiency is ascertained. Jb'or before then, the deficiency judgment is a mere contingent provision: Chapin v. Broder, 16 Cal. 403, 422; Hibberd V. Smith, 50 Cal. 511, 51§, 519. See, also, Englund v. Lewis, 25 Cal. 337, 357. 5 Judgment Lien: See sections 623-636, below. The statute of limitations on the judgment lien which accrues upon the docketing of the deficiency judgment begins to run from the time of the accrual: Chapin v. Broder, 16 Cal. 403, 423; Hibberd v. Smith, 50 Cal. 511, 519. Historical.— Under Practice Act, section 209 (Code Civ. Proc, sec. 681), an execution could be issued on a judgment at any time within five years of the entry thereof only, and under Practice Act, section 204 (but compare Code Civ. Proc, sec. 671, as amended 1895), the judgment lien expired in two years. So where a foreclosure judgment was rendered in favor of a mort- gagee, and the mortgaged property was subsequently sold and a deficiency judgment docketed against the person personally liable on the secured obligation, the mortgagee cannot, more than five years after the ren- dition of the foreclosure judgment, and more than two years after the accrual of the judgment lien, but less than five years after the docketing of the deficiency judgment, cause execution to issue on the unsatisfied deficiency, for the five years within which execution may issue runs from the rendition of judgment, and not from the docketing of the deficiency: Bowers v. Crary, 30 Cal. 622. 300 THE FORECLOSURE ACTION. § 165 or redeemed hj a person against whom personal judgment was docketed, in which case the judg- ment constitutes a lien against such property.® <5 Deficiency Judgment Usually does not Constitute Lien Against Property Sold.— '^ In case of a redemp- tion by the judgment debtor or mortgagor, the effect of the sale is extinguished, and he is restored to his estate in the land, which then, for the first time, be- comes subject to the lien of the unsatisfied portion of the judgment The lien attaches then because the ef- fect of the sale has been extinguished, and the mort- gagor or judgment debtor is the owner of the estate, as though no sale nad been made. '^But if he had conveyed his interest in the land before redemption, and his grantee had redeemed, no interest remained m the mortgagor or judgment debtor on which the lien could operate, unless it be on the theory that the unsatisfied portion of the judgment was a lien on the land before redemption, and that the grantee of the mortgagor or judgment debtor took his conveyance subject to that lien — a theory which finds no support in the statute.'' Thus, the successor in interest, upon redeeming, takes the title free from any judgment lien for the deficiency: Simpson v. Castle, 52 Cal. 644, per Crockett, Rhodes, and Mies, JJ.; McKinstry, J., and Wallace, C. J., dissenting. A judgment docketed for a deficiency, after the sale of mortgaged premises upon a foreclosure judgment, is not a lien against the premises sold, if they are pur- chased by any person other than the mortgagor: Black v. Gerichten,' 58 Cal. 56, 58. Historical.— In Simpson v. Castle, 52 Cal. 644, the early decisions, and the alterations which the Practice Act underwent in respect to this matter, are extensive- ly commented upon. Practice Act, section 231, as enacted 1851, in stating the payments prerequisite to redemption, provided that ^^if the purchaser be also a creditor, having a lien prior to that of the redemptioner, the amount of I § 165 DEFICIETS^CY JUDGMENT. 301 such lien, with interest/' must be paid by the pro- posed redemptioner. Keferring to the statutory provision, the court, in Simpson v. Castle, said: ^^In construing this clause, it was held in Van Dyke V. Herman, 3 Cal. 295, Knight v. Fair, 9 Cal. 117, and McMillan v. Eichards, 9 Gal. [365], 413 [70 Am. Dec. 655, note], that if the real estate which is subject to a judgment lien be sold under an execution on a judg- ment, to a judgment creditor for a sum less than the whole amount of the judgment, he still continued to be a * creditor having a lien' for the unsatisfied portion of the juagment upon the property sold under the exe- cution; and that neither the judgment debtor [n]or a redemptioner with a subsequent lien could redeem without paying the judgment .... [p. 646], ^^ McMillan v. Eichards was a very important case. .... At the earliest opportunity thereafter the legis- lature modified the rule established in that case, by enacting that ^ after the sale of any real estate, tne judgment under which such sale was had shall cease to be a lien on such real estate': Stats. 1859, p. 139. .... But this section was again amended at the next succeeding session, by substituting for the words above quoted a provision to the effect that, in order to effect a redemption *if the purchaser be also a creditor having a lien prior to that of the redemptioner other than the judgment under which such purchase was made,' the amount of such lien, with interest, shall also be paid: Stats. 1860, p. 302. At the same time section 232 was amended, and, as amended, pro- vides that in redeeming from a redemptioner, and in the payment of prior liens held by him, Hhe judgment under which the property was sold need not be paid as a lien.' This continued to be the law until the codes took effect in 1873, when sections 231 and 232 of the Practice Act, as amended in 1860, were incorpor- ated into the Code of Civil Procedure as sections 702 and 703 [p. 647]. ^^From this history of the decisions and legislation on the point under discussion, it is manifest that the amendment of 1859 unequivocally abrogated the rule laid down in McMillan v. Eichards, and the earlier 302 THE FORECLOSURE ACTION. § 165 cases; and we think it is equally clear that the amend- ment of 1860 (afterward incorporated into the code) was only intended to modify the rule prescribed by the amendment of 1859, and not to restore that an- nounced in McMillan v. Kichards .... [pp. 647, 648]. * ' It was probably foreseen that under the broad language of the amendment of 1859 it might be claimed that even though the property was redeemed by the judgment debtor, it would not thereafter be subject to the lien of the unsatisfied portion of the judgment. To obviate this result, the amendment of 1860, instead of retaining the provision that the lien of the judg- ment should cease absolutely after the sale, modified the rule .... [p. 648]. '*The clause excusing the payment of the judgment for the deficiency, on redeeming, is equivalent to an explicit declaration that during the time for redemp- tion the unsatisfied portion of the judgment is not a hen on the land sold under the judgment. The stat- ute, however, declares that if the judgment debtor re- deems, the effect of the sale is terminated, and he is restored to his estate as though there had been no sale. From that time the lien of the unsatisfied por- tion of the judgment would doubtless attach in the same manner as though no sale had taken place ^' [p. 649]. BEDEMPTION FBOM SALE. 303 AETICLE 8. EEDEMPTION FEOM SALE. SuMivision 1. What Property Redeemahle. 166. Certain interests in immovable property redeem- able. Subdivision 2. Use and Control of Property During Time of Redemption, 167. Eight of possession not changed during time of redemption. 168. Purchaser entitled to rents or value of use of property. 169. Waste to be restrained — What deemed wastg. 170. Penalty for impairing freehold. Subdivision 3. The Redemption, 171. Persons entitled to redeem. 172. Evidence of redemptioner's right to redeem. 173. Conditions of redemption from purchaser. 174. Conditions of redemption from redemptioner. 175. Eents and profits received to be credited on re- demption money. 176. Payments, how made. 177. Notice of redemption must be given by redemp- tioner. 178. Purchaser or redemptioner who has redeemed must, on demand, state rents and profits. 179. Person who by mistake fails in attempt to re- deem may complete redemption. 180. Upon redemption by owner, certificate of re- demption must be issued. 304 THE FORECLOSURE ACTION. Subdivision 4- Effect of Redemption. 181. Effect of redemption by redemptioner. 182. Effect of redemption by person who owned inter- est sold. Subdivision 5. Expiration of Time of Redemption. 183. Title becomes absolute upon expiration of time of redemption. Points of Constitutional Law Concerning Statutes of Re- demption. The enactment of laws creating a right of redemp- tion from judicial sales or altering the incidents of the right has given rise to the question whether or not the obligation of contracts is impaired by .the application of such laws to sales made in satisfaction of contract encumbrances created, or to redemptions from sales made, before their passage. For it is urged that such an application brings these laws into conflict with the provision of article 1, section 10, of the United States constitution, that * ^ no state shall .... pass any .... law impairing the obligation of contracts.'' The first group of cases concerns the establishment of a right of redemption where none previously ex- isted. The United States supreme court first considered this question in Bronson v. Kinzie, 1 How. (42 U. S.) 311, 320, 11 Law ed. 143. In that case a mortgage had been made under the laws of Illinois. At the time the mort- gage was executed, the law was such that upon a breach of the condition of the mortgage the title to the mortgaged property vested in the mortgagee in trust, and that thereafter, at the instance of either mortgagor or mortgagee, the property might be subjected to sale in satisfaction of the secured obligation. This sale was absolute. But in the case in question before the sale of REDEMPTION FROM SALE. 305 the property, the law was altered so that all foreclos- ure sales of property were subject to redemption for a period of fifteen months. The supreme court held (p. 320) that this law, as applied to mortgages created before its enactment, was unconstitutional, saying: ''This law gives to the mortgagor, and to the judg- ment creditor [meaning a creditor who was entitled to redeem], an equitable estate in the premises, which neither of them would have been entitled to under the original contract; and these new interests are di- rectly and materially in conflict with those which the mortgagee acquired when the mortgage was made. ^ ' In Howard v. Bugbee, 24 How. (65 U. S.) 461, 16 Law ed. 753, on a similar state of facts, the court in 1860 affirmed this conclusion without dissent. Yet it is evident that a decision of the constitutional ques- tion was not necessary in Bronson v. Kinzie, 1 How. (42 U. S.) 311, 11 Law ed. 143, for while Mr. Justice McLean dissented from the conclusion of the court on this point (p. 322), he concurred in the judgment ren- dered (p. 332). Moreover, in the subsequent case of McCracken v. Hayward, 2 How. (43 U. S.) 608, 11 Law ed. 606, where a different constitutional point, involved in the Bronson case also, was under consid- eration, Mr. Justice Catron, who was a member of the court at the time the Bronson case was decided, said (pp. 617, 618): ''I have formed no opinion, whether the statute of Illinois is constitutional or otherwise," thereby showing' that while, like Mr. Justice McLean, he concurred in the judgment in the Bronson case, he did not base his concurrence on an approval of the views expressed in the opinion of the court. In view of these circumstances Mr. Justice Heyden- feldt, of the California supreme court, in delivering a Liens— 20 306 THE FORECLOSURE ACTION. dissenting opinion in Thorne v. The City of San Fran- cisco, 4 Cal. 127, 156, which was subsequently adopted in 1869, in Moore v. Martin, 38 Cal. 428, ^39, as an authoritative statement of the law, says in respect to the Bronson and McCracken cases: "It is very certain that the court was not unani- mous; for in the first case is the dissenting opinion of Judge McLean, and in the second, Judge Catron de- clines to give any opinion on that point. ''It is also certain that the decisions of both those cases might well have been made in the same way, without any reference to the constitutionality of the Illinois laws. ''I am, therefore, inclined strongly to the view that what the judges said upon that question is extrajudi- cial "The same judgment would have been given if the court had held the opposite doctrine on the constitu- tional question, and therefore, as far as that question is concerned, there is no judicial opinion, and upon it the court should have been silent." This constitutional question was brought to the at- tention of the California courts soon after a right of redemption was first established by the enactment of the Practice Act of 1851. In Thorne v. The City of San Francisco, 4 Cal. 127, wherein the decision was based on the ground that the act of 1851 was not retro- active, and if retroactive, that there was no legal re- demption (p. 154), Mr. Justice Wells, thought that the act was unconstitutional as applied retroactively. But in Moore v. Martin, 38 Cal. 428, 438, 439, the court held that a sale made in satisfaction of a judgment which had been rendered, and was an existing contract at the time the act of 1851 took effect (although ren- dered after its passage), was subject to redemption. The court said: REDEMPTION FROM SALE. 307 ''We do not consider it necessary to discuss this con- stitutional question. We are saved that labor by the very able dissenting opinion of Justice Heydenfeldt, delivered in the case of Thorne v. The City of San Francisco (4 Cal. 154). We agree with him that the legislature had power to provide that all judicial sales of real estate thereafter to be made, whether upon judgments then existing or upon judgments thereafter to be obtained upon contracts then existing, should be made subject to redemption, without violating either the federal or state constitution. Besides, we regard the case of Tuolumne Eedemption Co. (15 Cal. 515) as overruling the case of Thorne v. The City of San Francisco (4 Cal. 127). '' In the opinion referred to Mr. Justice Heydenfeldt had said: '^The power of the legislature, it has been decided by this court, is only limited by express constitutional restrictions Following this rule, I do not see what is to prevent it from limiting, modifying or de- laying the remedy, even admitting the doctrine that it cannot so alter the remedy as to impair the right [p. 157]. ''It is said that if you admit the power to provide a redemption in six months [where none had previously existed], then the power exists to extend it forever. It is sufficient answer to this, that every act must be construed according to its own provisions, and their effects .... [p. 157]. "How is it that a right in the judgment debtor to redeem the land within six months can injuriously af- fect the creditor? The only answer given is, that the land will not fetch as much money. But suppose the land of the debtor is ten times the value of the debt to be paid, is it presumable that the power of redemp- '308 THE FORECLOSURE ACTION. tion will prevent its selling for the amount of the debt? I know no doctrine of the law which assumes that every debtor, or any debtor, has only enough land to pay a particular debt when sold absolutely. And it seems to me, if a creditor complains that a law im- pairs his right under a contract, he must show the facts which go to prove the truth of his complaint, [p. 158]. ''Nor do I consider it by any means certain that property would sell for less money because of the right to redeem; and this, as a fact, in order to allow it to affect the validity of the law, ought to be affirma- tively shown by the record Under the liberal provisions of our statute in favor of the purchaser, 1 should come to the conclusion that such strong induce- ments are there held out, and such a premium offered, as would make the property bring fully as much money as if there was no provision for redemption It was urged at the argument that was there were here rapid fluctuations in the price of property; that the object of purchasers is speculation; that frequently in a short time land doubles in value, and for that reason the right of redemption will prevent a benefi- cial sale. But it is sufficient answer to this, that while the law tolerates and protects all contracts which are fairly made, it has no special regard for what are called speculations It has but one basis to regu- late its view of the acquisition of property, and that is the 'quid pro quo' '' (pp. 158, 159). In Tuolumne Kedemption Co. v. Sedgwick, 15 Cal. 515, also cited in Moore v. Martin above, the court pointed out that the contract of indebtedness was one thing, and the matter of redemption another, the lat- ter relating to the means provided by law for its en- forcement, but in the statement made in denying a REDEMPTION FROM SALE. 309 motion for a rehearing expressly withheld a decision upon this question. The second group of cases concern the alteration of the conditions of redemption. The first point of in- quiry relates to the applicability of such alterations to redemptions from sales made in satisfaction of judgments rendered before the alterations took effect. In Thresher v. Atchinson, 117 Cal. 73, 59 Am. St. Rep. 159, 48 Pac. 1020, the question was involved whether the rights of a purchaser at a judicial sale made before May 26, 1895, at which time the amount to be added to the purchase price as prerequisite to a redemption was reduced from two per cent per month to one per cent by an amendment to the California Code of Civil Procedure, were affected by the amend- ment. The court held that the conditions of redemp- tion and the time within which redemption could be made are terms in the contract of purchase at the ju- dicial sale, and that thus the amount of redemption money required in case of redemptions from sales made before the amended law took effect could not constitutionally be reduced, nor the period of redemp- tion lengthened by the alteration. In other cases the applicability of such alterations to redemptioners was involved. In Tuolumne Redemp- tion Co. V. Sedgwick, 15 Cal. 515, the controversy con- cerned a change made in the redemption law after a judgment foreclosing a mortgage had been rendered, but before the sale thereunder had been made, whereby a subsequent redemption was permitted on much more favorable terms than theretofore. The court held that while this alteration prejudiced the rights which would otherwise have accrued to the first redemptioner, yet that at the time of the statutory alteration he had no vested rights in the premises, and thus no right guar- 310 THE FORECLOSURE ACTION. anteed to him by the federal constitution was im- paired by makinjo^ this alteration applicable to a re- demption from him. In Teralta Land etc. Co. v. Shaffer, 116 Cal. 518, 58 Am. St. Eep. 194, 48 Pac. 613, the court, however, held that if the sale was made before the alteration of the conditions of redemption to the prejudice of an authorized redemptioner, the altered conditions could not constitutionally be made applicable to a redemp- tion by him. In this case, the provisions of section 3817 of the Political Code were involved, which pm)- vided before the amendment of March 28, 1895, that where land had been sold to the state for delinquent taxes a redemption might be made by a qualified per- son upon the payment of all taxes due thereon, to- gether with twenty-five per cent in addition thereto. By the amendment the additional amount required to be paid was graduated according to the length of time which had elapsed since the sale from a minimum of ten per cent to a maximum of one hundred per cent. In this case this alteration much increased the burden of a redemptioner if it could be constitutionally ap- plied to him. The court said: '^What the state could sell under the tax sale was limited by what the purchaser could purchase, and that was the right to have th« title subject to the owner ^s right to redeem upon the payment of a given sum of money at any time before the state parted with its interest in the property. This right of redemption became a condition of the contrac-t of purchase, and could not, in reason or justice, be ignored or changed by a subsequent statute any more than the sale itself. It was an essential element of the contract of sale, and not a mere naked right to be changed or abridged as a mere matter of public policy. Though intimately connected with the remedy, it was not a part of the REDEMPTION FROM SALE. 311 remedy, but a substantive right preserved to the re- demptioner, and equally sacred with those acquired by the purchaser, which latter rights it limited. It was a right of property remaining in the former owner after the exhaustion of the remedy by sale, and the statute which, passed after the sale, seeks to impair this right by adding new burdens to its exercise, is violative of constitutional guaranties. ' ' Thus a redemptioner as such cannot complain of al- terations in the law of redemption made before the sale, but neither purchaser nor redemptioner can be affected injuriously by alterations made after the sale. The further question now arises whether such altera- tions can constitutionally apply to sales made after they took effect in satisfaction of contract encum- brances created before that time. The amendment to the California Code of Civil Pro- cedure which reduced the amount to be added to the purchase price as prerequisite to redemption was above noted. In Connecticut Mutual Life Ins. Co. v. Cushman, 108 U. S. 51, 2 Sup. Ct. Eep. 236, 27 Law ed. 648, decided in 1882, a statute of Illinois which made a precisely similar reduction in the percentage was held to be applicable to the redemption of property from sales made after it took effect in satisfaction of contract encumbrances created before its passage. The court said: *^The statute in force when the mortgage was exe- cuted, prescribing the rate of interest which the amount paid or bid by the purchaser should bear, as between him and the party seeking to redeem, had no relation to the obligation of the contract between the mortgagor and the mortgagee. The mortgagor might, perhaps, have claimed his statutory right to redeem 312 THE FORECLOSURE ACTION. could not be burdened by an increased rate of interest beyond that prescribed by statute at the time he exe- cuted his mortgage. But, as to the mortgagee, the obligation of the contract was fully met when he re- ceived what the mortgage and statute in force when the mortgage was executed entitled it to demand. The rights of the purchaser at the decretal sale, if one was had, were not of the essence of the mortgage con- tract, but depended wholly upon the law in force when the sale occurred^' (p. 64). ''But it is insisted that the value of the mortgage contract was impaired by a subsequent law reducing the interest to be paid to a purchaser at a decretal sale; this upon the assumption that the probability of the debt being satisfied by the decretal sale of the property was lessened by reducing the interest which any purchaser could realize on his bid in the event of redemption [But] we have seen that no reduc- tion of the rate of interest, as between the purchaser of mortgaged property at decretal sale and the party entitled to redeem, affected, or could possibly affect, the right of the insurance company [mortgagee] to receive, or the duty of the mortgagor to pay, the en- tire mortgage debt, with interest as stipulated in the mortgage up to the decree of sale. And the result of the sale in this case shows that the company, as a mortgagor [mortgagee?], has received all that it was entitled to demand ^^ (pp. 65, 66). In Hooker v. Burr (Cal.), 70 Pac. 137, 663, 778, 781B, 782A, where a mortgage was made before the passage of this amendment to the California code and the foreclosure sale after it took effect, the court, on the authority of the above case, held that a person who wished to redeem from such sale was required to pay only the reduced percentage, and stated that this had always been the law in California since the de- BEDEMPTION FROM SALE. 313 cision of Tuolumne Eedemption Co. v. Sedgwick, 15 Cal. 515. By a further amendment to the California code which took effect February 26, 1897, the period of re- demption was enlarged from six to twelve months. The question whether or not this amendment could constitutionally apply to sales made after it took ef- fect in satisfaction of contract encumbrances created before its enactment was somewhat confused by the decision in Barnitz v. Beverly, 163 U. S. 118, 16 Sup. Ct. Eep. 1042, 41 Law ed. 93, decided in 1895. By the Kansas statute redemption had been per- mitted for a limited period, but the purchaser had been entitled to the rents and profits and the posses- sion during the time of redemption. In the Barnitz case an amendment to this statute which (1) enlarged the period of redemption to eighteen months, (2) authorized the person entitled to possession had there been no sale to hold the possession during the time of redemption, (3) entitled the person entitled to the rents and profits had there been no sale to receive the same (except such as were required for necessary repairs or to prevent waste) during such period, and (4) in case of a redemption of the property by the encumbrancer or judgment debtor, exempted the property from further liability for any of the ob- ligations upon which it was sold, was involved, and the court held that the statute, so far as designated to affect sales in satisfaction of con- tract encumbrances created before its enactment, was unconstitutional. The court, indeed, on page 129, says: **We hold that a statute which authorizes the redemption of 314 THE FORECLOSURE ACTION. property sold upon foreclosure of a mortgage, where no right of redemption previously existed, or which extends the period of redemption beyond the time formerly allowed, cannot constitutionally apply to a sale under a mortgage executed before its passage/' But, speaking more specifically of the act under consideration, the court says: * ' The act carves out for the mortgagor or the owner of the mortgaged property an estate of several months more than was obtainable under the former law, with full right of possession, and without paying rent or accounting for profits in the meantime. What is sold [at the foreclosure sale] under this act is not the estate .... described in the mortgage, .... but a remainder— an estate subject to the possession, for eighteen months, of another person who is under no obligation to pay rent or to account for profits ' ' (p. 130). "The twenty-third section of the act should not be* overlooked, providing that real estate once sold upon order of sale, special execution or general exe- cution, shall not again be liable for sale for any bal- ance due upon the judgment or decree under which the same is sold, or any judgment or lien inferior thereto, and under which the holder of such lien had a right to redeem '* (p. 130). ''This law .... in express terms declares that this real estate shall not again be liable for sale for any balance due upon the judgment or decreee under which the same is sold. This cannot be held to mean merely that the land is sold free from existing liens, for such would be the legal effect of the sale at any rate. It plainly means that the balance of the debt shall not be paid out of the lands, even if and when they become the property of the debtor BEDEMPTION FROM SALE. 315 What we are now considering is, whether the change of remedy was detrimental to such a degree as to amount to the impairment of the plaintiff's right; and as this record discloses that the sale left a por- tion of the plaintiff's judgment unpaid, it may be fairly argued that this provision of the act does de- prive the plaintiff of a right inherent in her con- tract'' (p. 130). ^^When we are asked to put this case within the rule of those cases in which we have held it compe- tent for the states to change the form of the remedy, or to modify it otherwise as they may see fit, pro- vided no substantial right secured by the contract is thereby impaired, we are bound to consider the en- tire scheme of the new statute, and to have regard to its probable effect on the rights of the parties" (p. 131). When the statement made by the court in the open- ing paragraph above is taken in connection with tne subsequent quotations, it is apparent that other fea- tures of the statute, such as the provisions entitling the former owner to the rents and profits of the property during the time of redemption and exempt- ing it from execution for a deficiency in case of re- demption, largely influenced the judgment of the court. Moreover, the court said that the case of Connecticut Mutual Life Ins. Co. v. Cushman, 108 U. S. 51, 2 Sup. Ct. Eep. 236, 27 Law ed. 648, quoted above, *'does not collide with the previous or subsequent cases. There the statute did not lessen the duty of the mortgagor to pay what he had contracted to pay, nor affect the time of payment, nor affect any remedy which the mortgagee had by existing law for the enforcement of his contract" (pp. 128, 129). Thus the most that the Barnitz case can be said to hold is that the entire scheme of the amended Kansas 316 THE FORECLOSURE ACTION. act was such as to conflict with constitutional guar- anties when applied to sales made after it took effect, but in satisfaction of contract encumbrances created before its passage. The general expressions in the opening paragraph above were materially modified by their context, and this case cannot be said to hold that a mere lengthening of the time of re- demption would in itself be obnoxious to the con- stitution, especially as such a construction might col- lide with the principle of the Connecticut Life Ins. Co. case which was expressly approved. But notwithstanding these considerations, it is clear that this case has been interpreted by the California supreme court, and to some extent by the bar, to hold the above-mentioned amendment of February 26, 1897, in conflict with the United States constitu- tion so far as designed to apply to sales made after it took effect in satisfaction of contract encumbrances created before such time. Thus in Benson v. Bunt- ing, 127 Cal. 532, 534, 78 Am. St. Eep. 81, 59 Pac. 991, the parties to the action conceded the unconstitu- tionality, while in Savings Bank of San Diego v. Bar- rett, 126 Cal. 413, 417, 58 Pac. 914, and Malone v. Boy, 134 Cal. 344, 66 Pac. 313, the court reached the same conclusion almost without discussion, principally on the authority of the Barnitz case. In Haynes v. Tredway, 133 Cal. 400, 402, 403, 65 Pac. 892, however, the court considered the matter at some length, and said: **It may be said that the agreement of the mort- gagor was, that the purchaser at the sale should have the title to the property, subject to a right of posses- sion thereafter in the mortgagor for six months It is thus patent upon its face that a statute extend- ing the right of possession in the mortgagor to a REDEMPTION FROM SALE. 317 period of twelve months is a substantial impairment of the obligation of a contract limiting the right of possession to six months. The mortgagee's security- is the interest of the mortgagor in the property, less the equitable interest reserved to the mortgagor by the statute of redemption. The greater the reserved interest in the mortgagor, the less the security. If the interest of the mortgagor in the form of the right of redemption may be extended from a six months' interest to a twelve months' interest after the con- tract between the parties has been executed, then it may be extended from a six months' interest to a five or ten years' interest, and thus the security of the mortgagee absolutely wiped out," Thus the California cases hold (1) that the application of laws creating a right of redemption where none previously existed to sales made after their enactment, but in satisfaction of contract encumbrances created before their passage, is constitutional, (2) that such an application of laws reducing the percentage to be paid in case of a redemption is constitutional, but (3) that such an application of laws lengthening the time within which a redemp«tion is authorized is un- constitutional, and (4) that while a redemptioner, as such, has no valid ground of complaint against a law which alters the conditions of redemption from a sale yet to be made upon a judgment or contract encumbrance existing at the time of the alteration, yet as against neither purchaser nor redemptioner can the condi- tions of redemption of any property be altered by a law which takes effect after the sale of the prop- erty has been made. 318 THE FORECLOSURE ACTION. That the conclusions reached on the first and third points are in conflict with each other is clear, and whether the conclusions on the second and third points are consistent may well be doubted. But if the conclusions on the second and third points are not consistent, the difficulty would seem to come from a misinterpretation of the Barnitz case, for the United States supreme court has declared that the Barnitz and the Connecticut Life Ins. Co» cases do not collide with each other, and the Califor- nia supreme court, in Hooker v. Burr (Cal.), 70 Pac. 137, 663, 778, 781B, said that this determination was ''absolutely binding^' upon the state court, and that the same conclusion was reached in the Connecticut Life Ins. Co. case as was expressed by the state court in 1860. In Hooker v. Burr, the court (pp. 781By 782A) also attempted to differentiate the Connecticut Life Ins. Co. and the Barnitz cases, and said, appar- ently in view of the fact that in the former case suffi- cient proceeds were realized at the foreclosure sale of the mortgaged property to satisfy the secured ob- ligation, notwithstanding the sale was made subject to the altered condition of redemption, while in the latter the proceeds of the sale were insufficient and the court had thought that from that fact it might ''be fairly argued that the provision of the [amended] act does deprive the plaintiff [mortgagee] of a right inherent in her contract,'' as follows: "The essential distinction seems to be that if the party complaining of the operation of the law is himself not injured by it— if the obligations of his contract are not impaired — he cannot be heard to complain, nor will the law be held, as to him, to violate any of his rights.'' § 166 REDEMPTION FROM SALE. 319 Subdivisian 1. What Property Redeemable, 166. Certain Interests in Immovable Property Redeemable. Every interest in immovable property, amount- ing to not less than a leasehold of two years^ un- expired term, which has been sold at foreclosure sale is redeemable from the sale for the period and in the mode hereinafter set f orth.^ 1 What Property Redeemable.— Code of Civil Pro- cedure, section 700, as enacted 1872, in part: "Upon a sale of real property, the purchaser is substituted to and acquires all the right, title, interest, and claim of the judgment debtor thereto; and when the estate is less than a leasehold of two years' unexpired term, the sale is absolute. In all other cases, the property is subject to redemption as provided in this chapter/' This section of the Code of Civil Procedure (Prac- tice Act) and those which follow, relative to redemp- tions from forced sales, are sufficiently comprehensive to include in their design sales of immovable prop- erty under judgments foreclosing encumbrances. "The decisions as to the estate of the judgment debtor after sale become, therefore, authorities for determining the estate of the mortgagor after sale under a judgment of foreclosure'': McMillan v. Eich- ards, 9 Cal. 365, 412, 70 Am. Dec. 655; Kent v. Laffan, 2 Cal. 595; Guy v. Middleton, 5 Cal. 173; Harlan v. Smith, 6 Cal. 173; Gross v. Fowler, 21 Cal. 392. "We are of opinion that there is error in the judg- ment in the direction for the sale of the property without the right of redemption. The right to re- deem is given by statute, and the defendant [trustor] cannot be deprived of it by the court. It makes no difference that the security here involved is a deed of trust. It was held at an early day in Kent v. Laffan, 2 Cal. 595, and ever since, that the statutory redemption applied to a sale on foreclosure of a 320 THE FORECLOSURE ACTIOI^. § 167 Subdivision 2. Use and Control of Property Dur- ing Time of Redemption, 167. Right of Possession not Changed During Time of Redemption.^ During the period of redemption and until the execution of a valid deed*^ to the person in whom the title has become absolute, the person who would have been entitled to the possession of the property had there been no judicial sale con- tinues to be entitled to the possession thereof. mortgage. If it applies to a mortgage, it as weU ap- plies to a deed of trust. Both are securities only. The difference is only in form. In one case the mort- gagee is the trustee, in the other a third person": Levy V. Burkle (Cal.), 14 Pac. 564. Thus it is error for the court to direct the sheriff immediately upon the foreclosure sale to execute a deed to the purchaser, and that upon the produc- tion of the deed the purchaser shall have possession of the property: Harlan v. Smith, 6 Cal. 173. Where, however, in case of a foreclosure of a trust deed in the nature of a mortgage, the commissioner appointed to make the sale was given such instruc- tions, and the trustor failed to appeal from such judg- ment or the order confirming the commissioner's acts, but afterward appealed from the order granting the purchaser a writ of assistance, the court refused to interfere with the judgment or order of confirmation: Odd FeUows' etc. JtJank v. Harrigan, -53 Cal. 229. Query: "Is there a right of redemption from a sale by a mortgagee imder a power of sale?'' Cormerais V. GeneUa, 22 Cal. 116, 124, 125. 2 Right of Possession not Changed: Guy v. Middle- ton, 5 Cal. 392; West v. Conant, 100 Cal. 231, 233, 34 Pac. 705. § 168 REDEMPTION FROM SALE. 321 168. Purchaser Entitled to Rents or Value of Use of Property.- The^ purchaser of the property from the time of sale until a redemption^ and a redemptioner *'The statute of this state, allowing a redemption yjf real property sold at judicial sales, plainly con- templates that the possession shall not change to the purchaser until the expiration of the time pre- scribed as a limit to the redemption. Section 235 of Compiled Laws, page 563 [compare Code Civ. Proc, sec. 706, section 169, below], provides that, 'until the expiration of the time allowed for redemption, the court may restrain the commission of waste on the property'; and, also, under the same section, *but it shall not be deemed waste for the person in possession of the property at the time of the sale, or entitled to possession afterward, during the period allowed for redemption to continue to use it in the same man- ner in which it was previously used.' This section most clearly contemplates an adverse possession to the purchaser until the time has expired for redemp- tion. The succeeding section of the act [Code Civ. Proc, sec. 707, first sentence], allowing to the pur- chaser the value of the use and occupation, affords the only remedv he is entitled to'': Guy v. Middle- ton, 5 Cal. 392*; 3 Is Entitled to Possession Until Execution of Valid Deed: Sands v. Pfeiffer, 10 Cal. 258, 265; Bernal v. Gleim, 33 Cal. 668, 676. 4 Code of Civil Procedure, section 707, first sen- tence (Practice Act, section 236), provides: ''The pur- chaser, from the time of the sale until a redemption, and a redemptioner, from the time of his redemption until another redemption, is entitled to receive, from the tenant in possession, the rents of the property sold, or the value of the use and occupation thereof." Historical. —Before the enactment of the codes, the court held that although the revenue laws provided for the collection of certain taxes by a suit, and that Liens — 21 322 THE FORECLOSURE ACTION. § 168 from the time of his redemption until another redemption, is entitled to receive from the per- son entitled to the possession,^ unless the in- terest of such person in the property is para- such provisions of the Practice Act as are necessary to give effect to the revenue system are applicable to such suits, yet the above provision of the Practice Act is not applicable to sales made to satisfy a judg- ment in such a tax suit: Mayo v. Woods, 31 Cal. 269. But now that the revenue laws are principally em- bodied in the Political Code, and the four codes are construed together as one law, this reasoning would not seem to hold. 5 The Person Entitled to the Possession.— The code language is ''the tenant in possession,'' a phrase which was construed by the court in Harris v. Rey- nolds, 13 Cal. 514, 517, 518, 73 Am. Dec. 600, as fol- lows: ''The phrase 'tenant in possession' is a generic term, intended to designate the class of persons from whom the purchaser was to receive the rents. The language is not that, when a tenant of the debtor is in possession, the tenant shall pay the purchaser, or that the debtor, when in possession, shall not; but the phraseology designed, evidently, to fix a general right, applying in all cases of tenancy, for none are excluded. .... The owner in fee in possession is no less, in legal contemplation, a tenant, than the man who occupies under him. The definition of tenant is: 'One that holds or possesses land or tenements by any kind of title, either in fee, for life, years, or at will.' .... The concluding words of the section of the statute we are considering lend some strength to the construction we give; for, after providing for the recovery of the rents of the property sold, the words 'or the value of the use and occupation' are added, these latter words applying to, and covering, the case of the possession of the debtor." The Person Entitled to the Possession is the Person LiaUe. In a proper case he is liable although he paid the rent in advance. Thus where a lessee of mortgaged § 168 EEDEMPTION FROM SALE. 323 property with notice of the mortgage paid the rent in advance, and the property was sold at foreclosure sale before the expiration of the term for which the property was leased, the purchaser may require the lessee to pay the rent to him from the time of pur- chase over again. '^The lessor, to whose title plain- tiff [the purchaser] has succeeded, was not entitled to the rent accruing, or to the value of the use and occupation of the property, subsequent to the sale under the judgment of foreclosure, unless such lessor effected a redemption from the sale; and the pay- ment of rent for the period extending beyond the date of such sale was made by defendant [the lessee] at his peril. This necessarily follows from the well- established rule that a subsequent grant or lease of mortgaged premises is subject to the prior mortgage, if the purchaser or lessee had either actual or con- structive notice of such mortgage. If the law were otherwise, it would be in the power of the mortgagor to materially diminish the value of the mortgaged property as security for the debt for which the mort- gage was given, by simply leasing it for a long period and collecting the rent in advance, or by leasing it for such period for a nominal sum^^: Harris v. Fos- ter, 97 Cal. 292, 295, 33 Am. St. Eep. 187, 32 Pac. 246. Where the lessee in possession of the sold property paid certain rent to the* owner of the estate before the sale, the purchaser may nevertheless recover the rent from him: McDevitt v. Sullivan, 8 Cal. 592. It is not the Actual Possessor of the Property Who is Lia&Ze.— "Where a tenant of the sold property was enti- tled to the possession, but an agent of the tenant had the actual management of the property, the possession of the agent is the possession of the tenant, and the rem- edy of the purchaser is confined to the tenant, al- though the- proceeds of the property went into the hands of the agent. ^^The statute only gives a remedy against the tenant in possession; the right to recover rests upon the statute; and the tenant in possession is the only person against whom the right exists'': Shores v. Scott Eiver Co., 21 Cal. 135. Actions Have Been Sustained Against the Following Persons as Persons LiaUe for the Bent or the Value 324 THE FORECLOSUKE ACTION. § 168 mount to the interest sold and nothing is owing by him to the owner of the interest sold,^ the proportionate amount of the rents earned'' by the property during such period or the value of of the Use: A judgment debtor: Harris v. Eeynolds, 13 Cal. 514, 73 Am. Dec. 600. A mortgagee in posses- sion under a judgment debtor: Knight v. Truett, 18 Cal. 113. A lessee of a mortgagor: McDevitt v. Sul- livan, 8 Cal. 592; Harris v. Foster, 97 Cal. 292, 33 Am. St. Rep. 187, 32 Pac. 246. A lessee who holds over after the expiration of his lease: Harris v. Fos- ter, 97 Cal. 292, 296, 33 Am. St. Rep. 187, 32 Pac. 246. Administrator of estate of judgment debtor: Walls V. Walker, 37 Cal. 424, 431, 432, 99 Am. Dec. 290, note. The successor in interest of a trustee m possession under a trust deed from a mortgagor: Walker v. McCusker, 71 Cal. 594, 12 Pac. 723. e Unless Interest Paramount to Interest Sold and Nothing Owing Owner of Interest Sold,— \v^here prop- erty was sold under a judgment lien against the owner, and was in the possession of a tenant under a valid lease made before the lien attached to the property, and the tenant paid his rent in advance and his term had not expired at the time of the sale, the tenant would not be again liable to the purchaser for the rent (his estate being superior to the interest sold) : Webster v. Cook, 38 Cal. 423, 425. 7 Purchaser is Entitled to Proportionate Amount of Rent Earned. — ^^The ma^^erial question is not. When does the rent become due and payable? but it is. What amount of rent has the property earned sub- sequent to the purchase, and prior to the redemption? By virtue of the statute, if the property is not rented the purchaser may sue for the value of the use and occupation; and the value of the use and occupation would be such value for the time the purchaser held under the certificate of sale. And, likewise, a re- covery for rent would necessarily be limited to the amount earned for that time. *'In the case at bar, where the rent is an annual rent, .the purchasers at the fore^closure sales are en- § 168 REDEMPTIOI^ FROM SALE. 325 titled to an amount of rent in proportion as the time intervening between their purchases and the expira- tion of the year term bears to one year. (Providing, of course, the six months^ term of redemption had not expired in the meantime.) ^^The contention that rent payable by the year is indivisible is unsound. Undoubtedly, the statute could provide for a division of it. It must be borne in mind that the whole matter of redemption is purely statutory, and the statute seems to contemplate a pro- portionate division of the rents. It was intended by this statute to give the purchaser at the sale the fruits of the land produced while he held the certifi- cate of purchase — only this and nothing more. To support a construction which would give the pur- chaser at the sale— perchance for a single day— the rents of property under a lease for years, for the sole reason that rents for the entire period happen to become due and payable upon that day, would seem to wander far from the intention of the legislature in enacting the statute ^^We cannot bring ourselves to hold that if the mortgagor himself is in the possession he is liable only for the value of the use and occupation after the sale, while if the tenant under the mortgagor is in possession, all rents owing by the tenant for an unlimited period in the past, and which happen to become due while the certificate is held by the pur- chaser at the sale are his property' ': Clarke v. Cobb, 121 Cal. 595, 599, 600, 54 Pac. 74, in bank, Harrison, J., dissenting. Historical.— In Harris v. Foster, 97 Cal. 292, 33 Am. St. Eep. 187, 32 Pac. 246, where the property was in the possession of a lessee of the mortgagor who had paid the rent in advance for his whole term at the commencement, and where only a portion of the term of the lease existed after the sale of the property at judicial sale, the purchaser was neverthe- less permitted to recover rent for the whole term of lease (the above question not being raised). In McDevitt v. Sullivan, 8 Cal. 592, the court held that the purchaser of an interest in leased property at foreclosure sale was entitled to the proportionate 326 THE FORECLOSURE ACTION. § 168 the use and occupation thereof, and may, ex- cept when the property has been redeemed from him,^ maintain an action for the recovery there- of^ against the person so in possession or to whom part of the rents from the time of his purchase, not- withstanding they had been partly paid to an ad- verse party. s Except When the Property Has Been Redeemed from Him. — See section 175 below, which contem- plates that in case of a redemption the rents or the value of the use and occupation shall belong to the person who redeems, such person being allowed a re- bate merely for those which the person redeemed from had actually received. Historical.— FTSidtiae Act, sec. 236, did not contain the provisions of the Code of Civil Procedure, section 707 (see section 175 below), that the rents and profits of the sold property which were actually received by the purchaser were to be a credit on the redemp- tion money, but apparently contemplated that the rents and profits between the time of sale and a re- demp-^ioner were to go to the purchaser in addition to the redemption money and notwithstanding the redemption. So where the sold property was in the possession of the judgment debtor and was subsequently redeemed by him, the purchaser may recover the value of the use and occupation thereof during such time from such person: Harris v. Eeynolds, 13 Cal. 514, 73 Am. Dec. 600. Where the property was occupied by a number of tenants, who after the sale and before the redemp- tion by the judgment debtor paid the judgment debtor certain rent, the purchaser may, after the redemption, maintain an action to recover such rents from the judgment debtor: Kline v. Chase, 17 Cal. 596. 9 May Maintain Action for Recovery. The action may be commenced whenever the rent is due. ^^ Before the time of redemption expired, the purchaser was entitled to collect the rents. .... And § 168 REDEMPTION FROM SALE. 327 the rents have been paid/^ but a receiver can- not be appointed in such action.^^ The person in possession of the property is prima facie liable for the payment of such amounts to the pur- chaser or redemptioner who has redeemed.^^ 169. Waste to be Eestrained — ^What DeemeS Waste. Until the expiration of the time allowed for redemption the court may restrain the commis- after the time expired, he would have the same righf : McDevitt v. Sullivan, 8 Cal. 592, 597. A plurality of actions is permissible. Where the sold property was in tne possession of a tenant of the judgment debtor at a monthly rental of one hun- dred dollars, the tenant was responsible to the pur- chaser for the rents in the same way he would have been to the judgment debtor had no sale been made, and consequently the purchaser could sue for the rent as often as it fell due under the terms of the lease existing when he became purchaser: iteynolds v. Lathrop, 7 Cal. 43. 10 It is generally said that the action must be brought against the person entitled to the possession. In Kline v. Chase, 17 Cal. 596, however, where the lessee had paid the rent to the owner of the fee, the action was permitted to be brought directly against the owner of the fee. 11 Receiver cannot be Appointed.— ^^ It is true the statute provides that the purchaser, from the time of sale until redemption, is entitled to receive from the tenant in possession the rents of the property sold, or the value of the use and occupation thereof, but this is no warrant for the appointment of a receiver to oust the judgment debtor from his possession, and take from him the crops which have been produced through his labor ^': West v. Conant, 100 Cal. 231, 34 Pac. 705. 12 Webster v. Cook, 38 Cal. 423. 328 THE FORECLOSURE ACTION. § 169 sion of waste on the property^ by order granted with or without notice^ on the application of the purchaser or of the judgment creditor. But it h not waste for the person in possession of the property at the time of the sale^ or entitled to possession afterward, during the period allowed for redemption, to continue to use the property in the same manner in which it was previously used; or to use in the ordinary course of hus- bandry; or to make the necessary repairs of build- ings thereon; or to use wood or timber on the property therefor, or for the repair of fences, or for fuel in his family, while he occupies the prop- erty.^^ 170. Penalty for Impairing^ Freehold. Every mortgagor of immovable property who, with intent to injure or defraud the purchaser of such property at the judicial sale thereof, his representatives or assigns, removes from such property or otherwise disposes of, or permits to be so removed or otherwise disposed of, any house, barn, windmill, or water-tank upon or affixed to such premises as an improvement there- is Code Civ. Proc, sec. 706. Thus the judgment debtor possesses the right to the use and possession of the premises until the exe- cution of the deed to the purchaser, but possesses no right to despoil the property of the fixtures: Sands v. Pfeiffer, 10 Cal. 258, 265. § 170 REDEMPTION FROM SALE. 329 OB, without the written consent of such pur- chaser, his representatives or assigns, is guilty of larceny and shall he punished accordingly.^^ Subdivision 3. The Redemption. 171. Persons Entitled to Redeem.^^ Subject to the conditions hereinafter provided, the person who owned the property interest sold 14 See Pen. Code, sec. 502%, new section, in effect March 26, 1895. 15 Persons Entitled to Redeem, in General.— Code of Civil Procedure, section 701 (Practice Act, section 230), provides: '^ Property sold subject to redemption, as provided in the last section, or any part sold sepa- rately, may be redeemed in the manner hereinafter provided by the following persons, or their successors in interest: (1) the judgment debtor, or his successor in interest, in the whole or any part of the property; (2) a creditor having a lien by judgment or mortgage on the propert}^ sold, or on some share or part there- of, subsequent to that on which the property was .sold. The persons mentioned in the second subdivi- sion of this section are, in this chapter, termed re- demptioners. ' ' ** Judgment debtors and their successors in inter- est do not come within the class termed *redemp- tioners, ^ and, therefore, are not required to follow the demands of section 705 [for example, see section 172, below] in making a redemption. While the successor in interest of the judgment debtor is only mentioned in section 701, and the succeeding sections refer to the judgment debtor and redemptioners alone, still that fact is not material. The statute declares that suc- cessors in interest have the right to redeem, and fur- ^ ther declares in effect that they are not to be con- sidered redemptioners as the word is there used. 330 THE FORECLOSURE ACTION. § 17 1 at the foreclosure sale or any part thereof/^ or his successor in interest in the whole or any parr of the property/''' or any redemptioner, or the Under such conditions successors in interest stand in the place of judgment debtors, and when the statute uses the term ^judgment debtors/ as contradistin- guished from 'redemptioners/ the words should be con- strued broad enough to include successors in interest of judgment debtors. That such was the intention of the legislative mind there can be no question, and that the successor in interest of the judgment debtor possesses the rights given by the statute to the judg- ment debtor, rather than those of the redemptioner, there is likewise no question' ': Phillips v. Hagart, 113 Cal. 552, 555, 54 Am. St. Eep. 369, 45 Pac. 843. 16 Person Who Owned Interest Sold may Redeem.— (The code language is '^ judgment debtor, '^ but that is not wholly appropriate in case of foreclosure sales.) The judgment debtor as such may redeem without regard to whether or not he has a successor in interest in the property: Yoakum v. Bower, 51 Cal. 539; South- ern California Lumber Co. v. McDowell, 105 Cal. 99, 101, 38 Pac. 627. Persons not Entitled to Redeem —Ilhistrations. The mayor of a city, when not clothed with au- thority by the legislative power, is not qualified to redeem sold property of the city on its behalf, even though he presents the redemption money to it: Thorne .v. San Francisco, 4 Cal. 127, 145-147, 154, per Wells, J., and Murray, C. J.; Heydenfeldt, J., dissent- ing (pp. 169-171). A taxpayer as such is not qualified to redeem the property of the city in which he pays his taxes from the sale thereof, although he himself advances the money for the redemption: Thorne v. San Francisco, 4 Cal. 127, 149, 150. 17 Who may Redeem as Successor in Interest, Where a mortgagor declares a homestead upon mort- gaged property, his wife becomes his successor in in- terest, and in case of the foreclosure sale of the prop- § 171 REDEMPTION FROM SALE. 331 erty is entitled to redeem: Hefner v. Urton, 71 Cal. 479, 12 Pac. 486; Watts v. Gallagher, 97 Cal. 47, 51, 31 Pac. 626. The purchaser of immovable property at execution sale, whatever is the nature of his title, legal or equitable, becomes from the date of the purchase a ** successor in interest ^^ of the judgment debtor, *'for by the provisions of section 700 of the Code of Civil Procedure it is ... . provided that *upon a sale of real property, the purchaser is substituted to and ac- quires all the right, title, interest, and claim of the judgment debtor thereto^; which is to say, unequivo- cally, that he becomes the successor in interest of the judgment debtor; nor is the language used susceptible of a different construction. Any other construction of the act would lead to the absurd result that by pur- chasing at an execution sale the purchaser would lose the right to redeem altogether [which in this case he theretofore had as a judgment lienor], for .... his judgment is satisfied and his lien thus extinguished '': Pollard V. Harlow, 138 Cal. 390, 71 Pac. 454. In denying a petition for rehearing, Shaw, J., Feb- ruary 24, 1903, however, points out that it is sufficient for the purposes of the case to hold that the purchaser may redeem without holding that the right of the judgment lienor was ended, and evidently doubts the latter proposition. The successor in interest of a cotenant of a re- mainder in fee, where the entire estate in the prop- erty was sold, is authorized to redeem the property as a successor in interest: Warner Bros. Co. v. Freud, Cal., March 19, 1903. The successor in interest of a cotenant of the land which was sold is a qualified redemptioner: Calkins v. Steinbach, 66 Cal. 117, 119, 120, 4 Pac. 1103. Where, after the sale of property under execution or a foreclosure judgment, the judgment debtor or mort- gagor conveys the property, the grantee *' becomes his successor in interest, and as such entitled to redeem within the statutory time'^ Simpson v. Castle, 52 Cal. 644, 649. A trustee in bankruptcy may redeem as a succes- sor in interest: In re Novak, 111 Fed. (D. C.) 161. 332 THE FORECLOSURE ACTION. § 171 assigns*^ or duly qualified agent^^ of any one of them, is entitled to redeem the property in its entirety,^^ or in the same subdivisions in which Where a partnership mortgaged its property, and after the death of one partner the mortgage was fore- closed, an heir of the deceased partner before the partnership has been wound up is not entitled to re- deem, nor is an assignee of a judgment creditor of such heir at law: McGorray v. O'Connor, 79 Fed. (C. C.) 861, 864, 87 Fed. (C. C. A.) 586, 589. For where property and the title thereto is vested in a partnership, upon the death of a partner, the surviving partner had *Hhe absolute right of pos- session, and the power to control the property until the affairs of the partnership were wound up. It is still in his hands as such surviving partner. No right of redemption has descended to the heirs of the de- ceased partner: McGorray v. O'Connor, 87 Fed. 586, 589, 31 C. C. A. 114. 18 Assign may Redeem.— The judgment debtor may assign his right of redemption to a third party, who may thereupon redeem, notwithstanding the transfer of a portion of the property to a successor in inter- est: Southern California Lumber Co. v. McDowell, 105 Cal. 99, 102, 38 Pac. 627. 19 Duly Qualified Agent may Redeem.— A redemp- tion may be made by the authorized agent of a quali- fied redemptioner when it affirmatively appears to the sheriff that he is acting for such redemptioner and the redemption money is paid in behalf of the re- demptioner: Hooker v. Burr, 137 Cal. 663, 70 Pac. 778. 20 Such Person may Redeem in Entirety.— Where property was sold under a judgment against the two tenants in common of the property, a subsequent judgment creditor having a lien against the undivided interests to one of the cotenants may redeem the whole property: Eldridge v. Wright, 55 Cal. 531, per Thornton, J., Morrison, C. J., McKinstry, McKee, and Eoss, JJ.; Sharpstein and Myrick, JJ., dissenting. § 171 REDEMPTION FROM SALE. 333 it was solcl.^* Every^^ creditor holding a judg- ment lien or mortgage against the property sold or against any share or part thereof^ subordinate 21 May Redeem in Divisions in Which Sold.— Where the sale of a piece of land divided in known parcels could not be effected in parcels, and thereupon the sheriff sold the whole land in two parts to two dif- ferent purchasers, any redemption must be made ac- cording to the parts in which it was sold: Hibernia Sav. etc. Soc. v. Behnke, 121 Cal. 339, 341, 53 Pac. 812. 22 Redemption Defined.— This definition of a re- demptioner is found in the second subdivision of code, section 701 (see note 15, above). Eef erring to it, the court, in Eldridge v. Wright, 55 Cal. 531, 535, says: ^'This subdivision, in our judgm.ent, defines the class of persons who have a right to exercise the privilege of redemption. It does not in any way limit or define the extent of the right. Such extent will be found in the other provisions of the statute.'' In view of the language of the Code of Civil Pro- cedure, section 705, first subdivision (compare section 172, below, first subdivision), however, it seems that any encumbrancer (any encumbrancer of record, at any rate) may redeem, for in enumerating the records which the redemptioner must produce, that subdivision states that [where the redemption is made from a judgment lien] the redemptioner must produce **a copy of the docket of the judgment,'' while if the redemptioner redeems "upon a mortgage or other lien, a note of the record thereof" must be produced, thereby clearly implying that not onlv holders of judgment liens and mortgages, but also the holders of other recorded liens, may become redemptioners. Persons Who are not Redemptioners —Illustrations, Where mortgaged property is sold at foreclosure to a third party, a judgment creditor having a lieu against the property of the mortgagor by virtue of the docketed deficiency judgment arising from the mort- gage sale is not authorized to redeem from the pur- chaser at the sale: Hershey v. Dennis, 53 Cal. 77. 334 THE FORECLOSURE ACTION. § 171 to the encumbrance to enforce which the prop- erty was sold,^^ is a redemptioner. Whether or not a person who -seeks to redeem is authorized A person recovering a judgment in one county, a transcript of which was never filed in another county so as to become a lien against the immovable prop- erty of the judgment debtor therein, cannot be a qualified redemptioner of the property of such debtor in such latter county: Perkins v. Center, 35 Cal. 713, 722. A purchaser of property at an execution sale upon a subordinate encumbrance is not a redemptioner as such: Pollard v. Harlow, 138 Cal. 390, 71 Pac. 454. But see note 17, above. Redemptioner ^s Right to Redeem not Lost hy Judg- inent Debtor ^s Death.— Code of Civil Procedure, sec- tion 1505, last sentence, provides: *'A judgment cred- itor having a judgment which was rendered against the testator or intestate in his lifetime may redeem any real estate of the decedent from any sale un- der foreclosure or execution, in like manner and with like effect as if the judgment debtor were still living. ' ' 23 Must be Subordinate to Encumbrance to Enforce Which the Property was Sold.— (The code language is ^^ subsequent to that on which the property was sold.^0 Where an inferior encumbrancer, who was made a party defendant in an action to foreclose a superior encumbrance against the same property, merely asked for the api)lication of any surplus proceeds arising at the foreclosure sale to the reduction of the obligation secured by his encumbrance, his encumbrance is sub- ordinate to that on which the property was sold, al- though a portion of the proceeds of the sale were ap- plied in reduction of the obligation secured by his en- cumbrance, and he is a qualified redemptioner: Frink V. Murphy, 21 Gal. 108, 112, 113, 81 Am. Dec. 149. But where the inferior encumbrancer by a cross- complaint or otherwise affirmatively seeks the fore- closure of his mortgage in the foreclosure action, the § 171 EEDEMPTIOIN^ FROM SALE. 335 to make a redemption is a question which con- cerns the purchaser of the property and the per- sons anthorized to redeem and may be contested by any one of them,^^ bnt a redemption which property is sold to enforce his encumbrance as well as that of the plaintiff, and he is not a qualified re- demptioner: Black v. Gerichten, 58 Cal. 56; San Jose Water Co. v. Lyndon, 124 Cal. 518, 57 Pac. 481. See section 122, above. 24 Right to Redeem may be Contested by Purchaser or Person Authorized to Redeem.— The purchaser, or a redemptioner who redeems, may attack the right of a person to redeem the property, and when such per- son claims under a judgment lien may collaterally at- tack such judgment, because he cannot be deprived of his interest in the property without an opportunity to be heard: Bennett v. Wilson, 122 Cal. 509, 514, 515, 68 Am. St. Eep. 61, 55 Pac. 390. Where a person who held no such relation to sold property or the parties as authorized him to redeem from the purchaser at the foreclosure sale, but the purchaser permitted him to redeem as a redemptioner, and afterward the redemptioner assigned his certifi- cate of redemption back to the purchaser, the judg- ment debtor who had owned the property or his grantee could redeem the property from the pur chaser thereafterward upon paying the purchaser the amount of his bid with costs, etc., as the redemp- tion by the purported redemptioner was without valid- ity as to the judgment debtor, and the purchaser ac- quired no right by reason of the assignment to him of the certificate of redemption: Hershey v. Dennis, 53 Cal. 77. In Bagley v. Ward, 27 Cal. 369, 371, an action for the recovery of the possession of immovable property, the court held that where a redemptioner from an exe- cution sale under a purported judgment lien did not in fact have a valid lien, the deed executed by the sheriff to such redemptioner when his title became absolute was executed without authoritv of law and was void. 336 THE FORECLOSURE ACTION. § 171 is acquiesced in by all such persons cannot he afterward attacked.^^ 172. Evidence of Eedemptioner's Right to Re- deem. A redemptioner^^ who seeks to redeem must produce to the officer or person from whom ho seeks to redeem: 25 ** Whether a person seeking to redeem from a sheriif's sale is authorized to make such redemp- tion is a question which concerns him and the pur- chaser alone. If the purchaser is willing to con- sider him as a redemptioner, and accepts the redemp- tion money paid by him, he cannot thereafter question the effect of such redemption' ': White v. Costigan, 134 Oal. 33, 37, 66 Pac. 78. An assignee of the purchaser after the redemption was made is equally bound with the purchaser: White V. Costigan, 134 Cal. 33, 38, 66 Pac. 78. Where the purchaser does not object to a certain per- son's redeeming the whole property, the effect of the transaction is to vest in the person so redeeming whatever right the purchaser had acquired. So where the sheriff receives the money and executes a deed to a person who seeks to redeem, and the purchaser, by receiving the money and acquiescing in the conveyance to the person, ratified the act of the sheriff, no third person can attack the transaction: Per Sharpstein, J., in Eldridge v. Wright, 55 Cal. 531, 537. 26 See Code Civ. Proc, sec. 705. This section does not apply to a judgment debtor seeking to redeem: Yoakum v. Bower, 51 Cal. 539. Nor to his successor in interest: Phillips v. Hagart, 113 Cal. 552, 555, 54 Am. St. Eep. 369, 45 Pac. 843. See the case as quoted under section 171, note 15, above. § 172 REDEMPTION FROM SALE. 32f7 (1) [where the redemptioner is a judgment lienor]^ a copy of the docket of the judgment under which he claims a right to redeem, cer- tified by the clerk of the court, or of the county where the judgment is docketed,^'' or if he redeemed upon a mortgage or other lien, a note of the record thereof, certified by the recorder; (2) a copy of any assignment necessary to es- tablish his claim, verified by the affidavit of himself, or of a subscribing witness thereto; and (3) an affidavit by himself or his agent, showing the amount then actually* due on the lien. As between the immediate parties to a redemp- tion, the production of these papers may be waived without affecting the validity of the re- demption.^^ 2T Production of Copy of Docket Essential.—* * When the redemption is attempted to be effected through the sheriff, he has no authority, either to receive tne redemption money from one claiming the right to redeem under a judgment, or to execute a deed to him, unless the redemptioner produces a copy of the docket of his judgment. His power is altogether stat- utory, and his acts are nugatory, unless the provisions of the statute are pursued. The transcript of the plaintiff ^s judgment, which was produced to the sheriff, is not the equivalent of a copy of the docket of the judgment ^^ Wilcoxson v. Miller, 49 Cal. 193, 194; Haskell v. Manlove, 14 Cal. 54. 28 Bagley v. Ward, 37 Cal. 121, 129, 99 Am. Dec. 256. Liens— 22 338 THE FORECLOSURE ACTtON. § 173 173. Conditions of Redemption from Purchaser. The^^ person who owned the interest sold^ or his snecessor in interest of any redemptioner, may, at any time within twelve months after the sale, but not thereafterward/"^^ unless by the con- sent of the purchaser at the foreclosure sale,^^ redeem the sold property from the purchaser up- on paying the purchaser (1) the amount of the purchase price^^ witli one per cent per month thereon in addition,^^ up to the time of redemption, together with 29 See Code of Civil Procedure, section 702. Prac- tice Act, section 231, which was amended on several occasions, was substantially similar. 30 Redemption cannot be Made after Expiration of Twelve Months.— Where a redemptioner fails to re- deem within the statutory time, his right is cut off. When he contests the validity of the judgment under which the property was sold, and commences an action for that purpose, he must at least offer to redeem by paying the amount which may be found to be a valid lien in order to preserve his right of redemption in case of a possible adverse determination of his con- test: TiUey v. Bonney, 123 Cal. 118, 124, 55 Pac. 798. 31 Time may be Prolonged by Agreement.— Where the purchaser agrees to prolong the time of redemp- tion, and the judgment debtor relies upon the assur- ance, notwithstanding the assurance was not in writ- ing and was made without consideration, the purchaser is estopped by it upon the ground that the debtor was lulled into a false security: Benson v. Bunting, 127 Cal. 532, 536, 78 Am. St. Eep. 81, 59 Pac. 991. 33 Where with the consent of the ofl3.cer appointed to isell encumbered property the purchaser raised his bid a few days after the sale, the judgment debtor cannot thereafter redeem without paying the f 173 REOEMPTIOIS' FROM SALE. 339» (2) the amount of any taxes or assessments which the purchaser may have paid thereon after the purchase, with interest on such amount, and (3) in case of a redemption by a redemptioner,^** the amount of any encumbrance owned by the purchaser, other than that under which the purchase was made and prior to that of the re- demptioner, with interest. increased amount paid together with the proper per- centages, etc.: Weyant v. Murphy, 78 Cal. 278, 12 Am. St. Eep. 50, 20 Pac. 568. 33 With One Per Cent in Addition.— The percent- age here directed to be added was intended to cover the whole amount required under this item, and there is no pretext for also adding interest to the amount of the purchase price: McMillan v. Vischer, 14 Cal. 232, 241. 34 In Case of a Redemption by a Redemptioner ~ Rationale.— * ^ The reason for the distinction made be- tween the judgment debtor and the redemptioner is, that if the latter were permitted to redeem without paying the prior lien held by the purchaser, the title would pass to the redemptioner and the lien of the purchaser would be defeated. But if the judgment debtor redeem, he is restored to his estate, and the lien held by the purchaser will be available": Sharp V. Miller, 47 Cal. 82. A different explanation was given in Knight v. Fair, 9 Cal. 117, 118, and McMillan v. Eichards, 9 Cal. 365, 413, 414, 70 Am. Dec. 655, cases decided when it was held that the purchaser did not obtain the title to the property during the period of redemption. See section 154, note 65, above. But the judsrment debtor may redeem without paying intermediate liens of the purchaser as specified in this subdivision: Campbell v. Oaks, 68 Cal. 222, 9 Pac. 77. •340 THE FORECLOSUKE ACTION. § 173 So long as the payment is made in behalf of and with the consent of a person entitled to re- deem the property, it is immaterial whence comes the money with which the redemption is sought to be made.^'^ Should the person who redeems make any overpayment of redemption money, the overplus may be recovered back by him.^^ 174. Conditions of Redemption from Redemp- tioner. The person who owned the interest sold may at any time within twelve months after the sale, or within sixty days after a redemption by a re- demptioner, and any subsequent redemptioner may at any time within sixty days after the last previous redemption, again redeem the prop- erty from the last previous redemptioner upon paying (1) the sum paid on such last redemption, with two per cent thereon in addition, together with (2) the amount of any taxes or assessments which the last redemptioner may have paid thereon after the redemption by him, with interest on such amount, and . »5 Seale v. Doane, 17 Cal. 476. 36 Where the redemptioner makes an overpayment to the sheriff of redemption money, the payment cannot be regarded as compulsory; nevertheless, such payment was not intended as a gift to the of- ficer, and he has no title to it, and may be regarded § 174 REDEMPTION FROM SALE. 341 (3) the amount of any encumbrances of the last redemptioner prior to that of the person re- deeming; except that the judgment under which the property was sold need not be paid.^'' as the bailee of the redemptioner, who may recover it back from him: McMillan v. Vischer, 14 Cal. 232, 240, 241. 37 Conditions of Redemption from Redemptioner.— Code of Civil Procedure,, section 703, in part provides: *^If property be so redeemed by a redemptioner, an- other redemptioner may, within sixty days after the last redemption, again redeem it from the last re- demptioner on paying the sum paid on such last re- demption, with two per cent thereon in addition, and the amount of any assessment or taxes which the last redemptioner may have paid thereon after the redemp- tion by him, with interest on such amount, and, in ad- dition, the amount of any liens held by said last re- demptioner prior to his own, with interest; but the judgment under which the property was sold need not be so paid as a lien. The property may be again, and as often as a redemptioner is so disposed, redeemed from any previous redemptioner within sixty days af- ter the last redemption, on paying the sum paid on the last previous redemption, with two per cent thereon in addition, and the amounts of any assessments or taxes which the last previous redemptioner paid after the redemption by him, with interest thereon, and the amount of any liens, other than the judgment under which the property was sold, held by the last redemp- tioner previous to his own with interest In all cases, the judgment debtor shall have the entire period of twelve months from the date of the sale to redeem the property. If the judgment debtor redeem, he must make the same payments as are required to effect a re- demption by a redemptioner.'' Historical.— The provisions of the Practice Act, sec- tion 232, several times amended, were in most re- spects similar to the above, except that the judgment 342 THE FORECLOSURE ACTION. § 175 175. Rents and Profits Received to be Credited on Redemption Money. The amount of any rents and profits received from the property by the purchaser or redemp- tioner who has redeemed, or assigns, are a credit upon the redemption money to he paid by any person thereafter redeeming.^® 176. Payments, How Made.^^ The payments required in order to effect a redemption from the purchaser or redemptioner who has redeemed may be made to the purchaser or redemptioner respectively, or for him to the officer who made the sale. When the judgment under which the sale has been made is payable in a specified kind of money or currency, pay- ment must be made in the same kind of money debtor or person who owned the interest sold was required to redeem, if at all, within sixty days after a redemption by a redemptioner: See Boyle v. Dalton, 44 Cal. 332. But ''there is no such thing under our statute as a redemption from a successor in interest of one of two or more judgment debtors, who redeems land sold sub- ject to redemption'': Calkins v. Steinbach, 66 Cal. 117, 120, 4 Pac. 1103. 38 Compare Code of Civil Procedure, section 707, second sentence, first clause. Historical.— No similar provision was found in the corresponding section of the Practice Act. 39 Code of Civil Procedure, section 704, pro- vides: ''The payments mentioned in the last two sec- tions may be made to the purchaser or redemptioner, OP for him to the officer who made the sale. When ^^ UN; . . § 176 REDEMPTION FROM SALE. 343 ^..,.. .- or currency .^^ Where neither the'law-Hor^fh.o judgment of the court, nor the instructions of the purchaser or redemptioner where he has the, right to give such instructions, require the offi- cer to receive a particular kind of money or cur- rency only, the officer may receive whatever is regarded as current money at the time and place, although not strictly a legal tender.'*^ A ten- der of the money is equivalent to payment. the judgment under which the sale has been made is payable in a specified kind of money or currency, pay- ments must be made in the same kind of money or currency, and a tender of the money is equivalent to payment. ' ' B'is^oricaL— Practice Act, section 233, as amended April 27, 1863, provided substantially the Same. The original section omitted the last sentence to the words, '^and a tender of the money," etc. 40 Payment Must be Made in Same Kind of Money. Compare the following: Where the redemption money was payable in gold coin, and the redemptioner, at the request of the sheriif, deposited the redemption money in gold coin in a bank receiving therefor a certified check not in terms payable in gold coin, which, how- ever, was in fact afterward paid to the sheriff in gold coin, the person from whom the redemption was made having in fact received precisely what he was entitled to was not injured, and cannot complain that the check was not payable in gold coin: Hooker v. Burr, 137 Cal. 663, 70 Pac. 778. 41 In Absence of Direction, Officer may Receive any Current Money.— ^' We are satisfied that the sheriff is by law constituted the agent of the purchaser in re- ceiving the redemption money, and that as such agent, in cases where neither the law nor the judgment of the court directs him to receive a particular kind of money only, he may properly receive for the purposes of re- demption any lawful money, in the absence of instruc- 344 THE FORECLOSURE ACTION, § 176 tions from the purchaser, when he has the right to give such instructions, restricting him to a certain kind of money "As we have already remarked, silver money is not a legal tender in payment of sums exceeding five dol- lars, but can it be questioned that it is lawful money? .... If the silver coins are not lawful money, they could not be employed in the payment of a debt call- ing for money, unless the creditor agreed to receive and did receive them as lawful money. Treasury notes, like silver coins, are not a legal tender for all purposes, but, like them, constitute lawful money'': The Court, in People v. Mayhew, 26 Cal. 655, 664, 665, in denying a petition for rehearing. In Hooker v. Burr, 137 Cal. 663, 70 Pac. 778, for the convenience and at the request of the sheriff after having offered the redemption money in gold coin, the payment was made by a certified check which was seasonably cashed in gold coin and the actual money taken into the custody of the sheriff. The court said: "The sheriff is made the agent of the purchaser for the purpose of receiving payment. It is true that his agency is a limited agency, and that his act does not bind the purchaser upon any matters outside of the payment, and only upon those when, in compliance with the law, payment in money suffi- cient in kind and amount has been made. "In general mercantile and commercial transactions a check is, after all, but a convenient form of trans- ferring money, and operates either as payment ab- solute or payment conditional, as the parties them- selves intend But in all such transactions where a check is received as conditional payment the pay- ment becomes absolute, and relates to the time of the delivery of the check when its recipient actually cashes it.'' The sheriff "is the agent merely for the purpose of receiving the payment, and that payment, to bind his principal, must be made in the amount and kind of money to which the principal is entitled. He, .... of course, could refuse the tender of a check, but if in a bona fide transaction he accepts a check as condi- § 177 REDEMPTION FROM SALE. 345 177. Notice of Redemption must be Given by Redemptioner.^^ Every redemptioner^^ who makes a redemp- tion must give a written notice thereof to the sheriff and file a duplicate with the recorder of the county^ serving with his notice the papers required to be produced by section 172 above;"*"* tional payment, and that check is regularly paid, his principal has suffered no detriment and the transac- tion under modern business methods has come to be regarded as perfectly legitimate, and quite with- in the scope of the agent's authority/' In Hooker v. Burr, 137 Cal. 663, 70 Pac. 778, the statement in Thorne v. San Francisco, 4 Cal. 127, 150, that payment upon redemption cannot be made to the sheriff by certified check, although the check was af- terward cashed, the court saying: **Such pretended payment was made by delivering private checks of such individuals to the sheriff. This was no payment under our laws. The constitution forbids it. This is emphatically a hard money state,'' was overruled. 42 Compare Code Civ. Proc, sec. 703, in part. Historical,— 'Practice Act, section 232, provided: '^Notice of redemption shall be given to the sheriff." 43 Every Redemptioner.— The portion of the code section prior to the provision on which this section is founded relates to redemptioners exclusively, and not to the person who owned the interest sold or his successor in interest, and in view of the concluding phrase of this portion that ^'if such notice be not filed, the property may be redeemed without paying such tax, assessment, or lien," which clause can only refer to redemptioners, the portion of the code on which this section is founded doubtless, too, refers to redemptioners only. 44 See Code of Civil Procedure, section 705, which provides: *^A redemptioner must produce to the offi- cer or person, from whom he seeks to redeem, and serve with his notice to the sheriff ^' 346 THE FORECLOSURE ACTION. § 177 and must in like manner give to the sheriff and file with the recorder notice of any taxes or as- sessments which he may pay and of any encum- brance which he may hold or acquire upon the redeemed property other than that on which the redemption was made; otherwise the property may again he redeemed without paying such tax, assessment, or encumbrance. 178. Purchaser or Redemptioner Who has Re- deemed must, on Demand, State Rents and Profits.*^ Whenever a redemptioner or the person who owned the interest sold or his successor in in- terest,^^ before the expiration of the time al- lowed for his redemption, demands in writing of the purchaser or of a redemptioner who has re- deemed, or the assign of either of them, a writ- ten and verified statement of the amounts of any rents and profits which may have been re- ceived by him, the period of redemption is ex- tended until the expiration of five days after tha statement is given by such person to the redemp- tioner or former owner. The redemptioner or former owner may maintain an action against a purchaser or redemptioner or assign who, for a period of one month after such demand fails or refuses to give the statement to compel an ac- 45 See Code Civ. Proc, sec. 707, last half. 46 See section 171, note 15^ above. § 178 REDEMPTION FROM SALE. 347 counting and disclosure of such rents and profits ; and until the expiration of fifteen days after the final determination of such action the right of redemption is extended to such redemptioner or former owner or his successor. 179. Person Who by Mistake Fails in Attempt to Redeem may Complete Redemption. Any person authorized to redeem the sold property who makes an attempt in good faith to redeem within the prescribed time^ but who, through his innocent mistake, fails to tender a sufficient amount of redemption money, may thereafter perfect the redemption by making up the deficiency.^'' 47 Mistake in Attempt to Redeem: Pownall v. Hall, 45 Cal. 187; Kofoed v. Gordon, 122 Cal. 314, 324, 325, 54 Pac. 1115; Walsh v. Erwin, 115 Fed. (G. C.) 531, 535. Illustrations. — A qualified redemptioner who at- tempts in good faith to redeem within the proper time, but is prevented from perfecting a valid redemp- tion by an innocent mistake in respect to a spurious note (he paying as redemption money a counterfeit one hundred dollar note as part thereof), may be re- lieved from his mistake by a payment of the one hundred dollars with interest: Pownall v. Hall, 45 Cal. 187. Where on making a redemption the redemptioner, by mistake, fails to tender a sufficient sum to cover a small amount of taxes which had been paid by the purchaser at the judicial sale, but of which payment neither the redemptioner nor the sheriff nor the agent of the purchaser who accepted the amount knew, and where on being informed of the deficiency the re- demptioner made it up, the redemption is valid: Kofoed V. Gordon, 122 Cal. 314, 324, 325, 54 Pac. 1115. 348 THE FORECLOSURE ACTION. § 180 180. Upon Redemption by Owner, Certificate of Redemption must be Issued.'*^ Upon a redemption by the person who owned the interest sold or his successor in interest,^^ the person to whom the payment is made must execute and deliver to him a certificate of re- demption, acknowledged or proved before an offi- cer authorized to take acknowledgments of con- Where the owner of land which had been sold upon the foreclosure of a miner's lien thereagainst in- quired of the sheriff the amount required for re- demption, and upon being informed by the sheriff that a certain sum was required, paid that sum to the sheriff and received a certificate of redemption, and afterward, after the expiration of the period of redemption, the sheriff discovered that the amount which he had required the owner to pay was too smaH by forty-seven dollars, and notified the owner thereof, who thereupon paid such sum, but the pur- chaser at the judicial sale refused to accept it, but claimed the sale had become absolute by reason of a failure to redeem and obtained a writ of mandate from the superior court to compel the sheriff to exe- cute him a deed of the property, the mistake being in- nocent and corrected as soon as discovered, equity will relieve the owner from it and permit him to perfect the redemption: Walsh v. Erwin, 115 Fed. (C. C.) 531, 535. ' 48 See Code of Civil Procedure, section 703, last two sentences. In order to validate the redemption, it is not neces- sary that the certificate of redemption should state the capacity in which the redemption was made; Pol- lard V. Harlow, 138 Cal. 390, 71 Pac. 454. 49 That this section applies as well in case of a re- demption by the successor in interest as by the person who owned the interest sold, is held in Calkins v. Steinbach, 66 Cal. 117, 120, 121, 4 Pac. 1103. § 180 REDEMPTION FROM SALE. 349 veyances of immovable property. This certifi- cate must be filed and recorded in the office of the recorder of the county in which the prop- erty is situate, and the recorder must note the record thereof in the margin of the record of the certificate of sale. Subdivision Jf.. Effect of Redemption. 181. Effect of Redemption by Redemptioner. A redemption by a redemptioner, together with the issuance of a certificate of re- demption to him, has the same effect as would the assignment of the certificate of sale to him,^^ and if the property is not again redeemed from such redemptioner before the expiration of the time of redemption, he is there- upon entitled to a deed of the property in like 50 **lt will be seen, therefore, that the effect at- tending a redemption of property, sold subject to redemption, depends upon the character of the per- son making the redemption. If made by a * redemp- tioner^ (defined in the second subdivision of section 701 of the statute [see section 171, above]), and there be no further redemption within the statutory period, the redemptioner is entitled to a deed from the sheriff, conveying to him the interest of the judgment debtor therein. But if made by the judgment debtor, or his successor in interest, the effect of the sale is terminated, which fact is made to appear of record by a certificate of redemption, and a note thereof on the margin of the certificate of sale^^: Calkins v. Steinbach, 66 Cal. 117, 121, 4 Pac. 1103. 350 THE FORECLOSURE ACTION. § 181 manner and with like effect as would the pur- chaser have been had there been no redemption.^^ 182. Effect of Redemption by Person Who Owned Interest Sold.^^ Upon a redemption of the property by any per- son who owned an interest which was sold at the foreclosure sale or by his successor in interest,^^ the effect of the sale is terminated and each per- son who owned an interest at the time of the sale^ or where he has transferred his interest or any part thereof, his successor in interest to such extent, is restored to his former interest in the property sold.^^ Where other persons than the 51 Abadie v. Lobero, 36 Cal. 390, 397; White v. Cos- tigan, 134 Cal. 33, 38, 6Q Pac. 78. 52 Code of Civil Procedure, section 703, in part: '^If the judgment debtor redeem, the effect of the sale is terminated, and he is restored to his estate.'' Historical.— The concluding sentence of Praictice Act, section 232, provided substantially to the same effect. 53 Successor in Interest Redeems with Like Effect as Person who Owned the Property.— '* The same ef- fect must be held to attend a redemption by the suc- cessor in interest of the judgment debtor, since the right of redemption, which is by the statute given to the judgment debtor, is also given to his successor in interest: Calkins v. Steinbach, 66 Cal. 117, 120, 4 Pac. 1103. 54 All Persons Restored to Estate— Person Who Redeems has Lien. — Where one of several cotenants redeemed as a successor in interest, ''the effect of the sale was terminated, and he thereupon acquired an equitable lien upon the interest of his cotenants in the lands, for their just proportion of the money paid § 182 REDEMPTION FROM SALE. 351 person who redeemed are thus restored to their estates, the person who effected the redemption has an equitable lien^'* against their respective interests in the property for the repayment to by him in effecting the redemption; and he had his ac- tion to recover such proportion, and a decree to that effect that, in default of such payment, the interests of the cotenants in the lands be foreclosed. Those were the relative rights and duties of the respective parties'': Calkins v. Steinbach, 66 Cal. 117, 120, 4 Pac. 1103. Where, before the final settlement of the estate of a decedent, certain mortgaged property of the estate was sold at foreclosure and a redemption made by a successor in interest of a cotenant of a remainder in fee in the property (the remainder having been de- vised to the cotenants by the decedent), the effect of the redemption ^^was simply to terminate *the ef- fect of the sale,' thus restoring the property to the estate, but reviving the lien of the mortgage for the benefit of the party redeeming." The person who made the redemption '* acquired no title, but an equitable lien only, by subrogation to the title of the mortgagee." If, then, the administratrix of the estate redeems the property from the person who had made the redemption, it is ** still the lien of the original mortgage from which redemption is to be made": Estate of Freud, 131 Cal. 667, 673, 82 Am. St. Eep. 407, 63 Pac. 1080. Where a cotenant of a remainder in fee redeems, the entire estate in the land having been sold, the cotenant has an equitable lien against the interest of the other remaindermen and of the tenant for life as security for reimbursement for their respective shares of the money paid to redeem. Such cotenant is not, however, substituted to the full rights of the pur- chaser at the foreclosure sale and entitled to a deed without a resale, but by his redemption the foreclos- ure sale was '^set at large, leaving a lien in his favor": \Varner Bros. Co. v. Freud, Cal., March 19, 1903. 352 THE FORECLOSURE ACTION. § 182 hirn by each person who was thus restored to an interest in the property sold of his respective share of the redemption money, this lien being enforceable as other liens by judicial sale.^^ Subdivision 5. Expiration of Time of Redemption, 183. Title Becomes Absolute upon Expiration of Time of Redemption.^^ If no redemption is made within twelve months after the sale, the sale becomes absolute 55 Lien to be Foreclosed by Judicial Sale.— Where a cotenant of a remainder in fee redeems, he may maintain an action for the foreclosure of his equitable lien, in which action the judgment should be that in default of payment by the other person inter- ested in the property of their respective shares of the redemption money within a reasonable time to be fixed by the court, the property be sold, and the pro- ceeds, or so much thereof as may be necessary, be applied to the payment of the amount due the coten- ant, and the surplus properly distributed: Warner Bros. Co. V. Freud, Cal., March "^19, 1903. Historical.— In Warner Bros. Co. v. Freud, Cal., March 19, 1903, the doctrine of Calkins v. Steinbacii, 66 Cal. 117, 121, 4 Pac. 1103, that 'Ho enforce the relative rights and obligations of the respective par- ties, it is necessary that this amount [which the coten- ant who effected the redemption can recover from his cotenants] be judicially ascertained, a day fixed within which it be paid, and a decree to the effect that in default of such payment, defendant be for- ever foreclosed of all right of interest in the lands'' was repudiated, the court saying: **No authority was cited in support of the proposition, nor was the ques- tion discussed, or any reference made to prior deci- sions in this court declaring that strict foreclosures 'are unknown to our law,' and the mortgagee can in no case in this state become the owner of the mort- § 183 REDEMPTION FROM SALE. 353 without the performance of any act by any- body.^'' If redemption has been made by a re- demptioner, then npon the expiration of twelve months after the sale and of sixty days after the redemption without other redemption beijig made and notice thereof given^ the estate of the re- demptioner becomes absolute. In each case the time when the estate becomes absolute is post- poned by the refusal to account for rents and profits which may have been received, as pro- vided in section 178 above. gaged premises, except by a purcliase upon sale un- der judicial decree.^' 56 See Code of Civil Procedure^ section 703, in part: ^^If no redemption be made within twelve months after the sale, the purchaser, or his as- signee, is entitled to a conveyance; or if so re* deemed, whenever sixty days have elapsed, and no other redemption has been made, and notice thereof given, and the time for redemption has expired, the last redemptioner, or his assignee, is entitled to a sheriff ^s deed; but, in all cases, the judgment debtor shall have the entire period of twelve months from the date of the sale to redeem the property.'' Historical. — Practice Act, section 232, contained a similar provision except that the judgment debtor was allowed only sixty days after a redemption by a re- demptioner within which to redeem. 57 Page V. Eogers, 31 Cal. 293, 301; Leonard v. Flynn, 89 Cal. 543, 545, 26 Pac. 1099; Duff v. Eandall, 116 Cal. 226, 230, 58 Am. St. Eep. 158, 48 Pac. 66; Bennett v. Wilson, 122 Cal. 509, 513, 68 Am. St. Eep. 61, 55 Pac. 390. Upon the expiration of the period of redemption, the title becomes absolute in the purchaser, although the deed given by the sheriff was void, for the deed is but evidence of the title: Lone Jack Min. Co. v. Megginson, 82 Fed. 89, 92, 27 C. C. A. 63. Liens— 23 354 THE FORECLOSURE ACTION. § 184 AKTICLE 9. APPEAL BONDS IN FORECLOSUEE ACTIONS.! 184. Appeal bond from order for sale of immovable property. 185. Appeal bond from order for sale of mortgaged movable property. 184. Appeal Bond from Order for Sale of Im- movable Property.^ Any person who appeals from a judgment or an order for the sale of encumbered immovable 1 In connection with appeal bonds in foreclosure cases, the general discussion of the subject in Es- tate of Schedel, 69 Gal. 241, 10 Pac. 334, and Pen- nie V. Superior Court of San Francisco, 89 Cal. 31, 26 Pac. 617, might be examined. 2 See Code of Civil Procedure, section 945, Prac- tice Act, section 352; ''If the judgment or order ap- pealed from direct the sale or delivery of possession of real property, the execution of the same cannot be stayed, unless a written undertaking be executed on the part of the appellant, with two or more sureties, to the effect that during the possession of such property by the appellant, he will not commit, or suffer to be committed, any waste thereon, and that if the judg- ment be affirmed, or the appeal dismissed, he will pay the value of the use and occupation of the property from the time of the appeal until the delivery of possession thereof, pursuant to the judgment or order, not exceeding the sum to be fixed by the judge of the court by which the judgment was rendered or order made, and which must be specified in the undertaking. § 184 APPEAL BONDS. 355 property in satisfaction of an encumbrance there- against must execute a written undertaking with two or more sureties in an amount to be deter- mined by the court ' or a judge thereof^ as se- curity When the judgment is for the sale of mortgaged premises, ana the payment of a deficiency arising upon the sale, the undertaking must also provide for the payment of such deficiency. '^ Code of Civil Procedure, section 1199, expressly de- clares that the general provisions as to appeals are applicable in appeals from judgments for the sale of property upon a mechanic's lien. Construction of Code.— '^ This section is double, and provides for two distinct undertakings upon two dis- tinct kinds of judgments, one directing a sale of real property, and the other directing the delivery of the possession of real property. In a case where the judgment directs a sale, the undertaking need only provide security against waste, unless such sale is of mortgaged premises and the judgment provides for the payment of a deficiency, in which case it must provide for the payment of such deficiency. In such a case, no provision need be inserted in the under- taking for the payment of the value of the use and oc- cupation of the premises pending the appeal, for the obvious reason that the judgment creditor does not become entitled to the value of the use and occupa- tion until after a sale has been made Where the sale is directed for the purpose of satisfying any lien other than a mortgage lien, the undertaking need not provide for the payment of any deficiency which the judgment may direct'': Englund v. Lewis, 25 Cal. 337, 353, 354. See, also, Whitney v. Allen, 21 Cal. 233. 3 To be Fixed by Court or Judge Thereof.— The amount of the undertaking for the deficiency is to be fixed by the court as well as the amount of the under- taking against waste: Boob v. Hall, 105 Cal. 413, 38 Pac. 977, in bank, Harrison, J., dissenting; Hubbard V. University Bank, 120 Cal. 632, 52 Pac. 1070. 356 THE FORECLOSURE ACTIOiS". § 184 (1) if tlie aj)peliant is in possession,'* against the commission of waste during the time of ap- peal, and also (2)' whether in possession or not,^ in case of the The court may fix the amount of the bond upon an ex parte application, although it would be better and safer practice to give the respondent an opportunity to be heard; and when the order is complied with the proceedings are stayed: Hubbard v. University Bank, 120 Cal. 632, 52 Pac. 1070. As the effect of the bond is to stay all further pro- ceedings in the court whose judgment was appealed from, the court has no power to alter the amount of the bond or impose further conditions upon appellant: Hubbard v. Universitv Bank, 120 Cal. 632, 52 Pac. 1070. ^'It was not necessary for the judge to name in the order [fixing the amount of the bond in case of an appeal from a judgment foreclosing a mortgage in which a deficiency judgment was ordered] separate amounts for waste, occupation, and deficiency. It was sufficient to name the whole amount which in his judg- ment would be necessary to meet the requirements of section 945, although the undertaking itself must con- tain covenants for each of the matters covered by the section^': Wheeler v. Karnes, 130 Cal. 618, 620, 621, 63 Pac. 62; Ogden v. Davis, 116 Cal. 32, 37, 38, 47 Pac. 772. 4 If Appellant in Possession.— This first branch of the bond is required solely when the appellant is in possession: Hoppe v. Hoppe, 99 Cal. 536, 34 Pac. 222. The word *' possession '^ applies (1) to any person who is actually residing upon the premises. If such person appeals and desires a stay he must give the bond. He cannot have a stay without it upon the plea that he is only an agent, or that he occupies in subordination to, or in connection with, somebody else; (2) to any persons in subordination to whom the prop- erty is held. If such person appeals and desires a § 184 APPEAL BONDS. 357 stay, he cannot avoid giving the bond on the ground that another is in actual possession of the property, if such other holds in subordination to him: McMillan V. Hayward, 84 Cal. 85, 24 Pac. 151. So an administrator, being entitled to the possession of all the property of the estate except the homestead, cannot avoid the bond on the ground that the heirs of the decedent are, with his permission, in possession of the premises: McMillan v. Hayward, 84 Cal. 85, 24 Pac. 151. Where a lessee of land held under a verbal lease for a year, which probably would be terminated during the appeal, and the appellant was the lessor and also the mortgagor of the property, the appeal being from a judgment foreclosing the mortgage, although there was no deficiency judgment, a stay bond must be given. '^The case should be a very clear one to authorize the court to refuse to apply the statute to a particular case'': Bank of Woodland v. Stephens, 137 Cal. 458, 70 Pac. 293. Conversely, an appellant not in possession is not re- quired to give this bond: McMillan v. Hayward, 84 Cal. 85, 24 Pac. 151; compare Eoot v. Bryant, 54 Cal. 182. Where the respondent is in possession, no bond against waste is required: Owen v. Pomona Land etc. Co., 124 Cal. 331, 334, 57 Pac. 71. Where mortgaged land is in the possession of a ten- ant holding under a verbal lease for a year, which would probably be terminated during the appeal, al- though the court had appointed a receiver who was not in actual possession, the mortgagor must, in case of an appeal by him, file a stay bond in order to stay proceedings: Bank of Woodland v. Stephens, 137 Cal. 458, 70 Pac. 293. 5 Whether in Possession or not.— The second branch of the bond is required in every case of the sale of mortgaged property where there is a provision for a deficiency judgment. It is required from an appellant out of possession as well as one in possession: Spence v. Scott, 95 Cal. 152, 30 Pac. 202. Compare Home Loan Assn. v. Wilkins, 64 Cal. 379. 358 THE FORECLOSURE ACTION^. § 184 sale of mortgaged property^ under a judgment providing for the payment of any deficiency which may arise upon the sale, for the payment thereof ; otherwise the sale is not stayed by the appeal^ And where the person appealing is not liable for the deficiency as well as where he is personally liable therefor: Johnson v. King, 91 Cal. 307, 27 Pac. 644; Gutzeit V. Pennie, 97 Cal. 484, 487, 32 Pac. 584. G Required Merely in Case of Mortgage.— Where, however, the sale is directed for the purpose of satis- fying any encumbrance other than a mortgage, the undertaking need not provide for the payment of a deficiency which may be directed: Englund v. Lewis, 25 Cal. 337, 354; Painter v. Painter, 98 Cal. 625, 33 Pac. 483. So in an appeal from a judgment enforcing a ven- dor's lien, the undertaking is not required by law to cover a deficiency judgment, and if given is void: Englund v. Lewis, 25 Cal. 337, 354. So in an appeal from a judgment foreclosing a me- chanic's lien: Corcoran v. Desmond, 71 Cal. 100, 103; Central Lumber etc. Co. v. Center, 107 Cal. 193, 198, 40 Pac. 334. And from a judgment foreclosing an equitable lien in the nature of a mortgage: Kreling v. Kreling, 116 Cal. 458, 48 Pac. 383. Compare same case, 118 Cal. 413, 50 Pac. 546, which shows that it concerned an equitable lien. And from a judgment foreclosing a lien imposed by court: Owen v. Pomona Land etc. Co., 124 Cal. 331^ 334, 57 Pac. 71. 7 Where the Stay Bond is not given, the sale is not stayed by an appeal, and a writ of assistance will issue to the purchaser: California etc. Sav. Bank v. Graves, 129 Cal. 649, 651, 62 Pac. 259. See, also, Montgomery v. Tutt, 11 Cal. 190, 193. § 185 APPEAL BONDS. 359' 185. Appeal Bond from Order for Sale of Mort- gaged Movable Property. Any person who appeals from a judgment or an order for the sale of mortgaged movable prop- erty in satisfaction of a mortgage thereon must execute a written undertaking with two or more sureties^ in an amount to be determined by the court or a judge thereof, as security for the de- livery of the property to the proper officer iti case the judgment or order is affirmed, or, in de- fault of such delivery, for the payment to the proper officer of the full value of the property at the date of the appeal; otherwise the sale is not stayed by the appeal.^ 8 See Code of Civil Procedure, section 943, last sen- tence, new provision in effect March 3, 1897. But where a pledgee maintaining a foreclosure ac- tion is in possession of the pledged property, the pledgor appealing is not required to give a bond ex- cept for damages and costs as is always required: Commercial etc. Bank v. Hornberger, 134- Cal. 90, 6Q Pac. 74. Historical.— Before the enactment of this provision, no stay bond was required in case of an appeal from an order of sale of mortgaged movable property: Snow V. Holmes, 64 Cal. 232, 30 Pac. 806. PART TWO. ENCTJMBEAJ^CES FOE SECUEITY CEE- ATED BY CONTEACT. INTEODUCTOEY PEOPOSITIONS. 186. Encumbrance may be created against future in- terest. 187. Encumbrance made to delay or defraud creditors void. 188. Encumbrance made by insolvent without con- sideration void. 189. Forfeitures prohibited. 186. Encumbrance may be Created Against Fu- ture Interest. An agreement may be made to create an en- cumbrance against property not yet acquired by the party agreeing to give the encumbrance, or not yet in existence. In such case the encum- brance agreed for attaches from the time when the party agreeing to give it acquires any interest in such property, to the extent of such interest.* 1 See Civil Code, section 2883; also section 249, below. Instance Where Lien was UpJield on Property to he Acquired: Kreling v. Kreling, 118 Cal. 413, 419, 50 Pac. 546. (361) 362 CONTRACT ENCUMBRANCES. § 187 187. Encumbrance Made to Delay or Defraud Creditors Void. Every encumbrance made with intent to delay or defraud any creditor or other person of his demands is void against all creditors of the debtor, and their successors in interest, and against any person upon whom the estate of the debtor devolves in trust for the benefit of others than the debtor. The question of intent is one of fact, not of law.^ 188. Encumbrance Made by Insolvent Without Consideration Void. An encumbrance made or given, voluntarily or without valuable consideration, by a party while insolvent or in contemplation of insolvency, is void as to existing creditors.^ 2 Civil Code, section 3439: ''Every transfer of property or charge thereon made, every obligation in- curred, and every judicial proceeding taken, with in- tent to delay or defraud any creditor or other person of his demands, is void against all creditors of the debtor, and their successors in interest, and against any person upon whom the estate of the debtor de- volves in trust for the benefit of others than the debtor.'' Civil Code, section 3442, in part: ''The question of fraudulent intent is one of fact and not of law.'' Where an insolvent, not knowing his insolvency, makes a voluntary transfer of his property, the ques- tion of fraudulent intent is one of fact, which does not necessarily follow from his insolvency, and which must be established to render the transfer void: Bull V. Bray, 89 Cal. 286, 26 Pac. 873. 3 Civil Code, section 3442, latter part: "Any § 189 CONTRACT ENCUMBRANCES. 363 189. Forfeitures Prohibited. Sections 335 and 336 below, are applicable to all encumbrances for security created by contract. transfer or encumbrance of property made or given voluntarily, or without valuable consideration, by a party while insolvent or in contemplation of insol- vency, shall be fraudulent, and void as to existing creditors. ^ ' New provision, in effect May 25, 1895. Compare Civil Code, section 3432: *^A debtor may pay one creditor in preference to another, or may give to one creditor security for the payment of his de- mand in preference to another.'' As enacted 1872. TITLE 1 CONTEACT E]SrCUMBEA:N"CES DEPEND- ENT ON POSSESSION. AGAINST MOVABLE PEOPEETY. PLEDGE. AETICLEl. • NATUEE OF PLEDGE. 190. Pledge defined. 191. Delivery and change of possession of corporeal property necessary. 192. Notice of intention to pledge must, in certain cases, be recorded. 193. Transfer from debtor to creditor constitutes pledge. 194. Encumbrancer may pledge his right. 195. Person under sixteen must not pledge certain property. 196.- Insolvent person must not pledge property pur- chased on credit. 190. Pledge Defined. Every bailment by way of security for the per- formance of an obligation is a pledge.^ Property 1 Civil Code, section 2986: ** Pledge is a deposit of personal property by way of security for the per- formance of another act.'' (364) § 190 NATURE THEREOF. 365 not capable of manual delivery may be pledged by a written transfer of the title thereto.^ In Section 2987: *^ Every contract by which the pos- session of personal property is transferred, as security only, is to be deemed a pledge/' Illustrations.— The transfer of a negotiable instru- ment accompanied with a bill of lading or shipping receipt pledges the goods 'represented by the bill or receipt: Dodge v. Meyer, 61 Cal. 405, 418. . Moneys advanced by a trustee to the beneficiary of the trust on the understanding that the same should be repaid out of the rents of the trust propeity constitute a lien against the net incoming rents (not against the trust property) : EUig v. Naglee, 9 Cal. 683, 696. 2 Intangible Property Pledged by Written Transfer. ^ * Incorporeal property, being incapable of manual delivery, cannot be pledged without a written trans- fer of the title. Debts, negotiable instruments, stocks in incorporated companies, and choses in action gener- ally are pledged in that mode. Such transfer of the title performs the same office that the delivery of pos- session does in case of a pledge of corporeal property. The transfer of the title, like the delivery of posses- sion, constitutes the evidence of the pledgee's right of property in the thing pledged. The transfer m writing of shares of stock not only does not prove that the transaction is not a pledge, but the stock, un- less it is expressly made assignable by the delivery of the certificates, cannot be pledged in any other man- ner'': Brewster v. Hartley, 37 Cal. 15, 25, 99 Am. Dec. 237. '^A delivery of the possession of pledged property must be made to the pledgee, otherwise his right can- not be consummated. When the property is of a char- acter or quality not capable of manual delivery, such as debts and choses in action, the same may be pledged by a written assignment or other effective means of transfer, as the transfer of the capital stock of a cor- porate company by the delivery of the scrip or cer- tificate": Goldstein v. Hort, 30 Cal. 372, 375, 376. 366 PLEDGE. § 190 case of property capable of manual delivery the pledge need not be accompanied by a writing.^ 191. Delivery and Change of Possession of Cor- poreal Property Necessary.* Whenever property capable of manual delivery is pledged by a person in possession or control ''There can be no physical possession of an opea accoant) but its assignment by an instrument of writ- ing will ^eslf the assignee with the legal right to col- lect the pinme, whether such assignment be an absolute ownership, or for the mere purpose of collection, either as the agent of the assignor, or as security for the performance of an obligation from the assignor to the assignee, and, in the latter case, the power of collec- tion will be so coupled with an interest in the ac- count as to prevent the assignor from doing any act to impair the rights of the assignee to collect the amount'^: Works v. Merritt, 105 Cal. 467, 469, 38 Pac. 1109. IllustraUons. — A transfer to a bank of a certificate of its own stock as security for an indebtedness due it constitutes a pledge: Jennings v. Bank of California, 79 Cal. 323, 326, 12 Am. St. Eep. 145, 21 Pac. 852. The assignment and delivery of a policy of insurance constitutes a pledge thereof: Savings Bank of St. Helena v. Middlekauff, 113 Cal. 463, 466, 45 Pac. 840. 3 In Case of Property Capable of Manual Delivery Writing not Necessary: Smith v. Mott, 76 Cal. 171, 18 Pac. 260. ^ ^ In resi^ect to most kinds of property, a delivery of the property to the pledgee, without any written trans- fer of the title, is sufficient to pass the requisite spe- cial property' ': ^Brewster v. Hartley, 37 Cal. 15, 25, 99 Am. Dec. 237. 4 Delivery and Change of Possession Necessary. Civil Code, section 2988, provides: *^The lien of a pledge is dependent on possession, and no pledge is § 191 NATURE THEREOF. 367 valid until the property pledged is delivered to the pledgee, or to a pledgeholder, as hereafter described.'' Civil Code, section 3440: *^ Every transfer of per- sonal property, other than a thing in action, or a ship or cargo at sea or in a foreign port, and every lien thereon, other than a mortgage, when allowed by law, and a contract of bottomry or respondentia, is con- clusively presumed, if made by the person having at the time the possession or control of the property, and not accompanied by an immediate delivery, and fol- lowed by an actual and continued change of posses- sion of the things transferred, to be fraudulent, and therefore void, against those who are his creditors while he remains in possession, and the successors in interest of such creditors, and against any persons upon whom his estate devolves in trust for the benefit of others than himself, and against purchasers and encumbrancers in good faith subsequent to the trans- fer/' '^The object of the statute is to require notice to the world of the transfer of personal property, in order that men may be able to deal with each other upon equal terms, and from a common level ' ' : Murphy V. Mulgrew, 102 Cal. 547, 550, 41 Am. St. Eep. 200, 36 Pac. 857. Histo7Hcal.—Stats. 1850, c. 266, sees. 15, 16, and 18, in effect April 19, 1850, contained a similar provision. '^15. Every sale made by a vendor of goods and chattels in his possession, or under his control, and every assignment of goods and chattels, unless the same be accompanied by an immediate delivery, and be followed by an actual and continued change of possession of things sold or assigned, shall be conclu- sive evidence of fraud as against the creditors of the vendor, or the creditors of the person making such as- signment, or subsequent purchasers in good faith. ^^16. The term ^creditors,' as used in the last sec- tion, shall be construed to include all persons wno shall be creditors of the vendor or assignor, at any time while such goods and chattels shall remain in his possession, or under his control. ^^18. Nothing contained in the last three sections shall be construed to apply to contracts of bottomry, 368 PLEDGE. § 191 thereof,^ the property^ or where the property if? deposited with a third person the muniineiit of title thereto,^ must be expeditiously delivered'' to the pledgee or pledgeholder and kept in his open unequivocal possession as pledgee for i length of time sufficient to give general advertise • ment of the new status of the property.^ When respondentia, nor assignments or hypothecations of vessels or goods, at sea, or in foreign states, or with- out this state; provided, the assignee or mortgagee phall take possession of such vessel or goods as soon as may be after the arrival thereof within this state. ' ' ^^Upon no question of general jurisprudence has there been so much controversy and conflict as in the construction of the English statutes of fraud, and analogous statutes of the American states This disagreement has been greater upon the question now before us— the effect of the retention of the possession of personal property by the vendor, after an absolute sale — than upon any other portion of the statute. Two sects divided the judiciary upon this question, one holding that the retention was per se fraud; the other, that it was only prima facie evidence of fraud, susceptible of explanation and rebuttal. And these sects have been split into numerous minor subdivi- sions. '^ The English courts, the federal courts, and the courts of New York hold the first and most strin- gent of these rival views; but most of the states have adopted the more liberal rule. The California legisla- ture has , however, adopted the stringent rule, but did not intend to go beyond it as interpreted by the Eng- lish and federal courts: Stevens v. Irwin, 15 Cal. 503, 505, 506, 76 Am. Dec. 500. Tlie Statute Applies to Pledges Equally as to Sales.— Thus, the same rules as to delivery and change of pos- session are applicable in either case : Hilliker v. Kuhn, 71 Cal. 214, 221, 16 Pac. 707; Eohrbough v. Johnson, 107 Cal. 144, 149, 40 Pac. 37; Dubois v. Spinks, 114 Cal. 289, 294, 46 Pac. 95. § 191 NATURE THEREOF. 369 5 Where the Property is already in the possession of the pledgee, no delivery to him is necessary: Smith V. Mott, 76 Cal. 171, 18 Pac. 260. 6 Delivery and Change of Possession of Muniment of Title Sufficient.— Goods at sea may be pledged by an assignment of the bill of lading, which is deemed equivalent to actual possession, because it is a deliv- ery of the means of obtaining possession: Goldstein v. Hort, 36 Cal. 372, 376. Where the pledged property was placed by the pledgor in a warehouse of a third party, and the pledgee held • the warehouse receipts therefor in his own name, the change of possession is sufficient: Sa- linas City Bank v. Graves, 79 Cal. 192, 197, 21 Pac. 732. 7 Expeditious Delivery Essential.— (The words of the code are ^^ immediate delivery. '') '^By an imme- diate delivery is not meant a delivery instant er; but the character of the property sold, its situation, and all the circumstances must be taken into considera- tion in determining whether there was a delivery with- in a reasona,ble time, so as to meet the requirement of the statute^': Samuels v. Gorham, 5 Cal. 226; Dubois V. Spinks, 114 Cal. 289, 293, 46 Pac. 95. 8 Open, UnecLuivocal, etc., Possession Essential. — (The words of the code are ^^ actual and continued change of possession.'') '* The word ^actual' was de- signed to exclude the idea of a mere' formal change of possession, and the word ^continued' to exclude the idea of a mere temporary change. But it never was the design of the statute to give such extension to the meaning of this phrase, 'continued change of posses- sion,' as to require, upon penalty of a forfeiture of the goods, that the vendor should never have any con- trol over or use of them. This construction, if made without exception, would lead to very unjust and very absurd results. A vendor could never become trustee of the goods, without their being forfeited or liable for his debts. If a livery-stable keeper hired a horse to the original vendor, it would be liable for his debts; or if a boarder came into a room, the furniture would be liable for his debts if he once owned it. The Liens— 24 370 PLEDGE. § 191 property not capable of manual delivery after- ward becomes capable of manual delivery, it must thereupon be so delivered and taken into the pos- session of the pledgee.^ But after the lapse of ^continued change of possession/ then, does not mean a continuance for all time of this possession, or a per- petual exclusion of all use and control of the prop- erty by the original vendor. A reasonable construc- tion must be given to this language, in analogy to the doctrines of the courts holding the general principles transcribed into the statute. The delivery must be made of the property; the vendee must take the actual possession; that possession must be open and unequivo- cal, carrying with it the usual marks and indicia of ownership by the vendee. It must be such as to give evidence to the world of the claims of the new owner. He must, in other words, be in the usual relation to the property which owners of goods occupy to their property. This possession must be continuous — not taken to be surrendered back again— not formal, but substantial. But it need not necessarily continue in- definitely, when it is bona fide and openly taken, and is kept for such a length of time as to give general advertisement to the status of the property and the claim to it by the vendee '^ Stevens v. Irwin, 15 Cal. 503, 506, 507, 76 Am. Dec. 500. This case is sustained in a long line of cases, many of which are referred to in George v. Pierce, 123 Cal. 172, 177, 56 Pac. 53. ^ ^ Fitzgerald v. Gorham, 4 Cal. 290, Stewart v. Scan- nell, 8 Cal. 80, and Bacon v. Scannell, 9 Cal. 271, were substantially overruled by Stevens v. Irwin'': God- chaux V. Mulf ord, 26 Cal. 316, 323, 85 Am. Dec. 178. ^^ ^Actual' means existing in act, and truly and ab- solutely so; really acted or acting; carried out; op- posed to potential, possible, virtual, or theoretical'* (p. 170). ^^The possession which the law requires the vendee to have, after a transfer to him of personal property, is not sufficient if it amounts simply to con- structive possession, or the mere possession which the § 191 NATURE THEREOF. 371 law attaches to the ownership of the land'^ (p. 173): Bunting v. Saltz, 84 Cal. 168, 24 Pac. 167. ''The efficacy of the statute would be entirely de- stroyed if the vendor were allowed to remain in pos- session of the property as the agent of the vendee, in the absence of any notice to the world of such a change of conditions'^: Murphy v. Mulgrew, 102 Cal. 547, 550, 551, 41 Am. St. Eep. 200, 36 Pac. 857. CJianqe of Possession cannot he Accomplished hij Writ- ings. — The statute, in dealing ''with a change of pos- session sufficient to defeat creditors, does not contem- plate writings, but acts. No writings pertaining to a transfer of personal property, regardless of their num- ber or character, can create an actual and continued change of possession as to creditors of the pledgor. Acts only can do it. A visible, actual, continued change of possession must -be had, and the law will be satisfied with nothing else. Writings never can ac- complish this result^' : George v. Pierce, 123 Cal. 172, 175, 56 Pac. 53; Hitchcock v. Hassett, 71 Cal. 331, 334, 12 Pac. 228. Thus a change of possession is not affected merely by having the former owner manage the property as a servant, agent, or clerk of the pledgree: Lilienthal v. Ballon, 125 Cal. 183, 187, 57 Pac. 897. 9 When Property Becomes Capable Thereof, Must be Delivered. — "Growing crops are chattels not sus- ceptible of manual delivery until harvested, and are not 'in the possession or under the control of the vendor' within the meaning of the statute requiring an immediate delivery and continued change of posses- sion When the crop was harvested it was the duty of plaintiff [the vendee] to take immediate pos- session of the grain, and to retain such possession'': O'Brien v. Ballon, 116 Cal. 318, 321, 48 Pac. 130. (1869) "A growing crop, until ready for harvest, cannot, by itself, become. the object of a delivery, and can only be delivered into the possession of the vendee by delivering to him the possession of the land also, of which it is a part. We do not consider that chat- tels thus situated fall within the rule prescribed by the statute in relation to the immediate delivery and actual and continued change of possession of goods 372 PLEDGE. §191 the s-ufficient time the redelivery of the property to the pledgee in a new character does not of it- self defeat the pledge. ^^ and chattels in the possession and under the control of the vendor, at least until nature has prepared them for delivery to the reaper. To so construe the statute would make it an absolute interdiction upon the sale of growing crops, unless the vendor is willing to aban- don the possession of his farm to the vendee at the same time. Growing crops, in respect to delivery, are not unlike ships and cargoes at sea, of which delivery cannot be made until they reach port. If delivery of ship and cargo be made within a reasonable time after reaching port, the sale is good as against credi- tors and subsequent purchasers Although grow- ing crops are chattels, and, as we have seen, will pass by verbal sale, yet they are not susceptible of manual delivery until harvested'^: Davis v. McFarlane, 37 Cal. 634, 638, 99 Am. Dec. 340. So until harvested and reduced to actual possession growing crops will pass by deed or conveyance: Bours V. Webster, 6 Cal. 661; Bernal v. Hovious, 17 Cal. 541, 545, 79 Am. Dec. 147. Where a person in possession of certain land sold the crop growing upon it by deed, the mere fact that the vendor remained on the premises, or in the occu- pancy of the house thereon, in the face of the deed, does not amount to possession of' the crop so as to ren- der the sale void as to creditors: Yisher v. Webster, 13 Cal. 58, 61; Bernal v. Hovious, 17 Cal. 541, 545, 79 Am. Dec. 147. lo Redelivery of Property to Pledgor in New Char- acter Admissible. — ^^ There is na doubt that the trans- fer of possession to the pledgee of the thing pledged is requisite to constitute a valid pledge, and the con- tinuance of possession is also requisite As a general rule, it is, no doubt, true that the delivery back of the possession of the thing pledged with the consent of the pledgee terminates the bailment and his lien But if the pledgor recover possession § 191 NATURE THEREOF. 373* of the pledged property wrongfully, without the con- sent of the pledgee, the pledge is still valid And if it is delivered back to the pledgor in a new character, as a special bailee or agent, the pledgee will still be entitled to the pledge, not only against the owner, but against third persons, for under such circumstances the possession is perfectly consistent with the existence of the original right of the pledgee'': Palmtag v. Doutrick, 59 Cal. 154, 159, 43 Am. Rep. 245. Illustrations. — Where a pledgee of certain pianos permitted the pledgor as his agent to let one of them and to deliver it to the lessee, directing that the lease should be made in his own name, but the pledgor made the lease in his own name and appropriated the rent to his own use and afterward sold the piano to a vendee, who, however, had notice that the pledgee claimed some interest therein, the pledge was not de- feated by these circumstances, and the lessee right- fully redelivered the property to the pledgee, of whose claim he had been informed soon after receiving the piano, notwithstanding the pledgor had directed him to deliver the piano to the vendee: Palmtag v. Dout- rick, 59 Cal, 154, 43 Am. Eep. 245. "Where a pledged thresher in the possession of a pledgeholder was operated by him under an agreement with the pledgor, although for a short time, in the absence of the pledgeholder, the pledgor had taken charge of it, this was not such a possession by the pledgor as would render the pledge void as to third parties: Hilliker v. Kuhn, 71 Cal. 214, 16 Pac. 707. See Goldstein v. Nunan, Q6 Cal. 542, 6 Pac. 451, a case of sale. In Salinas City Bank v. Graves, 79 Cal. 192, 21 Pac. 732, however, a flouring-mill company bought grain and stored it in warehouses, the warehouse receipts being taken in the name of the Salinas City Bank, which advanced money thereon as a pledgee. The mill company was permitted to take the grain in quan- tities as required, to be made into flour, and the flour was stored in the mill company's warehouse until sold or shipped. The pledgee held the keys to this ware- 574 PLEDGE. § 192 192. Notice of Intention of Pledge must, in Cer- tain Cases, be Recorded. Notice of an intended pledge of a quantity ot a stock in trade amounting to substantially the whole thereof, made out of the ordinary course of trade or out of the regular and usual practice and method of business of the pledgor, unless by direction of a competent court, or by a person acting in the regular discharge of official duty or of a trust imposed upon him by law, must be recorded in the office of the county recorder of each county in which the stock in trade or any part thereof is situate at least five days before the actual consummation of the sale, and must set forth: (1) the name and address of the intended pledgee, (2) a general statement of the character of the property to be pledged, and (3) the date when and place where the consider- ation money, if any, for the pledge is to be paid.** house, but intrusted them to a person who was also connected with the mill company, and the employees of the mill company had full access to the warehouse during working hours. The court held that as to creditors the pledge was ended when the grain passed into the possession of the mill company for milling. 11 Civil Code, section 3440 (as amended by Stats. 1903, March 10, p. Ill, c. 100), latter part, provides: ''The sale, transfer, or assignment of a stock in trade (or of such a quantity of a stock in trade as to sub- § 193 NATURE THEREOF. 375 193. Transfer from Debtor to Creditor Constitutes Pledge. In the absence of a special agreement to the contrary, to be affirmatively established by the stantially amount to a whole) in bulk, or in any man- ner otherwise than in the ordinary course of trade, and in tiie regular and usual practice and method of busi- ness of the vendor, transferor, or assignee, will be conclusively presumed to be fraudulent and void as against the existing creditors of the vendor, trans- feror, or assignor, unless at least five days before the consummation of such sale, transfer, or assignment the vendor, transferor, or assignor, or the intended vendee, transferee, or assignee, shall record in the office of the county recorder in the county or counties in which the said stock in trade is situated, a notice of said intended sale, transfer, or assignment, stating the name and address of the intended vendee, trans- feree, or assignee, and a general statement of the character of the property or merchandise intended to be sold, assigned, or transferred, and the date when, and the place where, the purchase price, if any there be, is to be paid; provided, nevertheless, that if such intended sale is to be at public auction the notice above required to be recorded shall state that fact, the time, terms, and place of said sale, the names and addresses of the vendor and auctioneer, and a general statement of the character of the property or mer- chandise required to be sold, but such sale shall in no event occur within five days of the recordation of said notice; provided, further, that the provisions of this section shall not apply or extend to any sale, trans- fer, or assignment made under the direction or order of a court of competent jurisdiction, or by an executor, administrator, guardian, receiver, or other officer or person acting in the regular and proper discharge of official duty, or in the discharge of any trust imposed upon him by law, nor to any transfer or assignment made for the benefit of creditors generally, nor to any sale, transfer or assignment of any property exempt from execution/' 376 PLEDGE. § 193 debtor^ any transfer of movable property from the debtor^ or from a third person for him, to his creditor, constitutes a pledge of the property transferred, and does not extinguish nor reduce in amount the obligation to secure which the transfer was made.^^ 12 Transfer from Debtor to Creditor Constitutes Pledge. ''The owner of property remains such until he is devested of his ownership by law, or his voluntary act. The mere transfer of his property to another does not devest him of his owjiership, unless such was his in- tent, and manifested by suitable acts. ''If the person to whom the transfer is made is his creditor, his ownership will none the less be retained in the absence of any evidence respecting his motives in making the transfer When a debtor deposits property with his creditor, in the absence of any show- ing as to the purpose with which the deposit is made or received, it is presumed that it was intended as a collateral security for the debt. Unless there is some evidence tending to show an intention on the part of the debtor to give, and also on the part of the creditor to receive, the property in satisfaction of the debt, either in whole or in part, the law presumes that it is given only as a collateral security. Especially does this presumption arise if the property given is itself a chose in action or a security of a different na- ture from the debt, whose value is neither intrinsic nor apparent, and is not agreed upon by the parties "The duty of establishing the contrary is alfirma- tive, and it rests upon the debtor. If' he fails to per- form this duty, the law makes the positive inference that the assignment is only as collateral security^': Borland v. Nevada Bank, 99 Oal. 89, 95, 96, 37 Am. St. Eep. 32, 33 Pac. 737. "This court has repeatedly recognized the rule that an express agreement must be shown to establish the fact that a bill or note of either the debtor or a third § 194 NATURE THEREOF. 377 194. Encumbrancer may Pledge His Right. An encumbrancer in possession of movable property may pledge it to the extent of his en- cumbrance.^^ person was taken by the creditor in payment of a pre- existing debt^': Brown v. Olmstead, 50 Cal. 162, 165, 166. '^ There is no evidence in this case of any express agreement that the new note was to be in payment of the old one, or that the debt due on the old note was to be extinguished by accepting the new one. The only fact tending that way was, that the old note was surrendered when the new note was received; 'but that was .... insufficient; .... The law will not presume such an agreement, and it must be proved by the party relying upon if: Welch v. Arrington, 23 Cal. 322. ^ • Unless received by express agreement as payment, it dia not extinguish the debt'^ Griffith v. Grogan, 12 Cal. 317, 321, 322. ' ' The acceptance of a note payable at a future time for a pre-existing debt does not extinguish the debf : Brewster v. Bours, 8 Cal. 501, 506. Thus, in Stone v. Owens, 105 Cal. 292, 297, 298, 38 Pac. 726, it was held that the legal effect of the assignment of a contract as security for the pay- ment of debts coupled with a power of attorney ta receive the money to become due under the contract was to pledge the contract, and no obligation was im- posed upon the pledgee to perform, or pay for, the work which the pledged contract required to be per- formed by the pledgor. 13 Civil Code, section 2990: '^One who has a lien upon property may pledge it to the extent of hi& lien/' 378 ' PLEDGE. § 195 195. Person under Sixteen must not Pledge Cer- tain Property. Any person who receives in pledge from a per- son under the age of sixteen years any junk, metal, mechanical tools, or implements, is guilty of a misdemeanor.^^ 196. Insolvent Person must not Pledge Property Purchased on Credit. Any person who, within three months before the filing of a petition consequent upon which he is adjudged an insolvent under the state in- solvent laws, with intent to defraud his cred- itors pledges any property which has been ob- tained on credit and remains unpaid for, other- wise than by bona fide transactions in the ordi- nary way of his trade, is guilty of a misdemeanor punishable by imprisonment in the county jail for not less than three months nor more than two years. *^ 14 See Pen. Code, see. 501. 15 Compare Insolvent Law 1895, sec. 60, latter part. § 197 OPERATION THEREOF. 379 ARTICLE 2. OPERATION OF PLEDGE. 197. Pledge does not transfer title. 198. Increase of pledged property also pledged. 199. After-acquired title inures to pledgee. 200. Pledge of future obligation prolongs secured obligation. S;01. Executory agreement to pledge mostly void. 202. Failure to file notice of intention to pledge ren- ders pledge void against creditors. 203. Pledge of corporate stock not entered on books of corporation valid except as against bona fide purchasers. 204. Pledge by apparent owner valid as to bona fide pledgee. 205. Transfer by pledgee not clothed with indicia of ownership subject to pledge. 200. Pledged property may be attached bv garnish- ment process. 207. Measure of damages caused by conversion of pledged property. 197. Pledge does not Transfer Title. Ko pledge can transfer any title to the pledged- property.^ 1 Pledge does not Transfer Title: Hyatt v. Argenti, 3 Cal. 151, 162; Dewey v. Bowman, 8 Gal. 145, 151; Plevland v. Badger, 35 Cal. 404, 410; Wright v. Eoss, 36 Cal. 414, 428; Brewster v. Hartley, 37 Cal. 15, 25, 26, 99 Am. Dec. 237; Cross v. Eureka Lake and Yuba Canal Co., 73 Cal. 302, 306, 2 Am. St. Kep. 808, 14 Pac. 885; 380 PLEDGE. § 198 198. Increase of Pledged Property also Pledged. The increase of pledged property is pledged with the property.^ 199. After-acquired Title Inures to Pledgee. Any interest in pledged property acquired by the person pledging it after making the pledge Haber v. Brown, 101 Cal. 445, 452, 35 Pac. 1035; Stone V. Owens, 105 Cal. 292, 297, 38 Pac. 726; Anderson V. Pacific Bank, 112 Cal. 598, 601, 53 Am. St. Eep. 228, 44 Pac. 1063; Fernandez v. Tormey, 121 Cal. 515, 519, 53 Pac. 1119. See, also section 4, above. When a chose in action is pledged, an assignment and delivery are necessary to give the pledgee the fall authority readily to control it, but the title does not in consequence pass: Gay v. Moss, 34 Cal. 125, 132. ^^A general property in the thing pledged remains in the pledgor, and only a special property rests in the pledgee^': Brewster v. Hartley, 37 Cal. 15, 25, 99 Am. Dec. 237. '^It seems clear, in view of the code provision, that a mere indorsement of non-negotiable paper by way of pledge should be restricted in effect to an author- ity from the pledgor to the pledgee to enforce the obligation in his own name as trustee and agent for the pledgor, and to apply the proceeds in payment of the debt secured, accounting to the pledgor for any surplus collected. It could not operate as an assignment of the general title so long as the pledge subsists, and could only operate as such in case of an agreement that the pledge should be extinguished, and the amount of the collateral security applied as a payment upon the debt secured, or in case of a transfer of the collateral security by the pledgee tc> third parties'': Haber v. Brown, 101 Cal. 445, 453, 35 Pac. 1035. a Civ. Code, sec. 2989. § 199 OPERATION THEREOF. 38-1 inures to the benefit of the pledgee as of the time of the pledge.^ 200. Pledge of Future Obligation Prolongs Se- cured Obligation. The transfer by way of pledge of a personal obligation payable at a future time prolongs the time of payment of the indebtedness secured by such transfer until the maturity of the security."* Where a series of personal obligations payable at successive times are thus received in pledge, up- on default in the payment of any one of them at maturity the pledgee may terminate the agree- 3 Goldstein v. Hort, 30 Cal. 372, 377. 4 ** Unless received by express agreement as pay- ment, it did not extinguish the debt. It only op- erated to extend until its maturity the period for the payment of the debt. This is the settled doctrine as to the notes of the debtor, or of third persons, taken for an antecedent debt. Their acceptance is considered as accompanied with the condition of their payment at their maturity '' (pp. 321, 322). '^The authorities proceed upon the obvious ground that nothing is to be considered as payment in fact but that which is in truth such, unless something else is expressly agreed to be received in its place'' (p. 823): Griffith v. Grogan, 12 Cal. 317. '^The taking of the new note operated as an ex- tension of the time of payment of the old note'': Welch V. Arrington, 23 Cal. 322. ^^The acceptance of a note payable at a future time for a pre-existing debt does not extinguish the debt; its only effect is to suspend the creditor's right to recover until the maturity of the note": Brewster V. Bours, 8 Cal. 501, '506. 382 PLEDGE. § 200 ment and enforce the obligation secured by such pledge without further delay.^ 201. Executory Agreement to Pledge Mostly Void.<5 An executory agreement to pledge, not accom- panied by the requisite delivery and change of 5 Where a note secured by mortgage was after- ward further secured by the pledge of two notes pay- able at different times, the time of the payment of the original note is extended to that of the collateral secu- rities, but up©n default in payment of the first of the notes given as security according to its terms the origi- nal note may be enforced. The court said: ^*The [lower] court finds that the parties intended a condi- tional payment, and there is no doubt that such was the object and effect of the transaction. The debt was not extinguished, and the acceptance of the notes only operates a temporary suspension of the remedy for its recovery. The liability of the defendant [promisor on the original note] was not affected, and payment of the notes at maturity was necessary to prevent the plaintiff from enforcing it. The first of the notes [received as collateral security] became due and was not paid, and the action [to foreclose the mortgage which secured the original note] was commenced before the second note had matured. .... The notes were taken upon the understanding that they were to be paid according to their terms, and the failure in respect to the first note entitled the plaintiff [mortgagee] to put an end to the trans- action. The agreement on his part was to receive payment in a particular manner, and the contract ceased to be binding upon default of payment in the manner agreed upon^': Crary v. Bowers, 20 Cal. 85, 88, 89. 6 See Civil Code, sections 2988 and 3440, as quoted under section 191, note 4, above. § 201 OPERATION THEREOF. 383 possession of the pledged property, or, in case of incorporeal property, by a written transfer of title,''' is valid as against the pledgor and his per- sonal representatives;^ but as against any bona fide purchaser or encumbrancer for value and any creditor (whether secured or unsecured) who becomes such during the time that the property remains in the possession of the pledgor or un- transf erred, is void.^ Whether or not the deliv- 7 **Such transfer of the title performs the samo office that the delivery of the possession does in case of a pledge of corporeal property'': Brewster v. Hart- ley, 37 Cal. 15, 25, 99 Am. Dec. 237. 8 Executory Agreement Valid Between Parties: George v. Pierce, 123 Cal. 172, 173, 56 Pac. 53. Where, under contractual agreement, one person advances money to another for the express purpose of purchasing a band of cattle, the loan to be repaid from the proceeds of the sale of the cattle, the raoney lender has a lien against the cattle when pur- chased for the sum advanced, which lien is valid as against the borrower and parties taking the prop- erty with notice of the lien: Citizens' Bank of Paso Kobles V. Rucker (Cal., March 13, 1903), 72 Pac. 46. i> Void as Against a Creditor at Large, Who Be- comes Such During the Time that the Property Re- mains in the Possession of the Pledgor.— *' The code does not limit the creditor to a seizure while the property remains in the possession of the person at- tempting to make a transfer of it, but its effect is to make the attempted transfer fraudulent, and there- fore void, as against the demands of a person who was a creditor during the time [that the property remained in the possession ef the transferor]. It is claimed that the code only makes the sale void dur- ing the time that the property remains in the pos- session of the vendor, and thus subjects it to a seiz- 384 • PLEDGE. § 201 ery and change of possession is sufficient is always a question of fact^ never a matter of law.^^ lire during that time. But that is not a correct con- struction of the provision of the code. It denounces the transfer as fraudulent and void, as against the claijns of a creditor who is such creditor during any of the time that the person who made the transfer remained in possession, after a transfer which is not accompanied by an immediate delivery and followed hy an actual and continued change of possession^': Watson V. Eodgers, 53 Cal. 401; Edwards v. Sonoma Valley Bank, 59 Cal. 148; Eohrbough v. Johnson, 107 Cal. 144, 419, 40 Pac. 37. Executory agreement to pledge void as against creditor: Hitchcock v. Hassett, 71 Cal. 331, 334, 12 Pac. 228. So, where a person sold some property in 1871, con- tracted a debt in 1874, and delivered the property to the purchaser in September, 1876, the creditor could attach the property the following month, although in the possession of the purchaser: Watson v. Rod- gers, 53 Cal. 401. 10 Delivery and Change of Possession Questions of Fact. — ^"'What constitutes an ^immediate delivery' or an ^actual and continued change of possession' is, however, a fact to be determined by the court upon the evidence presented in each particular case. The circumstances connected with a transfer of personal property are so varied that it would be impossible to frame a rule applicable to each case, or to determine in advance what acts would be sufficient to meet the requirements of the statute'': Claudius v. Aguirre, 89 Cal. 501, 503, 26 Pac. 1077; Samuels v. Gorham, •5 Cal. 226; Godchaux v. Mulf ord, " 26 Cal. 316, 322, 323, 85 Am. Dec. 178; Woods v. Bugbey, 29 Cal. 466, 476; Byrnes v. Moore, 93 Cal. 393, 29 Pac. 70; Eohr- bough V. Johnson, 107 Cal. 144, 149, 40 Pac. 37; Du- bois V. Spinks, 114 Cal. 289, 293, 46 Pac. 95. In no case can the mere fact that the vendee has the control of the property, as matter of law, be § 202 OPERATION THEREOF. 385 202. Failure to File Notice of Intention to Pledge Renders Pledge Void as Against Creditors. Whenever a notice of intention to pledge is re- quired to be filed, a pledge made without such filing, except when property exempt from exe- cution is pledged, is void against all existing creditors of the pledgor.^^ 203. Pledge of Corporate Stock not Entered on Books of Corporation Valid Except as Against Bona Fide Purchasers.^^ A pledge of corporate stock, hot entered intL> the books of the corporation, is valid against conclusive that the change of possession has becomfr actual and continued as against creditors: Hesthal v^ Myles, 53 Cal. 623, 626. The declarations of the vendor of the propert}'",. marie while in actual possession of the property sold, with the knowledge or consent, express or implied, of the vendee, are admissible in determining the question of the delivery of the property, being a part of the res gestae: Cahoon v. Marshall, 25 Cal. 197.. 202; Murphy v. Mulgrew, 102 Cal. 547, 552, 41 Am.. St. Eep. 200, 36 Pac. 857. 11 See Civil Code, section 3440, latter part, as^ quoted under section 193, note 11, above. 12 Weston V. Bear Eiver etc. Co., 6 Cal. 425; Naglee v. Pacific Wharf Co., 20 Cal. 259; People V. Elmore, 35 Cal. 653; Parrott v. Byers, 40 Cal. 614,. 625; Farmers' Nat. Gold Bank v. Wilson, 58 CaL 600; Blakeman v. Puget Sound Iron Co., 72 Cal. 321^ 13 Pac. 872; Sprecliels v. Nevada Bank, 113 Cal. 272,, 276, 54 Am. St. Eep. 348, 45 Pac. 329; McFaH v. Buckeye etc. Assn., 122 Cal. 468, 68 Am. St. Eep. 47^ Liens— 25 386 PLEDGE. § 203 everyone except a bona fide purchaser or encum- brancer for value. ^^ 204. Pledge by Apparent Owner Valid as to Bona Fide Pledgee.^^ No person who allows^^ another to assume the apparent ownership^^ of property for the pur- 5o Pac. 253; West Coast Safety Faucet Co. v. Wulff, 133 Cal. 315, 85 Am. St. Eep. 171, 65 Pac. 622. 13 The expression ''bona fide purchaser for value" does not, however, include a person who buys a certificate of stock indorsed in blank, which has been stolen from or lost by the owner without his fault, when bought from the thief or finder or per- son deraigning- from him: Barstow v. Savage Min. Co., 64 Cal. 388, 49 Am. Eep. 705, 1 Pac. 349;. Sher- wood V. Meadow Val. Min. Co., 50 Cal. 412. See, also, Craig V. Hesperia Land etc. Co., 113 Cal. 7, 14, 54 Am. St. Eep. 316, 45 Pac. 10. The contrary was held in Winter v. Belmont Min. Co., 53 Cal. 428. 14 Compare Civil Code, section 2991. This section must be read together with Stats. 1877-78, p. 835, c. 535. By that statute a transfer of ''goods, or of the documents of title to goods," by way of pledge or security, made by a person intrusted with the posses- sion thereof to a bona fide pair chaser for value, was declared valid as against the owners of the goods or muniment of title to the amount actually ad- vanced by the transferee to the person intrusted with the possession (sections 1, 2 and 8). This statute was applied in Amann v. Lowell, 66 Cal. 306, 5 Pac. 363. . 15 No Person Who Allows Another.— In Arnold v. Johnson, 66 Cal. 402, 5 Pac. 796, where a bailee of a certificate of stock indorsed in blank pledged the same to a bona fide pledgee for value, the court said: "The difference between this case and Barstow v. Savage Min. Co., 64 Cal. 388, 49 Am. Eep. 70o, 1 Pac. § 204 OPERATION THEREOF. 387 349, is that in this case the owner of the stock volun- tarily delivered the indorsed certificate to the person who pledged it, while in that the indorsed certificates were stolen from the owner of the stock. In this esse the owner allowed another to assume the ap- parent ownership of the stock. In that the owner did not allow another to assume the apparent owner- ship. The distinction is an important one.'' 10 What Amounts to Apparent Ownership.— The mere possession of chattels, by whatever means ac- quired, if there be no other evidence of property or authority to sell from the true owner, will not en- able the possessor to give a good title. But if the owner intrusts to another, not merelj' the possession of the property, but also written evidence, over his own signature, of title thereto and of unconditional power of disposition over it, the case is vastly differ- ent: Shafer v. Lacy, 121 Cal. 574, 578, 52 Pac. 1004. Compare Brewster v. Sime, 42 Cal. 139, 147. The mere statement of a person that he is the owner of property then stored in a common carrier *s warehouse, without s^howing a bill of lading or in- voice thereof, does not establish apparent ownership in him; and a pledgee of such person is not protected against the real owner: Chicago etc. Press Co. v. Lowell, 60 Cal. 454. An indorsee of a warehouse receipt is the apparent owner: Davis v. Eussell, 52 Cal. 611, 616, 28 Am. Eep. 647. A factor is the apparent owner under Civil Code, section 2369, providing: ^*A factor has ostensible authority to deal with the property of his principal as his own, in transactions with persons not having notice of the actual ownership'*: See Green v. Camp- bell, 52 Cal. 586; Wisp v. Hazard, 60 Cal. 459, 6 Pac. 91. Historical.— In the early California cases, a similar rule as to factors was adopted, which, however, was not applied to persons whose sole business was to sell the goods of others consigned to him: Hutchinson v. Bours, 6 Cal. 383; Glidden v. Lucas, 7 Cal. 26, 30; Horr v. Barker, 11 Cal. 393, 70 Am. Dec. 791. Compare Leet 388 PLEDGE. § 204 pose of making any transfer'^'' thereof can de- feat a pledge of the property actually made^'^ V. "Wadsworth, 5 Cal. 404. But these cases were over- ruled and the common-law rule restored in Wright v. Solomon, 19 Cal. 64, 79 Am. Dee. 196, and the doctrine of this case prevailed. until the adoption of the code. Certificates of stock are so far subject to the opera- tion of the negotiability principle that the possessor of a certificate indorsed in blank is the apparent owner thereof, and hence a bona fide pledgee for value thereof may hold the security for the full amount advanced by him thereon: Ambrose v. Evans, €6 Cal. 74, 4 Pac. 963; Arnold v. Johnson, 66 Cal. 402, 5 Pac. 796; Brittan v. Oakland Bank of Savings, 124 Cal. 282, 288, 289, 71 Am. St. Eep. 58, 57 Pac. 84; Thompson v. Toland, 48 Cal. 99, 111, 112. The same is true of a warrant on a municipal treasury: Coit v. Humbert, 5 Cal. 260. Liikewise, it follows that the pledgee of a note ex- ecuted without consideration may enforce it against the maker for the amount of his pledge: Bell v. Bean, 75 Cal. 86, 16 Pac. 52. 3 7 For Purpose of Transf er.— ^ ^ One who has al- lowed another to assume the apparent ownership ut property for the purpose of sale or transfer cannot recover from the pledgee of such other person, if the pledgee receives the property in good faith, in the ordinary course of business and for value. The rule of the code permits the owner to show that the property was not intrusted to the bailee or person assuming ownership, for the purpose of sale, but for transportation or temporary custody and the like ob- jects^': Shafer v. Lucv, 121 Cal. &74, 577, 52 Pac. 1004. IS Actual Transfer is Necessary.— Under section 3 of the act of 1877-78 (see note 14, above), the goods must be actually transferred before the transferee receives notice of the want of authority of the per- son in possession of them, to transfer the goods, in order to render the transfer valid as against the § 204: OPEKATION THEREOF. 389 by tlio other to a pledgee in good faith^^ in the ordinary course of business and for present value ;^^ but the pledge is valid as against every- one. 205. Transfer by Pledgee not Clothed with In- dicia of Ownership Subject to Pledge. A transferee of pledged property, either abso- lutely or conditionally transferred to him by a pledgee not clothed with the apparent indicia of owner, although it is not necessary for the transfer to be made at the same time as the advance. 10 Pledgee In Good Faith. — The pledgee of a certi- ficate of mining stock, pledged by a person in whose name it stood, with, however, the word *' trustee' ' added, after the name, is a pledgee in good faith. The mere addition of the word *^ trustee'' after the name, on a certificate of mining stock, is not, in this state, of itself, nothing more appearing, to be deemed constructive notice of the equities of the secret owner of the stock: Brewster v. Sime, 42 Cal. 139, 144-148; Thompson v. Toland, 48 Cal. 99, 113. 20 Present Value as Distinguished from a Pre- existing Debt Necessary.— Under section 2 of the act of 1877-78 (see note 14, above), an antecedent debt cannot be considered a valuable consideration for such a transfer. Before the enactment of this statute, the rule was declared in Davis v. Eussell, 52 Cal. 611, 616, 28 Am. Eep. 647, to be that a pre- existing indebtedness was a valuable consideration within the meaning of Civil Code, section 2991. In Niles v. Edwards, 90 Cal. 10, 13, 27 Pac. 159, a transfer by an apparent owner was held not to cre- ate a pledge as against the owner of the property, the transferee not having parted with value on the faith of the pledge but merely holding an antecedent indebtedness from the pledgor. 390: PLEDGE. § 205 ownership nor authorized to make the transfer, succeeds to the rights and duties of the pledgee under the original pledge.^^ 206. Pledged Property may be Attached by Gar- nishment Process.^^ In case of the attachment of or levy of an exe- cution upon pledged property in the possession of the pledgee or pledgeholder upon a demand 21 Transfer by Pledgee not Clothed with Indicia of Ownership. — Although an unauthorized sale by the pledgee is void, the transferee has some equities, as the pledgee holds the property not only by way of security, but also as bailee, and the pledge carries the implication that the property may be sold to dis- charge the secured obligation. **The pawnee may deliver the goods to a stranger without consideration, or he may sell and assign all his interest absolutely, or he may assign it condi- tionally by way of pawn, without in either case de- stroying the original lien, or giving the owner a right to reclaim them on any other or better terms than he could have done before such delivery or assignment^' : Williams v. Ashe, 111 Cal. 180, 186, 187, 43 Pac. 595; Brittan v. Oakland Bank of Sav- ings, 124 Cal. 282, 287-289, 71 Am. St. Rep. 58, 57 Pac. 84; Dewey v. Bowman, 8 Cal. 145, 152. So, a purchaser from a pledgee, even under an illegal sale, may set off the amount of the secured debt against a claim for damages for wrongful deal- ing with the pledged property: Williams v. Ashe, 111 Cal. 180, 187, 43 Pac. 595. 22 Interest of Owner must be Reached by Garnish- ment: Treadwell v. Davis, 34 Cal. 601, 607, 94 Am. Dec. 770; Dubois v. Spinks, 114 Cal. 289, 294, 295, 40 Pac. 95. ^^ Whilst the interest of the pledgor may therefore be reached under an execution, it can only be done § 200 OPERATION THEREOF. 391 against the owner of the property, the attaching officer cannot take the property from the pledgee, hut must reach the interest of the owner hy serv- ing a garnishment upon the pledgee. Where the property is capable of manual delivery, the court may, after an examination of the pledgee, on such terms as m.ay he just, having reference to his pledge, order the property to be delivered to the officer.^^ 207. Measure of Damages Caused by Conversion of Pledged Property. Where pledged property has been wrongfully converted, the pledgee in an action for the re- covery of damages for such conversion,^^ where by serving a garnishment on the pledgee, and not by a seizure of the pledge. The law wisely provides that the pledgee shall not be disturbed in his posses- sion, unless it be by an order of the court made after examination, 'on such terms as may be just, having reference to any liens thereon, or claims against the same.' In this method the rights of all parties may be protected, and it is the only method by which the interest of the pledgor can be subjected to au execution'': Treadwell v. Davis, 34 Cal. 601, 607, 04 Am. Dec. 770. See Code Civ. Proc, sees. 542 and 544; Practice Act, sees. 125 and 127. By Code of Civil Procedure, section 688, Practice Act, section 217, it is provided that property not capable of manual delivery ''may be attached on ex- ecution in like manner as upon writs of attachment." 23 See Code Civ. Proc, sec. 545, Practice Act, sec. 128. 24 Action for Damages. — The measure of damages here provided applies merely in an action for dam- 392 PLEDGE. § 207 the property has not been re(;overed back by him^^^ may recover (1) in every case a fair compensation for tha time and money properly expended in pursuit of the property,^^' and (2) in case of a conversion by a person having a right to the property after the discharge o£ the pledge superior to that of the pledgee, the amount owing upon the secured obligation if the property is worth that much, but if worth less than that amount, only the value of the property ;^'' or in case of a conversion by a per- flges for wrongful conversion, but does not apply in an action for the recovery of movable property which has been wrongfully detained, with damages for the detention. The latter action is regulated by the Code of Civil Procedure, section 627, which specifies what the verdict shall be in such case, and Code of Civil Procedure, section 667, first and second sen- tences, which specifies what the judgment shall pro- vide; while Civil Code, section 3336, applies in the former case, and establishes the measure of damages obtainable where the return of the specific property is not demanded: Kelly v. McKibben, 54 Cal. 192, 195; Eedington v. Nunan, 60 Cal. 632, 639. 25 Where Property has not Been Recovered Back by Him: See section 306, note 79, below. 26 See Civil Code, section 3336, second subdivision, and Civil Code, section 3338, as quoted at section 306, notes 81 and 82, below. 27 See Civil Code, section 3338, as quoted at section 306, note 81, below. Compare the following: ''In an action by the pledgee against a stranger for the conversion of goods, the plaintiff is entitled to recover the full § 207 OPERATION THEREOF. 393 son without such right to the property, the value of the property at the time of the con- version with interest from that time, or where the action has been prosecuted with reasonable diligence, the market value of the property at any time between the conversion and the ver- dict, without interest, at the option of the in- jured party.^^ value of the goods, because he is answerable over to the pledgor for the surplus. But if the goods be converted by the owner, or by anyone acting in privity with him, the pledgee can recover only the value of his special interest in the pledge'^: Tread- well V. Davis, 34 Cal. 601, 606, 94 Am. Dec. 770; Thompson v. Toland, 48 Cal. 99, 117. But) in view of sections 3336 and 3338 of the Civil Code these cases do not seem to contain a complete statement of the rights of the pledgee. 28 See Civil Code, section 3336, as quoted at section 306, note 6, below. In certain cases, where the provisions of Civil Code, section 3336, as modified by Civil Code, section 3338, do not seem to have received the attention of the court, it was held that where the sheriff takes the pledged property from the pledgee, under process against the pledgor, the damages for the conversion of the property were to be measured by this second measure. For by seizing the property instead of serving a garnishment, the sheriff became a tres- passer, and '^therefore could not be in privity with the pledgor '^ Dubois v. Spanks, 114 Cal. 289, 294, 295, 46 Pae. 95; Treadwell v. Davis, 34 Cal. 601, 607, 608, 94 Am. Dec. 770. 394 PLEDGE. § 208 AETICLE3. EIGHTS AND DUTIES. 208. Pledgee must exercise ordinary care. 200. Pledgee must account for income and advan- tages from pledged property. 210. Pledgor entitled to receive back precisely sim- ilar property. 231. Pledgee of corporate stock may enter trans- action on books of corporation. 212. Pledgee may collect dividends. 2-13. Pledgor votes stock. 214. Pledgor may require pledged property to be sold when adequate to satisfy demand. 215. Pledgee may retain from proceeds sufficient to satisfy his largest possible demand. 216. Pledgee may retain pledged property until se- cured obligation satisfied. 217. Effect of misrepresentation of value of pledged property. 218. Effect of transfer of mortgaged property to pledgee of secured obligation. 219. Effect between parties of sale by pledgee of pledged collateral securities. 220. Amount of damages recoverable for wrongful dealing with pledged property. 208. Pledgee must Exercise Ordinary Care.^ A pledgee must, in the absence of a special agreement,^ use at least ordinary care for tho preservation of the pledged property. § 209 RIGHTS AND DUTIES. 395 209. Pledgee must Account for Income and Ad- vantages from Pledged Property. Upon the satisfaction of the secured obligation, the pledgee must ^account for all thei incomo, profits, and advantages derived by him from the bailment, and cannot make any gains to himself, directly or indirectly, in dealing with the pledged property.^ 210. Pledgor Entitled to Receive Back Precisely Similar Property. Upon the satisfaction of the secured obligation, the right of the owner of property which has been bailed as security therefor is not to recover the identical thing bailed, but merely a precisely similar thing.* 1 St. Losky V. Davidson, 6 Cal. 643. Civil Code, section 2997, provides: ''A pledgee .... assumes the duties and liabilities of a deposi- tary for reward.'' Section 1852: ''A depositary for hire must use at least ordinary care for the preservation of the thing depiosited. ' ' The pledgee of negotiable paper must use ordinary diligence in preserving the legal validity thereof, and is answerable to the pledgor to the extent of the loss consequent upon the breach of such duty: Haw- ley Bros. Hardware Co. v. Brownstone, 123 Cal. 643, 649, 56 Pac. 468. 2 The parties may stipulate for a different degree of care; St. Losky v. Davidson, 6 Cal. 643. 3 Hunsaker v. Sturgis, 29 Cal. 142, 145. 4 Pledgor Entitled to Receive Back Precisely Similar Property: Atkins v. Gamble, 42 Cal. 86, 100- 396 PLEDGE. § 211 211. Pledgee of Corporate Stock may Enter Transaction on Books of Corporation.^ A pledgee of corporate stock may cause a proper entry of the transaction between himself and his pledgor to be so entered npon the books of the corporation as to show the names of the pledgor and pledgee, the number of the certifi- lOC, 10 Am. Eep. 282; Hayward v. Eogers, 62 Cal. 348; Krouse v. Woodward, 110 Cal. 638, 643, 42 Pac. 1085. Illustrations.— A pledgee who disposed of pledged corporate stock to a bona fide purchaser or encum- brancer for value, but owned other similar stock must, upon the extinction of the pledge, compensate the owner from such other stock: Krouse v. Woodward, lie Cal. 638, 42 Pac. 1085. A return of precisely similar stock to the pledgor upon the satisfaction of the pledge is a sufficient compliance by the pledgee with his duties: Atkins v. Gamble, 42 Cal. 86, 10 Am. Eep. 282. The mere fact, then, that the pledgee sold the par- ticular certificate of stock pledged to him does not, of itself, render him liable for a conversion of the pledge: Thompson v. Toland, 48 Cal. 99, 116. 5 Pledgee of Corporate Stock may Enter Transaction en Books of Corporation.— Civil Code, section 324, provides: ''Whenever the capital stock of any cor- poration is divided into shares, and certificates there- of are issued, such shares of stock, except as herein- after provided, are personal property, and may be transferred by indorsement by the signature of the proprietor, his agent, attorney, or legal reptresenta- tive, and the delivery of the certificate; but such transfer is not valid, except as to the parties thereto, until the same is so entered upon the books of the corporation, as to show the names of the parties by whom and to whom transferred, the number of the certificate, the number or .designation of the shares, § 211 RIGHTS AND DUTIES. 397 cate^ the number or designation of the shares, and the date of the transfer; but must not have such stock transferred to his own name, nor sur- ancl the date of transfer; provided, however, that any corporation organized for, or engaged in the business of selling, distributing, supplying, or delivering water for irrigation purposes, or for domestic use, may, in its by-laws, provide that water shall only be so sold, distributed, supplied, or delivered to owners of the capital stock, and that such stock shall be appurte- nant to certain lands Avhen the same are described in the certificate issued therefor; and when such certifi- cate shall be so issued, and a certified copy of such by-law recorded in the office of the county recorder in the county where such lands are situated, the shares of stock so located on any land shall only be trans- ferred with said lands and shall pass as an appurte- nance thereto." Historical.— Before the adoption of the code, the law was substantially the same [except the provisions in regard to corporations to sell water] : Winter v. Belmont Min. Co., 53 Cal. 428, 431. This section "is general in its terms, and applies not merely to sales of stock, but to all transfers thereof and thus includes transfers by way of pledge as fully as tiansfors by which the absolute title is parted with. We entertain no doubt, therefore, that under this sec- tion a pledgee of stock has the right, and as an ordi- nary business precaution it may well be his duty, to cause a proper entry of the transaction between him- self and his pledgor to be entered upon the books of the corporation for his protection, as the section contemplates ''In the case of a sale of stock, the purchaser's right to have the stock transferred from the name of the seller into his own, and to surrender, if he desires, the old certificate, and to have a new one issued to him in his own name, is unquestioned and unques- tionable. ''But in the case of a pledgee, unless this partic- 398 PLEDGE. § 211 render the original certificate of stock and cause a new one to be issued in his own name; and an injunction^ will issue to prevent such transfer. Tilar form of procedure is necessary for his protection, it will not be adjudged to be within his rights, for the effect of it might be to imperil, upon the other hand, valuable rights and privileges of the pledgor. Thus, as here, it would give rise to questions involv- ing: the right to vote the stock at corporate elections, questions as to who should receive and retain dividends, questions of the removal of the stock to foreign jurisdictions, and the like. ^^All that Civil Code, section 324, exacts of the pledgee for the protection of his interests, is that he should cause the transaction and the nature of it to be so entered upon the books of the corporation as to show the names of the pledgor and pledgee, the number or designation of the shares, and the date of the transfer. All this may be done to the full pro- tection of the pledgee's rights without the surrender of the certificates, their cancellation, and the issuance to him of new ones, and, when done, the pledgee would be fully protected against a subsequent pur- chaser, who would be charged with the constructive notice which the entries upon the books of the cor- poration impart; and, upon the other hand, there would be preserved to the pledgor all the rights inci- dent to his ownership under the pledge'': Spreckels v. Nevada Bank, 113 Cal. 272, 277, 278, 54 Am. St. Eep. 348, 45 Pac. 329. 6 An Injunction will issue to prevent a transfer of pledged stock in the books of the corporation: Spreckels v. Nevada Bank, 113 Cal. 272, 54 Am. St. Kep. 348, 45 Pac. 329. For an illustration of the injury to the pledgor, which might result from such transfer, see Strout v. Natoma etc. Co., 9 Cal. 78; Naglee v. Pacific Wharf Co., 20 Cal. 529. § 212 EIGHTS AND DrTIES. 399 212. Pledgee may Collect DividendsJ A pledgee of stock may, at his option,® collect any dividends thereon, the amount whereof must forthwith be credited upon the principal obliga- tion. 213. Pledgor Votes Stock. The pledgor of stock has the right to vote it." 214. Pledgor may Require Pledged Property to be Sold When Adequate to Satisfy De- mand. Whenever pledged property can be sold for a price sufficient to satisfy the secured obligation, the owner may require the. holder to sell it.^^ 7 McAuley v. Moody, 128 Cal. 202, 208, 60 Pac. 778. 8 To be Collected at His Option.— The failure of the pledgee of stock to collect any dividends thereon does not put him under the duty of crediting them upon the indebtedness: McAuley v: Moody, 128 Cal. 202, 60 Pac. 778. Likewise, the pledgee of securities is entitled to collect the money due upon them: Fernandez v. Tormey, 121 Cal. 515, 520, 53 Pac. 1119. 9 Dulin V. Pacific Wood etc. Co., 103 Cal. 357, 363, 35 Pac. 1045, 37 Pac. 207. 10 Compare Civil Code, section 3007: ''Whenever property pledged can be sold for a price sufficient to satisfy the claim of the pledgee, the pledgor may re- quire it to be sold, and its proceeds to be applied to such satisfaction, when due." 400 PLEDGE. § 215 215. Pledgee may Retain from Proceeds Suffi- cient to Satisfy His Largest Possible De- mand. Upon the sale of pledged property by order of the owner thereof before the secured obliga- tion is due, the pledgee may retain out of the proceeds all that can possibly become due under his claim until it becomes due, and must pay the surplus to the pledgor.^^ 216. Pledgee may Retain Pledged Property Until Secured Obligation Satisfied. Although the secured obligation has been bar- red by lapse of time, the pledgee may lawfully retain the pledged property thereafterward until the secured obligation is satisfied.*^ 11 Compare Civil Code, section 3009: *'When prop. -erty pledged is sold by order of the pledgor be- fore the claim of the pledgee is due, the latter may retain out of the proceeds all that can possibly be- •come due under his claim until it becomes due/' 12 May Retain Property Until Secured Obligation Satisfied: Cross v. Eureka Lake etc. Canal Co., 73 Cal. 302, 306, 2 Am. St. Eep. 808, 14 Pac. 885; Spect V. Spect, 88 Cal. 437, 441, 22 Am. St. Rep. 314, 26 Pac. 203; Zellerbach v. Allenberg, 99 Cal. 57, 69, 33 Pac. 786; Gage v. Riverside Trust Co.-, 86 Fed. (C. C.) 984, 998. See, also, Treadwell v. Davis, 34 Cal. 601, 606, 94 Am. Dec. 770; Sonoma Valley Bank v. Hill, 50 Cal. 107, 110, 111. See section 84, note 9, above; also section 338, be- low. Rationale.— ^ ^ Common honesty requires a debtor to pay his just debts if he is able to do so, and the courts, when called upon, always enforce such ptay- § 217 RIGHTS AND DUTIES. 401 217. Effect of Misrepresentation of Value of Pledged Property. Where a debtor has obtained credit, or an ex- tension of time, by the fraudulent misrepresenta- tion of the value of property pledged by or for him, the creditor may demand a further pledge to correspond with the value represented; and, in default thereof, may recover his debt im- mediately, though not actually due.^^ 218. Effect of Transfer of Mortgaged Property to Pledgee of Secured Obligation. If without the consent of the pledgor the pledgee of an obligation secured by mortgage takes a conveyance of the mortgaged property without a judicial sale in satisfaction of the se- cured obligation, the pledgor may, at his option, either (1) cause the conveyance of the property and the release of the mortgage to be annulled, or (2) hold the pledgee as trustee of the property for the benefit of the pledgor, and' compel hira to account for the value thereof in excess of the amount owing the pledgee from the pledgor.*^ ments if they can. The fact that a debt is barred by the statute of limitations in no way releases the debtor from his moral obligation to pay it": Booth V. Hoskins, 75 Cal. 271, 276, 17 Pac. 225; Zellerbach v. AUenberg, 99 Cal. 57, 69, 33 Pac. 786. 13 Civil Code, sec. 2999. 14 Where the pledgee of a note secured by mort- Liens— 26 402 PLEDGE. § 219 219. Effect Between Parties of Sale by Pledgee of Pledged Collateral Securities. A pledgee who transfers pledged collateral se- curities (whether negotiable or non-negotiable) to third persons without authority of the pledgor will be deemed at the option of the pledgor to have taken the pledged property at its face valu(3 in satisfaction of the obligation for which it was pledged to him, and may be regarded as having pledged to his assignee his own personal respon- gage took a conveyance of the mortgaged prop- erty from the mortgagor in satisfaction of the mort- gage (without a foreclosure), the pledgor might hold the pledgee as a trustee of the property as he had taken title to the property without the consent and in violation of his rights, or the pledgor could treat the pledgee as having wrongfully converted the prop- erty, hold him for the value thereof, have the pledgee's debt satisfied therefrom, and recover the balance: Kelly v. Matlock, 85 Cal. 122, 129, 24 Pac. 642. In Chester v. Hill, 66 Cal. 480, 6 Pac. 132, the court held, under similar circumstances, that the pledgor was entitled to the annulment, and that he might also obtain the foreclosure of his mortgage in the same action, the proper parties being joined there- in. In Ponce v. McElvey, 47 Cal. 154, where the pledgee of a note secured by mortgage presented the secured claim against the estate of the deceased mortgagor, and the mortgaged property was subsequently sold at an administrator's sale to the pledgee, the court de- termined that the pledgee held the property in trust, and that an action might be brought to have the trust declared, and the trust property sold, and -the proceeds applied first to the obligation owing the pledgee, and the remainder to the pledgor. § 219 RIGHTS AND DUTIES. 403 sibility, and not that of his pledgor ; and no sub- sequent reassignment of the collateral securities to himself will restore him to his original rights. ^^ 220. Amount of Damages Recoverable for Wrongful Dealing with Pledged Property. In an action against a pledgee for damages for a wrongful dealing with the pledged property, the pledgee may set off the amount of his special property in such property.^® 15 Haber v. Brown, 101 Cal. 445, 453, 454, 35 Pac. 1035. i« Compare Williams v. Ashe, 111 Gal. 180, 187, 43 Pac. 595. 404 PLEDGE. § 221 AETICLE 4. PLEDGELENDER. 221. Pledgelender defined. 222. Withdrawal of pledged property by pledge- lender. 223. Pledgelender 's rights similar to pledgor ^s. 221. Pledgelender Defined. Every person who pledges property in which he has a pledgeable interest as security for the performance of the obligation of another persoji is a pledgelender.^ 222. Withdrawal of Pledged Property by Pledge- lender. N'o pledgelender can withdraw the property pledged otherwise than a pledgor for himself might, and if he receives from the debtor a con- sideration for the pledge he cannot withdraw it without his consent.^ 1 Civil Code, section 2992: ''Property may be pledged as security for the obligation of another per- son than the owner, and in so doing the owner has all the rights of a pledgor for himself, except as hereinafter stated. '' 2 See Civil Code, section 2994. § 223 PLEDGELENDER. 405 223. Pledgelender's Rights Similar to Pledgor's. Except as to withdrawal, a pledgelender has all the rights of a pledgor.^ 3 Compare Civil Code, sections 2992 and 2994; quoted immediately above. 406 PLEDGE. § 224 AKTICLE5. PLEDGEHOLDEE. 224. Pledgeholder defined. 225. Duty of pledgeholder to pledgee. 2z6. Pledgeholder for reward cannot exonerate him- self. 227. Pledgeholder for reward must exercise ordinary- care. 228. Manner in which gratuitous pledgeholder may exonerate himself. 229. Gratuitous pledgeholder must exercise slight care. 224. Pledgeholder Defined. A pledgor and pledgee may agree upon a third person with whom to deposit the pledged property, who, if he accepts the deposit, is called a pledgeholder.^ 225. Duty of Pledgeholder to Pledgee. A pledgeholder must enforce all the rights of the pledgee unless authorized by him to waive them.2 I 1 Civil Code, section 2993. 3 Civil Code, section 2996. § 226 PLEDGEHOLDER. 407 226. Pledgeholder for Reward cannot Exonerate Himself. A pledgeholder for reward cannot exonerate himself from his undertaking.^ 227. Pledgeholder for Reward must Exercise Ordinary Care. A pledgeholder for reward mnst use at least ordinary care for the preservation of the pledged property.* 228. Manner in Which Gratuitous Pledgeholder may Exonerate Himself. A gratuitous pledgeholder can only exonerate himself from his undertaking hy giving reason- able notice to the pledgor and pledgee to appoint a new pledgeholder, and in case of their failure to agree, by depositing the property pledged with some impartial person, who will then be en- titled to a reasonable compensation for the care of the same.^ 3 Civil Code, section 2995, first clause. 4 Civil Code, section 2997: "A pledgee, or pledge- holder for reward, assumes the duties and liabilities of a depositary for reward.'' Section 1852: *'A depositary for hire must use at least ordinary care for the preservation of the thing deposited. ' ' 5 Civil Code, section 2995, latter clause. '408 PLEDGE. § 229 229. Gratuitous Pledgeholder must Exercise Slight Care. A gratuitous pledgeholder must use at least slight care for the preservation of the pledged propert}^^ 6 Civil Code, section 2998: ''A gratuitous pledge- holder assumes the duties and liabilities of a gratuitous depositary. ' ' Section 1846: ^'A gratuitous depositary must use at least slight care for the preservation of the thing deposited." 230 A CUMULATIVE SECURITY. 409 ARTICLE 6. PLEDGE A CUMULATIVE SECUEITY. 230. Pledge a cumulative security. 230. Pledge a Cumulative Security. A pledge is an additional and cumulative se- curity, the existence of which does not affect nor impair the right to maintain a direct action for the enforcement of the secured ohligation; nor is the pledge affected or discharged by such ac- tion or the judgment rendered therein until the judgment is satisfied.^ 1 Pledge is Additional and Cumulative Security: Hawley Bros. Hardware Co. v. Brownstone, 123 Cal. 643, 648, 56 Pac. 468; Sonoma Valley Bank v. Hill, 59 Cal. 107, 110; Ehrlich v. Ewald, 66 Cal. 97, 4 Pac. 1062; Savings Bank of St. Helena v. Middlekaufl:, 113 Cal. 463, 467, 45 Pac. 840; French v. McCarthy, 125 Cal. 508, 512, 58 Pac. 154. In the absence of a statute or stipulation to the contrary, the possession of the pledged property does not suspend the right of the pledgee to proceed per- sonally against the pledgor for his debt, without sell- ing the pledge, for the reason that the security is only collateral: Sonoma Valley Bank v. Hill, 59 Cal. 107, 110. Code of Civil Procedure, section 726, sections 385- 388 below, is inapplicable to pledges: Ehrlich v. Ewald, 66 Cal. 97, 4 Pac. 1062. 410 PLEDGE. § 230 Where a second note extending the time of payment was given as security for the payment of a former note, ''as soon as that extended time had expired, the plaintiff [pledgee] had a right to bring his action upon the old note, if the amount was not then paid": Welch V. Arrington, 23 Cal. 322. An executory contract for a pledge is not affected by a direct action for the recovery of the money, nor was the right to recover the money in a direct action affected by the existence of the lien: Citizens' Bank of Paso Kobles v. Rucker (Cal., March 13, 1903), 72 Pac. 46. 231 ~ ENFORCEMENT THEREOF. 411 AETICLE 7. ENFOECEMENT OF PLEDGE. 231. Methods of enforcement. 232. Pledgee generally may not sell evidence of in- debtedness. 233. Demand of performance of principal obligation must be made. 234. Demand of performance, how waived. 235. Actual notice of sale must be given pledgor. 236. Sale of pledged property must be made at pub- lic auction. 237. Irregular sale voidable. 238. Pledgee may purchase at sale. 239. Application of proceeds of sale. 240. Pledgee may maintain action for deficiency. 231. Methods of Enforcement.^ An obligation secured by pledge may be en- forced against the pledged property either (1) by a nonjudicial sale as hereinafter pro- vided;,^ or (2) by a foreclosure action.^ 1 Methods of Enforcement: Wilson v. Brannan, 27 Cal. 258, 271; Wright v. Eoss, 36 Cal. 414, 429; Ehrlich V. Ewald, 66 Cal. 97, 4 Pac. 1062. Compare Mauge v. Heringhi, 26 Cal. 577. a Nonjudicial Sale.— Civil Code, section 3000: ^' Where performance of the act for which a pledge is given is due, in whole or in part, the pledgee may collect what is due to him by a sale of the property pledged, subject to the rules and exceptions herein- after prescribed. '^ 3 Foreclosure Action. — Civil Code, section 3011: 412 PLEDGE. § 232 232. Pledgee Generally may not Sell Evidence of Indebtedness.^ In the absence of a special agreement permit- ting the sale,^ a pledgee or pledgeholder^ must not himself sell any evidence of indebtedness pledged to him, except the obligations of govern- " Instead of selling pledged property, .... a pledgee may foreclose the right of redemption by a judicial sale, under the direction of a competent court." 4 Civil Code, section 3006, provides. ^'A pledgee cannot sell any evidence of debt pledged to him, ex- cept the obligations of governments, states, or cor- porations; but he may collect the same when due." Where the pledged property is a note secured by mortgage, the pledgee may upon its maturity collect it by a foreclosure action: Kelly v. Matlock, 85 Cal. 122, 129, 24 Pac. 642. 5 In Absence of Special Agreement.— The provision that the pledgee must not sell the evidence of indebt- edness, being designed for the benefit of the pledgor, may be waived by him. The effect of an agreement, however, which permits the pledgee to sell the evi- dence of debt is not to restrict the pledgee to the mode agreed upon (as was urged by counsel), but is merely a permission added to his statutory rights; so that he may either sell or collect, while under the code he could only collect. The authorization is considered in law as given not for the purpose of restricting or curtailing the rights of the pledgee, but for the purpose of enlarging his rights, making the pledge more advantageous to him by giving him a more effectual and speedy means of obtaining money from his security: Mc Arthur v. Magee, 114 Cal. 126, 129, 45 Pac. 1068; Farmers' etc. Bank v. Copsey, 134 Cal. 287, 66 Pac. 324. Compare Donohoe V. Gamble, 38 Cal. 340, 351, 99 Am. Dec. 399. 6 Civil Code, section 3006, applies to a pledge- holder: Fernandez v. Tormey, 121 Cal. 515, 520, 53 Pac. 1119. § 232 ENFORCEMENT THEREOF. 413 ments, states^ or corporations. He may, how- ever, collect the same when due, or cause it to be sold by judicial sale in a foreclosure action.'' '233. Demand of Performance of Principal Obli- gation must be Made. After the principal obligation is due and be- fore a sale of the property pledged as security for the performance thereof is made, the pledgee must demand performance thereof from the debt- or if the debtor can be found.® 234. Demand of Performance, How Waived. A debtor or pledgor waives a demand of per- formance as a condition precedent to a sale of the pledged property by a positive refusal to per- form after performance is due; but cannot waive it in any other manner except by contract.® 7 Such evidence of debt is, however, subject to sale in a foreclosure action in satisfaction of the de- mand secured thereby: Donohoe v. Gamble, 38 Cal. 340, 353, 354, 99 Am. Dec. 399 (Ehodes, J., dissenting). 8 Compare Civ. Code, sec. 3001. Dewey v. Bowman, 8 Cal. 145, 151; Gay v. Moss, 34 Cal. 125, 132. Where the pledgee does not demand performance nor give reasonable notice of the intended sale, the sale amounts to a conversion, and the pledgor becomes liable for the value of the pledged property with interest, less the amount of the secured obligation: Gay V. Moss, 34 Cal. 125, 132. 9 Civ. Code, sec. 3004. Hyatt V. Argenti, 3 Cal. 151, 160-167; Bendel v. Crystal Ice Co., 82 Cal. 199, 22 Pac. 1112. 4H PLEDGE. § 235 235. Actual Notice of Sale must be Given Pledg- or. A pledgee must give actual notice to the pledgor of the time and place at which the pledged property will he sold, at such reasonable time before the sale as will enable the pledgor to attend; but such notice may be waived by the pledgor at any time. Mere waiver of demand of performance does not waive this notice.^^ 236. Sale of Pledged Property must be Made at Public Auction. The sale by a pledgee of pledged property must be made at public auction in the manner and upon the notice to the public usual at the place of sale in respect to auction sales of similar prop- erty, and must be for the highest obtainable price; but the pledgor may consent to a private sale.*-^ An express stipulation in writing made by a pledgor in a draft on the pledgee making it payable when the pledgee was in funds from the proceeds of the securities placed in his hands, after deducting the amount due him and interest, sufficiently shows the authority of the pledgee to sell at his pleasure with- out demand of payment: Hyatt v. Argenti, 3 Cal. 151, 158. 10 Civ. Code, sees. 3002, 3003; Bendel v. Crystal Ice Co., 82 Cal. 199, 22 Pac. 1112. 11 Civ. Code, sec. 3005. Winiams v. Hahn, 113 Cal. 475, 45 Pac. 815. Where but two days' notice of the sale was given, and the evidence showed that as much as ten or § 237 ENFORCEMENT THEREOF. 415 237. Irregular Sale Voidable.^^ A sale of pledged property which is not made in conformity with the provisions of the five pre- ceding sections is voidable at the election of the pledgor exercised within a reasonable time.^^ 238. Pledgee may Purchase at Sale. Whenever pledged property is sold by the holder thereof as hereinbefore provided, the pledgee or pledgeholder may purchase such prop- erty at the sale.** twenty days' notice was usually given of the sale of similar property, the sale is invalid: Bendel v. Crystal Ice Co., 82 Cal. 199, 22 Pac. 1112. 12 Sale is Merely Voidable.—* ' The provision of the code for notice to the pledgor before sale of a pledge is made for his benefit, and he alone has a right to complain of its omission. Where, after a sale with- out notice, he has been credited upon his indebtedness with the full value of the pledge, it may be greatly to his advantage to accept the situation, and he may ratify the sale either expressly or by implication. He is not bound to object, and until he does object the sale and credit bind his creditor'': Colton v. Oak- land Bank of Savings, 137 Cal. 376, 70 Pac. 225, 228A. Sale rendered valid by being ratified: Child v, Hugg, 41 Cal. 519; Hill v. Finigan, 62 Cal. 426, 439. As to the Rights Which Third Parties may OMain in the Pledged Property by its transfer by the pledgee, see sections 204 and 205, above. 13 Election to Declare Sale Void Must be Exer- cised Within a Reasonable Time: Hill v. Finigan, 77 Cal. 267, 272, 11 Am. St. Eep. 279, note, 19 Pac. 494. 14 Compare Civ. Code, section 3010, as amended in effect March 8, 1895. Historical.— JJndeT the common law the pledgee could not become a purchaser at his own sale, and 416 PLEDGE. § 239 239. Application of Proceeds of Sale. After the pledgee has lawfully sold the pledged property, or otherwise collected its proceeds, he may apply the same to the necessary expenses of sale or collection, and to the satisfaction of the amount due on the secured ohligation, and must pay the surplus to the pledgor on demand.*^ 240. Pledgee may Maintain Action for Defi- ciency. After a lawful sale of the pledged property has been made, the pledgee may maintain an action to recover any unsatisfied deficiency that may re- sult against any person personally liable for the payment thereof.^^ so it was in this state before the enactment of this section: Wright v. Eoss, 36 Cal. 414, 442. Before March 8, 1895, this section read: **A pledgee or pledgeholder cannot purchase the property pledged, except by direct dealing with the pledgor.'' This section is interpreted in Hill v. Finigan, 62 Cal. 426, 439. 15 See Civ. Code, sec. 3008. That pledgee must account for the surplus is also affirmed in Dewey v. Bowman, 8 Cal. 145, 151, 152; Haber v. Brown, 101 Cal. 445, 452, 453, 35 Pac. 1035. 16 Mauge V. Heringhi, 26 Cal. 577. TITLE % COISFTEACT EXCUMBEANCES INDEPEND- ENT OFTOSSESSION. CHAPTER 1. MORTGAGE. ARTICLE 1. NATUEE OF MOETGAGE. Subdivision 1, What is Mortgage. 241. Mortgage defined. SuMivision 2. The Instrument of Mortgage, 242. Mortgage must be evidenced by formal writing. 243. Form of instrument of mortgage. 244. Description of mortgaged property must be suffi- cient for identification. 245. As against mortgagor instrument of mortgage may be reformed. Subdivision 3, Most Formal Hypothecations Mortgages. 246. Most transactions hypothecating property as security deemed mortgages. 247. Extrinsic evidence admissible. 248. Test of mortgage. Liens— 27 (417) 418 MORTGAGE. § 241 Suhdivision Jf. What Property Mortgageable, 249. Future interests mortgageable. 250. Every interest in immovable property mortgage- able. 251. Enumeration of mortgageable movable property. 252. Enumeration to be liberally construed. Subdivision 5. Possession. 253. Possession of mortgageil property may be con- ferred on mortgagee. 254. Upon change of possession of movable property transaction deemed pledge. Subdivision 6, Power of Sale, 255. Mortgage may confer power of sale. 256. Power of sale deemed part of security. Subdivision 7, Insurance, 257. Mortgage may confer power to insure. Subdivision 8. Interpretation. 258. Mortgage construed in connection with other related writings. 259. Ambiguities to be resolved in favor of mort- gagor. 260. Mortgage only secures obligations expressly se- cured thereby. Subdivision 1, What is Mortgage, 241. Mortgage Defined. A mortgage is a charge or encumbrance created by formal contract against specific property, without the necessity of a change of possession of the property, as security for the future per- formance of an obligation, whether previously § 241 NATURE THEREOF. 419 existing or contemporaneously made or there- after to arise.^ Subdivision 2, The Instrument of Mortgage, 242. Mortgage must be Evidenced by Formal Writing. A mortgage^ can be created, renewed, or ex- tended to secure an additional obligation,^ only 1 What is Mortgage.— See Civil Code, section 2920: '^ Mortgage is a contract by which scecific property is hypothecated for the performance of an act, with- out the necessity of a change of possession.'' Section 2923: *^The lien of a mortgage is special, unless otherwise expressly agreed, and is independent of possession." A pre-existing debt is a sufficient consideration for a mortgage: Frey v. Clifford, 44 Cal. 335, 342, 45 CaL 580, 583, and many other cases. May Secure Future Advances: Tapia v. Demartini, 77 Cal. 383, 11 Am. St. Eep. 288, 19 Pac. 641; Irwin v. McDowell, 91 Cal. 119, 27 Pac. 601; Lemon v. Wolff, 121 Cal. 272, 53 Pac. 801; Moss v. Odell, 134 Cal 464, 66 Pac. 581. 3Iay be Given as Indemnity: Waldrip v. Blake, 74 Cal. 409, 16 Pac. 226. 2 Civil Code, section 2922: *'A mortgage can be created, renewed, or extended, only by writing, exe- cuted with the formalities required in the case of a grant of real property'': See, also, Porter v. Mullerr 53 Cal. 677. That a power of attorney to execute a mortgage mnst likewise be in writing, see Civil Code, sections 2933 and 2309. 3 Extended to Secure an Additional Obligation.— *^The term ^extended,' as here used [that is, in Code» section 2922 (note 2, above)], refers to a broadening 420 MORTGAGE. § 242 in writing, executed with the formalities required in the case of a grant of real property. The ob- ligation secured by the mortgage need not, how- ever, be evidenced by a separate writing.^ 243. Form of Instrument of Mortg^age. A mortgage may be made in substantially the following form: This mortgage, made the day of , in the year , by A B of , by oc- cupation a , mortgagor, to C D of , by occupation a , mortgagee, witnesseth: That the mortgagor mortgages to the mort- gagee [here describe the property], as security for the payment to him of dollars oq [or before] "the day of , in the year , with interest thereon [or, as se- curity for the payment of a note or obligation, describing it, etc.]. (Signed) A B. In the case of a mortgage of immovable prop- erty, the phrase "by occupation a ^^ may be omitted.^ of the security to cover additional advances^': Lon- don etc. Bank v. Bandmann, 120 Cal. 220, 223, 52 Pac. 583. ^^The extension of a lien is not tHe prolongation of its life, but is making it security for an additional obligation'^: Southern Pacific Co. v. Prosser, 122 Cal. 413, 418, 55 Pac. 145. 4 Whitney v. Buckman, 13 Cal. 536. Compare Blankman v. Yallejo, 15 Cal. 638, 644. 5 Civ. Code, sees. 2948, 2956. § 244 NATURE THEREOF. 421 244. Description of Mortgaged Property must be Sufficient for Identification. In respect to third parties^^ the description of mortgaged property in an instrument of mort- The words ''we mortgage the property," when ac- companied by a provision for the sale of it in case the money, recited in the instrument as being thus secured, is not paid, are clearly sufficient to create a mortgage: De Leon v. Higuera, 15 Cal. 483, 496. No particular form of words is necessary to con- stitute a mortgage: Woodworth v. Guzman, 1 Cal. 203, 205. 6 As to Third Parties, description must be suffi- cient by inquiries directed by instrument to identify property: HaU v. Glass, 123 Cal. 500, 507, 69 Am. St. Eep. 77, 56 Pac. 336. ''The general rule is that the description in a chattel mortgage need not be so specific and certain that the property might be identified by the descrip- tion alone. If the description of the personal prop- erty contained in the chattel mortgage is such as will enable third persons to identify the property, aided by the inquiry which the mortgage itself di- rects, the mortgage, when recorded, is notice to all third parties. "Descriptions of personal property in a chattel mortgage are not required, of themselves, to fully identify the property. They are required to furnish the means and information by which, upon inquiry, the property can be identified. That is certain which can be made certain by making the inquiry indi- cated and directed by the mortgage^': Alferitz v. Ingalls, 83 Fed. (C. C.) 964, 966, 968. Thus, in Alferitz v. Ingalls, 83 Fed. (C. C.) 964, 967-969, the court held a movable property mortgage of "8,000 sheep, and the increase thereof,'' which set forth that at the time of the execution thereof they were owned by, and in the possession of, the mortgagors in Merced county, California, valid subse- 422 MORTGAGE. § 244 gage must be sufficient to enable them by in- quiries directed by the instrument itself to iden- tify the property covered thereby ; but as between the parties themselves'' is sufficiently . certain if quently when the sheep had been driven into Es- meralda county, Nevada. The court said: **The de- scription directed parties to the situs of the property .... at the time of the execution of the mortgages. This directed third parties to the starting point of inquiry. But the large bands of sheep on this coast are not usually kept in any particular farm or range. They are generally driven, as in the present case, from one county to another in the same state, or across the line into another state. In the summer time they are driven into the mountains, grazing upon the public lands, and there herded and kept, and upon the approach of winter are driven back to the val- leys. The most the mortgage can do is to direct the attention of the parties to the time and place where the property was at the time of the execution of the mortgage, and it would be their duty, under such cir- cumstances, to ascertain whether the property in the possession of the mortgagor at another place was the same band of sheep that was mortgaged. Any person who read the mortgages in question would naturally have concluded that the property would be, as it was, found in the possession of the mortgagors, and could have readily ascertained, upon inquiry suggested by the records, whether the sheep were of the same band described in the mortgages Undoubtedly, it would in all cases be safer, better, and clearer if .... marks and brands were mentioned in a descrip- tion in a chattel mortgage, as it would obviate ob- jections that might otherwise be urged to the validity of the description. But the decisions- are universal to the effect that it is not necessary that the descrip- tion in the mortgage should be such as would enable a stranger to identify the property. '' Nor is a mortgage of '^8,000 sheep, and the in- crease thereof in Merced county void on the ground § 244 NATURE THEREOF. 423 that for aught that appears in the mortgage or the record thereof the mortgagor might have a great many more in his possession in the same county, as the court has no right to imagine facts to exist which if shown might invalidate the mortgage: Al- feritz V. Ingalls, 83 Fed. (C. C.) 964, 967. The following description is sufficient to mort- gage all crops planted during the life of the mort- gage: ^'All the crops and products, of whatever na- ture, which are now standing, or growing, or which shall or may hereafter at any time be sown, planted, cut, or harvested by the said party of the first part during the continuance of this; mortgage, on the following described lands and premises, and every part and portion thereof, to wit ....'' (the descrip- tion of the land then following) : Hall v. Glass, 123 Cal. 500, 505, 69 Am. St. Eep. 77, 56 Pac. 336. 7 As Between Parties Themselves description suf- ficient if capable of being made certain. Extrinsic evidence is admissible to identify the mortgaged prop- erty — that is, to apply to the property the descrip- tion contained in the mortgage: Hancock v. Watson, 18 Cal. 317; California Title etc. Co. v. Pauly, 111 Cal. 122, 127, 128, 43 Pac. 586; Higgins v. Higgins, 121 Cal. 487, 66 Am. 8t. Rep. 57, note, 53 Pac. 1081. ^'It is only necessary that the description of prem- ises in a deed or mortgage be sufficiently definite and certain to enable the land to be identified '': Rea v. Haffenden, 116 Cal. 596, 602, 603, 48 Pac. 716. It is undoubtedly essential to the validity of a con- veyance that the thing conveyed be described so as to be capable of identification, but it is not essential that the conveyance should itself contain such a de- scription as to enable the identification to be made without the aid of extrinsic evidence. This doctrine as to conveyances is applicable to mortgages: De Leon V. Higuera, 15 Cal. 483, 496. The mortgagor, however, cannot complain at the enforcement of a mortgage as it is written because of mere indefiniteness of description of the mortgaged property, whatever the effect of a sale under such de- scription. If nothing passes, that is the misfortune of the mortgagee: Tryon v. Sutton, 13 Cal. 490; Whitney 424 MORTGAGE. § 244 capable of being made certain by extrinsic evi- dence. A mortgage may be valid as to property sufficiently described in. the instrument of mort- gage^ and void as to other property because of the insufficiency of the description thereof.^ 245. As Against Mortgagor Instrument of Mort- gage may be Reformed. As against a mortgagor and every other person except a bona fide purchaser or encumbrancer V. Buckman, 13 Cal. 536; Graham v. Stewart, 68 Cal. 374, 381, 9 Pac. 555. Illustrations.— The word ** estate/' used without qualification in description of the property covered by a mortgage, comprehends all property susceptible of mortgage in respect to which the mortgage is prop- erly executed: Higgins v. Higgins, 121 Cal. 487, 66 Am. St. Rep. 57, 53 Pac. 1081. A description of the property mortgaged as the '^interest in the quartz-mill and lode formerly owned by John H. Hancock, said interest being one-half of the mill and lode,'' when applied by extrinsic evi- dence, is sufficient: Hancock v. Watson, 18 Cal. 137. Where the owner of a Mexican grant surveys and subdivides the same in the same way as if the grant was a part of the public domain, a description in a mortgage by such subdivisions is sufScient: Eea v. HafPenden, 116 Cal. 596, 602, 603, 48 Pac. 716; Sav- ings Bank of San Diego Co. v. Daley, 121 Cal. 199, 202, 53 Pac. 420. A trust deed in the nature of a mortgage of all the lands belonging to the trust or in a designated county covers all lands in that county shown by proper evidence dehors the trust deed to have be- longed to the trustor at the time of its execution: Staples V. May (Cal.), 23 Pac. 710, 712B. 8 Hall V. Glass, 123 Cal. 500, 505, 69 Am. St. Rep. 77, 56 Pac. 336. § 245 NATUEE THEREOF. 425 for value, a mistake in the description of mort- gaged property, and all other mistakes arising therefrom, may be corrected by a court of equity as matter of course to conform to the intention of the parties.^ 9 As Against Mortgagor Instrument of Mortgage may be Reformed: Woodworth v. Guzman, 1 Cal. 203, 205; GiselTTian v. Starr, 106 Cal. 651, 659, 40 Pac. 8. Davis V. Ward, 109 Gal. 186, 50 Am. St. Kep. 29, 41 Pac. 1010. A court of equity may reform a mortgage by go- ing back to the original mistake and correcting all subsequent mistakes which grow out of it: Quivey v. Baker, 37 Cal. 465; Donald v. Deals, 57 Cal. 399, 405. Having reformed the mortgage and mistakes grow- ing out of it down to the foreclosure sale of the mort- gaged property, the court may direct a new notice and sale if justice requires it: Busey v. Moraga, 130 Cal. 586, 588, 589, 62 Pac. 1081. Although it is conceded that the party might have had full relief from the mistake in the original ac- tion, he may nevertheless bring a separate action to correct the mistake: Busey v. Moraga, 130 Cal. 586, 588, 62 Pac. 1081. Illustratwns. — Where a subsequent purchaser re- ceived notice of the mistake after part payment of his purchase money, the mortgagee, upon refunding such part payment, may have the mortgage reformed and enforced: Davis v. Ward, 109 Cal. 186, 191, 50 Am. St. Eep. 29, 41 Pac. 1010. A mortgage on the separate property of the wife may be reformed: Savings etc. Soc. v. Meeks, 66 Cal. 371, 5 Pac. 624. Likewise a mortgage on the homestead of a mar- ried claimant: Stevens v. Holman, 112 Cal. 345, 350, 351, 53 Am. St. Eep. 216, 44 Pac. 670. And a mortgage which was given to secure a non- negotiable note which was transferred by the mort- gagee for value after maturity: San Jose Eanch Co. 426 MORTGAGE. § 240 Subdivision S, Most Formal Hypothecations Mortgages, 246. Most Transactions Hypothecating Property as Security Deemed Mortgages.*^ Every transaction^ evidenced in part by an in- strument of conveyance other than a trust deed V. San Jose Land etc. Co., 132 Cal. 582, 584, 64 Pac. 1097. lo Most Transactions Hypothecating Property as Security Deemed Mortgages.— Civil Code, section 2924: ** Every transfer of an interest in property, other than in trust, made only as security for the per- formance of another act, is to be deemed a mortgage, except when in the case of personal property it is ac- companied by actual change of possession, in which case it is deemed a pledge." Transactions Held to Create Mortgages. A conveyance of real property, conditioned to be void on the "payment of a certain sum of money on a given day, otherwise to remain in full force and virtue: Ferguson v. Miller, 4 Cal. 97. A deed absolute in form of certain property, the grantor remaining in possession under a lease, and a parol agreement of defeasance being established: Lodge V. Turman, 24 Cal. 385. An agreement by which a first party was to let a second party have a certain sum of money in con- sideration for which the second party was to con- vey certain property to the first, the first party there- upon to lease the property to the second at a rent which would be equivalent to interest upon such sura of money and to reconvey upon payment of the sum with rent, and notwithstanding the lease was not exe- cuted until several days after the deed: Sears v. Dixon, 33 Cal. 326, 332. A conveyance of certain land, made for the purpose of securing an indebtedness owing to the creditor grantee, the grantor having the right to liquidate the I § 246 NATURE THEREOF. 427 indebtedness either by its payment or by the con- veyance of certain other property at a certain agreed- valuation: Purser v. Eagle Lake Land etc. Co., Ill Cal. 139, 142-144, 43 Pac. 523. A conveyance by a mortgagee under a deed absolute in form, conveying the mortgaged property to a third person who paid him the mortgage obligation, and thereupon held the land as security for the payment of such sum advanced, the transaction being made under agreement with the mortgagor: Wilcox v. Gregory, 135 Cal. 217, 67 Pac. 139. A duly acknowledged and recorded contract for an annuity, the payment of which was to constitute a lien upon the estate of the obligor during his life- time and after his death during the lifetime of the obligee, constitutes a valid mortgage upon the im- movable property of the obligor: Higgins v. Higgins, 321 Cal. 487, 66 Am. St. Eep. 57, 53 Pac. 1081. A deed made by the owner of property to a second party who thereupon, on the same day, deeds it to a third person, parol evidence showing that the prop- erty was transferred to the second party without con- sideration, and to the third party to secure an in- debtedness of the original grantor to the third party and such future advances as might be made: Hooker V. Burr, 137 Cal. 663, 70 Pac. 778. Transactions not Amounting to Mortgages. Where a deed absolute was given *'as security'' for the performance of a future and contingent act, it is not a mortgage, but a conditional sale (appar- ently on the ground that there was no subsisting in- debtedness between the parties) : Patterson v. Don- ner, 48 Cal. 369, 378, 379, Ehodes, C. J., dissenting. (Later cases have held that a deed absolute in form may be a mortgage, though given to secure future ad- vances.) Under the homestead law as amended in 1860, the homestead was in no event mortgageable. Where married homestead claimants made a deed absolute in form, but intended as a mortgage of the homestead, parol evidence was admissible to show that the deed was in reality intended as a mortgage; and that fact 428 MORTGAGE. § 246 in the nature of a mortgage/^ in essence^^ in- tending to hypothecate specific property as se- curity for the future performance of an obliga- appearing both deed and mortgage were rendered in- valid: Sears v. Dixon, 33 Cal. 326. A deed absolute in form of a homestead, together with a contemporaneous oral agreement of defeasance, does not constitute either a deed or a mortgage of the homestead, because the deed cannot be taken alone, and the defeasance is not executed as a mortgage of the homestead is required to be: Merced Bank v. Eosenthal, 99 Cal. 39, 49, 31 Pac. 849, 33 Pac. 732, in bank. tllustrating Difference Between Mortgage and Con- veyance. Where A executed a deed to B, conveying cer- tain property to him, and contemporaneously with this B executed a conveyance to A, the words of con- veyance being the same in both, and where the lat- ter deed recited the former deed and that it was made in consideration of an agreement by B to pay A forty thousand dollars, to be realized from sales to be made, and not otherwise chargeable to him, and purported to reconvey the lands to A to secure the said sum of forty thousand dollars, the former deed conveyed the title to the property, but the latter deed merely mortgaged the property to A. *^The lan- guage used in the latter instrument has always, both here and elsewhere, been construed to constitute a mortgage'': Adams v. Hopkins (Cal.), 69 Pac. 228, 231A-232A. 11 Except Deed of Trust: See sections 414-425, be- low. An absolute deed made to one person as security for the obligation of a third person is a mortgage, except in case of an express trust: Banta v. Wise, 335 Cal. 277, 67 Pac. 129. 12 It is the real character, not the form of the in- strument, to which the court will look: Peninsular etc. Fishing Co. v. Pacific Steam Whaling Co., 123 Cal. 689, 694, 56 Pac. 804. § 246 NATLBE THEREOF. 429 tion^ whether previously existing or contempora- neously made or thereafter to arise/^ is deemed to create a mortgage. 247. Extrinsic Evidence Admissible. The presumption arising from the execution and delivery of an instrument of conveyance is that such instrument was made pursuant to an agreement to sell and vests absolute title in the grantee.^^ But extrinsic evidence of every kind is admissible/^ except as against a bona fide pur- is The debt to secure which the deed is given may be an antecedent debt, or one created at the time, or it may be advances to be thereafter made by the mortgagee to or for the mortgagor: Husheon v. Husheon, 71 Cal. 407, 412!, 12 Pac. 410; Campbell v. Freeman, 99 Cal. 546, 548, 549, 34 Pac. 114; Banta v. Wise, 135 Cal. 277, 67 Pac. 129. 14 Presumption: Locke v. Moulton, 96 Cal. 21, 29, 30 Pac. 957; Ford v. Irwin, 18 Cal. 117, 120, 121; Eoss V. Brusie, 70 Cal. 465, 11 Pac. 760; Mahoney v. Bost> wick, 96 Cal. 53, 58, 31 Am. St. Eep. 174, 30 Pac. 1020; Penney v. Simmons, 99 Cal. 380, 33 Pac. 1121. 15 Extrinsic Evidence Admissible.— Civil Code, sec- tion 2925: '^The fact that a transfer was made sub- ject to a defeasance on a condition may, for the purpose of showing such transfer to be a mortgage, be proved (except as against a subsequent purchaser or encumbrancer for value and without notice), though' the fact does not appear by the terms of the in- strument. ' ' "Whether a deed absolute in form is a mortgage ia a question of intention to be inferred from all the facts and circumstances of the transaction in which the deed was executed, taken in connection with the conduct of the parties after its execution: Montgomery V. Spect, 55 Cal. 352. 430 MORTGAGE. § 247 chaser or encumbrancer for value/^ to show that the transaction in its entirety amounts to a mort- gage. In order^ however, to overcome the pre- sumption, this evidence must make a clear case.^'' Parol evidence is always admissihle to show that a deed, absolute on its face, is intended as a mort- gage, without regard to the existence of fraud, ac- cident, or mistake in the creation of the instrument: Pierce v. Eobinson, 13 Cal. 116, 124-133; People v. Irwin, 14 Cal. 428, 435, 436; Johnson v. Sherman, 15 Cal. 287, 291, 76 Am. Dec. 481; Lodge v. Turman, 24 tJal. 385, 390, 391; Hopper v. Jones, 29 Cal. 18, 87 Am. Dec. 146; Cunningham v. Hawkins, 27 Cal. 603; Sears V. Dixon, 33 Cal. 326, 332; Gay v. Hamilton, 33 Cal. 686; Eaynor v. Lyons, 37 Cal. 452; Farmer v. Grose, 42 Cal. 169, 172; Batemen v. Burr, 57 Cal. 480, 482; Eoss V. Brusie, 64 Cal. 245, 30 Pac. 811; Husheon v. Husheon, 71 Cal. 407, 411, 412, 12 Pac. 410; Baker v. Fireman's Fund Ins. Co., 79 Cal. 34, 41, 14 Pac. 686; Locke V. Moulton, 96 Cal. 21, 29, 30 Pac 957; Hawley V. Liverpool etc. Ins. Co., 102 Cal. 651, 655, 36 Pac. 926; Ahern v. McCarthy, 107 Cal. 382, 383, 40 Pac. 482; Yance v. Anderson, 113 Cal. 532, 538, 45 Pac. 816. It matters not whether it is a case at law or in equity, so called: Cunningham v. Hawkins, 27 Cal. 603; Hopper v. Jones, 29 Cal. 18, 87 Am. Dec. 146; Jackson v. Lodge, 36 Cal. 28, 47-56, per Sawyer, C. J., and Sanderson and Sprague, JJ.; Ehodes and Crockett, JJ., dissenting; Taylor v. McLain, 64 Cal. 513, 514, 2 Pac. 399. Historical.— In Pierce v. Eobinson, the early cases of Lee V. Evans, 8 Cal. 424, 434, Low v. Henry, 9 Cal. 538, 548, and Arguello v. Edinger, 10 Cal. 150, 360-166, holding the contrary doctrine, were overruled. In Taylor v. McLain, the case of Davenport v. Turpin, 43 Cal. 597, 604, holding that such evidence was not admissible in actions ^*at law,'' was over- ruled. § 247 NATURE THEREOF. 431 Thus a grantor in possession is not estopped from showing that a deed absolute in form given to his grantee is a mortgage by the fact that the secured obligation is barred by lapse of time, and to show that fact will bar the grantee's right to a recovery of possession and to all other relief: Locke v. Moulton, 96 Cal. 21, 32, 30 Pac. 957. Parol evidence is also admissible to show that a deed absolute in form and a defeasance are parts of the same transaction: Gay v. Hamilton, 33 Cal. 686. What may he Shown hy Parol Evidence,— AXthoxagh. an absolute deed, intended as such at the time of its execution and delivery, cannot be changed into a mortgage by the subsequent oral declarations of the grantee, his subsequent declarations are admissible to show that at the time an absolute deed was made, it was intended merely as security: Harp v. Harp, 136 Cal. 421, 69 Pac. 28. See, also, Ross v. Brusie, 64 Cal. 245, 30 Pac. 811. After the death of the grantee, corroborated testi- mony as to his declarations as to the nature of the transaction may be sufficient to show it to be in- tended as a mortgage: Harp v. Harp, 136 Cal. 421, 69 Pac. 28. A written memorandum signed by the parties con- temporaneously with the Execution of the deed is ad- missible for such purpose: Eogers v. Jones, 92 Cal. 80, 28 Pac. 97. Parol Evidence is also Admissible in Rebuttal.— * ^ A deed absolute upon its face may be shown by parol evidence to be a mortgage, and, that being true, no reason can be conjectured why such evidence may not be rebutted bv parol": Corcoran v. Hinkle (Cal.), 34 Pac. 1031, 103'4B. 16 Except Against Bona Fide Purchaser: See section 281, below. 17 Clear Case.— '' Language used by different courts in declaring how strong such evidence must be, may be seen in the notes to Mahoney v. Bostwick, 31 Am. St. Eep. 174, 180. Some of the expressions there quoted are 'Must be clear, satisfactory, and convincing'; 'clear and satisfactory'; 'clear and convincing-'; 'very satisfactory'; 'strong and convincing'; 'clear, un- 432 MORTGAGE. § 248 248. Test of Mortgage. Whenever there exists, after the delivery of the instrument of conveyance, an unsatisfied ob- ligation^^ from the grantor to the grantee which is secured by the conveyed property, the transtie- equivocal, and convincing^; * clear, explicit, and un- equivocal'; 'so clear as to leave no substantial doubt'; 'sufficiently strong to command the unhesi- tating assent of every reasonable mind' ": Sheehan v. Sullivan, 126 Cal. 189, 193, 58 Pac. 543. See, also. Hopper V. Jones, 29 Cal. 19, 87 Am. Dec. 146; Henley V. Hotaling, 41 Cal. 22, 26, 27; Mahoney v. Bostwick, 96 Cal. 53, 58, 31 Am. St. Eep. 174, 30 Pac. 1020; Ganceart v. Henry, 98 Cal. 281, 284, 33 Pac. 92; Pen- ney V. Simmons, 99 Cal. 380, 33 Pac. 1121; Ahern v. McCarthy, 107 Cal. 382, 40 Pac. 482; Cline v. Bobbins, 112 Cal. 581, 584, 44 Pac. 1023; Wood v. Jensen, 130 Cal. 200, 203, 62 Cal. 473; Rawlins v. Ferguson, 133 Cal. 470, 473, 65 Pac. 957. Whether the evidence is of such character and strength as to produce this conviction is a question for the trial court or jury to determine: Mahoney v. Bostwick, 96 Cal. 53, 58, 31 Am. St. Rep. 174, 30 Pac. 1020; Penney v. Simmons, 99 Cal. 380, 33 Pac. 1121. 18 Controlling Fact, Indebtedness.— The controlling fact is the existence of an indebtedness from the grantor to the grantee at the time of the transac- tion, and a continuance of the relation of debtor and creditor. If the debt continues after the execution of the conveyance, the transaction constitutes a mort- gage; if the debt was extinguished by the convey- ance, the transaction is an absolute or conditional sale as the case may be: Hickox v. Lowe, 10 Cal. 197, 206, 207; Henley v. Hotaling, 41 Cal. 22, 28; Farmer v. Grose, 42 Cal. 169, 172; Montgomery v. fepect, 55 Cal. 352, 353; Manasse v. Dinkelspeil, 68 Cal. 404, 406, 407, 9 Pac. 547; Booth v. Hoskins, 75 Cal. 271, 275, 17 Pac. 225; Baker v. Fireman's Fund Ins. Co., 79 Cal. 34, 40, 21 Pac. 357; Garwood v. Wheaton, 128 Cal. 399, 403, '404, 60 Pac. 961. § 248 NATURE THEREOF. 433 Thus ''a conveyance by deed of grant is deemed to be a mortgage when it is intended as a mortgage to secure the payment of a promissory note or the per- formance of any other obligation '' : County Bank v. Goldtree, 129 Cal. 160, 162, 61 Pac. 785. Circumstances Favoring the Conclusion that the Debt Subsisted. To accompany a deed absolute in form with an agreement for a reconveyance upon payment of the precise amount of the consideration for the convej''- ance with stipulated interest thereon: Hickox v. Lowe, 10 Cal. 197, 207. Great inequality between the value of the property conveyed and the price alleged to have been paid for it: Husheon v. Husheon, 71 Cal. 407, 412, 12 Pac. 410. The retention by the grantee of the notes of the grantor after the conveyance: Smith v. Smith, 80 Cal. 323, 326, 21 Pac. 4, 22 Pac. 186, 549. An agreement by a grantee in possession under a conveyance with a condition of defeasance to apply the proceeds of the transferred property, after deduct- ing the expenses of its care, to the payment of the monthly interest, and any excess upon the principal sum: Hickox v. Lowe, 10 Cal. 197, 207, 208. The fact that the grantee satisfied judgments against the grantor and charged them against the property: Montgomery v. Spect, 55 Cal. 352, 356. Entries in the grantee ^s books showing that the grantor was charged with annual interest on the ''purchase money'' for the land: Locke v. Moulton, 96 Cal. 21, 29, 30, 30 Pac. 957. Circumstances Repelling Conclusion tJmt Transaction was Mortgage. Eepeated statements of the grantor to third par- ties, also his conduct, both at the time of the trans- action and for long afterward, establishing the fact that he understood the transaction to amount to a sale with an option of repurchase: Page v. Vilhac, 42 Cal. 75, 85. The fact that upon the transfer of property to a creditor, the creditor surrendered the evidence of in- Liens— 28 434 MORTGAGE. § 248 tion creates a mortgage; and it is not necessary for the grantor to be personally bound to satisfy this obligation.^^ Where the parties in essence hypothecate specific property as security, merely calling the transaction something other than a mortgage does not alter its real character.^^ debtedness of the debtor to him, and executed to the debtor — transferor — his note for the balance of the purchase money, and thereafter had no evidence of in- debtedness of the transferor: Morris v. Angle, 42 Cal. 236, 243. See, also, Ahern v. McCarthy, 107 Cal. 382, 386, 40 Pac. 482. The assessment and taxation of the land in the name of the grantee: Locke v. Moulton, 96 Cal. 21, 30, 30 Pac. 957. 19 To constitute a mortgage it is not necessary for a personal obligation to pay to appear. ' * The only object in taking a personal obligation is to pro- vide against the contingency that the proceeds arising from the sale of the property may not be sufficient to satisfy the debt. No end could be obtained by re- quiring such obligation where the value of the prop- erty mortgaged greatly exceeds the debt. It is in these cases that the personal obligation is likely to be omitted, and it is in these cases that the equity of redemption is evidently much ' the strongest'': Hickox V. Lowe, 10 Cal. 197, 210-211; Montgomery v. Spect, 55 Cal. 352, 356; approved, 75 Cal. 271, 275, 80 Cal. 348, 352; Husheon v. Husheon, 71 Cal. 407, 412, 12 Pac. 410; Locke v. Moulton, 96 Cal. 21, 32, 30 Pac. 957. 20 **It seems clearly apparent from plaintiff's testimony alone that the deed was intended by both parties as mere security for a debt, and none the less so because, in plaintiff's opinion, it is not a mortgage": Malone v. Eoy, 94 Cal. 341, 346, 29 Pac. 712. '•'The question was whether they [certain deeds absolute in form] were given to secure the perform- § 248 NATURE THEREOF. 435 But where the transaction is susceptible of being otherwise interpreted,^^ especially if the parties so agree it should be interpreted, it will not be ance of an obligation — that is, to secure the payment of a debt. If they were given for that purpose they were mortgages, no matter how expressly the parties agreed that they should not be so deemed. They cannot, by agreeing to call or consider an instrument which hypothecates real estate for the payment of a debt something other than a mortgage, avoid the necessity of foreclosure or deprive the debtor of his right to redeem. If, in fact and in law, the instru- ment is a mortgage, it does not matter that the par- ties intend and stipulate that it shall be something else, and that, in case of a failure to pay, the title of the mortgagee shall be absolute'': Hodgkins v. Wright, 127 Cal. 688, 690, 60 Pac. 431, in bank. 21 Transaction Capable of Being Otherwise Inter- preted. — A contract by which the agent of lands with power of sale agrees to sell them at an agreed price, and the purchaser gives the right of repurchase upon specified terms, both parties intending a conditional sale, cannot be held to be a mortgage at the instance of a third party. **Such a contract is not opposed to public policy, nor is it in any sense illegal; and courts would depart from the line of their duties should they, in disregard of the real intention of the parties, de- clare it to be a mortgage'': Henley v. Hotaling, 41 Cal. 22, 27. Illustrations of Conditional Sales.— Where, after an action had been commenced to foreclose a mortgage, the mortgagor and mortgagee entered into an agree- ment, whereby the foreclosure action was dismissed and the mortgaged property conveyed to the mort- gagee, the mortgagor to have the privilege of sell- ing the lands at any time within six months there- after and of retaining all moneys which he might receive at such sale in excess of a certain sum, in view of the facts that the mortgagee had commenced the foreclosure action because he deemed the security insufScient, that the mortgagor made no promise to 436 MORTGAGE. § 248 held to be a mortgage. Where the transactioTi is equivoeal,^^ slight circumstances will deter- mine it to create a mortgage, when that can be pay any sum to the mortgagee, that the sum to be paid to the mortgagee in case of a resale was sev- eral thousand dollars less than the mortgage debt, that no interest was to be paid by the mortgagor, and that the mortgagee at once took possession of the premises with the full beneficial use, the transaction plainly was a conditional sale, or a mere power to sell for a designated sum— not a mortgage at all: Fletcher v. Northcross (Cal.), 32 Pac. 328. Where an absolute deed of certain property and a contract for a reconveyance thereof were made at different times, but simultaneously deliv- ered, the consideration for the deed being a pre-ex- isting debt, and the contract provided that the grantee in possession would reconvey the property to the grantors upon the payment within a certain time of a certain sum with stipulated interest, less the amount received by the grantee as rents and profits, and that the contract should be deemed merely a contract to reconvey and not an acknowledgment that the con- veyance was intended as a mortgage, the transaction amounts to a conditional sale and not to a mortgage, as the intention of the parties as expressed by them- selves is worthy of some consideration. ^ ^ Without it the presumption would be that the deed was intended to operate as a mortgage, and it is clear that the party executing the contract did not intend to sub- ject himself to the consequences of such a presump- tion. The nature of the transaction seems to have been well understood, and the provision declaring the meaning and intention of the parties must be regarded as one of the conditions upon which tjie contract was executed '^ Ford v. Irwin, 18 Cal. 117; same case, People V. Irwin, 14 Cal. 428, 435, 436. This case seems doubtful, for one of the grounds upon which it was distinguished from Hickox v. Lowe, 10 Cal. 199, in 14 Cal. 428, 435, 436, was shown to be erroneous in 18 Cal. 117. 22 Transaction Equivocal.— *' The only difficulty § 248 NATURE THEREOF. 437 done without violence to the understanding of the parties at the time of its consummation.^^ Subdivisio7i ^. What Property Mortgageable. 249. Future Interests Mortgageable. A mortgage may be given against property to be acquired by the mortgagor after the execution of the mortgage,^^ against a crop yet to be which arises in a case like the present is to ascer- tain the fact whether the debt subsists, or has been extinguished; and where there is doubt on this point, courts of equity lean in favor of the right of redemp- tion, and construe instruments as constituting a mort- gage, rather than a conditional sale ' ' : Hickox v. Lowe, 10 Cal. 197, 207. ''A conveyance, with an attendant agreement for a reconveyance upon the payment of the amount of the consideration and interest .... taken together, in the absence of other circumstances, do not of them- selves create a mortgage, but only a defeasible pur- chase, which should be narrowly watched, lest it may be made the means of converting what was in fact in- tended as security into an absolute purchase Slight circumstances will determine the transaction to be one of mortgage, when that can be done without violence to the understanding of the parties": Hickox V. Lowe, 10 Cal. 197, 210. 23 The transaction must be governed by the inten- tion of the parties at the time of its con^immation, and not afterward: Harp v. Harp, 136 Cal. 421, 69 Pac. 28, 24 On Property to "be Acauired: California Title etc Co. V. Pauly, 111 Cal. 122, 126, 43 Pac. 586. 438 MORTGAGE. § 249 planted^^^ or against the increase of mortgage- able animals.^^ 250. Every Interest in Immovable Property Mortgageable. Any interest in immovable property capable of being transferred may be mortgaged.^'' 25 On a Crop yet to be Planted: Argues v. Wasson, 51 Cal. 620, 21 Am. Rep. 718; Lemon v. Wolff, 121 Cal. 272, 53 Pac. 801; Hall v. Glass, 123 Cal. 500, 503, 69 Am. St. Rep. 77, 56 Pac. 336; Wilkerson v. Thorpe, 128 Cal. 221, 226, 60 Pac. 679. Thus a mortgage may be given on a crop yet to be planted to secure future advances: Lemon v. Wolff, 121 Cal. 272, 53 Pac. 801. 26 See section 251, subdivision 18, below. 27 Every Interest in Immovable Property Mortgage- able. — Compare the following sections of the Civil Code. Section 2947: ''Any interest in real property which is capable of being transferred may be mortgaged.'- What Interest may he Trans ferred.—Seetion 1044: "Property of any kind may be transferred, except as otherwise provided by this article.'' Section 1045: ''A mere possibility, not coupled with an interest, cannot be transferred." Section 1046: ''A right of re-entry, or of reposses- sion for breach of condition subsequent, can be transferred. ' ' Section 1047: ''Any person claiming title to real property in the adverse possession of another may transfer it with the same effect as if in actual pos- session. ' ' Hence it follows: Section 2921: "A mortgage may be created on prop- erty held adversely to the mortgagor." Thus a vested future interest in lands is mortgage- able: Dunn V. Schell, 122 Cal. 626, 55 Pac. 595. L § 251 NATURE THEREOF. 439 251. Enumeration of Mortgageable Movable Property.^^ The following kinds of movable property, and none other, are mortgageable: Under United States Eevised Statutes, sections 2262 and 2263, the pre-emptor of land must pre-empt with a purpose in good faith to appropriate the land to his exclusive use, or otherwise he forfeits all in- terest therein; and any agreement by which the title should inure to any other person in whole or in part is void; and the right of pre-emption is unassignable. But as a mortgage passes no title, a mortgage exe- cuted by a pre-emption claimant before final proof and payment to secure the repayment of money loaned to pay for the land, or in any manner to aid such claim- ant in perfecting his title, is not in contravention of the pre-emption laws, but will be sustained: Whitney V. Buckman, 13 Cal. 536; Stewart v. Powers, 98 Gal. 514, 516, 521, 33 Pac. 486. Movable property which, by being affixed to land by the owner, has become a part thereof may never- theless be mortgaged by the owner separately from any other interest in the land by an immovable prop- erty mortgage executed as such: Brodrick v. Kil- patrick, 82 Fed. (D. C.) 138. Under a contract for the sale and purchase of land, the vendor retaining the title which was to be con- veyed to the vendee upon payment of the price, the vendee has a mortgageable interest in the land: Houghton V. Allen (Cal.), 14 Pac. 641, 642. A leasehold interest is mortgaged as real estate: Commercial Bank v. Pritchard, 126 Cal. 600, 603, 59 Pac. 130; McLeod v. Barnum, 131 Cal. 605, 606, 63 Pac. 924. See, also, Johnson v. Sherman, 15 Cal. 287, 293, 76 Am. Dec. 481. Likewise a possessory interest in lands of the Uni- ted States under a claim of title: Houseman v. Chase, 12 Cal. 290; HafSey v. Maier, 13 Cal. 13. 28 Enumeration of Mortgageable Movable Property. 440 MORTGAGE. § 251 (1) Locomotives, engines, and other rolling stock of a railroad, (2) steamboat machinery, the machinery used by machinists, foiindrymen, and mechanics, (3) steam engines and boilers, (4) mining machinery, (5) printing presses and material. Civil Code, section 2955: *^ Mortgages may be made upon \- 95n j- the following personal property and none other ^ n95 ] : (1) Locomotives, engines, and other rolling [a] stock of a railroad; (2) steamboat machinery, the machinery used by [-03f [[h] machinists, foundrymen, and^ f 03 ^ me- chanics; (3) steam engines and boilers; (4) mining machinery; (5) printing presses and material; (6) professional libraries; (7) instruments of [ 87m j- surveyors, ■{ m87 -| [c] phy- sicians and dentists; (8) upholstery, furniture [9oo] [d], and [- 95n }- house- hold goods -j n95^ ; (9) }■ 93n }■ oil paintings, pictures, and works of art (10) }-93n \- all^ n93-{ growing crops }- 93n [-including grapes and fruit ■{ n93 ■{ ; (11) vessels of more than five tons burden; (12) 1- 75-6n \- instruments, negatives, furniture, and fixtures of a photograph gallery ■{ n75-6 ■{ ; (13) |-77-8n}-the machinery, casks, pipes, tubes [e] and utensils used in the manufacture j- 87n \- or storage -| n87 -j of wine, fruit brandy, f rmt syrups or sugar ^ n77-8 -j ; [► 87n |- also wines, fruit brandy, fruit syrup, or sugar with the cooperage in which the same are contained ■{ n87 -j ; (14) j- 87n [►pianos and organs^ n87-| ; § 251 T^ATURE THEREOF. 441 (6) professional libraries^ (7) instruments of surveyors, physicians, and dentists, (8) upholstery, furniture, and household goods, (9) oil paintings, pictures, and works of art, (10) all growing crops, including grapes and fruit, (11) vessels of more than five tons burden, (12) instruments, negatives, furniture, and fix- tures of a photograph gallery, (15) [-9311 [-iron and steel safes ^ n93 -[ ; (16) }>93n}" [03o] [f] cattle, horses, mules, swine, sheep, and goats, and the increase thereof ] n93 -j ; (17) 5- 95n }► harvesters, threshing outfits, hay-presses, [> 97n V wagons, -j n97 { farming implements, ■{ n95 -{ [ 97n [ and the equipments of a livery-stable, in- cluding buggies, carriages, harness, robes -j n97-{ ; (18) [ 95n ]- abstract systems, books, maps, papers, and slips of searchers of records -{ n95-j ; (19) }► 97n y raisins and dried fruits, cured or in pro- cess of i)eing cured; also, all boxes, fruit-graders, drying trays, and fruit-ladders J, n97 ■{ . (a) The word '^rolling'' was omitted from Febru- ary 28, 1887, to March 16, 1895. (b) Before March 9, 1897, this provision read sub- stantially as above. In 1897, the '^s'^ was omitted from ^ ^ machinists, ' ' and the commas left out. (c) Former reading, ^'a surgeon.'' (d) Here followed: (March 9, 1893, to March 16, 1895) ^'used in hotels and lodging-houses''; (be- fore Marck 9, 1893) ^^used in hotels, } 77-8n }- lodging ■{ n77-8 ■{ or boarding-houses, when mort- gaged to secure the purchase money of the articles mortgaged." Blaisdell v. McDowell, 91 Cal. 285, 25 Am. St. Rep. 178, 27 Pac. 6*56, discusses this subdivision as it existed before the amendment of 1893. 442 MORTGAGE. § 251 (13) the machinery, casks, pipes, tubes, and utensils used in the manufacture or storage of wine, fruit brandy, fruit syrups or sugar; also wines, fruit brandy, fruit syrup, or sugar, with the cooperage in which the same are contained, [(14) wines in the wineries or wine c*ellars of the owners or makers thereof, or other persons having possession, care, and control of the same, and thfe pipes, casks, and tanks in which the said wines are contained,]^® (e) Before February 28, 1887, 'Hubs'' instead of ''tubes.'' (f) Here was omitted "neat." Original section in effect January 1, 1873; amended Stats. 1875-76, p. 79, in effect April 3, 1876; Stats. 1877-78, p. 88, in effect April 1, 1878; Stats. 1887, d. 5, in effect February 2, 1887; Stats. 1893, p. 84, in ef- fect March 9, 1893; Stats. 1895, p. 57, in effect March 16, 1895; Stats. 1897, p. 95, in effect March 9, 1897; Stats. 1903, March 3, p. 78, c. 70. 29 Wines in Wineries, etc.— This subdivision is not found in the section which enumerates what movable property is mortgageable, but a proviso is found in Civil Code, section 3440, which makes this property mortgageable almost in the same manner as other mortgageable movable property. Civil Code, section 3440, proviso, declares: "The provisions of this sec- tion shall not apply to the transfers of wines in the wineries or wine cellars of the owners or makers there- . of, or other persons having possession, care, and con- trol of the same, and the pipes, casks, and tanks in which the said wines are contained, which transfers shall be made in writing, and certified [03o] [a] and verified in the same form as provided for chattel mortgages, and which shall be recorded in the book of miscellaneous records in the office of the county recorder of the county in which the same are situ- ated." § 251 NATURE THEREOF. 443 (15) pianos and organs, (16) iron and steel safes, (17) cattle, horses, mules, swine, sheep, and goats, (18) the increase of such animals, ^^ (19) harvesters, threshing outfits, hay-presses, wagons, farming implements, and the equip- ments of a livery-stable, including buggies, car- riages, harness, robes, (20) abstract systems, books, maps, papers, and slips of searchers of records, (21) raisins and dried fruits, cured or in process of being cured; also, all boxes, fruit-graders, drying trays, and fruit ladders. 252. Enumeration to be Liberally Construed. The provisions as to what movable property is mortgageable should be reasonably and lib- (a) Here was omitted '^and acknowledged/' 30 The Increase of Such Animals Mortgageable, The term *' increase ' ' means the offspring, progeny, or young of such animals, and nothing more. It can- not refer to wool clipped from sheep, or milk or butter or cheese obtained from cows: Alferitz v, Borg- wardt, 126 Oal. 201, 58 Pac. 460. The provision authorizing a mortgage of ''sheep .... and the increase thereof/' does not extend the operation of a mortgage against sheep to the increase thereof, but implies that unless the increase is cov- ered by the terms of the mortgage, it is not included therein: Shoobert v. De Motta, 112 Cal. 215, 53 Am. St. Eep. 207, 44 Pac. 487; First Nat. Bank v. Erreca, 116 Cal. 81, 58 Am. St. Eep. 133, 47 Pac. 926. 444 MORTGAGE. § 252 erally construed with a view to executing the evi- dent design of the legislature.^^ Subdivision 5. Possession. 253. Possession of Mortgaged Property may be Conferred on Mortgagee. The present or future possession of mortgaged property may be conferred upon the mortgagee by the express terms of the mortgage, or by a subsequent agreement without a new considera- tion,^^ except where a third party has a para- mount right to the possession.^^ 31 **The section of the code in question should have a reasonable construction with a view of exe- cuting the evident design of the legislature in enact- ing it. While the language used should not be strained to include cases clearly not embraced by it, the mean- ing to be given to it should not be so narrowly cir- cumscribed as to exclude cases clearly within it. The evident intent of the legislature was to encourage certain kinds of business by allowing persons to pro- cure certain personal property necessary to the busi- ness by giving a mortgage lien upon the property it- self' ': Blaisdell v. McDowell, 91 Cal. 285, 287, 2d Am. St. Eep. 178, 27 Pac. 656. But compare the statement in Alf eritz v. Borgwardt, 126 Cal. 201, 205, 58 Pac. 460, that the presumption is against the right to mortgage movable property. Does this statement have any reference to the amendment of 1895 that certain property '^and none other'' shall be mortgaged? 32 Civil Code, section 2927: '^A mortgage does not entitle the mortgagee to the possession of the property, unless authorized by the express terms of the mortgage; but after the execution of the mort- gage, the mortgagor may agree to such a change of possession without a new consideration." § 254 NATURE THEREOF. 445 254. Upon Change of Possession of Movable Property Transaction Deemed Pledge. Upon the actual change of possession of mort- gaged movable property from the mortgagor to the mortgagee, the transaction is deemed a pledge.^^ Svbdivision 6. Power of Sale. 255. Mortgage may Confer Power of Sale. A power of sale may be conferred by a mort- gage upon a mortgagee or any other person, to be Possession may be conferred upon the mortgagee after the execution of the mortgage by parol agree- ment: Fogarty v. Sawyer, 17 Cal. 589, 592, 593 j Spect V. Spect, 88 Cal. 437, 440, 22 Am. St. Eep. 314, 26 Pac. 203. A mortgage may give the mortgagee the right of possession upon default in the payment of interest: Bank of Woodland v. Duncan, 117 Gal. 412, 416, 49 Pac. 414; Elinn v. Ferry, 127 Cal. 648, 652, 60 Pac. 434. A provision giving a movable property mortgagee the right of possession of the mortgaged property upon the happening of a certain event is, upon the happen- ing thereof, equally binding upon the executor of the mortgagor after the mortgagor's decease: Mathew v. Mathew, 138 Cal. 334, 71 Pac. 344. 3J5 Thus ine mortgagee of the interest of one part- ner in movable partnership property has no right to take possession of such property,, as the other partner is entitled thereto (See Civ. Code, sec. 2405); Sheehy v. Graves, 58 Cal. 449, 456. 34 Civil Code, section 2924: ^^ Every transfer of an interest in property .... when in the case of personal property it is accompanied by actual change of possession .... is deemed a pledge.'' Eohrbough v. Johnson, 107 Cal. 144, 148, 40 Pac. 37. 446 MORTGAGE. § 255 exercised after a breach of the obligation for which the mortgage is as security.^^ 35 Mortgage may Confer Power of Sale: Civ. Code, sec. 2932. Cormerais v. Genella, 22 Cal. 116, 123, 124; Bate- man V. Burr, 57 Cal. 480, 482; Fogarty v. Sawyer, 17 Cal. 589. See, also, Wilson v. Brannan, 27 Cal. 258, 272. In Godfrey v. Monroe* 101 Cal. 224, 227, 35 Pac. 761, it was said that ^^this form of security is no longer looked upon with disfavor.'' But in Sacra- mento Bank v. Alcorn, 121 Cal. 379, 384, 53 Pac. 813, the court said that *Hhe continuance of this power in a mortgage is as inconsistent with the general policy of requiring all forced sales to be subject to redemp- tion as are trust deeds.'' A mortgage conferring a power of sale authorizes the mortgagee to execute a conveyance to the pur- chaser at the sale without an express provision to that effect, as such authority is necessarily incident to the power to sell: Fogarty v. Sawyer, 17 Cal. 589, 591. An agreement between a movable property mort- gagor and his mortgagee permitting a sale of the property in satisfaction of the mortgage otherwise than as provided bv law is valid: Harlan v. Elv, 68 Cal. 522, 9 Pac. 947, 949. Agreements Held to he Mortgages with Power of Sale,— *^An absolute conveyance of property by a debtor to his creditor, in trust, that he may sell the same, and out of the proceeds discharge the debt, is, in effect, only a mortgage with a power of sale, and the grantee may treat it as such, and, instead of making a sale under the power, may go into a court of equity for a foreclosure and sale under its decree; and whenever such course is pursued, his relation to the property is the same as that of the mortgagee in the foreclosure of the ordinary mortgage": Felton v. Le Breton, 92 Cal. 457, 465, 28 Pac. 490. ^'Even where there is a power of sale, it has been held that, if the trustee be one of the creditors se- t § 256 NATURE THEREOF. 447 256. Power of Sale Deemed Part of Security. A power to sell immovable property, given to a mortgagee or other encumbrancer in an instru- ment intended to secure the payment of money, is deemed a part of the security, and vests in any person who, by assignment, becomes entitled to the money so secured to be paid, and may be executed by him whenever the assignment is duly executed and recorded.^^ SiA division 7. Insurance. 257. Mortgage may Confer Power to Insure. A mortgage may confer upon the mortgagee the power to insure the mortgaged property cured, the transaction will be held to be a mortgage'': Banta v. Wise, 135 Cal. 277, 280, 67 Pac. 129. A deed given ^Ho secure the payment of an in- debtedness'' which provided that as soon as the grantees had *^ received their pay in full .... pay- able out of the receipts of the sale of the conveyed lands .... the balance of the property remaining un- sold" shall be reconveyed to the grantor, constitutes a mortgage with a power of sale: Godfrey v. Monroe, 101 Cal. 224, 227, 35 Pac. 761. In Southern Pacific E. Co. v. Doyle, 11 Fed. 253, 259, 260, principally in view of Civil Code, section 2932, the circuit court held an instrument conveying prop- erty to second parties on a trust to be sold only in case of a default of the first party in the payment of a series of obligations due certain third parties to be a mortgage and not a deed of trust. But see section 414, below. 36 See Civ. Code, sec. 858. 448 MORTGAGE. § 257 upon default of the mortgagor so to do, the premiums paid to be secured by the mortgage.^'' Subdivision 8. Interpretation, 258. Mortgage Construed in Connection with Other Related Writings. An instrument of mortgage must be construed together with any written obligation thereby se- cured, and with other writings contemporane- ously made.^^ 37 Where a mortgage gives the mortgagee such power, the premiums paid to be secured by the mort- gaged property, and the mortgagee seeks to fore- close the mortgage for such sums, the complaint must aver (1) failure of the mortgagor to insure as agreed, (2) insurance by the mortgagee conformable to the power, (3) the payment of the insurance money: Washburn v. Wilson, 59 Cal. 538. 38 Note and Mortgage Must be Construed Together: Phelps V. Mayers, 126 Cal. 549, 550, 58 Pac. 1048; Meyer v. Weber, 133 Cal. 681, 684, 65 Pac. 1110. Historical.— In Eobinson v. Smith, 14 Cal. 94, before the adoption of sections 385-388 and 390-392 below, an action was permitted on the secured note according to its terms, without reference to the terms of the instra- ment of mortgage, but this could not be done under the present law. Illustrations of Interpretation. Mortgages foreclosaUe for the principal sum upon de- fault in payment of interest. Where a note provided for its payment in monthly installments, and was secured by a mortgage in mov- able property providing ' ^ that if the mortgagor should fail to make any payment as in the note provided, the § 258 NATURE THEREOF. 449 mortgagee .... may immediately proceed to sell the property in the manner provided by law, and from the proceeds pay the whole amount in such note specified," the mortgagee was entitled to foreclose for the whole amount of all unpaid installments upon any default: Maddox v. Wyman, 92 Cal. 674, 28 Pac. 838; Clemens V. Luce, 101 Cal. 432, 434-436, 35 Pac. 1032; Phelps v. Mayers, 126 Cal. 549, 550, 58 Pac. 1048. See, also, Brickell v. Batchelder, 62 Cal. 623, 630, 631, 633, per Thornton, J., Morrison, C. J., and Myrick and Sharpstein, JJ.; McKinstry, McKee, and Eoss, J J., dissenting. Mortgages foreclosable for interest upon default in payment thereof, A promissory note payable two years after date, with interest thereon payable monthly, when secured by a mortgage providing that ^'in case of default by the mortgagor in the payment of said note or interest, or in the performance of any of the conditions hereof, then the mortgagee may at its option either commence proceedings to foreclose this mortgage in the usual manner, or cause the said premises, or any part thereof^ to be sold,'' gives the mortgage merely the right to foreclose for interest upon nonpayment thereof, but not for principal before the maturity of the note: Bank of San, Luis Obispo v. Johnson, 53 Cal. 99, Crock- ett, J., dissenting. A mortgage foreclosable ' ^ in default of Ihe payment of the note by its terms,'' and given to secure a note providing that interest iS ^* payable annually," may be foreclosed for the amount of any interest payment remaining unpaid: Yoakum v. White, 97 Cal. 286, 32 Pac. 238. In Brodribb v. Tibbets, 58 C^l. 6, where a mortgage was given ^'as security for the payment" of a certain sum on a certain day, '^with interest thereon accord- ing to the terms and conditions of a certain promissory note," which provided that interest was payable monthly, but contained no express provision for fore- closure upon the nonpayment of interest, the court held that the mortgage could not be foreclosed until the principal sum becomes due. Eeferring to this de- Liens— 29 450 MORTGAGE. § 259 259. Ambiguities to be Resolved in Favor of Mortgagor. Any doubt that fairly arises from the terms or the instrument of mortgage and the secured ob- cision, the court says, in Yoakum v. White: **This case does not seem to be in harmony with the general current of authority upon the subject; but assuming it to be correct, it is not, as we think, in point here"; in Van Loo v. Van Aken, 104 Cal. 269, 37 Pac. 925: '^Certainly that decision was opposed to the current of authority and to the reasonable construction of the Code of Civil Procedure, sections 726-728"; and in Phelps V. Mayers, 126 Cal. 549, 551, 58 Pac. 1048: ''Brodribb v. Tibbets is of doubtful authority." Mortgage in no respect foreclosahJe upon default in payment of interest. A mortgage given ''as security for the payment to the said mortgagee of the sum of five thousand dollars in gold coin on the ninth day of December, A. T>. 1895, with interest at the rate of eight per cent per annum, according to. the terms and conditions of a certain promissory note," which provided that *'said interest [was] payable annually, and, if not so paid, the inter- est to draw interest the same as the principal," is not foreclosable for default of payment of interest, as the language of the mortgage fairly warrants the conclu- sion that the intention oi the parties was that it should not be foreclosed until the principal of the note was due. It cannot be denied that when a mortgagee is bargaining for the right to sell the debtor's land to satisfy his claim, any doubt that fairly arises upon the terms of the note and mortgage should be resolved against him: Van Loo v. Van Aken, 104 Cal. 269, 37 Pac. 925. Interpretation of Reserimtion as to Homestead.— A mortgage which excepts and reserves to the mortgagor his homestead right and claim in re»x)ect to the mort- gaged property, although the declaration of homestead was invalid, operates only on the excess of the prem- ises over the statutory exemption ^i five thousand § 259 NATURE THEREOF. 451 ligation, if in writing, as to the rights of the mortgagee is to be resolved in favor of the mort- gagor.^^ 260. Mortgage Only Secures Obligations Ex- pressly Secured Thereby. Excepting expenses necessarily incurred by the mortgagee for the preservation of the mortgaged property, which are chargeable against the prop- erty/^ a mortgage only secures such obligations owing the mortgagee as the instrument of mort- gage by its express terms makes a charge against the mortgaged property.^^ Thus, when not ex- dollars— that being the clear intention of the parties: Grogan v. Thrift, 58 Cal. 378. 39 Van Loo v. Van Aken, 104 Cal. 269, 271, 37 Pac. 927. 40 Obligation Necessarily Incurred by Mortgagee for Preservation of Mortgaged Property Chargeable Thereagainst.— So if the mortgagee pays money due the state by the mortgagor on the purchase price of the mortgaged property in order to prevent a foref eit- ure of the mortgagor's rights, the money so paid be- comes a portion of the mortgage obligation: Hill v. Eldred, 49 Cal. 398, 401. 41 Mortgage Only Secures Obligations Expressly Made Charges Against the Property.— Civil Code, sec- tion 2923, provides: ^'The lien of a mortgage is special unless otherwise expressly agreed.'' See note 42 below. Thus in the absence of an express agreement, costs of suit are not covered bv a mortgage: Russell v. Fin- ley, 122 Cal. 478, 68 Am. St. Rep. 50, 55 Pac. 143. But by an express agreement a mortgage may cover an insurance premium: Humboldt Sav. etc. Soc. v. Burnham, 111 Cal. 343, 346, 43 Pac. 971. 452 MORTGAGE. § 260 pressly made a charge against the mortgaged property, an attorney's fee cannot be declared by the court a charge against the property, although contracted for by the parties.^^ y^eve an at- Yet a mortgage given to secure the principal and interest of a promissory note, the amount of the note being stated in the instrument of mortgage, but the rate of interest not being stated, covers whatever in- terest at whatever rate is in fact provided for in the note, there being no presumption as to what the rate was: KicketsoA v. Eichardson, 19 Cal. 330, 350, 351. 42 Attorney's fee, when not expressly secured b}^ property, cannot be charged thereagainst : Sichel v. Carillo, 42 Cal. 493, 508; Monroe v. Fohl, 72 Cal. 568, 14 Pac. 514; Clemens v. Luce, 101 Cal. 432, 436, 437, 35 Pac. 1032; Sainsevain v. Luce (Cal.), 35 Pac. 1033; Lee V. McCarthy (Cal.), 35 Pac. 1034; Chase v. High (Cal.), 35 Pac. 1035; Boob v. Hall, 107 Cal. 160, 162, 40 Pac. 117; Cooper v. McCarthy (Cal.), 36 Pac. 2; Barnett v. Mulkins (Cal.), 40 Pac. 115; Mason v. Luce, 116 Cal. 232, 238, 48 Pac. 72; Eafferty v. High (Cal.), 41 Pac. 489; Irvine v. Perry, 119 Cal. 352, 357, 51 Pac. 544; Eoberts V. Fitzallen, 120 Cal. 482, 484, 485, 52 Pac. 818; Eussell v. Findlev, 122 Cal. 478, 68 Am. St. Eep. 50, 55 Pac. 143; Klokke v. Escailler, 124 Cal. 297, 298, 56 Pac. 1113; Taylor v. Ellenberg, 128 Cal. 411, 414, 60 Pac. 1034; Cortelyou v. Jones, 132 Cal. 131, 64 Pac. 119; Orange Growers' Bank v. Duncan, 133 Cal. 254, 257, 65 Pac. 469. Illustrations.— Where a promissory note provided for the payment of the amount thereof with interest, and in case of action a counsel fee was secured by a mortgage expressly given to secure the payment of the principal sum of the note with interest thereon accord- ing to the terms of the note, the counsel fee is not secured by the mortgage and cannot be declared a mortgage charge against the property by the court: Clemens v. Luce, 101 Cal. 432, 436, 35 Pac. 1032; Cooper V. McCarthy (Cal.), 36 Pac. 2; Barnett v. Mul- kins (Cal.), 40 Pac. 115; Eafferty v. High (Cal.), 41 Pac. 489; Mason v. Luce, 116 Cal. 232, 238, 48 Pac. 72. § 260 NATURE THEREOF. 453 But in such case a personal judgment may be ren- dered for the attorney's fee against the person liable therefor: Clemens v. Luce, 101 Cal. 432, 436, 35 Pac. 1032; Mason v. Luce, 116 Cal. 232, 238, 48 Pac. 72. Nor are counsel fees a mortgage charge where a similar note was secured by a mortgage given ^^for the purpose of securing the payment of a promissory note, a copy of which is as follows '': Irvine v. Perry, 119 Cal. 352, 357, 51 Pac. 544. Where an instrument of mortgage provides that a judgment may be entered for a reasonable counsel fee, which it does not, however, purport to make a charge against the mortgaged property, the fee is merely a personal charge against the mortgagor, and is not secured by the mortgage, and the court cannot declare it to be so secured: Eussell v. Finley, 122 Cal. 478, 68 Am. St. Eep. 60, 55 Pac. 143; Klokke v. Escail- ler, 124 Cal. 297, 298, 56 Pac. 1113; Haensel v. Pacific States Sav. etc. Co., 135 Cal. 41, 44-45, 67 Pac. 38; Loewenthal v. Coonan, 135 Cal. 381, 384, 87 Am. St. Eep. 115, 67 Pac. 1033; Luddy v. Pavkovich, 137 Cal. 284, 70 Pac. 177. By an express provision a mortgage may cover an attorney's fee upon foreclosure: German Sav. etc. Soc. V. Hutchinson, 68 Cal. 52, 8 Pac. 627; O'Neal v. Hart, 116 Cal. 69, 47 Pac. 926; Sun Ins. Co. v. White, 123 Cal. 196, 203, 204, 55 Pac. 902; County Bank of San Luis Obispo v. Goldtree, 129 Cal. 160, 163, 61 Pac. 785; Peachy v. Witter, 131 Cal. 316, 319, 63 Pac. 468. Where the instrument of mortgage provides for cer- tain attorney's fees upon foreclosure, the fact that the note did not provide for nor mention them is entirely immaterial. The judgment, ''so far as it relates to the attorney's fee, is based upon the agreement in the mortgage, of which the note was a part": Hellier v. Eussell, 136 Cal. 143, 68 Pac. 581. An instrument of mortgage providing for ''counsel fees and charges of attorneys and counsel employed in such foreclosure suit not exceeding" a certain amount secures an attorney's fee: Alden v. Pryal, 60 Cal. 215, 220. A mortgage by its terms securing "counsel fees and charges of attorneys and counsel employed in such 454 MORTGAGE. § 260 torney^s fee is made an express charge in case of foreclosure^ the fee becomes a charge imme- diately upon the commencement of the foreclos- ure action,^^ but if the mortgage obligation is otherwise collected is not chargeable against the property.^^ foreclosure suit not exceeding /' or '* counsel fees, at the rate of per cent upon the amount which may be found to be due/' secures reasonable attorney's fees: Alden v. Pryal, 60 Cal. 215, 220; Bonestell v. Bowie, 128 Cal. 511, 516, 61 Pac. 78. Constitutionality.— \n allowing an attorney's fee where thus provided for, the constitutionality of a statute permitting the court to allow attorney's fees is not involved, for the fee is allowed by the terms of a valid agreement contained in the instrument of mortgage: Hellier v. Eussell, 136 Cal. 143, 68 Pac. 581. 43 Fee Becomes Charge Immediately upon Com- mencement of Action.— So it is not discharged by the dismissal of the action upon the payment to the plain- tiff therein of the principal, interest and costs, and the execution of an agreement to pay the fee: Stockton Sav. etc. Soc. v. Donnelly, 60 Cal. 481. 44 So where a trust deed in the nature of a mort- gage secured the payment of a counsel fee in case of foreclosure by proceedings in court, but the secured demand was presented and allowed by the bankruptcy court upon the bankruptcy of the trustor, the beneficiary is not entitled to recover the counsel fee provided for, as such presentation and allowance was not a foreclosure: In re Koche, 101 Fed. 956, 959- 961, 42 C. C. A. 115. I 261 RECORDATION OF INSTRUMENT. 455 AETICLE 2. EECOEDATION OF INSTEUMENT OF MOETGAGE. Subdivision 1. As to Immovable Property Mortgages. 261. Immovable property mortgage, how recorded. 262. Crop mortgage must be recorded as movable property mortgage. Subdivision 2. As to Movable Property Mortgages. 263. Movable property mortgages, how recorded. 264. What deemed location of property in transit. 265. What deemed location of property of common carrier. 266. Eecordation in additional counties by filing cer- tified copy. 267. General rules as to recordation applicable to movable property mortgages. Subdivision 1, As to Immovable Property Mortgages. 261. Immovable Property Mortgage, How Re- corded.^ Immovable property mortgages may be ac- 1 Immovable Property Mortgage, How Recorded: See Civ. Code, sec. 2952. Historical.— Jlnder the law as it stood in 1851, a mortgage not under seal was not entitled to be record- ed, nor did the record thereof impart constructive no- tice to anvone: Eacouillat v. Sansevain, 32 Cal. 376, 389; Eacouillat v. Eene, 32 Cal. 450, 452. 456 MORTGAGE. § 261 Imowledged^ or proved^ certified, and recorded/** in like manner and with like effect as grants of real property. Before the enactment of the code, a mortgage of a leasehold or other chattel interest in land did not come within the provisions for mortgaging land: Com- pare Houseman v. Chase, 12 Cal. 290; HafBey v. Maier, 13 Cal. 13. When the Civil Code was enacted, there was a pro- vision numbered section 2937, granting a time allow- ance for recordation which varied with the distance of the parties from the place of recordation, but in Odd Fellows^ Sav. Bank v. Banton, 46 Cal. 603, this was held to be in conflict with the rules of Civil Code; sec- tions 1213-1215 and 2952 as to recordation, and hence under Political Code, sections 4480-4484, to be void. The act concerning county recorders (Stats. 1851, p. 199, c. 191, sees. 12 and 13), provided that certain classes of instruments therein enumerated were, upon the payment of the proper fees, to be recorded each class in a separate book. The first subdivision of sec- tion 12 enumerates deeds, mortgages, powers of at- torney to convey real estate, and leases. Under this statute all the instruments enumerated in a single sub- division belong to the same class, so that a mortgage with a power of sale need be recorded but once: Fo- garty v. Sawyer, 23 Cal. 570. A similar provision is found in the County Government Act, Stats. 1897, c. 277, sec. 120. Query.— Will a recorded deed executed pursuant to an unrecorded power to execute it impart notice? Fo^ garty v. Sawyer, 23 Cal. 570. 2 May "be Acknowledged.— ^' The acknowledgment is the only mode provided by law for authenticating the act of the parties, so as to entitle the instrument to record and make it notice to subsequent purchas- ers, and to entitle it to be read in evidence without other proofs. If purchasers neglect to have their deeds properly authenticated and recorded, they will be liable to have their title devested by subsequent § 262 RECORDATION OF INSTRUMENT. 457 262. Crop Mortgage must be Eecorded as Mova- ble Property Mortgage. A mortgage of growing crops must be executed and recorded in the manner of a movable prop- erty mortgage, and. when recorded has the effect: thereof.* conveyances to innocent parties, and to the further inconvenience of being compelled to prove their exe- cution when called upon to put them in evidence'^: Landers v. Bolton, 26 Cal. 393, 405; Grant v. Oliver, 91 Cal. 158, 163, 27 Pac. 596, 861. '^The only object of an acknowledgment is that the instrument may be recorded, unless the acknowl- edgment is by statute made essential to the validity of the instrument: Farmers' Exch. Bank v. Purdy, 130 Cal. 455, 457, 62 Pac. 738. 3 May be Recorded.— There is no law in this ^ state requiring convevances or mortgages to be recorded: Commercial Bank v. Pritchard, 126 Cal. 600, 604, 59 Pac. 130. v.^ompare Bank of Ukiah v. Petaluma Sav. Bank, 100 Cal. 590, 35 Pac. i70. An instrument is deemed to be recorded when prop- erly filed for record: See Civ. Code, sec. 1170; Me- herin v. Oaks, 67 Cal. 57, a case of a movable prop- erty mortgage. 4 Crop Mortgage must be Recorded as Movable Property Mortgage: Simpson v. Ferguson, 112 Cal. 180, 184, 191, 40 Pac. 104, 53 Am. St. Rep. 201, 44 Pac. 484; Scott v. Hotchkiss, 115 Cal. 89, 93, 47 Pac. 45. Compare Ferguson v. Murphy, 117 Cal. 134, 138, 139, 48 Pac. 1018; Bishop v. McKillican, 124 Cal. 321, 327, 328, 71 Am. St. Rep. 68, 57 Pac. 76. While growing crops may, under some circum- stances, be regarded as realty and under others as personalty, yet it is manifest that the legislature intended to provide an exclusive mode for the mort- gaging of growing crops, and to declare that for such purpose this species of property should be regarded as personalty. For it is evident that before the 458 MORTGAGE. § 263 Subdivision 2, As to Movable Property Mort- 263. Movable Property Mortgages, How Re- corded.*^ Every movable property mortgage (a) accompanied by the affidavit of all the par- ties^ thereto that it is made in good faith with- appointment of a receiver or the foreclosure of a mortgage of immovable property the mortgagee thereof can by no means get the control of the crops, even though such a mortgage covers them, so that it follows that to mortgage them as movable prop- erty is the only method of causing them to become a security: Simpson v. Ferguson, 112 Cal. 180, 184, 53 Am. St. Eep. 201, 44 Pac. 484. ''As I understand Simpson v. Ferguson, supra, it is there held that such a mortgage does not constitute a lien upon the growing crops, even as against the mortgagor'^: Modesto Bank v. Owens, 121 Cal. 223, 226, 53 Pac. 552. Historical. — Before the enactment of the Civil Code, a mortgage of growing crops was, under the act of May 19, 1850, "concerning fraudulent conveyances and contracts,'' sec. 17 (as amended Stats. 1856, p. 87, in effect April 9, 1856), executed like an im- movable property mortgage. The mortgage, however, continued only until the crop was severed from the land, whereupon it was lost as against subsequent pur- chasers in good faith unless the crop was then actu- ally delivered to the mortgagee, and retained in his possession: Quiriaque v. Dennis, 24 Cal. 154; Good- year V. Williston, 42 Cal. 11, 17. ^ Movable Property Mortgages, How Recorded.— Civil Code, section 2957, provides: **A mortgage of personal property is void as against creditors of the mortgagor and subsequent purchasers and encum- § 263 RECORDATION OF INSTRUMENT. 459 braneers of the property in good faith and for value, unless (1) it is accompanied by the affidavit of all the par- ties thereto that it is made in good faith and with- out any design to hinder, delay, or defraud credi- tors; (2) it is acknowledged or proved, certified and re- corded, in like manner as grants of real property." A mortgage of the rolling stock and the other mov- able property of a railway must be executed and re- corded in accordance with this and the following sections. Section 456 of the Civil Code merely con- fers upon railway corporations the power of mort- gaging their property, but does not establish the mode nnd manner of mortgaging: Southern Cal. Motor Eoad Co. V. Union Loan etc. Co., 64 Fed. 450, 12 C. C. A. 215, interpreted in Illinois Trust etc. Bank v. Seattle R. R. Co., 82 Fed. 941, 27 C. C. A. 268, holding the contrary, is not followed, the court saying: '*We think that our state has settled the matter in the provisions of the code referred to [Civil Code, sees. 2955-2973], and that it is the duty of this court to follow the law as there laid down": Bishop v. McKillican, 124 Cal. 321, 327-330, 71 Am. St. Rep. 68, 57 Pac. 76. (In Union Loan etc. Co. v. Southern Cal. Motor Road Co., above, when in the circuit court, 51 Fed. 840, 851, a conclusion had been reached in agreement with Bishop v. McKillican.) As to mortgages of vessels engaged in commerce or navigation the power of Congress when exercised is exclusive, and having been exercised the laws of the state in regard thereto are of no effect: Mitchell V, Steelman, 8 Cal. 363. Thus Civil Code, section 2958, is without the scope of state legislation. In Schallard v. Eel River Steam Nav. Co., 70 Cal. 144, 11 Pac. 590, a mortgage on a vessel in process of construction was enforced in the state courts, it not appearing that the vessel was to be completed so as to be engaged in commerce or navigation. 6 Accompanied by Affidavit of All the Parties.— Where one of the parties to a mortgage is a partner- 460 MORTGAGE. § 263 out any design to hinder, delay, or defraud creditors, and (b) acknowledged or proved, and certified'' in like manner as grants of real property, must be (1) immediately recorded^ in the office of th(3 recorder of the county in which the mort- sMp or corporation, one partner or an agent of the corporation can make the affidavit for that party: Modesto Bank v. Owens, 121 Cal. 223, 226, 53 Pac. 552; Alferitz v. Scott, 130 Cal. 474, 477, 62 Pac. 735. 7 Certified. — A certificate showing in its body that the person signing it was secretary of the bank named therein as mortgagee is not defective when signed by such secretary in his own name with the word '* sec- retary'^ appended: Yost v. Commercial Bank of Santa Ana, 94 Cal. 494, 496, 29 Pac. 858. 8 Must be Immediately Recorded.— ''I think, that it was intended that the mortgage should be recorded at once, and in such case, it would be re- corded where the mortgagor then resided and where the property was then situated. But even if the mortgagee were to use due diligence in the recordation of his mortgage, still, if two records are required, both cannot be made at once, and it has elsewhere been held that, even if not recorded at once, it is not void but becomes operative, as against creditors and others, when it is recorded as required bv law'': Fassett v. Wise, 115 Cal. 316, 320, 47 Pac. 1095 (47 Pac. 47). Immediate recordation is required, the same as immediate change of possession in- case of sale or pledge: Euggles v. Cannedy, 127 Cal. 290, 59 Pac. 827, per Henshaw, Temple, and McFarland, JJ., and Beatty, C. J.; Garoutte, Van Dyke, and Harrison, JJ., dissenting. What Deemed Recordation: See section 261, note 3, second paragraph. § 263 KECORDATION OF INSTRUMENT. 401 gagor resides^ at the time of the execution of the mortgage^ and (2) with due diligence recorded^^ in each county in which any part of ^^ the mortgaged property 9 At Mortgagor's Residence and Situation of Prop- erty at Time of Recordation.— Civil Code, section 2959: ''A mortgagee of personal property must be recorded in the office of the county recorder of the county in which the mortgagor resides, and also of the county in which the property mortgaged is situ- ated, or to which it may be removed.'' Interpreting the phrase, *'and also of the county in which the property is situated, or to which it may be removed,'' the court said: '^I am inclined to agree with the construction to the extent of holding that .... 'is situated' refer [s] to the time of the execution of the mortgage It is not easy to give a definite meaning to the clause 'or to which it may be removed.' If I am right in the position that it cannot refer to a removal after the mortgage has once been recorded so as to be in force as against creditors, then it must refer to a removal after the execution of the mortgage, but before it has been properly recorded. It means, I think, simply this: 'Or, if the property has been removed to another county, then in the recorder ^s office of that county.' That is to say, if the prop- erty has been removed to another county after the execution of the mortgage, and before it has been recorded in the county where the property was situ- ated at the time of its execution, then it must be recorded in the county to which the property has been removed": Fassett v. Wise, 115 Cal. 316, 320, 47 Pac. 1095 (47 Pac. 47), per Temple, Harrison, Hen- shaw, JJ.; Yan Fleet, McFarland, and Garoutte, JJ., dissenting. 10 Must be Recorded with Due Diligence.— See note 8 above, first paragraph thereof. 11 Must be Recorded in Each County in "WTiich Any Part is Found or Removed.— Civil Code, section 2962, 462 MORTGAGE. § 263 may be situated at the time of the recorda- tion^ of the mortgage thereof, and (3) within thirty days after a removal/^ in each county to which any part^^ thereof may there- after he removed with the consent of the mort- gagor. A valid recordation cannot be had unless the mortgage is accompanied by a valid affidavit and acknowledged or proved and certified.^* provides: ^^A single mortgage of personal property, embracing several things of such character or so situ- ated that by the provisions of this article separate mortgages upon them would be required to be re- corded in 'different places, is only valid in respect to the things as to which it is duly recorded.'' 12 Eecord After Removal.— Civil Code, section 2965, provides: ^'When personal property mortgaged is thereafter by the mortgagor removed from the county in which it is situated, it is, except as between the parties to the mortgage, exempted from the opera- tion thereof, unless either (1) the mortgagee, within thirty days after such re- moval, causes the mortgage to be recorded in the county to which the property has been removed; or, (2) the mortgagee, within thirty days after such re- moval, takes possession of the property, as pre- scribed in the next section.'' (See section 330 below, and Civil Code, section 2966.) ^'Section 2965 adds a sort of condition subsequent, which, if not complied with, may defeat the mort- gage after it has been recorded so as to be operative against creditors": Fassett v. Wise, 115 Cal. 316, 320, 47 Pac. 1095 (47 Pac. 47), per Temple, Harrison, Henshaw, and McFarland, JJ.; Van Fleet and Garoutte, JJ., dissenting. :i3 See note 11, above. 14 Requisites of Valid Recordation.— Where a mort- § 264 RECORDATION OF INSTRUMENT. 463 264. What Deemed Location of Property in Transit. For the purpose of recordation^ property in transit from the possession of the mortgagee to the county of the residence of the mortgagor, or to a location for use, is, during a reasonable time for such transportation, to be taken as situ- ate in the county in which the mortgagor resides, or where it is intended to be used.^^ 265. What Deemed Location of Property of Com- mon Carrier. For a like purpose, movable property used in conducting the business of a common carrier is to be taken as situate in the county in which the principal office or place of business of the carrier is ioeated.*^ gage is recorded without the affidavit of one of the parties thereto, the recordation is ineffectual, and the defect is not cured by subsequently making the lacking affidavit and attaching it to the instrument of mortgage. The mortgage would then have to be recorded anew to give it validity against third par- ties: Alferitz v. Scott, 130 Cal. 474, 477, 62 Pac. 735. A Mortgage is not Duly Recorded. When accompanied with the proper affidavit and re- corded but not certified: Harms v. Silva, 91 Cal. 636, 27 Pac. 1088. Nor when recorded without either acknowledgment or proof or certification: Adlard v. Eogers, 105 Cal. 327, 332, 38 Pac. 889. 15 See Civ. Code, sec. 2960. . 16 Civ. Code, sec. 2961. 464 MORTGAGE. § 266 266. Recordation in Additional Counties by Fil- ing Certified Copy. A certified copy of a mortgage of movable property once recorded may be recorded in any other county^ and when so recorded, the record thereof has the same force and effect as though it was the original mortgage.^'' 267. General Rules as to Recordation Applicable to Movable Property Mortgages. Except as is otherwise in this subdivision pro- vided, mortgages of movable property may be ac- knowledged or proved, certified and recorded in like manner and with like effect as grants of real property; but they must be recorded in books kept for mortgages of movable property exclus- ively.^^ 17 Civ. Code, sec. 2964. > :I8 See Civ. Code, sec. 2963. A transfer of wines in wineries or wine cellars had the effect (see section 251, subdivision 14, and note, above) of a movable property mortgage, when re- corded ^^in the book of miscellaneous records in the office of the countj recorder of the county in which the same are situated.'' OPERATION OF MORTGAGE. 465 AETICLE 3. OPEEATION or MOETGAGE. SuMivision 1. In General. 268. Mortgage does not transfer title. 269. After-acquired title of mortgagor only inures to mortgagee. 270. After-acquired property does not inure to mort- gagee. 271. Mortgage made for accommodation. 272. Validity of mortgage of both movable and im- movable property. 273. Validity of mortgage misrepresenting transac- tion. 274. Mortgage made to defraud mostly void. 275. Mortgage given for greater sum than due to certain extent void. 276. Third parties may rely upon apparent expira- tion of mortgage. 277. Provision accelerating time of payment in case of default. 278. Eights among themselves of holders of notes secured by the same mortgage. 279. Mortgages made in conformity with concur- rent executory agreements on equality. Subdivision 2, Of Immovable Property Mortgages Executed as Such. 280. Validity in general. 281. Of mortgage by absolute deed. 282. Mortgage covers fixtures and appurtenances. Liens— 30 466 OPERATION OF MORTGAGE. 283. Fixture when severed and removed is disen- cumbered of mortgage. 284. Mortgage taken subject to existing burdens on mortgaged property. 285. Mortgage of land recorded as such but hypoth- ecating crops — Effect when mortgagor in possession. ' 286. Same— When mortgagee in possession. 287. Same— As against various third parties. Subdivision 3. Of Movable Property Mortgages. 288. Eecordation a substitute for change of posses- sion. 289. Mortgage valid only in counties where duly re- corded. 290. Unrecorded mortgage void as against creditors. 291. Void as against bona fide purchaser. 292. Gains validity upon recordation. 293. Valid between parties. 294. Valid against mere trespasser. 295. Mortgage against exempt property valid. 296. Kemoval of property terminates mortgage after thirty days. 297. Crop mortgage continues after severance with- out removal. 298. Time of attachment of mortgage on crop to be planted. 299. Offspring of mortgaged animals not necessarily mortgaged. 300. Income and profits not covered by mortgage. 301. Mortgage not impaired by affixment of prop- erty to immovable property. 302. As to creditors, substitution with consent of mortgagee of other for mortgaged property is release to extent of substitution. 303. Substitution without effect as between parties. 304. Mortgage covering both mortgageable and non- mortgageable property valid as to mortgage- able. OPERATION OF MORTGAGE. 467 805. Attempted mortgage of nonmortgageable prop- erty valid between parties, but mostly void. 306. Measure of damages caused by conversion of mortgaged property. Suhdivision 4- Of Mortgages to Secure Future Advances. 307. Validity limited when object of mortgage not stated. 308. When object stated, extent of secured obliga- tion need not be shown. S09. Concerning the advances. 310. Third parties may rely upon apparent maturity of mortgage. 311. Advances made before notice of subsequent en- cumbrance secure priority. 312. Obligatory advances thereafter made secure priority. 313. No priority for optional advances thereafter made. 314. Failure to make advances creates liability for damages. Suhdivision 5. Of Mortgages of the Homestead. 315. Homestead, how far mortgageable. 316. Krecorded mortgage superior to subsequent •homestead. 317. Unrecorded immovable property mortgage when superior to homestead. 318. Mortgage when postponed to homestead. 319. Penalty for making void mortgage. 320. Not rendered valid by subsequent termination . of homestead. Siihdwision 6. Levy upon Mortgaged Movable Property, 321. Mortgaged movable property leviable under certain conditions. 322. Seizure of property without performing condi- tions a conversion. 323. Distribution of proceeds of sale of levied prop- erty. 468 OPERATION OF MORTGAGE. § 268 Subdivision 1, In General. 268. Mortgage does not Transfer Title. ^0 mortgage can transfer any title to the mortgaged property.* 1 Mortgage does not Transfer Title.— Civil Code, section 2888, provides: ^^Notwithstanding any agree- ment to the contrary, a lien, or a contract for a lien, transfers no title to the property subject to the lien.'' Code of Civil Procedure, section 744 (Practice Act, sec. 260), provides: ''A mortgage of real property shall not be deemed a conveyance, whatever its terms, so as to enable the owner of the mortgage to recover i:)Ossession of the property without a foreclosure and sale.'' ^^In this state, under the provisions of section 260 of the Practice Act, enacted April 29, 1851, it has been uniformly held that a ^mortgage creates a mere lien for the purpose of security, and, as in other cases of lien upon real property, can only be foreclosed by judicial proceedings.' .... Nor, indeed, can the provision be otherwise construed. Its terms are that *a mortgage of real property shall not be deemed a conveyance, whatever its terms, so as to enable the owner of the mortgage to recover possession "of the real property without foreclosure and sale' (Practice Act, sec. 260), which is but to say, in effect, that it shall not be deemed a conveyance so as to pass the title. For title is but 'the means whereby the owner of lands hath the just possession of his property' ": Adams v. Hopkins (Cal.), 69 Pac. 228, 231B. Many other cases hold that an immovable property mortgage does not pass title: Guy v. Ide, 6 Cal. 99, 65 Am. Dec. 490; Belloc v. Kogers, 9 Cal. 123, 125; Nagle V. Macy, 9 Cal. 426, 428; McMillan v. Eichards, 9 Cal. 365, 411, 70 Am. Dec. 655; Haffley v. Maier, 13 Cal. 13; Johnson v. Sherman, 15 Cal. 287, 293, 76 Am. Dec. 481; Goodenow v. Ewer, 16 Cal. 464, 467, 468, 76 Am. Dec. 540; Boggs v. Hargrave, 16 Cal. § 208 OPERATION OF MORTGAGE. 469 r.59, 563, 76 Am. Dec. 561; Fogarty v. Sawyer, 17 Cal. 589, 592; Lord v. Morris, 18 Cal. 482, 488; Dut- ton V. Warschauer, 21 Cal. 609, 623, 82 Am. Dec. 765; Low V. Allen, 26 Cal. 141; Bkidworth v. Lake (No. 1), 33 Cal. 255, 264; Carpentier v. Brenham, 40 Cal. 221, 234; Healy v. O'Brien, 66 Cal. 517, 519, 6 Pac. 386;McGurren v. Garrity, 68 Cal. 566, 568, 9 Pac. 839; Tapia v. Demartini, 77 Cal. 383, 388, 11 Am. St. Eep. 288, 19 Pac. 641; Eandall v. Duff, 79 Cal. 115, 126, 19 Pac. 532, 21 Pac. 610; Savings etc. Soc. V. McKoon, 120 Cal. 177, 179, 52 Pac. 305; Williams v. Santa Clara Min. Assn., 66 Cal. 193, 201, 5 Pac. 85. And the fact that an immovable property mort- gage is defined as a conveyance for the purpose of certain sections of the recording act (see Civil Code, sec. 1215) does not imply that it transfers title: Stewart v. Powers, 98 Cal. 514, 518, 33 Pac. 486. Nor does a movable property mortgage convey the title: Shoobert v. De Motta, 112 Cal. 215, 219, 53 Am. St. Eep. 207, 44 Pac. 487; Maier v. Freeman, 112 Cal. 8, 12, 53 Am. St. Eep. 151, 44 Pac. 357; Alferitz V. Borgwardt, 126 Cal. 201, 207, 58 Pac. 460. Compare Bank of Ukiah v. Moore, 106 Cal. 673, 681, 39 Pac. 1071. In Alferitz v. Borgwardt, the case of Berson v. Nunan, 63 Cal. 550, which held the contrary, was overruled. (Before the enactment of the code, a movable property mortgage vested title in the mortgagee: Heyland v. Badger, 35 Cal. 404.) No breach of the conditions of a mortgage can possibly vest the title in the mortgagee: Godeffroy V. Caldwell, 2 Cal. 489, 492, 493, 56 Am. Dec. 360; Kagle V. Macy, 9 Cal. 426, 428; McMillan v. Eich- ards, 9 Cal. 365, 409, 410, 70 Am. Dec. 655; Haffley V. Maier, 13 Cal. 13; Johnson v. Sherman, 15 Cal. 287, 293, 76 Am. Dec. 481; Goodenow v. Ewer, 16 Cal. 464, 467, 76 Am. Dec. 540; Dutton v. Warschauer, 21 Gal. 609, 621, 82 Am. Dec. 765; Bludworth v. Lake (No. 1), 33 Cal. 255, 264; Mack v. Wetzlar, 39 Cal. 470 OPERATION OF MORTGAGE. § 269 269. After-acquired Title of Mortgagor Only In- ures to Mortgagee.^ A mortgage of an unlimited interest in any property mortgages every interest thereafter ac- quired^ by the mortgagor therein [as of the date 247, 254, holding that this doctrine apiplies to mort- gages executed "before the enactment of the Practice Act in 1851; McGurren v. Garrity, 68 Cal. 566, 568, 9 Pac. 839; Malone v. Eoy, 107 Cal. 518, 523, 524, 40 Pac. 1040; Savings etc. Soc. v. McKoon, 120 Cal. 177, 179, 52 Pac. 305. An absolute deed given as a mortgage does not transfer the title: Cunningham v. Hawkins, 27 Cal. 603; Jackson v. Lodge, 36 Cal. 28, 39; Taylor v. Me- Lain, 64 Cal. 513, 514, 2 Pac. 399; Healy v. O'Brien. 66 Cal. 517, 519, 6 Pac. 386; Eaynor v. Drew, 72 Cal. 307, 309, 13 Pac. 866; Smith v. Smith, 80 Cal. 323, 325, 21 Pac. 4, 22 Pac. 186, 549; Hall v. Arnott, 80 Cal. 348, 352, 22 Pac. 200; Hyde v. Mangan, 88 Cal. 319, 325, 326, 26 Pac. 180; Murdock v. Clarke, 90 Ca]. 427, 442, 27 Pac. 275; Brandt v. Thompson, 91 Cal. 458, 461, 27 Pac. 763; Moisant v. McPhee, 92 Cal. 76, 79, 28 Pac. 46; Locke v. Moulton, 96 Cal. 21, 32, 30 Pac. 957; Wenzel v. Schultz, 100 Cal. 250, 255, 34 Pac. 696; Vance v. Anderson, 113 Cal. 532, 538, 45 Pac. 816; Byrne v. Hudson, 127 Cal. 254, 256, 59 Pac. 597. In Taylor v. McLain, the cases of Hughes v. Davis, 40 Cal. 117, and Espinosa v. Gregory, 40 Cal. 58, holding the contrary doctrine, were overruled. The doctrine of the Hughes case is pushed to its logical conclusion in Allen v. Allen, 106 Cal. 137, 39 Pac. 436. Nor does possession by the mortgagee vest the title in him: Johnson v. Sherman, 15 Cal. 287, 293, 76 Am. Dec. 481; Dutton v. Warschauer, 21 Cal. 609, 62o, 626, 82 Am. Dec. 765; Cunningham v. Hawkins, 24 Cal. 403, 409, 85 Am. Dec. 73; Jackson v. Lodge, 36 Cal. 28, 40: Murdock v. Clarke, 90 Cal. 427, 442, 27 I § 209 OPERATION OF MORTGAGE. 471 Pac. 275; Peninsular etc. Co. v. Pacific S. W. Co., 123 Cal. 689, 695, 56 Pac. 604. 2 After-acquired Title Inures to Mortgagee.— Civil Code, section 2930: '^ Title acquired by the mortgagor subsequently to the execution of the mortgage inures to the mortgagee as security for the debt, in like manner as if acquired before its execution.'^ Thus, the act of a party in giving a movable prop- erty mortgage raises a presumption, as against him and his successors^ that he is the owner of the prop- erty: Mathew v. Mathew, 138 Cal. 334, 71 Pac. 344. 3 Every Interest Thereafter Acquired by the Mort- gagor Inures to Mortgagee: Tartar v. Hall, 3 Cal. 263; Hafiiey v. Maier, 13 Cal. 13; Whitney v. Buck- man, 13 Cal. 536, 539; Clark v. Baker, 14 Cal. 612, 76 Am. Dec. 449; Clark v. Boyreau, 14 Cal. 634, C36; Kirkaldie v. Larrabee, 31 Cal. 455, 89 Am. Dec. 205; Christy v. Dana, 34 Cal. 548, 554, 42 Cal. 174, 179; Parry v. Kelley, 52 Cal. 334; Camp v. Grider, 62 Cal. 20; Sherman v. McCarthy, 57 Cal. 507, 515; Trope V. Kerns (Cal.), 20 Pac. 82, 83, 84; Stewart v. Powers, 98 Cal. "514, 518, 33 Pac. 486; Stewart v. Powers (Cal.), 33 Pac. 489; Eobrecht v. Eeid, 114 Cal. 356, 362, 46 Pac. 101. See, also, cases cited under note 5, below. Thus a mortgagor of the fee is estopped to deny his ownership of the entire interest in the property: Trope V. Kerns (Cal.), 20 Pac. 82, 83, 84. Rationale.— The mortgagor is under obligation, from the nature of the mortgage contract, to pre- serve the property hypothecated for the purposes of the original security; and hence, on grounds of pub- lic policy, to insure good faith and fair dealing, he is estopped, independent of any covenants of war- ranty, ^from denying the existence of the encum- brance which he has attempted to create, or defeating its enforcement upon the property upon which it was placed, and those claiming under the mortgage are equally estopped: Clark v. Baker, 14 Cal. 612, 632- 634, 76 Am. Dec. 449. Illustrations.— Where a mortgagor covenants that he is lawfully seised in fee of the mortgaged premises, 472 OPERATIOI^ OF MORTGAGE. § 269 of the mortgage],'* although, acquired after the foreclosure of the mortgage;^ but any interest in the property which at an}^ time is acquired by that they are free from all encumbrances, that such mortgagor has a good right to sell, grant, and mort- gage the same, that he will forever warrant and de- fend the same to the mortgagee, his heirs and as- signs, against the lawful claims and demands of all persons, any after-acquired title would inure to the benefit of the mortgagee: Stewart v. Powers, 98 Cal. 534, 518, 33 Pac. 486. Where the mortgagor mortgages all his interest in a possessory claim under the California or United States pre-emption laws, and thereafter acquires a title to such claim from the government, such title inures to the mortgagee: Christy v. Dana, 42 Cal. 174, 179; Orr v. Stewart, 67 Cal. 275, 7 Pac. 693. Where, however, ^'an undivided fourth interest'* was mortgaged, it is error for the court to order the sale of the entire interest of the mortgagor: Schwartz V. Palm, 65 Cal. 54, 2 Pac. 735. 4 Relates to Date of Mortgage: McMillan v. Eich- ards, 9 Cal. 365, 412, 70 Am. Dec. 6o5, note; Sands v. Pfeiffer, 10 Cal. 258, 265; Montgomery v. Middlemiss, 21 Cal. 103, 108, 81 Am. Dec. 146; Grattan v. Wig- gins, 23 Cal. 16, 35; Horn v. Jones, 28 Cal. 194, 202, 203; People's Sav. Bank v. Hodgdon, 64 Cal. 95, 98, 27 Pac. 863; Dixon v. Schermeier, 110 Cal. 582, 585, 42 Pac. 1091. This statement does not seem, howe-ver, to be strictly correct, for intervening encumbrances are not affected by the fact that the title inures to the mort- gagee: Tolman v. Smith, 85 Cal. 280, 285, 24 Pac. 743. The correct statement seems to be that the title inures to the mortgagee as of the time it was ac- quired by the mortgagor. 5 Title acquired by the mortgagor after the foreclosure and judicial sale of the mortgaged prop- erty inures to the purchaser at such sale: Belloc v. Eogers, 9 Cal. 123, 125; Boggs v. Hargrave, 16 Cal. § 269 OPERATION OF MORTGAGE. 473 independent title by a successor in interest of the mortgagor in the whole or any part of the property is not covered by the mortgage.^ 270. After-acquired Property does not Inure to Mortgagee. In the absence of an express agreement, a mortgage is limited to the property described in the instrument of mortgage, and does not cover other property of the same character which the 559, 564, 76 Am. Dec. 561; Vallejo Land Assn. v. Viera,'48 Cal. 572; Orr v. Stewart, 67 Cal. 275, 7 Pac. 093; Barnard v. Wilson, 74 Cal. 512, 16 Pac. 307; Trope V. Kerns, 83 Cal. 553, 557, 23 Pac. 693; Sich- ler V. Look, 93 Cal. 600, 610, 29 Pac. 220. « Interest Acquired by Independent Title not Cov- ered. — Whatever interest the purchasers of mortgaged pi'op/erty may acquire therein from the mortgagor is covered by the mortgage, and so far as the purchasers claim under him they are estopped equally with him from denying the efficacy of the mortgage. But so far as they claim by an independent title, they are not bound by the mortgage, but can assert any rights which they may possess from that source against the mortgagor and the conveyance received from the mortgagor, whether they acquired the independent title before the purchase of the interest of the mort- gagor (San Francisco v. Lawton, 18 Cal. 465, 477, 478, 79 Am. Dec. 187; Grattan v. Wiggins, 23 Cal. 16, 39); or after such purchase (Bull v. Shaw, 48 Cal. 455; Kreichbaum v. Melton, 49 Cal. 50). Where a preemption claimant mortgaged his claim, and afterward perfected his title and sold the prop- erty, as the after-acquired title inured to the mort- gagee, the interest of the purchaser was subject to the mortgage: Stewart v. Powers (Cal.), 33 Pac. 489. 474 OPERATION OF MORTGAGE. § 270 mortgagor may afterward acquire and place with the mortgaged property.'' 271. Mortgage Made for Accominodation. A mortgage given as security for an ante- cedent obligation of a third person is not obliga- tory in the absence of a new consideration,® and 7 If the mortgagor retains possession of the mort- gaged property, he is at liberty to deal with it and use it as an owner, and whatever income or profit may be derived from such use belongs to him^ and not to the mortgagee. If, in the case of sheep, the use to which he puts the ewes is for breeding lambs, there can be no suificient reason why the lambs that are dropped by the ewes should belong to the mort- gagee, any more than the wool that is clipped from their backs; Shoobert v. De Motta, 112 Cal. 215, 219, 53 Am. St. Eep. 207, 44 Pac. 487. See, also, section 299 and notes, below. s Not Obligatory Without New Consideration.— Civil Code, section 2792: ^^ Where a guaranty is en- tered into at the same time with the original obli- gation, or with the acceptance of the latter by the guarantee, and forms with that obligation a part of the consideration to him, no other consideration need exist. In all other cases there must be a consider- ation distinct from that of the original obligation." Where the wife joins with the husband in a mort- gage of the homestead to secure the debts of the husband, who afterward died, and the claim was not presented to the administratrix of his estate, but not- withstanding that the surviving wife executed a new m.ortgago to secure them, this new mortgage was without consideration, as there was neither a legal nor moral obligation upon her to pay her husband's debts, and hence was void. A mortgage given by a wife upon her separate prop- erty to secure her husband's antecedent debts with- out any new consideration being received by the hus- § 271 OPERATION OF MORTGAGE. 475 if made for adequate consideration is discharged by anything which would^ under similar circum- stances^ discharge an individual guarantor.^ The presumption, however, is that a parson ap- pearing on the face of an instrument of mort- gage as a principal obligor is, in fact, bound as band, or by the wife, or moving from the creditor, is not obligatory upon her: Chaffee v. Brown, 109 Cal. 211, 220, 221, 41 Pac. 1028. Compare Macdonald v. Cool, 134 Cal. '502, 504, 66 Pac. 727. But conceding that a mortgage whereby a nego- tiable promissory note was secured was executed without consideration, the mortgage, while unenforce- able by the mortgagee, was nevertheless enforceable when held by a bona fide indorsee for value of the secured note: McDonald v. Eandall, Cal., June 9, 1903, i> For Adequate Consideration Discharged as Guar- antor. — ^*When property of any kind is mortgaged or pledged by the owner to answer for the default or miscarriage of another person, such propierty occupies the position of a surety or guarantor, and anything which would discharge an individual surety or guarantor who was personally liable will, under similar circumstances, discharge such property^': Parke & Lacy Co. v. White Eiver Lumber Co., 110 Cal. 658, 663, 43 Pac. 202. Where a mortgage for five hundred dollars was executed as a guaranty for the payment of a sum upon a note which was secured by another mortgage, the first mortgage is discharged upon the first pay- ment by the obligor of an amount equal to that secured by the guaranty, in the absence, at least, of a reasonably clear expression to make the guaranty a continuing one, until the whole debt should be paid: Carson v. Eeid, 137 Cal. 253, 70 Pac. 89. But, where a deed was given, which recited that the conveyance was made to the transferee for the 476 OPERATION OF MORTGAGE. § 271 such/^ and the burd'en is upon such person if in fact the other. parties to the transaction knew that he was a surety and consented to deal with him as such to show such fact by affirmative proof.^^ purpose of securing all amounts which shall hereafter become due from a third party to the transferee, and that on payment of all such amounts the transferee should reconvey the property to the transferor, there was created a continuing liability on the part of the transferor to the transferee as security for the pay- ment of all amounts due, without respect to the man- ner in which they were evidenced, unlimited as to original or successive transactions between the creditor and debtor, unrestricted as to number, a.mount, or time. As this mortgage provided gen- erally for all amounts due, it applied as well to re- newals of the notes whereby the secured obligation was evidenced as to the creation of the original in- debtedness. The mortgagor was a surety, not a guarantor, as a guaranty imports a personal liability exclusively: Sather Banking Co. v. Arthur E. Briggs Co. (Cal.), 72 Pac. 352. 10 Party Presumed to be Principal Obligor.— 'Where, by the terms of a written instrument, a pyke, JJ., dissenting. 51 See Civil Code, section 2957, quoted under sec- tion 263, above. Also, Euggles v. Cannedy, 127 Cal. 290, 299, 59 Pac. 827. 53 The question of notice is vital: Cardenas v. Miller, 108 Cal. 250, 252, 49 Am. St. Eep. 84, 41 Pac. 472. 53 So an encumbrancer with notice of a prior, but defectively recorded, movable property mortgage upon the same property, takes his rights subject thereto: Harms v. Silva, 91 Cal. 636, 639, 27 Pac. 1088. 54 Euggles V. Cannedy, 127 Cal. 290, 299, 59 Pac. 827. See Alferitz v. Scott, 130 Cal. 474, 477, 62 Pac. 735. 55 Adlard v. Eogers, 105 Cal. 327, 334, 38 Pac. 889; Lemon v. Wolff, 121 Cal. 272, 03 Pac. 801; § 294 MOVABLE PROPERTY. 499 294. Valid Against Mere Trespasser. As against a mere trespasser, a movable prop- erty mortgage, although not duly recorded, ^s valid.^^ 295. Mortgage Against Exempt Property Valid. A movable property mortgage against property exempt from forced sale has the same force and effect as a mortgage against any other property.^''' 296. Removal of Property Terminates Mort- gage after Thirty Days. If, within thirty days after the removal with the consent of the mortgagor of mortgaged prop- erty (except the rolling stock of a common car- rier) from the county in which it was situated at the time of the recordation of the mortgage, the mortgagee does not cause the mortgage to be recorded in the county to which the property has been removed, the property is, except as between the parties, released from the operation thereof, Euggles V. Cannedy, 127 Cal. 290, 299, 59 Pac. 827. Compare Modesto Bank v. Owens, 121 Cal. 223, 226, 53 Pac. 552. 56 Ruggles v. Cannedy, 127 Cal. 290, 299, 59 Pac. 827. 57 Code of Civil Procedure, section 690, last sen- tence, after having enumerated the species of prop- erty exempt from forced sale, provides: '^No ar- ticle, however, or species of property mentioned in this section is exempt from execution issued upon .... a judgment of foreclosure of a mortgage . . - . thereon. '^ 500 OPERATION OF MORTGAGE. § 296 unless taken possession of by the mortgagee aa permitted by section 330, below. ^^ 297. Crop Mortgage Continues After Severance Without Removal. A crop^^ is bound by a mortgage thereon after severance, so' long as the crop remains upon the land where raised, although severed, and whether in its original state or converted into another product ; but as to any bona fide purchaser or en- cumbrancer for value, and as to any creditor,^^ the crop is presumptively released^* from the mortgage by its removal from such land. The tortious removal^^ of the crop from the land by S8 See Civil Code, section 2965, quoted under sec- tion 263, note 8, above; also, section 330, -below. 50 Civil Code, section 2972: '^The lien of a mort- gage on a growing crop continues on the crop after severance, whether remaining in its original state or converted into another product, so long as the same remains on the land of the mortgagor.'^ 60 Section 2972 m.erely provides that, upon removal, the mortgage shall cease as to creditors and bona fide purchasers: Martin v. Thompson, 63 Cal. 3. <*l The removal of the crop from the land upon which it was raised prima facie extinguishes the mortgage: Waterman v. Green, 59 Cal. 142; Horgan V. Zanetta, 107 Cal. 27, 29, 30, 40 Pac. 22. 02 Tortious Removal Rebuts Presumption.— The removal of the crop from the land by a third person without paying the mortgage is a wrongful interfer- ence, which renders him liable to the mortgagee in tort, or at his election in quasi contract, and does not extinguish his lien: Martin v. Thompson, 63 Cal. 3; Wilson V. Prouty, 70 Cal. 196, 11 Pac. 608; Chitten- § 297 MOVABLE PROPERTY. 501" a third person without the consent of a vigilant^'^ mortgagee rebuts this presumption. 298. Time of Attachment of Mortgage upon Crop to be Planted. A mortgage on a crop to be planted attaches as of the time of the recordation thereof, and not of the time when the property comes into ex- istence.^"* den V. Pratt, 89 Cal. 178, 183, 184, 26 Pac. 626; Bank of Woodland v. Duncan, 117 Cal. 412, 416, 49 Pac. 414. G3 Mortgagee must be Vigilant.— But where tlio mortgagee does not consent to the removal, but uses no care nor diligence in looking after the crop, the mortgage is lost by the removal as against all cred- itors: Horgan v. Zanetta, 107 Cal. 27, 31, 32, 40 Pac. 22. 64 Arques v. Wasson, 51 Cal. 620, 21 Am. Eep. 718; Hall V. Glass, 123 Cal. 500, 505, 69 Am. St. Eep. 77, 56 Pac. 336. Rationale.— '^ There is in such cases a potential ex- istence, which sustains the lien of the mortgage ' ' : Hall V. Glass, 123 Cal. 500, 505, 69 Am. St. Eep. 77, 56 Pac. 336. ''Establish the fact that there is a sufacient poten- tial existence in the coming crops to sustain a legal or equitable lien upon them, and the lien must prevail against subsequent purchasers of every kind'' (p. 507). Thus it prevails over a homestead declared subsequently to the execution of the mortgage (p. 507). Nor is it affected by proceedings in insolvency (p. 505) : Hall v. Glass, 123 Cal. 500, 69 Am. St. Eep. 77, 56 Pac. 336. 502 OPERATION OF MORTGAGE. § 299 299. Offspring of Mortgaged Animals not Neces- sarily Mortgaged. In the absence of an express agreement, a mort- gage of animals does not hypothecate their off- spring.^^ 300. Income and Profits not Covered by Mort- gage. A movable property mortgage does not cover the income and profits of the mortgaged prop- erty.^^ 65 Offspring not Necessarily Mortgaged. A mortgage of animals does not cover their off- spring, begotten after the mortgage was made: Shoob- ert V. De Motta, 112 Cal. 215, 53 Am. St. Eep. 207, 44 Pac. 487. Nor their offspring in gestation at the date of the execution thereof: First Nat. Bank v. Erreca, 116 Cal. 81, 58 Am. St. Eep. 133, 47 Pac. 926. The provision in Civil Code, section 2955, authoriz- ing the execution of a movable property mortgage upon ^^ sheep, and the increase thereof,^' does not ex- tend the opieration of a mortgage upon ^^sheep^' to the increase thereof, but implies that, unless the in- crease is covered by the terms of the mortgage, it is not included therein: Shoobert v. De Motta, 112 Cal. 215, 53 Am. St. Rep. 207, 44 Pac. 487; First Nat. Bank V. Erreca, 116 Cal. 81, 58 Am. St. Rep. 133, 47 Pac. 926. So the owners of mortgaged sheep may sell their offspring, and the mortgagee cannot maintain an action against the mortgagor in consequence thereof: Shoobert v. De Motta, 112 Cal. 215, 53 Am. St. Rep. 207, 44 Pac. 487. 66 So a mortgage on ^' sheep and the increase thereof,'^ does not cover wool clipped from their backs, the term ^^ increase^' being equivalent to off- § 301 MOVABLE PROPERTY. 603 301. Mortgage not Impaired by Affixment of Property to Iminovable Property. The affixment of mortgaged movable property to immovable property covered by an antecedent mortgage likewise executed with the formalities requisite in a movable property mortgage, does not postpone the mortgage created against the movable property before its affixment to the mortgage against the immovable property to which it was affixed.^'' spring: Alferitz v. Borgwardt, 126 Cal. 201, 58 Pac. 460. See, also, section 324, below. In Alferitz v. Ingalls, 83 Fed. 964, 973, 974, the circuit court held that the term ^^ sheep, and the in- crease thereof covered the products of the sheep, as wool, clipped from their backs, as well as their off- spring; but, in the above California case, this de- cision was overruled. 67 Ordinarily, the encumbrance on property af- fixed to mortgaged land would relate back to the date of the mortgage on the land, but this rule will not be applied to defeat intermediate rights and liens lawfully acquired. The act of affixing does not amount to a confusion of the property: Tibbetts v. Moore, 23 Cal. 208, 216-219. So, where certain duly mortgaged movable prop- erty was affixed to certain lands which were covered by an antecedent mortgage also duly executed to cover movable property, the original mortgage on the movable property will prevail as to that: Tib- betts V. Moore, 23 Cal. 208. 504 OPERATION OF MORTGAGE. § 302 302. As to Creditor's Substitution with Consent of Mortgagee of Other for Mortgaged Property is Release to Extent of Substitu- tion. Where the mortgagor, with the consent of the mortgagee, substitutes for a portion of the mort- gaged propert}^, other property indistinguishable therefrom after reasonable inquiry, a creditor at large may cause a portion of such property not greater than the portion substituted to be ap- propriated for the satisfaction of his debt.^® 303. Substitution Without Effect as Between Parties. Where such a substitution is made, as between the parties themselves, all the property remains subject to the operation of the mortgage.^^ 68 Where a mortgage was placed on two thou- sand sheep, and the increase thereof, and five hun- dred wethers, part of the two thousand mortgaged sheep were exchanged with a third party for five hundred ewes, which were commingled with the re- maining fifteen hundred, and could not be distin- guished therefrom, and the exchange was made with the consent of the mortgagee, and one thousand lambs were born to the ewes of said band of sheep, an attachment by a creditor of three hundred and twenty of the sheep is valid: Alferitz v. Perkins, 122 Cal. 391, 55 Pac. 149. 69 Alferitz v. Perkins, 122 Cal. 391, 394, 55 Pac. 149. § 304 MOVABLE PROPERTY. 505 304. Mortgage Covering Both Mortgageable and Nonmortgageable Property Valid as to Mortgageable. A movable property mortgage, duly executed and recorded, which attempts to mortgage both mortgageable and nonmortgageable property, is fully operative as to the mortgageable property.''^ 305. Attempted Mortgage of Nonmortgageable Property Valid Between Parties, but Most- ly Void.'^i An attempted mortgage of nonmortgageable property is valid as between the parties them- selves/^ and as against a purchaser or en- 70 In re Fischer, 94 Cal. 523, 29 Pac. 961; San Francisco Breweries v. Schurtz, 104 Cal. 420, 426, 38 Pac. 92. Dufiicy v. Shields, 63 Cal. 332, so far as declaring a different rule, is overruled in San Francisco Brew- eries V. Schurtz. 71 What Property Mortgageable: See section 251, above (Civ. Code, sec. 2955). This section of the code was amended in 1895 to read that the property therein enumerated, * '■ and none other,'' is mortgageable. The adoption of this amend- ment does not seem, however, to have made any al- teration in the law. Mortgages upon nonmortgage- able proper.ty before the adoption of this amendment are discussed in Works v. Merritt, 105 Cal. 467, 38 Pac. 1109. 73 Valid Between the Parties Themselves: Tregear V. Etiwanda Water Co., 76 Cal. 537, 540, 9 Am. St. Rep. 245, 18 Pac. 658; Barker v. Maskell, 101 Cal. 9, 35 Pac. 641; Works v. Merritt, 105 Cal. 467, 38 Pac. 1109; Bank of Ukiah v. Moore, 106 Cal. 673, 506 OPERATION OF MORTGAGE. § 305 cumbrancer without consideration''^ or with actual notice f"* but is void as against every bona fide purchaser or encumbrancer for value of the mortgaged property/^ and as against any cred- itors^ Eecordation does not impart construc- tive notice of such a mortgage.''''' 306. Measure of Damages Caused by Conversion of Mortgaged Property. Where mortgaged movable property has been wrongfully converted^ the mortgagee may main- 680, 39 Pac. 1071; Bank of Ukiah v. Gibson, 109 Cal. 197, 199, 41 Pac. 1008; McLeod v. Barnum, 131 Cal. 605, 607, 63 Pac. 924. To the contrary, see Dufficy v. Shields, 63 Cal. 322. 73 Without Consideration.— It is valid as against a purchaser or encumbrancer without notice but with- out consideration: Bank of Ukiah v. Moore, 106 Cal. 673, 681, 39 Pac. 1071; Bank of Ukiah v. Gibson, 109 Cal. 197, 200, 41 Pac. 1008. Where the consideration is not irrevocably paid, the purchaser or encumbrancer is not for value: Bank of Ukiah V. Gibson, 109 Cal. 197, 199, 41 Pac. 1008. 74 With Actual Notice: Works v. Merritt, 105 Cal. 467, 38 Pac. 1109; Bank of Ukiah v. Moore, 106 Cal. 673, 680, 39 Pac. 1071; Bank of Ukiah v. Gibson, 109 Cal. 197, 200, 41 Pac. 1008; Tomlinson v. Ayres, 117 Cal. 568, 573, 49 Pac. 717. 76 Void Against Bona Fide Purchaser: Bank of Ukiah V. Moore, 106 Cal. 673, 681, 39 Pac. 1071; Perkins v. Maier & Zobelein Brewery, 133 Cal. 496, 498, 65 Pac. 1030. 76 Void Against Creditor: Perkins v. Maier & Zo- belein Brewery, 133 Cal. 496, 498, 65 Pac. 1030. Also Eohrbough v. Johnson, 107 Cal. 144, 148, 149, 40 Pac. 37, a case where the agreement under consideration was in reality for a pledge. § 306 MOVABLE PROPERTY. 507 tain an action for the recovery of damages for such conversion/^ in which action the mortgagee may, where the property has not been received back by him/^ recover (1) in every case a fair compensation for the time and money properly expended in pursuit of the property 5^^ and (2) in case of a conversion by a person having a right to the property after the discharge of 77 Recordation Ineffective: Bank of Ukiah v. Moore, 106 Cal. 673, 680, 39 Pae. 1071. 78 Action for Damages is Maintainable.— Thus where the sheriff attached mortgaged movable prop- erty without tendering to the mortgagee the amount of the mortgage obligation, this action for damages is maintainable against him: Wood v. Franks, 56 Cal. 217. 79 This Measure of Damages is Only Applicable Where the Mortgaged Property has not Been Received Back by the Mortgagee.— Thus, in Irwin v. McDowell, 91 Cal. 119, 123, 27 Pae. 601, the court says: ''The levy of attachment and the appointment of a keeper were sufficient, as we have seen, to constitute a con- version; and the action was commenced before the release. What became of the property after it was released does not appear. The court finds only that it was delivered to the mortgagor, and was never re- moved from the open field, where it was situate, by the defendant [sheriff] or by his authority. The plaintiff may have taken it back and applied its pro- ceeds to the payment of his debt, or. he may have refused to do so and relied on his claim for damages. If he took it back, he sustained no damages; and if not, the damages could not have exceeded the value of the property.^' 80 A Fair Compensation for Time and Money Prop- erly Expended Recoverable: See Civil Code, section 3336, second subdivision, as quoted, note 82, below, and Civil Code, section 3338, as quote^l, note 81, below. 508 OPERATION OF MORTGAGE. § 306 the mortgage superior to that of the mort- gagee, the amount owing upon the secured ob- ligation if the property is worth that amount, but if worth less than that amount only the value of the property;^^ or in case of a conver- 81 Conversion by Person Having Superior Right After Discharge of Mortgage.— Civil Code, section 3338, provides: ^^One having a mere lien on personal property cannot recover greater damages for its con- version, from one having a right thereto superior to his, after his lien is discharged, than the amount se- cured by the lien, and the compensation allowed by section 3336 for loss of time and expenses/' '^What is the amount secured by the lien? The answer must be, the full amount of the mortgage debt, if the property is worth enough to pay it; and if not, then such sum or amount as it is worth. It would seem absurd to say, if the mortgage debt was a. thousand dollars and the mortgaged property was worth only a hundred dollars, that the full amount of the debt was secured'': Irwin v. McDowell, 91 Cal. 119, 122, 123, 27 Pac. 601; Troxler v. Buckman, 126 Cal. 288, 290, 58 Pac. 691. Where a mortgaged crop of hay had been disposed of by a mortgagor, but the secured obligation had been partly paid, the court said: **In such case,- if he could not recover the identical hay he was en- titled to no greater sum, as damages, against the owner, or one in privity with him, than the balance due him": Wilkerson v. Thorpe, 128 Cal. 221, 226, 60 Pac. 679. Historical.— In Wood v. Franks, 56 Cal. 217, 67 CaJ. 32, 7 Pac. 50, and Sherman v. Finch, 71 Cal. 68, 11 Pac. 847, the mortgagee demanded the amount of the mortgage obligation as damages,' but no objec- tion was taken to the amount of the demand, and the question of the sufficiency of the mortgaged prop- erty to pay the mortgage obligation was not consid- ered. In Irwin v. McDowell, 91 Cal. 119, 123, 27 Pac. 601, this fact is commented upon, and the cases distinguished upon this ground. f 306 MOVABLE PROPERTY. 509 sion by a person without such right to the prop- erty;, the value of the property at the time of the conversion with interest from that time, or where the action has been prosecuted with reasonable diligence, the highest market value of the property at any time between the con- version and the verdict, without interest, at the option of the injured party.®^ Subdivision Jf. Of Mortgages to Secure Future Advances. 307. Validity Limited When Object of Mortg^age not Stated .83 A mortgage in good faith given in whole or S2 Civil Code, section 3336, provides: ''The det- riment caused by the wrongful conversion of personal property is presumed to be (1) the value of the property at the time of the con- version, with the interest from that time; or, where the action has been prosecuted with reasonable dili- gence, the highest market value of the property at any time between the conversion and the ver- dict, without interest, at the option of the injured party; and, (2) a fair compensation for the time and money prop- erly expended in pursuit of the property." As amended, in effect, January 22, 1878. 83 Tully V. Harloe, 35 Cal. 302, 309, 95 Am. Dec. 102; Wood V. Franks, 67 Cal. 32, 35, 7 Pac. 750. Com- pare D 'Oyly V. Capp, 99 Cal. 153, 33 Pac. 736. A mortgage which misrepresents the transaction be- tween the mortgagor and mortgagee is liable to sus- picion, and ought to be critically examined; but if, upon investigation, the real transaction turns out to be 510 OPERATION OF MORTGAGE. § 307 in part to secure future advances,^^ in which the true object is not expressed, is enforceable for ad- vances actually made merely to the utmost amount shown upon its face to be secured there- by, and not at all if the amount of liability is not expressly limited.?*'* 308. When Object Stated, Extent of Secured Ob- ligation Need not be Shown. A mortgage showing on its face that it is given in whole or in part to secure future advances is not required to set forth the amount of the ad- vances thereby to be secured.®^ 309. Concerning the Advances. The agreement under which the advances ar* A mortgage to secure future advances does not secure preference for optional advances made after actual^^ notice of a subsequent encum- brance. 92 Advances Made Before Notice of Subsequent Encumbrance Secure Priority. A mortgage to secure future advances, as against subsequent encumbrancers, becomes an encumbrance for the whole sum advanced from the time of its execution, and not for each separate amount advanced from the time of advancement, although the right to enforce the collection thereof can only arise upon each advancement being made. The recordation of a subsequent encumbrance is not constructive notice of its existence to a prior encum- brancer: Tapia V. Demartini, 77 Cal. 383, 387, 11 Am. St. Eep. 288, 19 Pac. 641. A mortgage given to secure advances to the amount of eighteen hundred dollars, the mortgage being duly recorded, constitutes a charge against the mortgaged property prior to an attachment levied subsequently t'> the recordation against the same property to the § 314 FUTURE ADVANCES. 513 314. Failure to Make Advances Creates Liability for Damages. In the absence of a rescission or attempt to rescind by the mortgagor, a mortgage to secure future advances is not rendered unenforceable by the failure of the mortgagee to make an obliga- tory advance when required to do so; but the mortgagor is entitled upon a foreclosure thereof to a recoupment for the damages caused by the breach of this stipulation of the contract.^^ Subdivision 5, Of Mortgages of the Homestead, 315. Homestead, How Far Mortgageable.^ A homestead is mortgageable to secure an an- tecedent obligation or one contemporaneously extent of any balance due the mortgagee up to eighteen hundred dollars: Bank of Oroville v. Law- rence (Cal.), 37 Pac. 936, 938B. 93 Compare Savings etc. Soc. v. Burnett, 106 Cal. 514, 536, 39 Pac. 922 (see section 313 and note 94). J>4 Tapia v. Demartini, 77 Cal. 383, 387, 388, 11 Am. St. Eep. 288, 19 Pac. 641: Savings etc. Soc. v. Burnett, 106 Cal. 514, 532, 533, 39 Pac. 922. 95 The notice must be actual. Constructive no- tice by the recording of a subsequent encumbrance is not sufficient: Tapia v. Demartini, 77 Cal. 383, 387, li Am. St. Kep. 288, 19 Pac. 641; Savings etc. Soc. V. Burnett, 106 Cal. 514, 532, 533, 39 Pac. 922. 96 Porter v. Lassen Co. Land etc. Co., 127 Cal. 261, 273, 59 Pac. 563. 1 See Civil Code, section 1241, as quoted under sec- tion 317, note 5, below. Liens— 33 514 OPERATION OF MORTGAGE. § 315 mad 6;, except that in the case of the homestead of a married claimant the mortgage thereof must be jointly and concurrently executed and deliv- ered^ by both husband and wife. If^ possible at all, a mortgage of a homestead to secure future advances can only be accomplished by an instru- ment which expressly declares its purpose. 316. Recorded Mortgage Superior to Subsequent Homestead. A duly recorded mortgage of any property is superior to a homestead subsequently impressed upon the same property.^ 2 A conveyance of a homestead of a married claim- ant must be jointly and concurrently executed and delivered by both husband and wife; otherwise it is void without qualification; and the same is truo of a mortgage: Hart v. Church, 126 Cal. 471, 477, 77 Am. St. Kep. 195, 58 Pac. 910. 3 Compare Merced Bank v. Kosenthal, 99 Cal. 39. 49, 31 Pac. 849, 33 Pac. 732. Thus a mortgage of the homestead by deed abso- lute, with a contemporaneous oral agreement of de- feasance, cannot secure future advances: Merced Bank V. Rosenthal, 99 Cal. 39, 49, 31 Pac. 849, 33 Pac. 732. 4 Van Sandt v. Alvis, 109 Cal. 165, 168, 50 Am. St. Rep. 25, 41 Pac. 1014; Glas v. Glas, 114 Cal. 566, 55 Am. St. Rep. 90, 46 Pac. 667; Loewenthal v. Coonan, 135 Cal. 381, 87 Am. St. Rep. 115, 67 Pac. 324. See Civil Code, section 1241, as quoted under next section. The fact that the mortgagee was wife and the mort- gagor (who afterward declared a homestead) her hus- band makes no difference: Glas v. Glas, 114 Cal. 566, 568, 55 Am. St. Rep. 90, 46 Pac. 667. ^ § 317 HOMESTEAD. 515 317. Unrecorded Immovable Property Mortgage When Superior to Homestead. An unrecorded immovable property mortgage executed by both husband and wif e^ or by an un- married homestead claimant^ is superior to a hom.estead subsequently declared by any of such persons upon the property affected by the mort- gage.^ 318. Mortgage When Postponed to Homestead. An unrecorded mortgage against the home- stead of a married claimant, when not executed Thus a duly recorded mortgage on a crop to be planted is superior to a declaration of homestead on the land affected thereby, the declaration of home- stead being filed after the recordation of the mort- gage but before the crop was planted, as the mort- gage attaches as of the time of its recordation: Hall V. Glass, 123 Cal. 500, 507, 69 Am. St. Eep. 77, 56 Pac. 336. 5 Civil Code, section 1241, in part, provides: ^ ^ The homestead is subject to execution or f orce^i sale in satisfaction of judgments obtained: .... (3) on debts secured by mortgage on the premises, executed and acknowledged by the husband and wife, or by an unmarried claimant; (4) on debts secured by mortgages on the premises, executed and recorded before the declaration of homestead was filed for record.'' Subdivision 4 applies merely to mortgages which are not executed by both husband and wife: Duncan V. Curry, 124 Cal. 106, 56 Pac. 898. Under subdivision 3, however, a homestead is subject to an unrecorded mortgage executed by both husband and wife before the declaration of homestead was filed: Duncan v. Curry, 124 Cal. 106, 56 Pac. 898; Kleinsorge v. Klein- 516 OPERATION OF MORTGAGE. § 318 jointly and concurrently by both husband and wife, is void to the extent of the homestead ex- emption, although subsisting against the property at the time of the declaration of homestead ;^ and when executed after the declaration of home- stead is also likewise void, although recorded;'' but such mortgages are valid as to any excess in sorge, 133 Cal. 412, 65 Pac. 876. (Downing v. Le Du, 87 Cal. 471, 473, 23 Pac. 202, is shown to be inap- plicable in Kleinsorge v. Kleinsorge.) 6 Ontario State Bank v. Gerry, 91 Cal. 94, 27 Pac. 531; First Nat. Bank v. Bruce, 94 Cal. 77, 79, 29 Pac. 488. See Civil Code, section 1241, subdivision 4, as quoted under section 317, note 5. The homestead is superior to the mortgage even when the homestead claimant has actual notice of the mortgage: Lee v. Murphy, 119 Cal. 364, 371-374, 51 Pac. 549, 955. Historical.— For a general discussion of mortgage of the homestead under the acts of 1851, 1860, and 1862, see Peterson v. Hornblower, 33 Cal. 266; Mc- Laughlin V. Hart, 46 Cal. 638; Herrold v. Been, 58 Cal. 443. 7 See the cases cited in note 8 below. ^^It is the settled law in this state that neither spouse can alienate or -encumber the homestead with- out the joint act of the other, and that the effort so to do is a nullity, and will not be validated by a subsequent dissolution of the marriage or termination of the homestead '^ Lange v. Geiser (Cal., March 23, 1903), V2 Pac. 343. Where certain property of a married claimant is impressed with a homestead, the wife cannot mortga^ge her interest therein to her husband, because the wife cannot alone mortgage such interest to her husband or to anyone else, and because the husband could not mortgage to himself and thus his signing the mort- gage would not have made it any the less illegal: § 318 ' HOMESTEAD. 517 value of the mortgaged property beyond tho homestead exemption.^ 319. Penalty for Making Void Mortgage. Every married person who falsely and fraudu- lently represents himself or herself as competent to mortgage any immovable property, to the validity of which mortgage the assent or concur- rence of the other spouse is necessary, and under such representations willfully mortgages such property, is guilty of felony.^ Freiermuth v. Steigleman, 130 Cal. 392, 80 Am. St. Eep. 138, 69 Pac. 615. « Valid for Excess in Value of Property Beyond Homestead Exemption.— Thus a mortgage against the homestead of a married claimant executed by the hus- band alone is void to the extent of the homestead ex- emption, but valid as Ijo any excess; Sargent v. Wil- son, 5 Cal. 504; Eevalk v. Kraemer, 8 Cal. 66, 74, 68 Am. Dec. 308; Kraemer v. Eevalk, 8 Cal. 74; Van Eeynegan v. Eevalk, 8 Cal. 75; Moss v. Warner, 10 Cal. 296; Lies v. De Diablar, 12 Cal. 327; Mabury v. Euiz, 58 Cal. 11, 14. Compare Quackenbush v. Eeed, 102 Cal. 493, 500, 37 Pac. 755. In Moss V. Warner, 10 Cal. 296, the court says that where the mortgage is valid for this excess of value, a proceeding to set apart from the entire premises a portion not exceeding in value the amount of the statutory exemption, through the appointment of com- missioners by the court, who are directed to select in as compact form as possible a portion, including the place where the dwelling-house is situated, of the value of five thousand dollars, is highly proper, and when practicable is far preferable to the sale of the entire premises with a reservation of the amount of the exemption from the proceeds. Compare the provi- sions of Civil Code, sections 1245-1259. 9 See Penal Code, section 534, as enacted 1872. 518 OPERATION OF MORTGAGE. § 320 320. Not Rendered Valid by Subsequent Termi- nation of Homestead. A mortgage void as to the homestead value of the mortgaged property cannot be rendered valid by the subsequent termination of the homestead, although the right to mortgage is thereby re- vested in the mortgagor. ^^ lo Not Rendered Valid by Subsequent Termination of Homestead: Eevalk v. Kraemer, 8 Cal. 66, 74, 68 Am. Dec. 304; Gleason v. Spray, 81 Cal. 217, 15 Am. St. Eep. 47, 22 Pac. 551; Powell v. Patison, 100 Cal. 236, 34 Pac. 677; Lange v. Geiser (Cal., March 23, 1903), 72 Pac. 343. Rationale.— Civil Code, sections 1242-1244, provide: ''The homestead of a married person cannot be con- veyed or encumbered, unless the instrument by which it is conveyed or encumbered is executed and ac- knowledged by both husband and wife. A home- stead can be abandoned only by a declaration of abandonment, or a grant thereof, executed and ac- knowledged (1) by the husband and wife, if the claimant is married; (2) by the claimant, if unmar- ried. A declaration of abandonment is effectual only from the time it is filed in the office in which the homestead is recorded. '' ''These three septions are in pari materia, and must be read together and effect given to each. Sec- tions 1242 and 1243 prescribed how homesteads may be alienated or encumbered, and the last-mentioned section, in addition thereto, how they may be aban- doned, and section 1244 the time from which the abandonment becomes effectual. This last section, it is to be observed, fixes the time, when the home- stead character r)f the property is extinguished by abandonment, and does not give the abandonment any retroactive operation In section 1244, the words 'from the time' must have been used for some pur- pose, and with the intention of preventing an in- strument made by the husband alone during the ex- § 321 LEVY ON MOVABLE PROPERTY. 519 Subdivision 6, Levy Upon Mwtgaged Mavalle Property, 321. Mortgaged Movable Property Leviable Un- der Certain Conditions'^ The proper officer may, after first^^ paying or tendering to the mortgagee, or depositing with the county clerk or treasurer, payable to the or- der of the mortgagee, the amount of the mortgage obligation with interest, take mortgaged movable istence of the homestead, and designed to affect it, from taking effect upon the abandonment of the homestead. By so construing those words, the three sections, taken together, erect a complete barrier iaround the homestead for the protection of it, in favor of the wife against the individual assaults of the husband upon if: Gleason v. Spray, 81 Cal. 217, 15 Am. St. Rep. 47, 22 Pac. 551. Historical.— In Gleason v. Spray, the cases of Gee v. Moore, 14 Cal. 472, Barman v. Norton, 16 Cal. 213, and Himmelmann v. Schmidt, 23 Cal. 117, 121, holding that the mortgage was rendered valid by the subse- quent termination of the homestead, were overruled. 11 See Civil Code, sections 2968 and 2969. 12 The Officer Must First Pay, etc., this Amount.— So where the sheriff took possession under a writ of attachment of mortgaged movable property (as a severed crop which remained upon the land where it was grown, or some household furniture), without first paying, tendering, or depositing, as above, the taking was wrongful and the sheriff becomes liable to the mortgagee in damages: Rider v. Edgar, 54 Cal. 127; Woo^d v. Franks, 56 Cal. 217; Person v. Nunan, 63 Cal. 550, 551; Meherin v. Oaks, 67 Cal. 57, 59, 7 Pac. 47. See, also, Chittenden v. Pratt, 89 Cal. 178, .183, 26 Pac. 626. 520 OPERATION OF MORTGAGE. § 321 property under attaclinieiit^^ or execution issued at the instance of a creditor of the mortgagor. 322. Seizure of Property Without Performing Conditions a Conversion. The officer is not bound to make the seizure of the property until the creditor furnished him with the funds necessary for making the requi- site payment, tender, or deposit ;^^ and if the officer seizes the property without first making such payment, he renders himself liable for the conversion of the property.^^ 13 For the purposes of attachment, a growing crop is deemed to be movable property not capable of manual delivery. Thus the attachment is to be made in conformity with the Code of Civil Procedure, section 542, subdivision 5, the copy of the writ of attachment and notice that the crop is attached be- ing left with the person in possession of the crop, although such person is the attachment debtor him- self: Raventas v. Green, 57 Cal. 254; Rudolph v. Saunders, 111 Cal. 233, 236, 43 Pac. 619. 14 Officer not Bound to Make Seizure until Fur- nished with Funds.— ^ ^ The officer is not bound to make the seizure unless the attaching creditor furnish him with the requisite funds to make the payment; a fail- ure to furnish the funds would be a good defense by the officer in a suit against him by the attaching creditor ^^: Wood v. Franks, 56 Cal. 217, 219. 15 Seizure without Prior Payment is a Conver- sion.— ^^ From these sections [Civil Code, sections 2968 and 2969] it clearly appears that an officer has no right to take mortgaged personal property under pro- cess against the mortgagor, unless he first complies with the requirements of section 2969; and if he does so, he makes himself liable as for a conversion '' : Ir- win V. McDowell, 91 Cal. 119, 122, 27 Pac. 601. § 323 LEVY ON MOVABLE PROPERTY. 521 323. Distribution of Proceeds of Sale of Levied Property. When the property thus taken is sold under process, the officer must apply the proceeds of the sale (1) to the repayment of the sum paid to the mort- gagee Fith interest from the date of such pay- ment, and (2) any balance in like manner as the proceeds of sales under execution are applied in other cases. ^^ 16 See Civil Code, section 2970. 522 MORTGAGE. • AETICLE4. EIGHTS AND DUTIES OF PAETIES. Subdivision 1. Possession, Control, Use. S24. In. absence of agreement, mortgagor entitled to possession. 32'5. Mortgagor entitled to reasonable subtractive use of land. 326. Mortgagor may not impair mortgagee's security. 327. Immovable property mortgagor under penalty must not impair freehold. 328. Movable property mortgagor under penalty must give notice of transaction concerning mort- gaged property. 329. Movable property mortgagor under penalty must not remove property from county where situ- ate. 330. Movable property mortgagee may take posses- sion upon removal. 331. Remedies of movable property mortgagee when entitled to possession. 332. Remedies of immovable property mortgagee en- titled to possession. 333. Liability of mortgagee in wrongful possession. 334. Removal of fixtures at instance of mortgager^ wrongful. SuMivision 2. As to Forfeitures. 335. Right to extinguish mortgage cannot be re- nounced by contemporaneous agreement. 336. By independent agreement mortgagpr may sell to mortgagee. k RIGHTS AND DUTIES. 523 Snhdivision 3. Absolute Deed as Mortgage. 337. Action to declare absolute deed mortgage and liquidate it niaintainable. 338. Although secured obligation barred, mortgagor must satisfy it. 339. Judgment must grant relief to mortgagor con- ditionally. Suhdivision 4- ^-^ to Insurance. 340. Acts of mortgagor avoid insurance although assigned to mortgagee. 341. When new contract with mortgagee is made, acts of mortgagor immaterial. 342. Insurance of mortgagee expires when mortgage extinguished. Suhdivision 5. As to Taxes and Assessments. 343. Secured obligation not deemed interest in mort- gaged property for purposes of assessment. 344. Obligation secured by property outside state not deemed interest therein for purposes of taxation. 345: Obligation secured by property within state deeded interest therein for purposes of taxa- tion. 346. Quasi public corporation when owning mortgaged property liable for tax. 347. In every other case mortgagor and mortgagee liable for their respective shares of tax. 348. Taxes may be paid by either party — Effect thereof. 349. Mortgagee liable for all taxes assessed before payment of mortgage. 350. Agreement compelling mortgagor to pav taxes or assessments on secured obligation declared void and penalized, 351. Agreement for optional payment of taxes by mortgagor valid. i 524 MORTGAGE. § 324 Snhdivision 6. Mortgagee in Possession of Immoi oMe Property. 352. Mortgagee in possession defined. 353. Mortgagee entitled to retain possession until se- cured obligation satisfied. 354. Mortgagee in possession must exercise ordinary care. 355. Mortgagee accountable for net proceeds of mort- gaged premises. 356. Obscurities in accounts of mortgagee to be re- solved against him. 357. Mortgagee not entitled to compensation for his services. 358. Mortgagee may sublet mortgaged premises. 359. Mortgagee not generally entitled to allowance for new improvements. 360. No limitation on time of commencing action to cause discharge of mortgage brought against mortgagee in possession as such. 361. Same— When certain parties interested in the mortgaged premises are not entitled to bring such action. SuMivision 1. Possession, Control^ Use, 324. In Absence of Agreement, Mortgagor En- titled to Possession. In the absence of a special express agreement to the contrary, the mortgagor is entitled to the possession^ and control of the mortgaged prop- erty and the complete beneficial nse.^ 1 Possession: See sections 253 and 254, above. Until default and a consequent foreclosure and sale and, where redemption is allowable, the expiration of the period of redemption, a mortgagee has no right to take possession of the mortgaged premises: Kidd v. § 325 RIGHTS AND DUTIES. 525, 325. Mortgagor Entitled to Reasonable Sub- tractive Use of Land. A mortgagor in possession of the mortgaged land may cut timber on, sever fixtures from, and do other parallel acts in respect to the land, so long as such acts are not carried to an extent cal- Teeple, 22 Cal. 255; Low v. Allen, 26 Cal. 141; Fogarty V. Sawyer, 17 Cal. 589, 593. This is equally true, although the mortgage is by deed absolute: Jackson v. Lodge, 36 Cal. 28, 52; Kaynbr V. Drew, 72 Cal. 307, 309, 13 Pac. 866; Smith v. Smith, 80 Cal. 323, 326, 21 Pac. 4, 22 Pac. 186, 549; Hall v. Arnott, 8') Cal. 348, 352, 353, 22 Pac. 200; Locke v. Moulton, 96 Cal. 21, 32, 30 Pac. 957; 132 Cal. 145, 64 Pac. 87; Vance v. Anderson, 113 Cal. 532, 538, 45 Pac. 816. In Eaynor v. Drew, and succeeding case, Hughes v. Davis, -^0 Cal. 117, and Pico v. Gallardo, 52 Cal. 206, holding the contrary, were overruled. And the mortgagee having taken possession is lia- ble to be ejected the same as anv other intruder: Kidd V. Teeple, 22 Cal. 255. Likewise a mortgagee of movable property is not entitled to possession: Bank of XJkiah v. Moore, 106 Cal. 673, 680, 39 Pac. 1071. 3 Beneficial Use: See sections 285, 299, and 300, above. A mortgagor in possession is entitled to receive and apply to his own use the income and profits of the mortgaged property until a judicial sale under fore- closure is had: Simpson v. Ferguson, 112 Cal. 180, 185, 53 Am. St. Eep. 201; 44 Pac. 484; Bank of Wood- land V. Heron, 120 Cal. 614, 617, 52 Pac. 1006. The mortgagor is not accountable either for the rents or for the occupation and use of the mortgaged premises: Whitney v. Allen, 21 Cal. 233; see Pendola V. Alexanderson, 67 Cal. 337, 339, 7 Pac. 756. 526 MORTGAGE. § 325 culated to render the land insufficient security for the amount due upon the mortgage obligation.^ 326. Mortgagor may not Impair Mortgagee's Se- curity. On the other hand, no person whose interest in any property is subject to a mortgage thereon may do any act which will substantially impair the mortgagee's security,^ but may be restrained therefrom by appropriate judicial proceeding.*^ 3 Buckout V. Swift, 27 Cal. 433, 437, 87 Am. Dec. 90. So a mortgagor may remove a house, unless the security is thereby rendered inadequate: Buckout v. Swift, 27 Cal. 433, 437, 87 Am. Dec. 90. Unless restrained by the terms of a mortgage, a mortgagor in possession may work mines or quarries upon the mortgaged property, and whatever he severs from the realty becomes unencumbered personalty, and his own propertv: Simpson v. Ferguson, 112 Cal. 180, 185, 53 Am. St.*^ Rep. 201, 44 Pac. 484. 4 See Civil Code, section 2929. But an act such as the removal of growing nursery stock or pendant fruit does not materially affect the value of the inheritance nor cause irreparable in- jury, and cannot be enjoined: Robinson v. Russell, 24 Cal. 467, 473. 5 May be Restrained by Appropriate Judicial Pro- ceeding. An action to preserve the mortgaged property from destruction, so that it may answer the purposes of the mortgage, is maintainable, although the time of the payment of the mortgage obligation has not ar- rived: Bank of Ukiah v. Moore, 106 Cal. 673, 681, 39 Pac. 1071. Compare Whitney v. Allen, 21 Cal. 233. An injunction may be issued to stay the commission of threatened acts upon the mortgaged premises cal- culated to materially impair the value of the prop- i § 327 RIGHTS AND DUTIES. 527 327. Immovable Property Mortgagee Tinder Pen- alty must not Impair Freehold. Every mortgagor of immovable property who, with intent to injure or defraud the mortgagee, his representatives, successors, or assigns, re- moves from such property or otherwise disposes of, or permits to be removed or otherwise dis- posed of, any house, barn, windmill, or water- tank, upon or affixed to such premises as an im- provement thereon, without the written consent of the mortgage holder, is guilty of larceny, and shall be punished accordingly.^ 328. Movable Property Mortgagor Tinder Pen- alty must Give Notice of Transaction Con- cerning Mortgaged Property. Every mortgagor of any movable property men- tioned in section 251 above, excepting locomo- tives, engines, rolling stock of a railroad, steam- erty so as to render it an inadequate security: Eobin- son v. Enssell, 24 Cal. 467, 473. An action may be maintained by the mortgagee for wrongful and fraudulent injury committed upon the encumbered property, whereby the mortgagee 's se- curity is impaired: Robinson v. Russell, 24 Cal. 467, 473. An action for damages may be maintained against a person removing fixtures from the land when it rendered the property inadequate to satisfy the mort- gage: Lavenson v. Standard Soap Co., 80 Cal. 245, 13 Am. St. Rep. 147, note, 22 Pac. 184. 6 See Penal Code, section 502%, new section in. ef- fect March 26, 1895. - 528 MORTGAGE. § 328 boat machinery in actual use, and vessels, who in- tends, directly or indirectly, to sell, transfer, or further encumber any such property during the continuance of the original mortgage thereon, must, before carrying into execution such inten- tion, (1) inform the person to whom the sale, trans- , ' fer, or subordinate encumbrance is to be made . of the existence of the subsisting mortgage, and (2) notify the original mortgagee of such inten- tion by a written notice setting forth the name and place of residence of the person to whom the sale, transfer, or subordinate encumbrance is to be made; otherwise the mortgagor is guilty of larceny, and is punishable accordingly.'' 7 This duty is laid upon a movable property mort- gagor by Penal Code, section 538, which provides: ^^ Every person who, after mortgaging any of the property mentioned in section 2955 of the Civil Code, excepting locomotives, engines, rolling stock of a rail- road, steamboat machinery in actual use, and vessels, during the existence of such mortgage, sells, transfers, or in any manner further encumbers the said mort- gaged property, or any part thereof, or causes the same to be sold, transferred, or further encumbered, is guilty of larceny, and shall be punished accordingly; unless at or before the time of making such sale, trans- fer, or further encumbrance, such mortgagor shall inform the person to whom such sale, transfer, or en- cumbrance may be made, of the existence of the prior mortgage, and shall inform the prior mortgagee of the intended sale, transfer, or encumbrance, in writing, by giving the name and place of residence of the party § 329 RIGHTS AND DUTIES. 629 329. Movable Property Mortgagor Under Pen- alty must not Remove Property from Coun- ty Where Situate. Every mortgagor of any movable property men- tioned in section 251 above, excepting locomo- tives, engines, rolling stock of a railroad, steam- boat machinery in actual use, and vessels, who, during the existence of the mortgage, with intent to defraud the mortgagee, his representatives, or assigns, transfers, sells, takes, drives, or carries away, or otherwise disposes of, or permits the transferring, selling, driving, or carrying away, or otherwise disposing of, such mortgaged prop- erty, or any part thereof, from the county where it was situated at the time of mortgaging, with- out the written consent of the mortgagee, is guilty of larceny, and shall be punished accord- ingly.^ 330. Movable Property Mortgagee may Take Possession upon Removal. Upon the removal with the consent of the mortgagor of mortgaged movable property (ex- cept the rolling stock of a common carrier) from to whom the sale, transfer, or encumbrance Is to bo made.'^ New section, in effect March 9, 1893. By section 378 below, this book, it is provided that a transfer of mortgaged movable property extin- guishes the mortgage. 8 See Penal Code, section 537 (second) ; new section in effect March 9, 1893. As to the rights of the mortgagee upon a removal of the property, see section 330, below. Liens— 34 530 MORTGAGE. ' § 330 the county in which it was situated at the time of the recordation of the mortgage^ the mortgagee may take possession and dispose of the property as a pledge for the payment of the principal ob- ligation^ although not due.^ 331. Remedies of Movable Property Mortgagee When Entitled to Possession. Whenever by operation of law or the agree- ment of the parties a movable property mort- gagee becomes entitled to the possession of the mortgaged property^ a refusal to yield possession of the property to him on demand constitutes a conversion thereof/^ and the mortgagee may maintain- an action for the damages sustained by him by reason of the conversion.^^/ Or, without = » See Civil' Code, section 2966. 10 Refusal to Yield Possession on Demand Consti- tutes Conversion: Mathew v. Mathew, 138 Cal. 334, 71 Pac. 344. 11 May Maintain Action for Conversion.— Where a movable property mortgage provided that upon de- fault in the payment of the secured obligation at =maturity the mortgagee might take possession of the property, using all necessary force so to do, and proceed^ to sell the same to satisfy the secured obliga- tion, a mortgagor who refuses to deliver the property to the mortgagee after demand made is liable to such mortgagee in damages 'to the amount- of his special interest. '^It is true that under section 2888 of our Civil Code the legal title of mortgaged property is in the mortgagor; and yet, at the same time, it must be ad- mitted that the mortgagee has an interest in the mort- gaged property; and here, this interest being by th3 § 331 RIGHTS AND DUTIES. 631 making such demand of possession, the mortgagee may maintain an action of claim and delivery for the recovery of the property/^ although an 'action is pending for the foreclosure of the mort- very terms of the mortgage contract coupled with h right of possession, the refusal to yield that possessioa on demand amounted to a deprivation of a valuable right which the mortgagee had in the property, and was a conversion of his interest in such property. The possession of the property, and its delivery on a sale to satisfy the debt, would naturally tend to in- crease the price that it might bring, and the in- ability to deliver would naturally decrease that price, and thus the want of possession in the mortgagee would depreciate the value of the mortgage security and greatly impair his interest in the property. The legal title is not always necessary to an action for conversion, but any special valuable interest in the property, accompanied with the right of possession, is a sufficient title upon which to base the right of such an action. We quote the language of the su- premo court of Wisconsin in a case similar to this: 'His right to recover against any person unlawfully converting the same in hostility to his rights as mort- gagee was just as perfect as if he had been the ab^ solute owner thereof; the only difference being that as against persons claiming under the mortgagor or his assigns his right to damages would be limited to the amount due upon his mortgage, and not the value of the property, if such value exceeded the amount so due' (Smith v. Konst, 50 Wis. 360, 7 N. W. 293)": Mathew v. Mathew, 138 Cal. 334, 71 Pac. 344. 12 May Maintain Action of Claim and Delivery.— Where a movable property mortgage gives the mort- gagee the right of possession upon a certain con- tingency, upon the happening thereof such mortgagee may maintain an action in claim and delivery for such property: Flinn v. Ferry, 127 Cal. 648, 652, 60 Pac. 434; Harper v. Gordon, 128 Cal. 489, 61 Pac. 84. 532 MORTGAGE. § 332 gage and without impairing the right to fore- close.^^ 332. Remedies of Imniovable Property Mort- gagee Entitled to Possession. Whenever by the agreement of the parties an immovable property mortgagee becomes entitled to the possession of the mortgaged property, such mortgagee may maintain an action for the re- covery of the property, although an action is pending for the foreclosure thereof and without impairing the right to foreclose, ^^ and may cause a receiver for the property to be appointed in such action/^ and where the mortgaged property is a 13 Action may be Maintained Notwithstanding Pending Foreclosure Action.— Although au action lies already been brought to foreclose a mortgage, an ac- tion may be maintained to recover possession of the mortgaged property in case the mortgagee is entitled thereto, notwithstanding the provision of the Code of Civil Procedure, section 726, that *Hhere can be but one action for the recovery of any debt, or the en- forcement of any right secured by mortgage upon real estate or personal property,'' as such possessory action is not to recover the debt, nor **for the en- forcement of any right secured by mortgage'' in the sense intended by the clause of the statute, the agree- ment for possession being but an incident to the mortgage, which, moreover, would have no value could it not be enforced by an independent action: Harper V. Gordon, 128 Cal. 489, 491, 492, 61 Pac. 84. 14 Action may be Maintained Notwithstanding Pending Foreclosure Action: See section 331, note 13, above. 15 Receiver may be Appointed: Sacramento etc. R. R. Co. V. Superior Court, 55 Cal. 453; McLane v. § 332 RIGHTS AND DUTIES. 533 railway, may anthorize the receiver to make pro- vision for operating the same so as to secure a a income and profits. ^^ 333. Liability of Mortgagee in Wrongful Pos- session. A mortgagee whose possession is wrongful U chargeable with rents and profits precisely as any other disseisor, and is not entitled to any ac- counting to determine how much he may have actually realized from his wrongful occupation, nor to a credit for the value of the improvements made.^'' Placerville etc. E. E. Co., Q6 Cal. 606, 615, 616, 6 Pac. 748. ''Section 564 (subdivision 6) of the Code of Civil Procedure provides that a receiver may be appointed by the court in which the action is pending, *in all cases where receivers have heretofore been appointed by the usages of courts of equity.' This is not a proceeding to foreclose a mortgage, and to subject the mortgaged property to sale under the decree of the court, but it is in the nature of a proceeding to en- force specific performance of the terms and conditions of a mortgage; and we find numerous cases in the books in which courts of equity have exercised the jurisdiction complained of in this case": Sacramento etc. E. E. Co. V. Superior Court, 55 Cal. 453. 16 McLane v. Placerville etc. E. E. Co., 66 Cal. 606, 618, 6 Pac. 748. - 17 Mahoney v. Bostwick, 96 Cal. 53, 58-60, 31 Am. St. Eep. 175, 30 Pac. 1020; Malone v. Eoy, 107 Cal. 518, 523, 524, 40 Pac. 1040. Where an immovable property mortgage confers no right of possession, entry by the mortgagee can con- fer none: Nagle v. Macy, 9 Cal. 426, 428. 534 MORTGAGE. § 334 334. Removal of Fixtures at Instance of Mort- gagee Wrongful. A person who^ at the instance of an immovable property mortgagee not in possession, severs and removes from the mortgaged premises a fixture affixed thereto is liable to the mortgagor in tort.18 Subdivision 2, As to Forfeiture^ 335. Right to Extinguish Mortgage cannot be Renounced by Contemporaneous Agree- ment. The right to extinguish a mortgage by payment is inseparably connected therewith, and cannot be abandoned or waived by any stipulations entered into between the parties at the time of the exe- cution of the mortgage, whether inserted in the infe^rument of mortgage or not.^^ 18 Hill V. Gwin, 51 Cal. 47. 19 Right to Extinguish Mortgage cannot "be Re- nounced by Contemporaneous Agreement. Civil Code, section 2889, provides: ''All contracts for the forfeiture of property subject to a lien, in sat- isfaction of the obligation secured thereby, and all contracts in restraint of the right of redemption from a lien, are void." Pierce v. Eobinson, 13 Cal. 116, 125; Gpodenow v. Ewer, 16 Cal. 461, 466, 467, 76 Am. Dec 540; Mont- gomery V. Spect, 55 Cal. 352, 358, 359. Rationale.— l!\iQ necessities of debtors often drive them to make ruinous concessions: Bradbury v. Daven- port, 114 Cal. 593, 599, 55 Am. St. Rep. 92, 46 Pac. 1062. § 336 RIGHTS AND DUTIES. 535 S36. By Independent Agreement Mortgagor may Sell to Mortgagee.2^ A mortgagee may acquire absolute ownership of mortgaged property by bona fide purchase 20 By Independent Agreement Mortgagor may Sell to Mortgagee: Phelan v. De Martin, 85 Cal. 365, 24 Pac. 725; Corcoran v. Hinkle (Cal.), 34 Pac. 1031, 1033 A; Watson v. Edwards, 105 Cal. 70, 75, 76, 38 Pac. 527; Bradbury v. Davenport, 114 Cal. 593, 598- 601, 55 Am. St. Eep. 92, 46 Pac. 1062; 120 Cal. 152, 52 Pac. 301; De Martin v. Phelan, 115 Cal. 538, 56 Am. St. Eep. 115, 47 Pac. 356. Compare Chapman v. Bank of California, 97 Cal. 155, 31 Pac. 845; Woods v. Jensen, 130 Cal. 200, 202, 203, 62 Pac. 473. / While courts view with jealousy and suspicion any dealings between a mortgagor and his mortgagee to extinguish the mortgagor's title, a purchase of the mortgagor's interest, if fair and honest on the part of the mortgagee, will not be disturbed. The law only prohibits a mortgagee from availing himself of a stipulation in a mortgage deed, or of some covenant or agreement, forming part of the same transaction with the loan and the taking of the security, by which he shall attempt, upon the happening of some future event or contingency, to render his interest not sub- ject to satisfaction, and thus acquire absolute owner- ship. In such case the maxim '*Onoe a mortgage al- ways a mortgage ' ' applies. But the law cannot in- , terfere with the right to foreclose, nor with any frosh contract which the mortgagor may choose to make with the mortgagee for the sale or the relin- quishment of the right to satisfy the mortgage, and vesting the latter with an absolute property: Green V. Butler, 26 Cal. 595, 601, 602. In Garwood v. Wheaton, 128 Cal. 399, 60 Pac. 961, an arrangement was made between a mortgagor and a mortgagee which the court sustained, having inter- preted it as a conveyance of the premises, but ae^ companied by an option by the exercise of which the mortgagor vendor could repurchase. 536 MORTGAGE. § 336 from the mortgagor for adequate consideration^* at any time subsequent to the execution of the mortgage by an independent and fair agreement between them; but an unequal transaction will be set aside^^^ without the necessity of a tender of the secured obligation by the mortgagor to the mortgagee.^^ 21 The kind or character of the consideration from the mortgagee to the mortgagor can make no dif- ference. It may be something outside the mortgage debt, or it may be the release of the mortgage debt: Watson V. Edwards, 105 Cal. 70, 76, 38 Pac. 527. But any marked under-valuation of the property in the price paid will vitiate the proceeding: Bradbury V. Davenport, 114 Cal. 593, 599-601, 55 Am. St. Eep. 92, 46 Pac. 1062. 22 Thus in Clark v. Fast, 128 Cal. 422, 426, 427, 61 Pac. 72, where a policy of life insurance was first pledged by an assignment for security, which was void because not permitted by the terms of the policy, and was afterward, to correct this mistake, absolutely assigned, the absolute assignment was set aside because not for adequate consideration. 23 In consideration of the discharge of an obli- gation secured by mortgage, the mortgagor con- veyed the mortgaged premises to the mortgagor, the consideration being grossly inadequate. Held, an ac- • tion may be maintained to cancel the conveyance when the effect will not be to deprive the mortgagee of his remedy on the debt. To impose upon the plain- tiff the condition that he shall first tender payment would give the defendant an advantage of great value from a transaction from which he should not be al- lowed to derive any benefit. Moreover, the sale of the interest of the mortgagor in the property might be his only asset, and in such case to compel him to make a tender before his ownership was declared "Would deprive him of all remedy: Bradbury v. Daven- § 337 EIGHTS AND DUTIES. 637 S'libdwision S. Absolute Deed as Mortgage. 337. Action to Declare Absolute Deed Mortgage and Liquidate It Maintainable.^* A mortgagor. in possession^^^ the mortgage of whose property is evidenced by a deed absolute in form, as against everyone except a bona fide purchaser or encumbrancer for value, may, with- out limitation of time,^^ commence, and without first tendering or offering to pay the amount of port, 114 Cal. 593, 603, 604, 55 Am. St. Eep. 92, 46 Pac. 1062. 24 Daul)enspeck v. Piatt, 22 Cal. 30; Montgom- ery V. Speet, 55 Cal. 352, 359; Baker v. Fireman '3 Fund Ins. Co., 79 Cal. 34, 21 Pac. 357; Boyce v. Fisk, 110 Cal. 107, 42 Pac. 473. 25 Mortgagor , in Possession.— Subject to sections 360 and 361, this section is also applicable where the mortgagee is in possession. 2G Without Limitation of Time: Baker v. Fireman's Fund Ins. Co., 79 Cal. 34, 42, 21 Pac. 357; Hall v. Arnott, 80 Cal. 348, 355, 22 Pac. 200. Civil Code, section 2903: ^^ Every person having an interest in property subject to a lien has a right to redeem it from the lien, at any time after the claim is due, and before his right of redemption is foreclosed. ' ' Historical, — The contrary rule as declared in Taylor v. McLain, 60 Cal. 651, 64 Cal. 513, was set aside by the code. Before the adoption of the codes a mortgage by deed absolute in form conveyed the legal title to the propr erty to the mortgagee, and whenever the obligation secured by the mortgage became barred by lapse of time, the right of the mortgagor to maintain an ac- tion to redeem the property from the mortgagor be- came likewise barred: Allen v. Allen (Cal.), 27 Pac. 30, 32A, 32B. 538 MORTGAGE. § 337 the secured obligation^''' maintain, an action to declare such deed a mortgage, to determine the amount secured thereby, and to cause a recon- veyance of the interest apparently conveyed by the mortgagor upon the satisfaction of the secured obligation (in other words, an action to quiet title ),^^ without regard to the validity of the mortgagor's title,^^ any adverse rights in good faith acquired by the mortgagee being reserved to him/^^ There is, however, no precedent for an action instituted for the sole purpose of de- 27 Without Tendering Secured Obligation.—^ ' Nor is it true that a debtor who has given a deed absolute in form as security for the payment of his debt must, under all circumstances, tender paiyment before he can litigate the character of the instrument; as, for ex- ample, where the debt is not due, -and the grantee asserts an absolute title, or is attempting to con- vey and sell to a stranger' ': Bradbury v. Davenport, 314 Cal. 593, 603, 604, 55 Am. St. Eep. 92, 46 Pac. 1062. Thus, neither averment nor proof of the tender of the mortgage obligation is a necessary prerequisite to the maintenance of the action: Daubenspeck v. Piatt, 22 Cal. 30. 28 This action to declare a deed absolute in form a mortgage upon its satisfaction is in effect merely an action to remove a cloud from the title: Baker V. Fireman's Fund Ins. Co., 79 Cal. 34, 42, 21 Pac. 357. 29 Without Regard to Validity of Title: Lorenzana V. Camarillo, 45 Cal. 125. 30 The action may be maintained notwithstand- ing the fact that the mortgagee subsequently and in good faith acquired an adverse title, but the recon- veyance from the mortgagee in such case should be limited to the interest conveyed by the deed referred to: Hall V. Arnott, 80 Cal. 348, 357, 22 Pac. 200. § 337 RIGHTS AND DUTIES. 539 daring an absolute deed a mortgage, and it can- not be maintained.^^ 338. Although Secured Obligation Barred, Mort- gagor must Satisfy It. In such action the mortgagor cannot obtaiu any affirmative relief without satisfying the prin- cipal obligation, although barred by lapse of time.^^ 339. Judgment must Grant Relief to Mortgagor Conditionally.^^ The judgment in the action must provide that in case of the failure of the mortgagor to satisfy the obligation secured by the instrument in form an absolute deed within a time specified by the judgment, 31 Cowing V. Eogers, 34 Cal. 648, 654; Cline v. Rogers, 112 Cal. 581, 585, 44 Pac. 1023. 32 See sections 216 and 339. The fact that his debt is barred by the statute of limitations does not absolve a mortgagor who would redeem the mortgaged property from the mortgagee from paying his debt. The moral obligation remains and re^ts upon the mortgagor who would redeem to pay, as a condition thereof, the sum of money which the mortgagee could have recovered but for the bar of the statute: Boyce v. Fisk, 110 Cal. 107, 113, 42 Pac. 473. 33 The law as stated in the text is not supported unanimously by the decisions, but seems to have the weight of reason and of some well-considered deci- sions on its side. 540 MORTGAGE. § 339 (1) if the secured obligation has not been barred by lapse of time, the property be sold and the proceeds be applied to the satisfaction of the secured obligation,^^ or 34 If Secured Debt not Barred, Then Property to be Sold: Murdock v. Clarke, in bank, 90 Cal. 427, 443, 444, 27 Pac. 275 (this was not a case of mortgagee m possession as might appear from a casual glance, see pp. 431-435). And in Byrne v. Hudson, 127 Cal. 254, 59 Pac. 597, a judgment that the mortgagor ^'be barred from all equity of redemption, or other right to said prop- erty" was held erroneous. In certain cases, however, it is held that the proper judgment was that the action he dismissed: Cowing V. Rogers, 34 Cal. 648; Cline v. Eogers, 112 Cal. 581, 585, 586, 44 Pac. 1023, in department, the judgment of the trial court in conformity with Murdock v. Clarke being set aside. Where an action to quiet title was brought by a mortgagor in possession against his mortgagee under a deed absolute in form, the secured debt not being barred by lapse of time, the court said: ^* Respondent [the mortgagor] stands simply in the position of a mortgagor seeking to quiet his title against a mort- gagee without paying, or tendering or offering to pay, the debt for which the mortgage was given. But such a result cannot be achieved The only way for a party in respondent's position to quiet a mortgage is to pay it. The decree in the case at bar first un- dertakes to quiet respondent's title, and then dis- turbs it again by declaring appellant's right to fore- close. If appellant's debt should become barred by the statute of limitations, then, by this decree,, re- spondent would have his title quieted without paying the mortgage debt — the very thing which equity says cannot be done. Respondent can have no remedy in the premises without paying or tendering the amount due appellant on his mortgages": Brandt v. Thompson, in department, 91 Cal. 458, 462, 27 Pac. 763. § 339 RIGHTS AND DUTIES. 541 (2) if the secured obligation has become barred by lapse of time, the action be dismis^ed.^^ Subdimsion Jf. As to Insurance. 340. Acts of Mortgagor Avoid Insurance Al- though Assigned to Moitgagee.^^ The assignment from a mortgagor to a mort- gagee of the sum which may become due on the 35 If Secured Debt Barred, then Action to be Dis- missed: Booth V. Hoskins, 75 Cal. 271, 276, 17 Pac. 225 (an action to quiet title), the judgment of the trial court in conformity with Murdock v. Clarke be- ing set aside; De Cazara v. Orena, 80 Cal. 132, 22 Pac. 74 (also to quiet title) ; Boyce v. Fiske, 110 Cal. 107, 116, 42 Pac. 473, which held that as a mortgagee could not obtain any affirmative relief upon his outlawed debt, an order adjudging that in case the mortgagor fails to satisfy the judgment his title shall terminate and the mortgagee's title become valid was erroneous. In one case at least, however, it was held that the proper judgment was that the property be sold: Healy V. O'Brien, in department, m Cal. 517, 520, 6 Pac. 386. 36 Acts of Mortgagor Avoid Insurance Although As- signed to Mortgagee.— Civil Code, section 2541: ^^ Where a mortgagor of property effects insurance in his own name, providing that the lass shall be payable to the mortgagee, or assigns a policy of insurance to the mortgagee, the insurance is deemed to be upon the interest of the mortgagor, who does not cease to be a party to the original contract, and any act of his which would otherwise avoid the in- surance will have the same effect, although the prop- erty is in the hands of the mortgagee." Such an assignment by way of security is per- missible. Where a policy of insurance was assigned as collateral security for the payment of a general balance, and the insured property was destroyed, and tne insurance became payable, and the insured party 542 MORTGAGE. § 340 insurance on the mortgaged property,^'' or a stipulation in an insurance policy that the insur- ance is payable in case of loss to the mortgagee,^* amounts merely to a provisional assignment of the contingent proceeds of the contract of in- surance; and the contract will thereafter, unless became insolvent, it was claimed that the assignee could not maintain an action to recover the insurance, as the insurance could be assigned only in connection with an insurable interest in the insured property, and then only with the consent of the insurer. The court held that ^'the fact that the title of the policies and to the insurance money when it, as a fund of in- demnity for the loss, came in esse, remained in the parties insured; and the further fact that the plain- tiff's [assignee's] right in respect to it was that of a lien upon it merely, subject to be discharged at the will of the debtor, .... obviates the objection that the .... transaction .... was void'': Bibend v. Liverpool etc. Ins. Co., 30 Cal. 78, 89, 90. 37 The so-called ^^ assignment of a policy of in- surance" is, rather, an assignment, when made bo- fore the loss occurs, of the sunl that may become due, and when the assignment is made after the loss, of the sum that has already become due: Bergson v. Builders' Ins. Co., 38 Cal. 543, 544. An indor.sement in a policy of insurance, making the loss payable to a mortgagee of the insured prop- erty as his interest might appear, operates as an as- signment of the policy to the mortgagee by way of collateral security: Ballard v. Nye (Cal.), 69 Pac. 481, 482A. 38 A stipulation for payment to the mortgagee in case of loss is a provisional assignment of the con- tingent proceeds of the contract, and has not the effect to substitute the mortgagee for the mortgagor as the party insured: Holbrook v. Baloise Fire Ins. Co., 117 Cal. 561, 566, 49 Pac. 555; Eeynolds v. London etc. Ins. Co., 128 Cal. 16, 19, 79 Am. St. Eep. 16, 60 Pac. 467. § 340 KIGIITS AND DUTIES. 543 otherwise expressly provided^^^ be avoided^^ by any act of the mortgagor which would otherwise have avoided it, although the mortgagee is in possession. 3^ Where a mortgagor insured the mortgaged premises in the name of the mortgagee, the policy providing that ^^as to the interests of the mortgagee or trustee only therein/' the policy ** shall not be invalidated by any act or negligence of the mortgagor or owner of the property insured, nor by the occupa- tion of the premises for purposes more hazardous than are permitted by the terms of this policy, nor by any change in title or possession of the property insured; provided, however, that whenever the said mortgagee or trustee shall become aware of any act or negligence on the part of the mortgagor or owner which would, except as to such mortgagee or trustee, invalidate this policy, or of any occupation of the premises for pur- poses more hazardous than are permitted by the terms of this policy, or of any change in title or posses- sion of the property insured, he will at once notify this company thereof; and provided, also, that he will, on demand, pay to this company the additional pre- mium charged by this company on account of any in- creased risk for the entire term of the policy; and fail- ure to so notify this company, or to so pay said addi- tional premium, shall avoid this contract, ' ' and where the mortgagee complied with the terms of the contract, the policy will be enforced notwithstanding the acts of the mortgagor which otherwise would have avoided the insurance: Nat. Bank v. Union Ins. Co., 88 Cal. 497, 22 Am. St. Eep. 324, 26 Pac. 509. 40 Contract will be Avoided— TAmito Hon of Prin- ciple.— But a condition in a policy of insurance on mortgaged property issued to the mortgagor, and made payable in case of loss to the mortgagee, that the policy should be void if, with the knowledge of the insured, foreclosure proceedings should be com- menced on any of the property covered thereby, is in- operative as against the mortgagee: Sharp v. Scot- tish etc. Tns. Co., in department, 136 Cal. 542, 543 et seq., 69 Pac. 253, 255A. 544 MORTGAGE. § 341 341. When New Contract with Mortgagee is Made, Acts of Mortgagor Immaterial. If the insurer consents to the transfer of an insurance from a mortgagor to a mortgagee, and, at the time of his assent, imposes further obliga- tions upon the assignee, making a new contract with him, the acts of the mortgagor cannot aft'ect his rights.^^ 342. Insurance of Mortgagee Expires When Mortgage Extinguished.'*^ Whenever insurance upon mortgaged property (whether effected by the mortgagor or mort- The reason for this conclusion is that "the insurer must have known, when attaching the mortgage clause, that it might become necessary for the mortgagee, in order to protect his interest under the mortgage, to commence foreclosure proceedings^': Sharp v. Scot- tish etc. Ins. Co., in department, 136 Cal. 542, 543 et seq., 69 Pac. 253. Beatty, C. J., dissented from an order denying a hearing in bank, saying, in part: "As to the second point decided, viz., that when a mortgagor takes in- surance which he makes payable to his mortgagee, the latter is not prejudiced by the failure of the in- sured to fulfill the conditions of his contract, this seems to nullify the express provisions of section 2541 of the Civil Code (see code section quoted, note 36, above): Sharp v. Scottish etc. Ins. Co., 136 Cal. 542, 547, 69 Pac. 615. 41 Civil Code, section 2542. Commissioners' note, 1872: "The provision of the text follows the general rule governing the alteration of the policy.'' 43 Illustrations. — Where a mortgagor effected in- surance made payable in case of loss to the mort- gagee, and a loss occurred after the foreclosure sale § 342 RIGHTS AND DUTIES. 545 gagee)^^ is payable in case of loss to the mort- gagee, the liability of the insurer to the mort- gagee is terminated by the extinction of the right of the mortgagee as snch to the mortgaged prop- erty. of the property, although the mortgagee purchased at such sale, the mortgagee cannot collect the in- surance. His right as mortgagee was terminated: Eeynolds v. London etc. ins. Co., 128 Cal. 16, 79 Am. St. Eep. 16, 60 Pac. 467. The conclusion of National Bank v. Union Ins. Co., 88 Cal. 497, 22 Am. St. Eep. 324, 26 Pac. 509, so far as in any way inconsistent with this conclusion, is expressly overruled. Where the obligation of the mortgagee to whom the loss was made payable is extinguished by pay- ment, and the insured property was destroyed, the mortgagor is himself entitled to maintain an action for the insurance money: Stockton etc. Works v. Ameri- can Fire Ins. Co., 121 Cal. 182, 184, 53 Pac. 573. 43 Insurance by Mortgagee.— The California cases do not deal directly with the case of an insurance by the mortgagee of his interest, as such, in the prem- ises. Thus in Eeynolds v. London etc. Ins. Co., 128 Cal. 16, 22, 79 Am. St. Eep. 16, 60 Pac. 467, the court says: ^^We are not concerned with the class of cases where the mortgagor himself procures a policy on buildings situated on the mortgaged premises, where he is the party insured, and where it has been held that he may take the policy on his interest in the property itself.^' The court, however, quotes approvingly the statement that ^'whether the mortgagee procures a policy of insurance, paying the premium, without authority from the mort- gagor, or whether it is procured by the mort- gagor in the name of the mortgagee, and the debt is paid, the insurers are not liable to the mortgagee, be- cause in the one case the payment of the debt and the extinguishment of the mortgage determines all efficacy in the policy, and in the other the mortgagor Liens — 35 546 MORTGAGE. Subdivision 5. As to Taxes and Assessments. Introductory Note. The taxation of mortgages, mortgaged property, and the obligations secured by mortgages, is controlled in California by sections 4 and 5 of article 13 of the state constitution. The system of taxation is set forth in the earlier portion of section 4, which provides: ^*A mortgage, deed of trust, contract or other obli- gation by which a debt is secured, shall, for the pur- paying the debt is subrogated and he alone should sue. ' ' Is Mortgagee's Interest as Such Insurable. — In the light of Civil Code, sections 2547 and 2549, this is per haps a close question, the code commissioners' note, 1872, saying in respect to insurable interest: '*It must be a direct interest in reference to the perils secured against, and not of a remote, circuitous, consequential eitect, such as a creditor's interest in the safety of his debt or property.'' In Iowa, however, the courts have held that a mechanic's lienor has an insurable inter- est, and in Ohio that both mortgagor and mortgagee have insurable interests. In White v. Oilman, 158 Cal. 375, 71 Pac. 436, it was held that both a vendor of immovable property under an executory contract of sale pursuant to which the vendee is in possession, and the vendee in possession himself, has an insurable interest in the building erected by the vendee on the land at his own expense, the vendor's insurable interest being to the extent of the unpaid purchase money. But before the vendee's default in payment of the purchase money the vendor had no interest in the building. Moreover, he did not pay for it, and lost nothing by its destruction; thus it seems extraordinary to say that he should actually gain the amount of the insurance money by the fire. The case would have been entirely different if the vendor had owned the building. TAXATION. 547 poses of assessment and taxation, be deemed and treated as an interest in the property affected thereby. Except as to railroad and other quasi public corpora- tions, in case of debts so secured, the value of the property affected by such mortgage, deed of trust, contract or obligation, less the value of such security shall be assessed and taxed to the owner of the prop- erty, and the value of such security shall be assessed and taxed to the owner thereof, in the county, city, or district in which the property affected thereby is situate. The taxes so levied shall be a lien upon the property and security, and may be paid by either party to such security; if paid by the owner of the security, the tax so levied upon the 'property affected thereby shall become a part of the debt so secured; if the owner of the property shall pay the tax so levied on such security, it shall constitute a payment therefrom, and to the extent of such payment a full discharge thereof. ^ ^ The first proposition established by this constitu- tional provision is that for the purposes of taxation every obligation of every sort secured by an encum- brance against property situate in the state of Cali- fornia inheres in, or is deemed an interest in, the property affected thereby. Thus in Germania Trust Co. v. San Francisco, 128 Cal. 589, 594, 61 Pac. 178, the court in bank, speaking through Mr. Commissioner Britt, McFarland, Temple, and Harrison, JJ., adopting his discussion of the case as tjie opinion of the court, and Garoutte, J., concur- ring *^in the views and conclusions of the court pro- mulgated through Mr. Commissioner Britt,'' said in reference to the constitutional provision quoted above (Van Dyke, J., dissenting) : ^'This declaration is comprehensive; no class of se- 548 MOBTGAGE. cured obligations is excepted from it; such obligations being made an interest in the affected property for the purposes stated, necessarily the property affected includes, for the same purposes, the obligations which affect it, as well as the remaining interest of the debtor. The form which credits should take for the purposes of taxation being thus fixed as an interest in the affected property, it remained to determine from whom payment of the tax on the aggregate of values comprised in the property should be exacted; as to credits secured on the property of individuals and strictly private corporations, the burden is di- vided and adjusted by assessing the interest separately -—the owner of the secured credit being taxed on its value, and the owner of the encumbered propertj^ be- ing taxed on the value thereof remaining after de- ducting the amount assessed to the secured creditor. But in the case of credits secured on the property of ^railroad and other quasi public corporations' no de- duction from the value of the property is allowed on account of the indebtedness; the whole of the prop- erty—precisely commensurate with the interests of both debtor and creditor— is assessed to such corpora- tion; and thus, as an interest in the affected property (which it is declared to be for this purpose by the first clause of section 4) the secured obligation is as- sessed, and the tax is paid by the debtor corporation. It necessarily follows that to assess and tax the obli- gation again to the holder thereof, as if it were an un- secured credit, would be to tax the. same property twice, which in this instance, at least, is made impos- sible by the terms of the constitution; for, since the secured obligation is for the purposes of assessment and taxation to be deemed and treated as an interest in the property affected, it cannot be taxed except as such interest. '' TAXATION. 649 This statement of the law was approved in Estate of Fair, 128 Cal. 607, 610, 61 Pac. 184, and in Estate of Pichoir, 128 Cal. 615, 61 Pac. 1130. Before the decision in Germania Trust Co. v. San Francisco, however, it was held that an obligation secured by an encumbrance against the property of a railroad or other quasi public corporation was not deemed an interest in the property affected by the encumbrance. Thus in Central Pacific E. R. Co. v. State Board of Equalization, 60 Cal. 35, 59, the court, in department, speaking through Mr. Justice McKins- try, said: ^^ Reading the whole section, it seems very plain that as to mortgages, deeds of trust, contracts, or other obligations secured upon the property of rail- road and other quasi public corporations, they should not be deemed and treated as an interest in the prop- erty affected by them *for the purposes of taxation.' Under the constitution of this state the property of such corporations is subject to assessment and taxa- tion, without deduction of the amount of any mortgage or like lien thereon.'' In Mackay v. San Francisco, 113 Cal. 392, 397, 45 Pac. 696, the court, in depart- ment, speaking through Mr. Commissioner Hayne, said: ^^ Railroads and other quasi public corporations are excepted from the above provision [that is, from the first sentence of the constitutional provision above quoted]." And the legislature, by the amendment of March 7, 1881, to Political Code, section 3627, adopted the same construction of the constitution. But this construction has been repudiated. In Savings etc. Soc. v. Multnomah County, 169 U. S. 421, 18 Sup. Ct. Rep. 392, 42 Law ed. 803, the conten- tion was made that a statute of Oregon in this respect similar to the California constitution was in conflict with the United States constitution, as a secured obli- gation owned by a nonresident followed his residence, 550 MORTGAGE. and was taxable only at his residence. But the court, by Mr. Justice Gray, Fuller, C. J., Brewer, Brown, Shiras, and Peckham, JJ., concurring, Harlan and White, JJ., dissenting said: *'The statute of Oregon, the constitutionality of which is now drawn in question, expressly forbids any taxation of the promissory note, or other instrument of writing, which is the evidence of the debt secured by the mortgage; and, with equal distinctness, provider for the taxation, as real estate, of the mortgage inter- esx in the land. Although the right which the mort- gage transfers in the land covered thereby is not the legal title, but only an equitable interest and by way of security for the debt, it appears to be clear to us upon principle, and in accordance with the weight of authority, that this interest, like any other interest, legal or equitable, may be taxed to its owner (whether resident or nonresident) in the state where the land is situated, without contravening any provision of the constitution of the United States'' (pp. 431, 432). *'The state may tax real estate mortgaged, as it may all other property within its jurisdiction, at its full value. It may do this, either by taxing the whole to the mortgagor, or by taxing to the mortgagee the in- terest therein represented by the mortgage, and to the mortgagor the remaining interest in the land. And it may, for the purposes of taxation, either treat the mortgage debt as personal property, to be taxed, like other choses in action, to the creditor at his domicile, or treat the mortgagee's interest in the land as real estate, to be taxed to him, like other real estate, at its situs" (pp. 427, 428). " The court (p. 428) distinguished the decision in Cleveland, Painesville &; Ashtabula Eailroad v. Penn- sylvania (Case of the State Tax on Foreign-Held TAXATION. 551 Bonds), 82 U. S. (15 Wall.) 300, 323, 21 Law ed. 179, on the ground that the tax in that case was a percent- age '^upon the interest due the bondholders upon the bonds, and was not a tax upon the railroad, or upon the mortgage thereof, or upon the bondholders solely by reason of their interest in that mortgage,'' and added by way of criticism that 'Hhe remarks in the opinion .... that a mortgage, being a mere security for the debt, confers upon the holder of the mortgage no interest in the land, and when held by a nonresi- dent is as much beyond the jurisdiction of the state as the person of the owner, went beyond what was required for the decision of that case, and cannot be reconciled with other decisions of this court." (In New Orleans v. Stemple, 175 U. S. 309, 20 Sup. Ct. Eep. 110, 44 Law ed. 174, the court, Harlan and White, JJ., dissenting as in the Multnomah county case above, held that mortgages and bonds could be taxed in the place where the evidence of their exist- ence was kept, on account of their concrete tangible form.) Similarly in Tappan v. Merchants' Nat. Bank, 86 V. S. (19 Wall.) 490, 22 Law ed. 189, the court held that '^shares of stock .... are a species of personal property which is, in one sense, intangible and incor- poreal, but the law which creates them may separate them from the person of their owner for the purposes of taxation, and give them a situs of their own" (pp. 499, 500). j^'or ^Hhe shareholder is protected in his person by the government at the place where he re- sides; but his property in this stock is protected at the place where the bank transacts his business" (pp. 503, 504). Thus every secured obligation is for the purposes of taxation deemed an interest in the property whereby ^^2 MORTGAGE. it is secured, and although owned by a nonresident of California is nevertheless taxable to the nonresident at the situs of the encumbered property, and no con- flict is thereby created with any provision of the United States constitution. In California Loan etc. Co. v. Weis, 118 Cal. 489, 493, 50 Pac. 697, the court refused to hold that the consti- tution and revenue laws recognized and treated a mort- gage as '^real estate,'' and that in any piece of land subject to a mortgage there are two separate and dis- tinct real properties— the one being the property of the owner of the fee, the value of which is the differ- ence between the mortgage debt and the value of the land if unencumbered, the second being the real prop- erty of the mortgagee, but decided that such a con- struction of the language of the constitution was un- warranted, and was '^not borne out by the remaining part of section 4, nor by the legislative enactments under it. The section itself speaks of the holder of the legal title as the owner of the property. As fur- ther appears by it, a mortgage is to be treated as an interest in the real property which it affects, only to the end that the mortgage tax itself may become a lien upon the land. If the constitution had intended to segregate a piece of realty into such anomalous properties, .... and thus to make a mortgage real property and distinct from the land in which it is an interest, it would not have permitted that the mort- gage tax should itself become a lien upon another's property, to wit, upon the property of the owner of the fee. No more was intended by the provision quoted than to provide, first, for a decreased assess- ment upon the realty by reason of the mortgage; next, for an assessment upon the mortgage; and finally, that the state may have security for the payment of the TAXATION. 553 mortgage tax, to make the mortgage an interest in the realty to the end that the latter may be made chargeable for the tax upon the former. No injustice thus results, for if the owner of the property is obliged to pay the mortgage tax, it becomes a payment upon the amount of his mortgage indebtedness,'' But in stating what this constitutional provision was in- tended to accomplish, the court omits to take into ac- count the important result achieved by it whereby, as was said in the Multnomah county case above, it ** ex- pressly .... provides for the taxation, as real estate, of the mortgage interest in the land,'' and ^' treat [s] the mortgagee's interest in the land as real estate, to be taxed to him, like other real estate, at its situs." Thus, in view of this case and of the Germania Trust Company case, wherein it was held that under no cir- cumstances could the secured obligation be taxed ex- cept at the situs of the mortgaged property, and then only as an interest in the land, it is evident that for the purpose of taxation the mortgage obligation is deemed an interest in the land— real estate in a quali- fied sense, where the mortgaged property is real estate. This conclusion does not, however, necessarily affect the ultimate result reached in California Loan and Trust Company v. Weis, that a tax upon the mort- gagor's interest constitutes a paramount lien against the whole property, including the mortgagee's interest, as the law which creates this interest for purposes of taxation may define its incidents. The California courts, however, limit this doctrine that an obligation secured by mortgage is, for the pur- poses of taxation, deemed an interest in the mortgaged property to obligations secured by mortgages against property situate within the state, and hold that obli- gations secured by property without the state do not inhere in the encumbered property, but are taxable to 554 MORTGAGE. the owners of them when residing in this state, with- out regard to the fact that the obligation may already have been taxed to the owner in the foreign state. Thus, the court, in department, in Mackay v. San Francisco, 113 Cal. 392, 45 Pac. 696, held that certain bonds secured by a mortgage against an Arizona rail- way, but owned by a resident of San Francisco, were taxable in San Francisco, saying: '^The bonds in question were held here. They could not be taxed in Arizona, where the property mortgaged to secure them is situated'' (pp. 397, 398). '^The debtor [that is, the mortgagor J is a nonresident, and the property upon which these bonds are secured is in another jurisdic- tion, and therefore beyond the taxing power of the state'' (p. 400). In Estate of Fair, 128 Cal. 607, 611-615, 61 Pac. 184, the further conclusion was reached that although tan- gible movable property is taxable at its situs, a bond, whether negotiable or non-negotiable (unless, perhaps, when in the possession and control of a foreign agent of the owner for management in the course of the principal's permanent business), had no situs apart from the domicile of the owner, for the paper itij merely an evidence of the obligation expressed by it, and the obligation, not the evidence, is the thing of value, and would subsist although the paper was destroyed, and in its nature could have no actual lo- cality. Thus a bond owned by a person domiciled in California, kept in New York, and secured by a mort- gage on the property of certain West Virginia railway corporations, is taxable in California. Mackay v. San Francisco, however, was mostly based upon the case of the State Tax on Foreign-Held Bonds, which was modified in Savings etc. Soc. v. Multnomah County, above, while Estate of Fair was based upon TAXATION. 555 Mackay v. San Francisco. Moreover the fact did not appear in either of these cases that the bonds by the law of the place wherein the property by which they were secured was situate were deemed interests in such property or that the bonds had already been taxed at such place. But had this fact appeared, it probably would not have influenced the judgment of the court. For in City and County of San Francisco V. Fry, 63 Cal. 470, where all the property of a Cali- fornia corporation was situate in Nevada, and had there been taxed at its full value, certain stock of the corporation which was owned by a resident of Califor- nia was held to be taxable to him in this state. (The California law in respect to the taxation of corpora- tions is that when the property of the corporation has been taxed at its full value by the California authori- ties, the shares of stock cannot be again taxed to their resident owners. For ^^when the property of the cor- poration is assessed to it, and the tax thereon paid, who but the stockholders pay it? It is true that it is paid from the treasury of the corporation before the money therein is divided, but it is substantially the same thing as if paid from the pockets of the individ- ual stockholders. To assess all of the corporate prop- erty of the corporation, and also to assess to each of the stockholders the number of shares held by him, would, it is manifest, be assessing the property twice, once in the aggregate to the corporation, and again separately to the individual stockholders, in propor- tion to the number of shares held by each. As well might it be contended that the property of a partner- ship should be assessed to the firm, and, in addition, that the interest of each partner in the firm property should be assessed to him individually '' : Burke v. Badlam, 57 Cal. 594, 601. This decision was followed in City and County of San Francisco v. Mackay, 21 556 MORTGAGE. Fed. (C. C.) 539.) In the Fry case, however, the court said: "It is further urged that to tax the shares in this state, when the property of the corporation is taxed in the state of Nevada, would be double taxa- tion. But the inhibition of double taxation only ap- plies to such taxation made by the same state or gov- ernment It will be seen that, in this state, the shares of the corporation alone are taxed. Its prop- erty is not here assessed. Conceding that taxation of the shares and property of a corporation by the state of California would be double taxation, there is here no taxation of that kind^' (pp. 471, 472). Thus, for the purposes of taxation, an obligation se- cured by an encumbrance against property situate without the state of California is not deemed an inter- est in the property affected thereby, and the situs of such property is the domicile of the owner. By the constitutional provision above set forth an obligation secured by an encumbrance against prop- erty within the state is deemed to be an interest in the encumbered property, and except when owned by a railroad or other quasi public corporation, is taxed to the owner of the obligation at its situs. But al- though the mortgagee is, for the purposes of taxation, in every case deemed to own the interest in the mort- gaged property represented by his mortgage, as wa^5 expressly held in Germania Trust Co. v. San Francisco, as quoted above (and in the subsequent cases above cited;, yet the value of the mortgage interest as well as of the remainder of the property i3, in case of the railroad and other quasi public corporations, taxed to the mortgagor, and it is compelled to pay the tax, and no right is conferred upon it to reimburse itself for the payment by withholding the amount paid from that to become payable to the mortgagee or bondholder. The TAXATION. 557 result of this arrangement is that the tax on the mort- gage interest is paid from the general funds of the quasi public corporation, and thus falls upon its stock- holders, while the bondholders are exempt from taxa- tion. A fair construction of the constitutional provision need not, however, bring us to this conclusion. For while the first sentence of the constitutional provision declares that in every case an obligation secured by an encumbrance against property situate in the state is deemed an interest in the property for the purposes of taxation, the second sentence, and doubtless the third also, merely prescribe the method in which this tax shall be levied against persons other than quasi public corporations, and contain no provision at all as to the method to be pursued in assessing and col- lecting a tax against the encumbered property of such a corporation, but merely infer that the method shall in some respect differ from that pursued in other cases. Subject, then, to the constitutional rule that the se- cured obligation is deemed an interest in the encum- bered property, and in virtue of the principle deter- mined in Savings etc. Soc. v. Multnomah County, above, that the situs of a secured obligation can, for the purposes of taxation, be made that of the encum- bered property, the legislature is apparently author- ized to provide that while the tax on the whole value of the encumbered property of a quasi public cor- poration is payable by the corporation, yet that the corporation must deduct from the amounts otherwise payable by the corporation to its bondholders the amount of the taxes owing on the interest which they are deemed to own in the encumbered property. Thereby the discrimination which the law has been said to make against quasi public corporations would be avoided. But now that business conditions and 558 MOETGAGE.' rates of interest have become adjusted to the present system, so that quasi public corporations borrow money at less rates of interest than other mortgagors, the expediency of such a change is not apparent. Conceding, however, that the construction hereto- fore placed on the provision concerning the taxation of quasi public corporations by the California supreme court is correct, does this provision conflict with the provision of the fourteenth amendment to the United States ''.onstitution, which declares that **no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States, nor shall any state deprive any person of life, liberty, or property, without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws''? This question was first raised in Central Pacific E. B. Co. v. State Board of Equalization, 60 Cal. 35, 58-60, where it was held that a corporation was not a person within the mean- ing of the provision of the United States constitu- tion, and that consequently any discrimination, if such there was, was immaterial. But in Santa Clara County V. Southern Pac. K. R. Co., 118 U. S. 394, 396, 6 Sup. Ct. Rep. 1132, 30 Law ed. 118, Chief Justice Waite said: '^The court does not wish to hear argu- ment on the question whether the provision in the fourteenth amendment to the constitution, which for- bids a state to deny to any person within its jurisdic- tion the equal protection of the laws, applies to these corporations. We are all of opinion that it does.'' And in subsequent cases this opinion has been fol- lowed. Taking this view of the scope of the four- teenth amendment, the United States circuit court, in County of San Mateo v. Southern Pac. R. R. Co., 13 Fed. 722, 729-748, 771-775, and County of Santa Clara V. Southern Pac. R. R. Co., 18 Fed. 385, 396-402, 429- TAXATION. V. r 559 437, held that quasi public corporations do not by themselves constitute a special class to which a spe- cial plan of taxation is applicable; that to value their property on a different basis from the property of other persons is an inequality; and that such an in- equality is prohibited by the fourteenth amendment. This decision cannot, however, be considered authori- tative, as both cases were appealed to the supreme court. The San Mateo case was afterward settled out of court, while the Santa Clara case was decided upon another point of law in 118 U. S. 394, 411, 416, 6 Sup. Ct. Eep. 1132, 30 Law ed. 118, the supreme court expressly refusing to pass upon the constitu- tional question. In California v. Central Pac; R. K. Co., 127 U. S. 1, 45, 8 Sup. Ct. Rep. 1073, 32 Law ed. 150, the court also refused to pass on this ques- tion. More recently the Missouri supreme court, in Russsell V. Croy, 164 Mo. 69, 63 S. W. 849, by a de- cision in which four justices concurred and from which three dissented, held a similar provision in the Mis souri constitution in conflict with the fourteenth amendment, but in view of the statement in Kirtland V. Hotchkiss, 100 U. S. 491, 25 Law ed. 558, that ''so long as the state, by its laws prescribing the modes and subjects of taxation, does not entrench upon the legitimate authority of the Union, or does not violate any right recognized or secured by the constitution of the United States, this court, as be- tween the state and its citizen, can afford him no relief against state taxation, however unjust, oppres- sive, or onerous'' (p. 498), and that ** whether the s»tate of Connecticut shall measure the contribution which persons resident within its jurisdiction shall make by way of taxes, in return for the protection it affords them, by the value of the credits, chosea in action, bonds, or stocks which they may own (other 560 MOKTGAGE.' § 343 than such as are exempted or protected from taxation under the constitution and laws of the United States), is a matter which concerns only the people of that state, with which the federal government cannot in- terfere V (p. 499), it seems improbable that the fed- eral sui3reme court would hold this provision of the constitution of California to conflict with the four- teenth amendment. 343. Secured Obligation not Deemed Interest in Mortgaged Property for Purposes of As- sessment.^ For the purpose of levying and collecting a special assessment,^ an obligation secured by mortgage, trust deed in the nature of a mortgage, contract, or other obligation, is not deemed an interest in the property whereby it is secured; but the assessment must be levied upon the prop- erty and the owner thereof as though the prop- erty was not affected by an encumbrance for se- curity, and without regard to the provisions of this subdivision. 1 Secured Obligation not Deemed Interest in Mort- gaged Property for Purposes of Assessment.— Thus an assessment by an irrigation district ''although refer- able to the powers of taxation, is distinct from a tax, and is not subject to the constitutional provisions re- specting taxation, but may be levied upon all real property within the district without deducting from the value of such property the amount of any mort- gages existing thereon'': Tregea v. Owens, 94 Cal. 317, 318, 319, 29 Pac. 643. 3 Assessment Defined and Distinguished: See sec- tion 643, and note below. § 344 TAXATION. 561 344. Obligation Secured by Property Outside State not Deemed Interest Therein for Purposes of Taxation. For the purposes of taxation^ an obligation secured by an encumbrance against property out- side the state of California is not deemed an in- terest in the property whereby it is secured, but when owned by a resident of California is taxable to him at the place of his residence.^ 345. Obligation Secured by Property Within State Deemed Interest Therein for Pur- poses of Taxation.^ For the purposes of taxation, every obligation secured by mortgage, trust deed in the nature of 3 See Mackay v. San Francisco, 113 Cal. 392, 397, 398, 45 Pac. 696, and Estate of Fair, 128 Cal. 607, 611-615, 61 Pac. 184, as quoted in the introductory note, pages 553, 554. 4 Obligation Secured by Property Within State Deemed Interest Therein for Purposes of Taxation: See Germania Trust Co. v. San Francisco, 128 Cal. 589, 594, 61 Pac. 178, Estate of Fair, 128 Cal. 607, 610, 61 Pac. 184, and Estate of Pichoir, 128 Cal. 615, 61 Pac. 1130, as quoted pages 547-549, above. Historical. — In several early cases decided under the constitution of 1849, it had been held that money at interest, secured by mortgage or not, was taxable to the mortgagee or other creditor in the county of his domicile (People v. McCreery, 34 Cal. 432, 447; People V. Whartenby, 38 Cal. 461; People v. Eddy, 43 Cal. 331; compare, also, Falkner, Bell & Co. v. Hunt, 16 Cal. 167), and it had also been held that if land subject to a mortgage was taxed, and the debt Liens — 36 562 MORTGAGE. § 345 secured by the mortgage was also taxed, the tax on the debt being paid by the mortgagee, the mortga- gor cannot complain of double taxation (Lick v. Aus- tin, 43 Cal. 590). The reasoning on which this conclusion rests is con- vincingly set forth in People v. Worthington, 21 111. 171, where the court said: **It may be true, in one sense, to say that it is double taxation to tax the horse which is sold and also the note which is given for the purchase money; and so it is to tax the note which is given for one hundred dollars borrowed money, and also the money which is borrowed; and so we might go on through the whole system of human transac- tions which involves a credit for things tangible, which are within the state and subject to taxation; and even so it is, if they are beyond the state, for the presumption is that they are taxed wherever they may be. Whatever rights, credits, or choses in action which may be taxed, are so much over and above the? money and other physical objects within the state, and are in the same sense, double taxation; for these very credits must ultimately be paid with those physi- cal objects if they are ever paid. To say that there shall not be double taxation in this sense of the term is at once to say that no credits of any sort shall be taxed; and all those whose fortunes consist in loanevl money or other credits must be allowed the bene^t and protection of the laws, and be exempt from the burdens incident to the making and enforcing them^' (pp. 173, 174). '^Whenever a credit is given, a new property is created in the hands of the creditor, which before did not exist, and when the debt is pai«l, that property is annihilated" (p. 176). But in Savings etc. Soc. v. Austin, 46 Cal. 415, 491- 500, the court, speaking through Mr. Justice Crockett (pp. 485-488, and 491), and Mr. Justice Niles (p. 520); Ehodes, J. (pp. 500-503), and Wallace, C. J. (pp. 518- 520), dissenting, and Belcher, J., not expressing an opinion^ overruled the earlier decisions, and held that an obligation secured by mortgage was not taxable. In People v. Hibernia Sav. etc. Soc, 51 Cal. 243, 21 Am. Eep. 704, per McKinstry, J., Wallace, C. J. (who had reversed his opinion), and Crockett, J.; Ehodes, J., § 345 TAXATION. 663 a mortgage^ contract^ or other obligation,*^ against property situate in the state of California is deemed an interest in the property whereby it is secured^ and is taxable at the place where the dissenting-, the court pushed this case to its legitimate conclusion, and held that under the constitution of 1843 no solvent debt nor credit of any kind was taxable. This decision was affirmed in Bank of Mendocino v. Chalfant, 51 Cal. 369, 51 Cal. 471. Thus, when the constitution of 1879 was adopted, tne question arose whether the interest of the mort- gagee could be newly defined and thereby subjected to taxation^ such interest having been exempt from taxation under the above decisions at the time of the execution of the mortgage. In Hay v. Hill, 65 Cal. 383, 4 Pac. 378, and Sanford V. Savings etc. Soc, 80 ±'ed. (C. C.) 54, 60, the court held that from the time of the adoption of the con- stitution of 1879 the mortgagee under a mortgage executed before the adoption of the new constitution became primarily liable for taxes on his interest in the mortgaged property. In McCoppin v. McCartney, 60 Cal. 367, 371, where a mortgage, also executed before the adoption of the constitution, contained a provision whereby the mort- gagor agreed to pay all taxes upon the mortgaged property, the court held that the obligation of con- tracts was not impaired by the altered constitutional provision in respect to taxation, and that the mort- gagee was primarily liable for the tax, as no one could have a vested right to exemption from taxation. The mortgagee might, however, enforce reimbursement from the mortgagor. 6 Obligation Secured by Mortgage, Trust Deed, Con- tract or Other Obligation Deemed Interest.— The lan- guage of the constitution is ^'a mortgage, deed of trust, contract or obligation by which a debt is se- cured^'; evidently what is meant was not that the '' mortgage, '^ etc., as such, but the obligation secured therebv is deemed an interest. 564 MORTGAGE. § 345 encumbered property is situate and nowhere else.^ The vakie of the mortgage interest is deemed to be the value of the secured obliga- Just what is embraced in the expression ^'mortgage, deed of trust, contract, or other obligation '^ has not been determined. In Sanford v. Savings etc. Soc, 80 Fed. (C. C.) 54, 58, 59, this description was held to embrace a deed absolute in form which was intended as a mortgage. The court said: '^It is objected to the application of these provisions (concerning taxation of mortgaged property), that they do not apply to a deed intended as a mortgage; that they only apply to a mortgage in form such, to a deed of trust in form such; and it is urged further in support of this construction that the machinery of the law is inadequate to assess any other but formal mortgages or deeds of trust. I do not think that either proposition is tenable. Not the first, because it is manifest that sections 4 and 5 should be taken together, and were intended to in- clude all forms by which money could be secured; and it would have been of little avail to have avoided 0. contract by which a debtor obliges himself Ho pay any tax or assessment on money loaned, or any mort- gage, deed of trust, or other lien,' if the result could have been produced by the easy and not uncommon form of a deed. Not the second, because the machin- ery of the law provides for not only what the records may show, but for the disclosures of the parties under oath— as adequate a method as can be applied to men, and as far as the state is concerned, completely adequate, the value of the visible land being the basis of taxation, whether as one interest or as two in- terests. ' ' 6 Mortgage Interest Taxable Nowhere Else.— The mortgage, being for the purposes of taxation deemed an interest in the mortgaged property, is taxable at the situs of the property, and, although the secured obligation is owned by a person residing elsewhere in the state, and is a bond of a quasi public corpora- tion upon which the mortgagor was compelled to pay § 345 TAXATION. 565 tion;'' the value of the interest remaining in the owner of the property is determined by deducting the value of the mortgage interest from the value of the property if unencumbered.^ Taxes levied upon either interest constitute liens against the encumbered property paramount to the encum- brance.^ The fact that the interest of the owner is in certain cases nontaxable does not of itself^ in the tax, it cannot be again taxed to the mortgagee at the p'lace of his residence: Germania Trust Co. v. San Francisco, 128 Cal. 589, 597, 61 Pac. 178, as quoted in the introductory note above. 7 Value of Secured Obligation.— In People v. Dunn, in bank, 59 Cal. 328, and Schroeder v. Grady, in bank, GG Cal. 212, 5 Pac. 81, Eoss, J., dissenting, the court held that although a mortgage was assessed at its face value, the assessment thereon was liable to be raised by a horizontal increase of the entire assess- ment-roll of a county by the state board of equal- ization. 8 The fact that a mortgage happens to belong to the state, and is, therefore, exempt from taxation, does not render nugatory the provision that only the value of the land, less the value of the mortgage, shall be assessed to the mortgagor: People v. Board of Supervisors, 77 Cal. 136, 19 Pac. 257; Henne v. Los Angeles, 129 Cal. 297, 298, 61 Pac. 1081. o Taxes Constitute Paramount Lien Against Mort- gaged Property. Thus, a tax sale of the interest of a mortgagee for nonpayment of taxes upon the mortgage sells an in- terest in the property, not merely the mortgage: Dorland v. Mooney, 72 Cal. 34, 13 Pac. 71. A tax lien against the interest of the mortgagor is superior to every other lien, including that of the mortgagee: California Loan and Trust Co. v. Weis, 118 Cal. 489, 492, 493, 50 Pac. 697. 566 MORTGAGE. § 345 those cases^ render the mortgage interest also ex- empt from taxation.^^ 346. ftuasi Public Corporation When Owning Mortgaged Property Liable for Tax. In case of a tax upon encumbered property of a railway or other quasi public corporation, the corporation must pay the tax upon both the mort- gage interest and the interest remaining in the owner of the property.^^ 347. In Every Other Case Mortgagor and Mort- gagee Liable for Their Respective Shares of Tax.i2 In case of a tax upon encumbered property situate in California, other than the property of a quasi public corporation, the value of the mort- 10 Thus where certain nontaxable stocks and bonds are pledged as security for an obligation, conced- ing that the secured obligation is an interest in the stocks and bonds within the meaning of the constitution, it does not follow that the secured ob- ligation is also exempt from taxation: Savings etc. Soc. V. City and County of San Francisco, 131 Cal. 356, 361, 362, 63 Pac. 665; Security Sav. Bank v. City and County of San Francisco, 132 Cal. 599, 600, 64- Pac. 898. See, also, City and County of San Francisco v. La Societe Francaise, 131 Cal. 612, 63 Pac. 1016. 11 See introductory note above (page 548). It has always been assumed that the corporation must -pny the tax, and in Central Pacific E. E. Co. v. State Board of Equalization, 60 Cal. 35, 58-60, this prac- tice was held constitutional. 12 See constitutional provision as quoted in the in- troductory note, page 547. § 347 TAXATION. 567 gage interest must be assessed and taxed in the county, city, or district in which the encumbered property is situate to the holder of the mortgage at the time of assessment ;^^ the value of the re- maining interest in the property must be assessed and taxed to the owner thereof. The assessment of the interest of the mortgagor must be com- plete in itself, so as to show upon its face, with- out reference to the assessment of the interest of the mortgagee, that the value of the mortgage interest is deducted; otherwise the assessment is void.^^ 348. Taxes may be Paid by Either Party— Effect Thereof. Taxes upon either the mortgage interest or the interest remaining in the owner may be paid by the owner of either interest. A tax upon the property when paid by the owner of the obliga- tion which is deemed an interest therein becomes a part of the second obligation; a tax upon the secured obligation when paid by the owner of the property constitutes to the amount of the payment a discharge of the obli- gation.^^ But if a mortgagor permits the whole 13 San Gabriel Valley Land etc. Co. v. Witmer Bros. Co., 96 Cal. 623, 636, 29 Pac. 500, 31 Pac. 588. 14 Knott V. Peden, 84 Cal. 299, 23 Pac. 1081, 24 Pac. 160; Pol. Code, sec. 3650, subd. 15. 15 Mayre v. Hart, 76 Cal. 291, 18 Pac. 325; Ham- ilton V. Jones, 62 Cal. 473, 476; Lloyd v. Davis, 123 Cal. 348, 355, 55 Pac. 1003. 668 MORTGAGE. § 348 tax to be assessed upon his interest in the prop- erty without deducting the value of the secured obligation, as though the property was not affected by an encumbrance, and pays such tax, he is not entitled to deduct any portion of the sum so paid from the secured obligation. ^^* Where, however, a mortgagee in possession un- der a deed absolute in form, thereby holding the apparent legal title to the property, permits the whole tax to be assessed upon the property, as though it was unencumbered, without apportion- ing the proper proportion of the tax to the mort- gage interest which he holds, upon an accounting with the mortgagor he can only include in the expenses of his trust the proportion of the tax which should have accrued upon the interest in the property remaining in the mortgagor, but must himself pay the tax upon the mortgage in- terest.^'' See latter part of the constitutional provision quoted in introductory note, page 547. 16 Hibernia Sav. etc. Soc. v. Behnke, 121 Cal. 339, 343, 53 Pac. 812, where the court said: '*It ap- peared bv the evidence on the part of the appellant [mortgagor] that the mortgagee was not assessed for that year, and that the assessment for which the taxes were paid was upon the land without any de- duction for mortgage or other obligation. It is only the tax levied upon the security' that the owner may pay and have the amount deducted from the amount of the security (Const., art. 13, sec. 4); and as there was no assessment of the security, the de- fendant [mortgagor] was not authorized to have this payment deducted. ' ' 17 Sanford v. Savings etc. Soc, 80 Fed. (C. C.) 51, § 349 TAXATION. 569 349. Mortgagee Liable for All Taxes Assessed Before Payment of Mortgage. A person who satisfies the secured obligation after the assessment of any tax thereon, but be- fore its levy, may either (1) retain the amount of the tax thereafter to be levied, computed according to the tax levy for the preceding year/^ or 58, 59; same case, Savings etc. Soc. v. Davidson, 97 Fed. 696, 718, 719, 38 C. C. A. 365, 9th Cir. The circuit court of appeals distinguished this case from Hibernia Sav. etc. Soc. v. Behnke, note 16 above, as in the Hibernia case, the owner [mortgagor] paid the entire tax and sought to obtain a reduction in the amount of the foreclosure judgment for the proportion of the tax which the mortgagee should have paid, while here the mortgagee, who held the title but was not the real owner of the property, and who stood in a trust relation to the mortgagor, paid the tax. *^The fact that it [the mortgagee] had the property assessed to itself instead of having it assessed as provided for in the constitution gave it no additional rights. It cannot be allowed to take advantage of its own wrong. The principles an- nounced in the Hibernia case are not, when the differ- ence in the facts is considered, in opposition to the conclusion we have reached.'' 18 Const., art. 13, sec. 4, last clause: *'If any such security or indebtedness shall be paid by any such debtor or debtors, after assessment and before the tax levy, the amount of such levy may likewise be retained by such debtor or debtors, and shall be computed according to the tax levy for the preced- ing year.'' This provision is permissive and not mandatory in its terms: San Gabriel Val. Land etc. Co. v. Witmer Bros. Co., 96 Cal. 623, 635, 29 Pac. 500, 31 Pac. 588. 570 MORTGAGE. § 349 (2) pay the secured obligation in full, and when the tax is thereafter levied, maintain an action to recover the true amount thereof from the mortgagee.-*-^ But a purchaser of mortgaged property at fore- closure sale in satisfaction of the first mortgage thereon (such purchaser being the former first mortgagee) cannot recover from a second mort- gagee of the same property, whose interest was sold to the state for delinquent taxes, the amount expended by himself in the redemption of the property from the sale to the state in satisfaction of the tax lien upon the interest of the second mortgagee.^^ 350. Agreement Compelling Mortgagor to Pay Taxes or Assessments on Secured Obliga- tion Declared Void and Penalized.-^ A contract purporting to obligate a debtor to pay any tax or assessment on any obligation se- 19 San Gabriel Val. Land etc. Co. v. Witmer Bros. Co., 96 Cal. 623, 635, 29 Pac. 500, 31 Pac. 588, per McFarland, De Haven, Garoutte and Sharpstein, JJ.; Beatty, C. J., Paterson and Harrison, JJ., dissent- ing: Campbell v. Quackenbush (Cal.), 31 Pac. 746, in bank, Harrison, J., dissenting; Angus v. Plum, 121 Cal. 608, 54 Pac. 97, in bank. Temple, J., dissenting. 20 Canadian etc. Trust Co., Lim., v." Boas, 136 Cal. 419, 69 Pac. 18. 21 Agreement Compelling Mortgagor to Pay Taxes or Assessments on Secured Obligation Declared Void and Penalized: Burbridge v. Lemmert, 99 Cal. 493, 32 Pac. 310; Harralson v. Barrett, 99 Cal. 607, 34 Pac. 342; Garms v. Jensen, 103 Cal. 374, 37 Pac. 337. § 350 TAXATION. 571 Constitution, article 13, section 5: ^' Every con- tract hereafter made, by which a debtor is obligated to pay any tax or assessment on money loaned, or on any mortgage, deed of trust, or other lien, shall, as to any interest specified therein, and as to such tax or assessment, be null and void/' In Daw v. Niles, 104 Cal. 106, 110, 111, the court said: ^'The language of this section is not happily chosen; and, literally taken, involves an absurdity; for it speaks •of a contract which obligates the debtor, and is at the same time void. What is evidently meant, how- ever, is a contract which but for the invalidating effect of this provision, would obligate the debtor to pay the tax, and this contract must be a part of the contract to pay the interest; for it is the interest specified therein, i. e., in the contract to pay the tax, which is alone invalidated/' This section only applies to contracts made after the adoption of the present constitution: Beckman v. Skaggs, 59 Cal. 541, 544. Rationale. — The end attempted to be accomplished is that a portion of the taxes might be collected from the mortgagee, and that the burden of the mortgagor might not at the same time be increased: Hewitt v. Dean, 91 Cal. 5, 11, 27 Pac. 423; Harralson v. Bar- rett, 99 Cal. 607, 608, 34 Pac. 342. Illustrations.— A proviso in a mortgage that, upon a foreclosure, the mortgagee may include in the se- cured obligation all payments made by the mort- gagee ^*for taxes on said premises, and the taxes of this mortgage on the money hereby secured" is void: Harralson v. Barrett, 99 Cal. 607, 34 Pac. 342. An agreement that the mortgagee may pay taxes, assessments, or other liens, which may be imposed upon the mortgaged ^^land or premises,'' such pay- ments to be secured by the mortgage, does not come within the constitutional inhibition: Marye v. Hart, 76 Cal. 291, 18 Pac. 325; Longmaid v. Coulter, 123 Cal. 208, 218, 55 Pac. 791. A provision in a mortgage that the mortgagee may pay all taxes, liens, or assessments upon the mort- gaged property, and that the same shall be repaid 572 MORTGAGE. § 350 cured by mortgage, trust deed^ or other encum- brance is void, and when made a part of a written^^ agreement, although evidenced by a with interest thereon at the rate of one per cent per month, falls far short of being a contract by which the mortgagor is obligated to pay any taxes upon the money loaned, or upon the mortgages given there- for. Thus it does not exonerate the mortgagor from paying interest to the mortgagee: Bank of Ukiah v. Beed, 131 Cal. 597, 604, 63 Pac. 921. A mortgage containing a provision for the pay- ment by the mortgagor of all taxes upon the ^^land^' mortgaged, when it did not appear that any other taxes were assessed upon the land than those which were assessed upon it when the value of the security was deducted, does not come within the constitutional inhibition: Barnhart v. Edwards (Cal.), 47 Pac. 251, 252B, 2o3A. 22 To Avoid Interest the Contract must be Writ- ten. — The general rule, as stated in Code of Civil Procedure, section 1856, is that parol evidence can- not be admitted to alter the terms of a writing. There is, however, an exception to this rule which admits *' evidence of a parol agreement which is part of a written agreement when the effect of the parol agreement is to invalidate the written agreement. But the proposition that a parol promise to do an unlawful thing will invalidate the written promise of the same pa,rty to do what is entirely lawful has little authority and less reason to support it. Tt is, of course, very different when the written promise of one party is made in consideration of an oral agreement of the other party to do an unlawful act. .... In such case the illegality of the consideration may undoubtedly be proved as a defense to an ac- tion on the written contract, because it neces- sarily invalidates it.'* Thus, a parol agreement to pay the taxes made by the mortgagor does not inval- idate the contract to pay interest: Daw v. Niles, 104 Cal. 106, 118, 37 Pac. 876, per Beatty, C. J., Be Haven, McFarland and Fitzgerald, J J.; Garoutte and Har- § 350 TAXATION. 573 separate instrument,^^ releases the debtor from all liability to pay any interest which may be provided for by such agreement, without regard rison, JJ., dissenting; California State Bank v. Webber, 110 Cal. 538, 542, 42 Pac. 1066; Harrelson V. Tomich, 107 Cal. 627, 40 Pac. 1032; Fisk v. Casey, 110 Cal. 643, 645, 51 Pac. 1077. Eeferring to Daw v. Niles, the court, in Matthews V. Ormerd, 134 Cal. 84, 66 Pac. 67, 210, says: ''The point of the decision seems to be, that the obligation, which, under the constitutional provision, will de- prive the lender of interest, must be one which would have been valid and enforceable but for this provision. ' ' So evidence of a verbal agreement between the parties when agreeing upon the amount of interest to be paid to make the rate of interest two per cent higher than it would otherwise have been, in order to cover the anticipated taxes on the mortgage, is inadmissible. In the absence of a usury law^ any rate of interest for which the parties contract is legal; and it is immaterial what ordinary business considerations lead them to adopt the stipulated rate; Hotaling v. Monteith, 128 Ca.1. 556, 61 Pac. 95. In London etc. Bank v. Bandmann, 120 Cal. 220, 224, 65 Am. St. Eep. 179, 52 Pac. 583, an agreement by which the mortgagor had agreed to pay the taxes on the secured obligation was held not to deprive the mortgagee of the right to interest, first, because it did not appear that this agreement ''was a part of the contract of mortgage. If it was a separate agreement, if it was no part of the contract of mort- gage, then it has no force here, for it is only the in- terest that is sptecified in the contract that is made uncollectible for a violation of this provision of the constitution. '' i23 Separate Instruments Construed Together.— A mortgagor who makes a promise by a separate writ- ten instrument to pay taxes on the mortgage is re- leased from his obligation to pay interest: Burbridge V. Lemmert, 99 Cal. 493, 32 Pac. 310. 574 MORTGAGE. § 351 to whether or not the debtor actually pays any such tax or assessment.^'* But if a mortgagor whose contract purports to obligate him to pay such taxes or assessments actually makes a pay- ment of the interest due on the secured obliga- tion voluntarily;, whether under mistake of law or as a waiver of a known right, he cannot re- cover back such sum; nor can it be allowed as a credit upon the secured obligation.^^ 351. Agreement for Optional Payment of Taxes by Mortgagor Valid. An agreement allowing a mortgagor a certain reduction in the interest upon his indebtedness in case he pays the taxes thereon is valid.^^ AVhere a mortgage was executed providing for twelve per cent interest, and another instrument was contemporaneously made providing that the interest should be only eight per cent, plus the amount of taxes on the mortgage, and the difference should ba refunded to the mortgagor, or if the mortgagor paid the taxes, only eight per cent should be paid in the first place, the two instruments are to be construed together, and the agreement is then clearly within the constitutional prohibition, and the pTomise to pay interest is invalidated: Matthews v. Ormerd, 134 Cal. 84, 66 Pac. 67, 210. 24 Whether or not the mortgagor actually pays the taxes is immaterial, as the penalty is affixed not alone to the attempt to compel ■ the mortgagor to pay them, but to the contract itself. Its ob- ject is to prevent the making of such a contract as well as its enforcement: Garms v. Jensen, 103 Cal. 374, 377, 37 Cal. 337. 25 Harralson v. Barrett, 99 Cal. 607, 611, 34 Pac. 342; London etc. Bank v. Bandmann, 120 Cal. 220, 224, 65 Am. St. Eep. 179, 52 Pac. 583. § 352 MORTGAGEE IN POSSESSION. 575 Subdivision 6. Mortgagee in Possession of Im- movable Property. 352. Mortgagee in Possession Defined. A mortgag'ee^'^ of immovable property who takes possession of the property by virtue of an agreement between himself and the mortgagor and 26 A coUateral agreement allowed the mortgagor two and one-half per cent reduction in interest each year in which he paid the taxes upon the mort- gage. Held, such an agreement merely offers the mortgagor an option which he may exercise to his advantage, and as it does not compel him to pay the taxes is not in contravention of the constitutional provision: Hewitt v. Dean, 91 Cal. 5, 10-14) 27 Pac. 423; California State Bank v. Webber, 110 Cal. 538, 542, 42 Pac. 1066. 27 Mortgage in Possession Defined: Freeman v. Campbell, 109 Cal. 360, 362, 42 Pac. 35. Illustrations. — Where a mortgagor leased the mort- gaged property to a tenant for years, and the tenant assigned the lease to the mortgagee, and the mort- gagee entered into piossession, the mortgagee becomes a mortgagor in possession: Barnhart v. Edwards (Cal.), 47 Pac. 251, 253B-254A. But* a mortgagee who enters into the possession of -mortgaged premises after the death of the mortgagor, not adversely, but for the protection of the property, as well in the interest of the mortgagor as himself, is not a mortgagee in possession, but merely a quasi bailiff of the mortgagor: Freeman v. Campbell, 109 Cal. 360, 363, 42 Pac. 35. Where one of two cotenants mortgaged his estate to his cotenant, and the cotenant mortgagee took pos- session of the whole of the premises without any op- position from the cotenant mortgagor or those in I)Ossession, this fact by itself does not constitute, and goes but a little w^ay toward constituting, the mortgagee a mortgagee in possession. For, as the 576 MORTGAGE. § 352 in recognition of the relation between them, is called a mortgagee in possession. This rela- tion can be created by parol agreement.^^ 353. Mortgagee Entitled to Retain Possession Until Secured Obligation Satisfied. As against a mortgagor, his heirs and assigns, a mortgagee in possession, holding as such, is en- titled to retain the possession of the mortgaged premises until the satisfaction of the secured ob- ligation, without limitation of time.^^ mortgagee, being a cotenant, had the right to enter upon the premises, the acquiescence of the mortgagor cotenant in his possession is not inconsistent with his claim as cotenant, especially when the facts stated do not show that the mortgagor cotenant was in pos- session when the mortgagee took possession, nor that the mortgagee turned the mortgagor out of posses- sion, nor that the mortgagor ever had notice that the mortgagee had entered: Davenport v. Turpin, 41 Cal. 100, 103. 2S Spect V. Spect, 88 Cal. 437, 440, 22 Am. St. Eep. 314, 26 Pac. 203. 29 Mortgagee Entitled to Eetain Possession Until Secured OlDligation Satisfied: Dutton v. WarscHauer, 21 Cal. 609, 626, 82 Am. Dec. 765; Frink v. Le Eoy, 49 Cal. 344. ' ''In taking possession, the mortgagee does not thereby acquire any estate in the land, or obtain for his mortgage any higher character or any greater or diif erent protection than it would otherwise have pos- sessed. In any action to enforce the mortgage, or to collect the debt for which it was given as security, the mortgagee has no additional rights by reason of the fact that he is in possession of the mortgaged premises with the consent of the mortgagor. ''Such possession does, however, give him rights in addition to those conferred by • the mortgage. It § 354 MORTGAGEE IN POSSESSION. 577 354. Mortgagee in Possession must Exercise Or- dinary Care. A mortgagee in possession must exercise ordi- nary care in respect to the mortgaged premises.^^ is an additional security for the debt, which he is entitled to retain in accordance with the terms under which it was received. This right to retain posses- sion of the land is not coincident with a right to foreclose his mortgage, or dependent upon such right, but depends solely upon the existence of the debt. The possession of the land is a special security for the debt, distinct and separate from the mortgage, which has been conferred by an act of the debtor, and the right to retain the same is independent of, and distinct from, any right springing from the mort- gage "When, therefore, in addition to the con- tract of hypothecation, the debtor gives to his cred- itor the possession of the mortgaged premises, he thereby, in addition to the mortgage which he has ex- ecuted, also pledges the land to him as security for the debt, and confers upon him such rights as are incident to a pledge On the same principle that the party who holds goods in pledge for a debt may retain those goods, even after an action upon such debt has been barred, the party who has got the rightful pos- session of land mortgaged may retain possession thereof until his debt is paid, although he can bring no action to foreclose the debt'^: Spect v. Spect, 88 Cal. 437, 440-442, 22 Am. St. Eep. 314, 26 Pac. 203. Compare Nagle v. Macy, 9 Cal. 426, 428; Kobinson V. Kussell, 24 Cal. 467, 472, 473. A mortgagee is entitled to remain in p'ossession as against a receiver appointed at the instance of the wife of the mortgagor, the wife suing the husband for a divorce: Cummings v. Cummings, 75 Cal. 434, 439, 440, 17 Pac. 442. 30 Must Exercise Ordinary Care: Benham v. Eowe, 2 Cal. 387, 398, 407, 56 Am. Dec. 342; Murdock v. Clarke, 59 Cal. 683, 694; 90 Cal. 427, 439, 440, 27 Pac. 275. Lic^is— 37 578 MORTGAGE. § 355 355. Mortgagee Accountable for Net Proceeds of Mortgaged Premises. A mortgagee in possession is chargeable with the rents and profits of the mortgaged premises after deducting taxes paid and other expenses necessarily incurred^^^ and must^in the absence of A mortgagee in possession is accountable merely for the net profits or rents, unless reduced by his willful default or gross negligence. By taking possession he impioses upon himself the duty of a provident owner, and he is bound to recover what such an owner would with reasonable diligence have recovered: Hidden v. Jordan, 28 Cal. 301, 309; Murdock v. Clarke, 90 Cal. 427, 439, 27 Pac. 275. A mortgagee who acts in bad faith toward the owner of the property is liable in damages. If guilty of gross negligence, he is chargeable with the dif- ference between the rents and profits received and the amount of those which should have been received, to be determined by a jury: Benham v. Eowe, 2 Cal. 387, 398, 399, 407, 56 Am. Dec. 342. But a person put into the possession of the mort- gaged property by the mortgagor and mortgagee jointly, who was to account to the mortgagee, is the agent of both parties for the management, so that the mortgagee upon subsequently becoming a mortgagee in possession is not accountable for his acts, nor for any waste or mismanagement by him: Murdock v. Clarke, 90 Cal. 427, 432-435, 27 Pac. 275. 31 Raun V. Eeynolds, 15 Cal. 459, 471; Hidden v. Jordan, 28 Cal. 301, 309; Murdock v. Clarke, 59 Cal. 683, 694; Husheon v. Husheon, 71 Cal. 407, 417, 12 Pac. 410; De Cazara v. Orena, 80 Cal. 132, 134, 135, 2Z Pac. 74; Murdock v. Clarke, 90 Cal. 427, 438, 27 Pac. 275; Moss v. Odell, 134 Cal. 464, 466, m Pac. 581. Compare Malone v. Roy, 118 Cal. 512, 50 Pac. 542. The mortgagee is chargeable with the net proceeds in the settlement of the secured obligation, and any § 355 MORTGAGEE IN POSSESSION. 579 a special agreement to the contrary, apply such net proceeds to the interest first and then to the principal of the secured obligation.^^ surplus remaining is subject to the disposition of the mortgagors. For such surplus he is the trustee of the mortgagor, the trust arising from the very nature of the security, by operation of law: Pierce v. Eobin- son, 13 Cal. 116, 120. Where no negligence or improper conduct is found, the mortgagee is only chargeable with what he has actually received: Murdock v. Clarke, 90 Cal. 427, 438, 27 Pac. 275; Barnhart v. Edwards (Cal.), 47 Pae. 251, 254A. The wages of a person hired by a mortgagee in possession under an agreement with the mortgagor to take charge of the mortgaged premises are a dis- bursement with which the mortgagee should be credited in the settlement of his account: Murdock v. Clarke, 59 Cal. 683, 695, 696. 32 In the absence of an explicit agreement to the contrary, a mortgagee in possession may recei\e the rents and profits of the mortgaged premises, and apply them to the payment of the secured debt. There is, indeed, no other good reason why the mort- gagor should be let into possession in preference to anv other party: Button v. Warschauer, 21 Cal. 609, 626, 82 Am. Dec. 765; Spect v. Spect, 88 Cal. 437, 442, 22 Am. St. Eep. 314, 26 Pac. 203. In the absence of a special agreement, the mort- gagee must apply rents and profits received to the interest first, and then to the principal of the mort- gage debt, but this duty may be supplanted by a specific agreement between the mortgagor and the mortgagee, as an agreement that the excess of rents beyond interest on the mortgage obligation shall be applied to other indebtedness due from the mortgagor, or to become due up to an assignment of the mort- gaged property: Demick v. Cuddihy, 72 Cal. 110, 12 Pac. 287, 13 Pac. 166. 580 MORTGAGE. § 350 356. Obscurities in Accounts of Mortgagee to be Resolved Against Him. The accounts of a mortgagee in possession should be clear and accurate^ and all obscurities and doubts must be resolved against him.^^ 357. Mortgagee not Entitled to Compensation for His Services. A mortgagee in possession is not entitled to make any charge for his services in respect to the mortgaged premises.^^ 358. Mortgagee may Sublet Mortgaged Prem- ises. A mortgagee in possession is not required to himself operate the mortgaged premises^ but msij rent them instead for their full value to any suit- able tenant.^^ 33 Murdock v. Clarke, 90 Cal. 427, 438, 27 Pac. 275. 34 Mortgagee not Entitled to Compensation. Rationale.— Where a mortgagee takes possession of the mortgaged premises, his care and trouble are be- stowed for the furthering and protection of his own interests. He is not a mere naked trustee, nor is his capacity that of an agent. He is, while in posses- sion, quasi its owner. It is a charge which he has voluntarily taken upon himself, and for which he has no right to seek a compensation out of the mortgagor: Benham v. Eowe, 2 Cal. 387, 408, 56 Am. Dec. 342. 35 Button V. Warschauer, 21 Cal. 609, 626, 82 Am. Dec. 765; Hidden v. Jordan, 28 Cal. 301, 309. § 359 MORTGAGEE IN POSSESSION. 581 359. Mortgag^ee not Generally Entitled to Al- lowance for New Improvements.^^ In the absence of special circumstances re- quiring the construction of new and permanent improvements, a mortgagee in possession cannot be allowed their cost;^'' but is not chargeable with any enhanced value of the rents and profits of the mortgaged premises resulting therefrom, unless an allowance is also made to him for the actual cost to him of the improvements.^^ 360. No Limitation on Time of Commencing Ac- tion to Cause Discharge of Mortgage Brought Against Mortgagee in Possession as Such.^ Unless a mortgagee in possession or those claiming under him have continuously maintained 36 Hidden v. Jordan, 28 Cal. 301, 309; 32 Cal. 397, 401. 37 So the cost of a fence cannot be allowed, unless necessary for the protection of the crops: Hidden v. Jordan, 28 Cal. 301, 309. A mortgagee in ptossession may make such repairs as are reasonably necessary for the preservation of the property, but not permanent improvements, or things which conduce merely to his comfort or convenience. The cases which go beyond this rest on grounds of equitable estoppel: Eaynor v. Drew, 72 Cal. 307, 312, 13 Pac. 866. 38 The mortgagee in possession is entitled to charge the mortgagor not more than the actual cost to him of such improvements: Hidden v. Jordan, 32 Cal. 397, 401. 39 Action to Discharge Mortgage in General.— Code of Civil Procedure, section 346, as enacted in 1872, 582 MORTGAGE. § 360 an adverse possession of the mortgaged premises for ^Ye years after breach of some condition of provides: ''An action to redeem a mortgage of real propierty, with or without an account of rents and profits, may be brought by the mortgagor, or those claiming under him, against the mortgagee in pos- session, or those claiming under him, unless he or they liave continuously maintained an adverse possession of the mortgaged premises for five years after breach of some condition of the mortgage/' The old phraseology has come down to us, and found a place in the statute. But it is manifest that an ac- tion to ^ ^redeem,'' where the title remains in the mortgagor and the mortgage is extinguished by lapse of time (Civil Code, section 2911), is in effect merely an action to remove a cloud. And, as a court of equity may require justice to be done as a condition of removing a cloud, why should there be any limita- tion for such an action? Eavnor v. Drew, 72 Cal. 307, 312, 13 Pac. 866. Ejectment. — The mortgagor cannot maintain an ac- tion in ejectment against the mortgagee in possession, unless the mortgagee is holding adversely. Mere lapse of time, however, does not constitute adverse possession: Spect v. Spect, 88 Cal. 437, 445, 22 Am. St. Eep. 314, 26 Pac. 203. Jurisdiction. — Where the defendant is a resident of the state, although the property involved is without its jurisdiction, the court has jurisdiction of such an action, so far as the remedy in personam by account- ing is available, and may exercise that: Peninsular etc. Co. V. Pacific Steam Whaling Co., 123 Cal. 689, 696, 697, 56 Pac. 604. Historical.— Before the adoption of the code, the rule w^as that, the rights of foreclosure and redemp- tion being reciprocal (as was said), when the right to foreclosure was barred by lapse of time, the right to redeem was also barred: Grattan v. Wiggins, 23 Cal. 16, 35; Cunningham v. Hawkins, 24 Cal. 403, 409-411, 85 Am. Dec. 502; Arrington v. Liscom, 34 Cal. 365, 369, 94 Am. Dec. 722; Espinosa v. Gregory, 40 Cal. § 360 MORTGAGEE IN POSSESSION. 583 the mortgage^^^an action against any such person to cause an immovable property mortgage to be discharged upon the satisfaction thereof,'** with or without an account of rents and profits, niay, without limitation of time,^^ be maintained by the mortgagor and those claiming under him. 58; Taylor v. Mc[C]Lain, 60 Cal. 651; 64 Cal. 513, 2 Pao. 399. 40 The right of action is defeated by five years' adverse possession after breach of some condition of the mortgage: Warder v. Enslen, 73 Cal. 291, 14 Pac. 874; Peshine v. Ord, 119 Cal. 311, 314, 63 Am. St. Eep. 131, 51 Pac. 536. Compare Prink v. Le Koy, 49 Cal. 314; Eaynor v. Drew, 72 Cal. 307, 311, 13 Pac. 866. Such adverse possession ''would not operate upon the lien alone, but would attack and overcome the legal title, and in effect would be the same as if a stranger to the title should obtain actual possession by a trespass, and succeed in holding adversely for the statutory period'': Hall v. Arnott, 80 Cal. 348, 356, 22 Pac. 200. 41 Mortgage will not be Discharged Without Sat- isfaction of Secured Obligation.— Although the mort- gage has been extinguished by lapse of time, the mort- gagor cannot obtain affirmative relief without sartis- fying the obligation which was secured, on the maxim that he who seeks equity must do equity, the moral obligation to pay subsisting notwithstanding that the remedv at law is barred: Peshine v. Ord, 119 Cal. 311, 314, 63 Am. St. Rep. 131, 51 Pac. 56. 42 Action may be Commenced Without Limitation of Time. — At any time after the principal obligation becomes due, the mortgagor may have the lien extin- guished that would otherwise cloud his title, upon paving the debt, without limitation as to time: Hall V. Arnott, 80 Cal. 348, 355, 22 Pac. 200. 584 MORTGAGE. § 361 361. Same — When Certain Parties Interested in the Mortgaged Premises are not Entitled to Bring Such Action. If there is more than one such mortgagor, or more than one person claiming under a mort- gagor^ some of whom are not entitled to main- tain such an action^ any one of them who is en- titled to maintain such an action may redeem therein a divided or undivided part of the mort- gaged premises, according as his interest may ap- pear, and have an accounting for a part of the rents and profits, proportionate to his interest in the mortgaged premises, on payment of a part of the mortgage ohligation bearing the same pro- portion to the whole of such obligation as the value of his divided or undivided interest in the premises bears to the whole of such premises.^^ 43 Compare Code of Civil Procedure, section 347. S(>'> ASSIGNMENT THEREOF. ' 685 ARTICLE 5. ASSIGNMENT OF MORTGAGE. • 362. Mortgage assigned by assignment of principal obligation. 363. Assignment when principal obligation not in writing. 364. Assignment of mortgage may be recorded. 365. Record of assignment does not invalidate pay- ment by mortgagor of evidence of mortgage indebtedness. S66. Record operates as notice in every other case. 362. Mortgage Assigned by Assignment af Prin- cipal Obligation. The assignment of an obligation secured by mortgage carries with it the security/ or where a plurality of obligations are secured by one mort- gage^ a pro rata thereof,^ without the necessity 1 See Civil Code, section 2936. Where the assignment is made after maturity, it is subject to the equities against the assignor, the same as in any other case: Brown v. Witts, 57 Cal. 304. 2 The indorsement of one of several notes secured by a single mortgage carries with it a pro rata of the security: Phelan v. Olney, 6 Cal. 478, 483. See section 278, above. k 58ft MORTGAGE. § 362 of an assignment of the instrument of mortgage.^ As distinct from the secured obligation^ a mort- gage is not a subject of transfer.* 3 Without the Necessity of the Assignment of the Instrument of Mortgage.— A mortgage is the incident of the debt it secures, and the indorsement or assign- ment of a promissory note thereby secured carries with it the security without a formal transfer of the in- strument of mortgage: Ord v. McKee, 5 Cal. 515; Phelan v. Olney, 6 Cal. 478, 483; Willis v. Farley, 24 Cal. 490, 497; Mack v. Wetzlar, 39 Cal. 247, 256; Storch V. McCain, 85 Cal. 304, 307, 24 Pac. 639; Bur- nett V. Lyford, 93 Cal. 114, 117, 28 Pac. 855; Adler v. F^argent, 109 Cal. 42, 49, 50, 41 Pac. 799; Savings etc. Soc. V. McKoon, 120 Cal. 177, 179, 52 Pac. 305. The assignment by way of pledge of an obligation secured by a movable property mortgage has the same effect: Bank of Woodland v. Duncan, 117 Cal. 412, 415, 49 Pac. 414. 4 Apart from Secured Obligation, Mortgage Non- transferable. — The debt and the mortgage are insepa- rable. The latter must follow the former. As distinct from the debt the mortgage has no determinate value and is not a subject of transfer. An assignment of the mortgage without the secured obligation is a nullity: Nagle V. Macv, 9 Cal. 426, 428; Polhemus v. Trainer, 30 Cal. 685, 687, 688; Hyde v. Mangan, 88 Cal. 319, 327, 26 Pac. 180. * ^ * A mortgage is a mere incident to the debt, and will not pass except by an assignment of the note, or debt^': Bitter v. Stevenson, 7 Cal. 388. The recorded transfer of a mortgage along with a forged note purporting to be secured thereby does not affect the rights of the assignee of the genuine note to secure which the mortgage was given, even when there was n,o delivery of the instrument of mortgage to the assignee: Adler v. Sargent, 109 Cal. 42, 41 Pac. 799. § 363 ASSIGNMENT THEREOF. 587 363. Assignment When Principal Obligation not in Writing. Where the obligation secured by mortgage is not evidenced by writing, the assignment of tho instrument of mortgage assigns such obligation.^ 364. Assignment of Mortgage may be Recorded. The assignment of a mortgage may be recorded in like manner as a mortgage.^ 365. Record of Assignment does not Invalidate Payment by Mortgagor of Evidence of Mortgage Indebtedness. The record of the assignment of a mortgagii executed as security for an obligation evidenced 5 Peters v. Jamestown Bridge Co., 5 Cal. 334, 63 Am. Dec. 134. An assignment of a mortgage is not a grant of an estate of real property, and thus does not come within the provisions of section 1107 of the Civil Code as to recordation: Adler v. Sargent, 109 Cal. 42, 49, 41 Pac. 799. The assignee of an instrument of mortgage after maturity is affected with all the equities against his assignor: Brown v. Witts, 57 Cal.- 304. But a purported deed of mortgaged property exe- cuted by the mortgagee cannot '^operate as an as- signment of the mortgage. The latter is a mere se- curity for the debt; so it would seem that the two transactions are totally different in character; the in- tent of the one is to convey title to the land; of the other, to transfer a debt with its security'': Peters V. Jamestown Bridge Co., 5 Cal. 334, 63 Am. Dec. 134; Mack V. Wetzlar, 39 Cal. 247, 256. 6 Compare Civil Code, section 2934, quoted at section 366, note 8, below. 588 MORTGAGE. § 365 by a promissory note^ bond, or other instrument designated in the mortgage does not of itself con- ' stitute such notice to a mortgagor, his heirs or personal representatives, as to invalidate a pay- ment made by any of them to the person hold- ing such evidence of mortgage indebtedness.'' 366. Record Operates as Notice in Every Other Case. Except as provided in the preceding section, the record of the assignment of a mortgage operates as notice to the mortgagor and every- one else.® 7 See Civil Code, section 2935, quoted under sec- tion 366, note 8, below. So, where a mortgagor conveyed the mortgaged property to the mortgage holder, part of the consid- eration being the cancellation of the note secured by the mortgage, and the mortgage holder had actual pos- session of the secured note at the time of the transac- tion, the payment is not invalidated by the fact that such mortgage holder had previously assigned the mortgage obligation to a third party for value with- out notice (without a change of possession of the note), and that such assignment had been recorded: Bodgers v. Parker, 136 Cal. 313, 316, 68 Pac. 975. 8 Record Operates as Notice in Every Other Case. Civil Code, section 2934: ''An assignment of a mort- gage may be recorded in like manner as a mortgage, and such record operates as notice to all persons sub- sequently deriving title to the mortgage from the as- signor. ' ' Section 2935: ''When the mortgage is executed as security for money due, or to become due, on a promis- sory note, bond, or other instrument, designated in the mortgage, the record of the assignment of the § 366 ASSIGNMENT THEREOF. 589 mortgage is not, of itself, notice to a mortgagor, his heirs, or personal representatives, so as to invalidate any payment made by them, or either of them, to the person holding such note, bond, or other instrument.^' In Rodgers v. Peckham, 120 Cal. 238, 242, 52 Pac. 483, the court says: ^^It will be observed that section 2934 does not declare that the record of the assign- ment of a mortgage will operate as notice only to per- sons subsequently deriving title to the mortgage from the assignor, while the language used in section 2935 clearly imports that such a record would operate as notice to a mortgagor, so as to invalidate any payment made by him to a person not holding the note or mort- gage. And in such case, if a payment is so made, it must be treated as made at the risk of the party mak- ing! it." Illustrations. — A payment made by a transferee of a mortgagor to the original mortgagor after the recordation of the assignment of the principal obliga- tion accompanied by the transfer of the notes evi- dencing it is of no effect: Woodward v. Brown, 119 Cal. 283, 302, 303, 63 Am. St. Rep. 108, 51 Pac. 2, 542. The fact that the note secured by the mortgage was non-negotiable, and that the payment was made to the original mortgagee does not alter the rule either as to the mortgagor or a bona fide purchaser without notice of the mortgaged property, as the record con- cludes them both: Rodgers v. Peckham, 120 Cal. 238, 52 Pac. 483. I 590 IMMOVABLE PROPERTY MORTGAGE. § 367 AETICLE 6. TEANSFER OF MORTGAGED IMMOVABLE PROPERTY. 367. Mortgagor may transfer mortgaged immovaole property. 368. Purchaser who assumes mortgage obligation be- comes principal obligor. 369. Purchaser of part of property who assumes part of mortgage obligation primarily chargeable pro tanto. 370. Such purchaser liable for expenses of foreclosure. 371. Such purchaser not liable for unsecured obliga- tions. 372. Purchaser not presumed to assume liability. 373. Mortgage voidable between original parties valid as to purchaser. 367. Mortgagor may Transfer Mortgaged Im- movable Property.^ A mortgagor may, at any time before his in- terest in mortgaged immovable property is ex- tinguished or the period of redemption has ex- pired, transfer his right thereto.^ . 1 on the effect of a transfer of mortgaged mov- able property, see section 378, below. 3 So ne cannot, by injunction, be restrained from selling the property during the pendency of fore- closure proceedings; Br eon v. Strelitz, 48 Cal. 645. § 368 TRANSFER OF PROPERTY. 591 368. Purchaser Who Assumes Mortgage Obliga- tion Becomes Principal Obligor. A purchaser of mortgaged immovable prop-' erty who for a consideration^ agrees^ to assume 3 Consideration Necessary.— A verbal promise to assume the secured obligation made by the purchaser subsequently to receiving the conveyance of the prop- erty and without consideration is not binding: Com- mercial Bank of Madera v. Eedfield, 122 Cal. 405, 408, 409, 55 Pac. 160. 4 Agreement to Assume Debt.— ** It is not necessary that there should be a formal promise, on the part of the grantee, to pay the mortgage debt, in order to ren- der him liable therefor, if his intention to assume the debt appears from a consideration of the entire in- strument. The obligation may be made orally or in a separate instrument; it may be implied from the transaction of the parties, or it may be shown by the circumstances under which the purchase was made, as well as the language used in the agreement": Hop- kins V. Warner, 109 Cal. 133, 137, 138, 41 Pac. 868. Agreements Rendering Purchaser Liahle.— An agree- ment by the purchaser of mortgaged property at all times to hold the mortgagor vendor harmless as against any mortgages existing upon the real estate this day transferred to the purchaser,, is an agreement to as- sume the entire mortgage debt: Hopkins v. Warner, 109 Cal. 133, 138, 41 Pac. 868. An agreement by the purchaser of mortgaged prop- erty that his conveyance is *^ subject, however, to a certain mortgage of seven hundred and fifty dollars, dated February 2, 1892, upon which has been paid fifty dollars; the party of the second part hereby assumes the payment of the above mortgage," is **an agree- ment to pay the note secured by the mortgage, for in no other way could the mortgage be paid": Daniels V. Johnson, 129 Cal. 415, 417, 79 Am. St. Eep. 123, 61 Pac. 1107. A purchaser of mortgaged property who agrees to *' assume the payment of a certain mortgage" agrees 502 IMMOVA.BLE PROPERTY MORTGAGE. § 368 the payment of the mortgage obligation^ is deemed, as between the mortgagor and pur- not merely to cause the mortgage to be discharged, but to satisfy the secured obligation. Any other con- struction would be absurds Lewis v. Covillaud, 21 Cal. 178, 189. Agreements not EstoUisJiing Personal Liability,— K mere recital in a deed that a deed is made subject to the ^^ payments, conditions, and agreements^' con- tained in a certain mortgage imposes no obligation on the grantee to pay the mortgage debt. Deeds are construed most strongly against the grantor, and in the absence of any agreement importing that the gran- tee shall assume upon himself the payment of a prior mortgage upon the premises, no such obligation arises, and the purchaser does not become personally liable for the mortgage obligation: Salmon v. Wilson, 41 Cal. 595, 608. An agreement by a second mortgagee to discharge a first mortgage upon the mortgaged property does not make the second mortgagee liable to the first mort- gagee for a deficiency of proceeds arising upon the sale of the mortgaged premises: Savings Bank of Southern Cal. v. Thornton, 112 Cal. 255, 44 Pac. 446. Where the grantee of the mortgagor is not rendered personally liable, a recital in a deed by such grantee to a subsequent grantee from him, that such grantee assumes a mortgage thereon does not render him per- sonally liable therefor: Ward v. De Oca, 120 Cal. 102, 105, 52 Pac. 130. 5 Referring to a provision in a deed of certain mortgaged premises that the grantee '^ assumes the payment of the above mortgage," the court said that, while the language of the agreement is that the grantee shall pay the mortgage, the real meaning of the covenant is that the grantee shall pay the note which the mortgage secures, for the discharge of the note is the only way to pay the mortgage, the latter being only the incident, the note being the principal thing: Daniels v. Johnson, 129 Cal. 415, 417, 79 Am. St. Rep. 123, 61 Pac. 1107. § 368 TRANSFER OF PROPERTY. 593 chaser,® and in reference to the mortgagee at the option of the mortgagee/ the principal debtor, and the mortgagor his surety. 6 Renders Purchaser Principal Debtor as Between Him and Mortgagor: A.bell v. Coons, 7 Cal. 105, 109, 68 Am. Dec. 229; Thomas v. Bettens, 94 Cal. 82, 84, 85, 29 Pac. 336; Williams v. Naftzger, 103 Cal. 438, 440, 37 Pac. 411; Hopkins v. Warner, 109 Cal. 133, 136, 41 Pac. 868; Tulare Co. Bank v. Madden, 109 Cal. 312, 314, 41 Pac. 1092; Eoberts v. Fitzallen, 120 Cal. 482, 484, 52 Pac. 818; Tuohy v. Woods, 122 Cal. 665, 667, 55 Pac. 683; Herd v. Tuohy, 133 Cal. 55, 61, 62, 65 Pac. 139; Daniels v. Johnson, 129 Cal. 415, 418, 79 Am. St. Eep. 123, 61 Pac. 1107. 7 Mortgagee may Hold Purchaser as Principal Debtor. Where the purchaser of mortgaged premises as- sumes the payment of the secured obligation, the court is not required to enter a personal judgment against the purchaser when not requested to do so by the mortgagee, but in such case the transferor's remedy against the purchaser must be obtained in an inde- pendent action: O'Neal v. Hart, 116 Cal. 69, 47 Pac. 926, This liability of the purchaser to the mortgagee * * re- sults from the familiar doctrine in equity that a cred- itor is entitled to the benefit of all securities or col- lateral obligations that his principal debtor may have given to the surety for the payment of the debt." Thus, in an action for the foreclosure of the mortgage, if the mortgaged premises are insufficient to satisfy the mortgage debt, judgment may be rendered against the purchaser as well as against the mortgagor for the amount of the deficiency: Williams v. Naftzger, 103 Cal. 438, 440, 37 Pac. 411; Hopkins v. Warner, 109 Cal. 133, 136, 41 Pac. 868; Tulare Co. Bank v. Madden, 109 Cal. 312, 314, 41 Pac. 1092; Daniels v. Johnson, 129 Cal. 415, 418, 79 Am. St. Eep. 123, 61 Pac. 1107. This principle is formulated in Civil Code, section 2854: ''A creditor is entitled to the benefit of every- Liens— 38 594 IMMOVABLE PROPERTY MORTGAGE. § 369 369. Purchaser of Part of Property Who As- sumes Part of Mortgage Obligation Pri- marily Chargeable Pro Tanto. A purchaser of part of mortgaged premises who binds himself to pay the whole or any part of the mortgage obligation, his assigns with no- tice of such agreement, and the property pur- chased, as between themselves and the mort- gagor and his successors in interest in other parts of the premises, become primarily liable for the mortgage obligation so far as assumed by them.^ 370. Such Purchaser Liable for Expenses of Foreclosure. A purchaser of mortgaged property who as- sumes the mortgage obligation becomes liable for the expenses of foreclosure.® 371. Such Purchaser not Liable for Unsecured Obligations. A purchaser of mortgaged property who binds himself to pay the obligation secured by the thing which a surety has received from a debtor by way of security for the performance of the obligation, and may, upon the maturity of the obligation, compel the application of such security to its satisfaction. ' ' 8 So where a purchaser of part - of mortgaged property agreed to pay eight dollars per acre upon the secured obligation, upon the foreclosure of the mortgage, his share of the property is primarily liable for such portion of the secured obligation: Ir- vine V. Perry, 119 Cal. 352, 356, 51 Pac. 544, 949. 9 Tulare Co. Bank v. Madden, 109 Cal. 312, 315, 41 Pac. 1092. § 371 TRANSFER OF PROPERTY. 695 mortgage is not thereby rendered liable for the payment of any obligation provided for by the mortgage note but unsecured by the mortgage.-^** 372. Purchaser not Presumed to Assume Liabil- ity. In the absence of an express agreement/* a purchaser of the whole or any part of mortgaged property is not personally bound to satisfy the whole or any part of the secured obligation; and in case of a purchase of a part of the property, the portion then remaining in the mortgagor's ownership is primarily chargeable*^ with the se- cured obligation. 373. Mortgage Voidable Between Original Par- ties Valid as to Purchaser. A mortgage, voidable between the original parties thereto, is nevertheless valid as against 10 So the purchaser is not liable for an attor- ney's fee provided for by the secured note but not secured by the mortgage: Eoberts v. Fitzallen, 120 Cal. 482, 484, 485, 52 Pac. 818. 11 The fact that the purchaser assumes personal liability must be affirmatively shown: Thomson v. Bet- tens, 94 Cal. 82, 84, 29 Pac. 336. Where the purchaser of mortgaged property from the mortgagor takes the property ''subject to the mort- gage, '' such purchaser does not assume liability for any deficiency that may occur from the sale of the mortgaged property at foreclosure: Commercial Bank V. Eedfield, 122 Cal. 405, 408, 55 Pac. 160. 12 See section 21, subdivision 4, above. A fortiori is this so, where the property is sold un- 696 MORTGAGE. § 373 a purchaser of the mortgaged property who as- sumes the payment thereof by a recital in the deed to him.^^ der a warranty against the mortgagor's acts: Clieever V. Fair, 5 Cal. 337. 13 Alvord V. Spring Yal. Gold Co., 106 Cal. 547, ,552, 553, 40 Pac. 27. EXTINCTION THEREOF. 697 AETICLE 7. EXTINCTION OF MOETGAGE. Subdivision 1. Rules Governing Extinction of All Mortgages. 374:, Extinction in general. 375. Extinction by lapse of time. 376. Not extinguished by tender after maturity. 377. Change in mode of evidencing indebtedness does not extinguish mortgage. Subdivision 2. Special Modes of Extinction of Movable Property Mortgage, 378. Movable property mortgage extinguished by au- thorized sale by mortgagor of the mortgaged property. 379. Extinction by removal. Subdivision 3, Extinction of Recorded Mortgage must be Recorded. 380. Extinction of recorded mortgage must be re- corded. 381. Certificate of discharge must be recorded at length. 382. Mortgage required under penalty to make cer- tificate of discharge, 383. Discharge by foreign executors. 384. Eelease of mortgage of record by mistake bind- ing as to certain parties and until set aside as to all others. 598 MORTGAGE. § 374 Subdivision 1. Rules Governing Extinction of all Mortgages, 374. Extinction in General. Except as otherwise in this article provided, a mortgage is extinguished as provided in sec- tions 81 to 89^ inclusive, above. 375. Extinction by Lapse of Time. A mortgage is extinguished by the lapse of time within which an action can be commenced for the foreclosure thereof.^ [376. Not Extinguished by Tender After Matur- ity. A mortgage is not extinguished by the refusal of a sufficient tender of the principal obligation made after the maturity thereof.]^ 1 Extinction by Lapse of Time. Civil Code, section 2911: ''A lien is extinguished by the lapse of time within which .... an action can be brought upon the principal obligation.'' This section is not wholly applicable to the case of mortgages, for where the principal obligation is not evidenced in writing, the remedy thereon is barred in two years, but the remedy on the written instru- ment of mortgage is not barred for four years: See NewhaU v. Sherman, Clay & Co., 124 Cal. 509, 511, 57 Pac. 387. So the statement found in some of the cases (for instance, AUen v. AHen (Cal.), 27 Pac. 30, 32A), that a mortgage is extinguished or barred by the lapse of the time within which an action may be maintained upon the principal obligation is fully applicable only § 377 EXTINCTION THEREOF. 599 377. Change in Mode of Evidencing Indebted- ness does not Extinguish Mortgage. A mere change in the mode of evidencing an obligation secured by mortgage does not extin- guish the mortgage unless so intended to oper- ate.^ where the principal obligation is evidenced by a writing. See section 393, below. 2 Not Extinguished by Tender After Maturity. Perre v. Castro, 14 Cal. 519, 530, 76 Am. Dec. 444; Himmelmann v. Fitzpatrick, 50 Cal. 650 (this case being decided after the enactment of the code) ; Chielovicli v. Krauss (Cal.), 11 Pac. 945. Compare, however, the remarks of a contrary tend- ency in Hayes v. Josephi, 26 Cal. 535, 546; Mahler v. Newbaur, 32 Cal. 168, 171, 91 Am. Dec. 571; Ketchum v. Crippen, 37 Cal. 223, 226. Section 83, above, Civil Code, section 2905, seems to have been wholly neglected in reaching this con- clusion. It is clear that a tender on the law day of the mortgage would be sufficient to discharge it. 3 Tolman v. Smith, 85 Cal. 280, 287-289, 24 Pac. 743; London etc. Bank v. Bandmann, 120 Cal. 220, 65 Am. St. Eep. 179, 52 Pac. 583; Bonestell v. Bowie, 128 Cal. 511, 514, 515, 61 Pac. 78. Illustration.— Where a mortgage was given to secure 'Hhe present indebtedness '' of the mortgagor, and *^such advances as said bank may hereafter make'' to him with interest, and the principal obligation was evidenced by two promissory notes, ^Hhe present indebtedness'' and not the notes was the principal obligation, and a surrender of the original notes, and a substitution of others for them, does not extinguish the mortgage, but continues it until thei expiration of four years from the maturity of such notes. And the same is true as to the advances made: London etc. 600 MORTGAGE. § 378 Subdivision 2. Special Modes of Extinction of Movable Property Mortgage. 378. Movable Property Mortgage Extinguished by Authorized Sale by Mortgagor of the Mortgaged Property. The sale of mortgaged movable property by the mortgagor under the authorization of the mortgagee extinguishes the mortgage.^ When the proceeds of such sale are received by the mortgagor, no lien is created thereon for the benefit of the mortgagee,'* but if the proceeds are to be received by the mortgagee directly, they are impressed with a lien in his favor.^ Bank v. Bandmann, 120 Cal. 220, 65 Am. St. Rep. 179, 52 Pac. 583. 4 Maier v. Freeman, 112 Cal. 8, 53 Am. St. Itep. 151, 44 Pac. 357. 5 Proceeds Received by Mortgage Directly.— Where a movable property mortgagor, the mortgagee consent- ing on condition that the purchaser pay the mortgage obligation to the mortgagee as part of the purchase price, transfers the property to a third person, a lien ottachep to the purchase money in favor of the mort- gagee, so that a third person attaching it in the hands of the purchaser secures no rights thereto as against the mortgagee; and the purchaser will not render himself liable to the attachment creditor by paying the amount to the mortgagee. Referring to Maier v. Freeman, the court said: *'The facts of the two cases are widely variant. In that case the sheep had not been sold at the time the agreement between the mortgagor and mortgagee was inade; and, in addition to that important fact, there, the mortgagor was to receive the proceeds of the sale of the sheep. Here, neither of these controlling cir- § 379 EXTINCTION THEREOF. 601 379. Extinction by Removal. As to a bona fide purchaser or encumbrancer for value and as to any creditor, a mortgaged crop is released from the operation of the mort- gage by the removal of the crop from the land upon which it was raised with the consent or through the laches of the mortgagor.^ Except as between the parties to a mortgage, any mort- gaged movable property (except the rolling stock of a common carrier) is released from the opera- tion of the mortgage thereof by its removal from the county in which it was situate, unless within thirty days after the removal the mortgage is duly recorded in the county to which the prop- erty has been removed.'' cumstances is presented'': Mclntyre v. Hauser, 131 Cal. 11, 14, 63 Pac. 69. There does not, however, seem to be a foundation for this distinction, as in both, cases the mortgagee consented to the sale before it was made, the only difference being that in the Mclntyre case the money was paid directly to the mortgagee, while in the Maier case it was received by the mortgagor, and by him deposited immediately to the credit of the mortgagee. 6 See section 297, above. Where mortgaged grain was removed three miles from the land of the mortgagor, the mortgage was extinguished: Waterman v. Green, 59 Cal. 142. Where a mortgaged crop of grain was grown on one parcel of land, and removed to the adjoining parcel to be more conveniently threshed, the mortgage thereagainst, is extinguished: Horgan v. Zanetta, 107 Cal. 27, 32, 40 Pac. 22. '^ See section 296, above. 602 MORTGAGE. § 380 Subdivision S. Extinction of Recorded Mortgage M%st lye Recorded. 380. Extinction of Recorded Mortgage must be Recorded.® The partial^ or entire discharge of a recorded mortgage must be entered upon the record, either (1) by an entry in the margin of the record of the mortgage^ signed by the mortgagee or his personal representatives or assignee, acknowl- edging the partial or entire satisfaction of the mortgage in the presence of the recorder, who must certify the acknowledgment in form substantially as follows: ^^Signed and acknowl- edged before me, this day of — '■ , in the year . A B, Eecorder/'^^ or 8 See Civn Code, sections 2938 and 2939. (Com- pare Stats. 1850, p. 249, c. 101, sees. 37 and 38; HittelPs Gen. Laws, sees. 679 and 680, in effect April 16, 1850.) The purchaser of a recorded mortgage is charged with notice of its assignment or satisfaction, when duly entered of record: Peters v. Jamestown Bridge Co., 5 Cal. 334, 63 Am. Dec. 134. 8 Partial Releases are authorized by Civil Code, section 2938, and subsequent sections: Woodward v. Brown, 119 Cal. 283, 297, 63 Am. St. Eepi. 108, 51 Pac. 2, 51 Pac. 542. lO The entry in the margin of the record is not required to state anything in regard to the in- debtedness to secure which the mortgage was given. Thus, where the entry read: *^Full payment and satisfaction of the within note and mortgage hereby § 380 EXTINCTION THEREOF. 603 (2) by the officer having the custody of the rec- ord, on the presentation to him of a certifi- cate signed by the mortgagee or his personal representatives or assignee, acknowledged or proved and certified as a transfer of property is required to be in order to be entitled to rec- ordation, stating that the mortgage has been discharged in part or in whole. 381. Certificate of Dischargee must be Recorded at Length. A certificate of the discharge of a mortgage, and the proof or acknowledgment thereof, must be recorded at length, and a reference made in the record to the book and page where the mort- gage is recorded, and in the minute of the dis- charge made upon the record of the mortgage to the book and page where the discharge is re- corded. ^^ 382. Mortgagee Required under Penalty to Make Certificate of Discharge.*^ When any mortgage has been satisfied, the mortgagee or his assignee must immediately, on acknowledged/' the words ^'full payment'' and ''note'' are surplusage: Beal v. Stevens, 72 Cal. 451, 457, 14 Pac. 186. 11 Civil Code, section 2940, (Compare Stats. 1850, p. 249, c. 101, see. 39; Hittell's Gen. Laws, sec. 681.) 12 Civil Code, section 2941. Historical.— Civil Code, section 2941, provides: ''When any mortgage has been satisfied, the mortgagee 604 MORTGAGE. § 382 the demand of the mortgagor, execute, acknowl- edge, and deliver to him a certificate of the dis- charge thereof, so as to entitle it to be recorded, or he must enter satisfaction, or canse satisfac- tion of such mortgage to be entered of record; and any mortgagee, or assignee of any mort- or his assignee must immediately on }■ 80n )■ the ■{ ngO ^ demand of the mortgagor, \ 73-4n }- execute, [ 80n }■ ac- knowledge, -I n80^ and deliver to him a certificate of the discharge thereof [80o] [a] so as to entitle it to be recorded, or he must -| n73-4^ enter satisfaction or cause satisfaction to be entered of record; and any mortgagee or assignee of such mortgagee [b] who [73-4o] [e] refuses [► 73-4n }■ to execute, }► 80n [► , acknowledge -( n80-j and deliver to the. mortgagor, the certificate of discharge [08O0] [d], or -| n73-4^ to enter satisfaction or |^ 73-4n [ cause satisfaction of the mort- gage to be entered ■{ n73-4-[ as provided in this chapter, is liable |- 73-4m \- [e] to the mortgagor or his grantee or heirs for all damages which he or they may sustain by reason of such refusal, and also for- feit to him or them the sum of one hundred dollars ] m73-4 ] . (a) Here was inserted ' ' \- 73-4n \- and must, at the expense of the mortgagor, acknowledge the execution thereof -( n73-4^ .'' (b) As enacted 1873-74, this word was '* mortgage. ' ' (c) As enacted 1872: ''neglects or/' (d) Here was inserted: '* }- 73-4n }- and to acknowl- edge the execution thereoi ^ n73-4 -{ . " (e) Original reading, 1872: *'in damages to such mortgagor, or his grantee or heirs, in the sum of one hundred dollars, to be recovered in a civil action before any court of competent jurisdiction/' Original section in effect January 1, 1873; amended Stats. 1873-74, c. 612, sec. 261, in effect July 1, 1874; and Stats. 1880, c. 81, in effect April 15, 1880. Compare Stats. 1850, p. 249, c. 101, sec. 40; Hitt ell's Gen. Laws, sec. 682. § 382 EXTINCTION THEREOF. 605 gagee, who refuses to execute, acknowledge, and deliver . to the mortgagor the certificate of dis- charge, or to enter satisfaction, or cause satis- faction of the mortgage to be entered, as pro- vided in this chapter, is liable to the mortgagor, or his grantee or heirs, for all damages which he or they may sustain by reason of such refusal, and shall also forfeit to him or them the sum of one hundred dollars.*^ 383. Discharge by Fareign Executors. Foreign executors and administrators may sat- isfy mortgages on the records of any county of this state, upon producing and recording in the office of the county recorder of the county in which such mortgage is recorded a duly certified and authenticated copy of their letters testa- mentary or of administration, and which certifi- cate shall also recite that said letters have not been revoked.^^ 384. Release of Mortgage of Record by Mistake Binding as to Certain Parties and until Set Aside as to All Others. A satisfaction of a mortgage entered of record by mistake of fact or law at the instance of the 13 In an action to recover the penalty prescribed in this section, an averment of the ownership of the property by the plaintiff is essential: Eandolph v. Kraemer, 106 Cal. 199, 39 Pac. 533. 14 Civil Code, section 2939%, new section in effect March 8, 1895. 606 MORTGAGE. § 384 holder thereof extinguishes such mortgage as against bona fide purchasers and encumbrancers without notice irrevocably/^ but merely until set aside by a direct proceeding for that purpose as to the mortgagor himself .^^ 15 Miller v. Hicken, 92 Cal. 229, 28 Pac. 339; Wittenbrock v. Parker, 102 Cal. 93, 107, 41 Am. St. Eep. 172, 36 Pac. 374. 16 Russell V. Mixer, 39 Cal. 504, 509; 42 Cal. 475. § 385 A PRIMARY SECURITY. 607 AETICLE 8. THE MOETGAGE A PEIMAEY SECUKITY.l 385. Mortgaged property must first be resorted to. 386. Waiver of mortgage waives personal liability of mortgagor. 387. Failure to foreclose does not impair remedies against secondary parties. 388. Loss of securit}'' without fault of mortgagee does not bar personal action. 385. Mortgaged Property must First be Re- sorted to. The proceeds of a sale at the instance of the 1 A Primary Security.— Code of Civil Procedure, section 726: '* There can be but one action for the recovery of any debt, or the enforcement of any right secured by mortgage upon real estate or personal property, which action must be in accordance with the provisions of this chapter. In such action the court may, by its judgment, direct a sale of the encumbered property (or so much thereof as may be necessary), and the application of the proceeds of the sale ' ' Practice Act, sec. 246, as amended 1861, contained a similar provision. The three essentials here provided for are: (1) to confine any recovery to one action [see sections 390, 391, and 392, below], (2) to make the mortgaged . property the primary fund out of which such satisfaction may be had [sections 385 through ii88], and (3) to give the plaintiff a personal judgment for such G08 MORTGAGE. § 385 mortgagee of the entire^ mortgaged property constitute the primxary fund^ for the satisfaction of any mortgage obligation, and the personal lia- balance as may remain due after the exhaustion of the mortgaged property [section 165, above] : Toby V. Oregon Pacific E. R. Co., 98 Cal. 490, 494, 495, 33 Pac. 556; Otto v. Long, 127 Cal. 471, 475, 476, 59 Pac. 895. A Violation of the Policy Here Established Bars a Foreclosure Action. Thus where a personal action was brought in Ohio on an obligation secured by mortgage on property in this state, but the judgment therein obtained remained wholly unsatisfied, an action to foreclose the mort- gage cannot thereafter be maintained in this state: OuM V. Stoddard, 54 Cal. 613. Where a mortgage is given as additional security for and to extend the time of payment of a debt then being enforced by a pending action, while the plain- tiff mortgagee, in the absence of a plea in bar, may continue such action, yet the continued prosecution of such action amounts to a waiver of the right to foreclose. The mortgage was a security which must first have been resorted to: Commercial Bank v. Kerahner, 120 Cal. 495, 498, 499, 52 Pac. 848. Historical,— Before the amendment of 1861 (Stats. 1861, p. 306, c. 315) to Practice Act, sec. 246 (Code of Civil Procedure, section 726), a personal judgment for the full amount of the secured obligation could be rendered in the first instance, the mortgaged prop- erty not being considered a primary fund for the sat- isfaction thereof: Eollins v. Forbes, 10 Cal. 299; Rowe V. Table Mountain Water Co., 10 Cal. 441; Rowland v. Liebv, 14 Cal. 156; Ladd v. Ruggles, 23 Cal. 232; Englund v. Lewis, 25 Cal. 337, 348, 350, 558; Cul- ver V. Rogers, 28 Cal. 520, 524. 2 The deficiency which may take the form of a personal judgment is a deficiency arising from the sale of the whole, not of a part of the mort- gaged property: Hopkins v. Warner, 109 Cal. 133, § 385 A PRIMARY SECURITY. 609 137, 41 Pac. 808; Woodward v. Brown, 119 Cal. 283, 288, 63 Am. St. Eep. 108, 51 Pac. 2, 542. See, also, Stockton Sav. etc. Soc. v. Harrold, 127 Cal. 612, 617, 60 Pac. 165. In the early case of Mascarel v. Eaffour, 51 Cal. 242, the contrary was held. 3 Proceeds of Sale a Primary Fund: Porter v. Muller, 65 Gal. 512, 513, 4 Pac. 531. See, also, Mc- Kean v. German-American Sav. Bank, 118 Cal. 334, 336, 50 Pac. 656; Woodward v. Brown, 119 Cal. 283, 292, 63 Am. St. Eep. 108, 51 Pac. 2, 542. ^^The statute is imperative. The word ^secured,' in the section, does not mean that the securitj^ shall be adequate, or that in case prior liens upon it would exhaust the money derived from the land conveyed as security on a sale of it, that then the plaintiff is relieved from bringing the action to foreclose. The proper construction of the language of the statute is, that if the mortgage on its face purports to De a security to the plaintiff, then he must bring his action for foreclosure The plaintiff is not authorized to waive the security and bring au action on the indebtedness Having elected to take the security at the value it possessed when the mortgage was originally exe- cuted, no change in value having since occurred, he cannot be allowed to urge, to evade a compliance with the provisions of section 726, that it has be- come valueless. '^ Code of Civil Procedure, section 537, permitting in certain cases an attachment, al- though the indebtedness is secured by mortgage, '^refers to a case where the security has changed in the value it had when originally taken — has so de- preciated as to become of no value' ^: Barbieri v. Eamelli, 84 Cal. 154, 23 Pac. 1086. Considering Barbieri v. Eamelli, the court, in Otto V. Long, 127 Cal. 471, 476, 59 Pac. 895, says: ^^The ruling was to the effect that so long as he [the junior mortgagee] had a lien on real property given as security he must foreclose. In effect, this is say- ing that a foreclosure and sale is the special mode provided for determining whether there is anything Liens— 39 610 MORTGAGE. § 385 bilitj of the principal obligors is contingent upon the exhaustion and insufficiency of this fund.^ for a particular mortgagee in the property subject to the lien/' Illustrations.— Where the security of a debt se- cured by pledge, mechanic's lien, judgment lien, at- tachment, or otherwise, is reinforced by a mortgage against the same or other property, there can be but one action for the enforcement of the debt, which action must be brought against the mortgaged prop- erty: Commercial Bank v. Kershner, 120 Cal. 495, 498, 499, 52 Pac. 848. Where the mortgagee holding a defaulted mort- gage debt is a bank with an open account of the mortgagor, such mortgagee has no right to a set- off: McKean v. German- American Sav. Bank, 118 Cal. 334, 50 Pac. 656. 4 Personal Liability Contingent upon Exhaustion of Fund.— Thus the creditor must exhaust the se- curity before recourse may be had to the general assets of the debtor. The personal liability of the mortgagor is contingent upon the failure of the sale of the mortgaged property to satisfy the debt and costs: Bartlett v. Cottle, 63 Cal. 366; Biddle v. Brizzolara, 64 Cal. 354, 362, 30 Pac. 609; Brown v. Willis, 67 Cal. 235, 7 Pac. 682; Bull v. Coe, 77 Cal. 54, 60, 11 Am. St. Eep. 235, 18 Pac. 808; Lavenson V. Standard Soap Co., 80 Cal. 245, 248, 13 Am. St. Kep. 147, 22 Pac. 184; Crim v. Kessing, 89 Cal. 478, 487, 23 Am. St. Eep. 491, 26 Pac. 1074; Savings Bank of St. Helena v. Middlekauff, 113 Cal. 463, 467, 45 Pac. 840; Eoberts v. Fitzallen, 120 Cal. 482, 484, 52 Pac. 818; Commercial Bank v. Kershner, 1^:0 Cal. 495, 500, 52 Pac. 848; Stockton Sav. etc. Soc. V. Harrold, 127 Cal. 612, 617, 60 Pac. 165; Bair v. Watkins, 130 Cal. 540, 542, 62 Pac. 929; Meyer v. Weber, 133 Cal. 681, 684, 685, 65 Pac. 1110; Newhall V. Bank of Livermore, 136 Cal. 533, 69 Pac. 248, 250A. See, also, McKean v. German-American Sav. BanK, 118 Cal. 334, 33(5, 50 Pac. 656. § 386 A PRIMARY SECURITY. 611^ 386. Waiver of Mortgage Waives Personal Lia- bility of Mortgagor. A mortgagee, who by his own act or neglect,® Yet '^it is not altogether or literally true, as de- clared m some of the cases, that tne mortgagor only undertakes to pay the deficiency which may remain after the return is maae of the result of the sale on foreclosure. He undertakes to pay the debt, but if there exists a valid lien to secure its payment the result is the same as though his contract had only been to pay the deficiency'': Otto v. Long, 127 Cal. 471, 477, 59 Pac. 895. S If a mortgagee loses the right to enforce his mortgage by his negligence, as by a failure to present a claim on the homestead of a deceased mort-^ gagor, he cannot resort to a personal remedy: Hearn V. Kennedy, 85 Cal. 55, 24 Pac. 606, per Sharpstein, Fox, McFarland, and Thornton, J J.; Beatty, C. J., dissenting; Hibernia Sav. etc. Soc. v. Thornton, 109 Cal. 427, 50 Am. St. Kep. 52, 42 Pac. 447; Savings Bank v. Central Market Co., 122 Cal. 28, 35, 54 Pac. 273. But a mortgagee who fails to join as a party de- fendant in a foreclosure action the grantee of rec- ord of the mortgaged property, in consequence of which the right of action against the grantee is barred by lapse of time and all recourse against the mortgaged property is lost, does not thereby lose his remedy against the mortgagor: Frost v. Witter, 132 Cal. 421, 428, 84 Am. St. Eep. .53, 64 Pac. 705. ' In the Frost case, Hibernia Sav. etc. Soc. v, Thornton is said to have ^'no application,'' as in the Hibernia case ^^the action was brought on the note alone, and the decision was simply an appli- cation of the rule established by other decisions in this state, that the mortgagee ^is not authorized to waive the security and to bring an action on the indebtedness.' Had the mortgage been set up— whether it had become valueless by neglect or other- wise—the result would have been different." G12 MORTGAGE. § 386 without the consent of the mortgagor,^ deprives himself to any extent of recourse against the mortgaged property, is deprived to the full value of the property against which recourse is losf It is clear, however, that where the mortgagor has ceased to own the property the court cannot order it to be sold when the new owner is not made a party. Under such circumstances a judgment *'for the foreclosure of the mortgage and for the docket- ing of a deficiency judgment^' is a mere sham, and is equivalent in its operation to an ordinary personal judgment. But a personal judgment cannot be ren- dered in the first instance (section 385), nor can the same thing be done under another name. The Frost case is irreconcilable with the other cases cited under sections 385 and 386. Act not Amounting to Waiver.— A mortgage is not waived by a mere presentation of the secured de- mand against the estate of thq deceased obligor without stating that the demand was secured by mortgage, the only elfect of such presentation being to render the presentation ineffectual: Bank of So- noma County V. Charles, 86 Cal. 322, 327, 328, 24 Pac. 1019. 6 Without Consent of Mortgagor.— But the en- tering of a discharge of a mortgage with the consent of a mortgagor does not of itself discharge the debt, but merely the security: Sherwood v. Dunbar, 6 Cal. 53. 7 Deprived of Recourse to Value of Property Re- leased. — If a mortgagor releases any portion of the mortgaged property without the consent of the mort- gagor, he must, on foreclosure, credit the mortgagor with the full value of the portion released, and a de ficiencv judgment can then be rendered: Woodward v. BroVn, 119 Cal. 283, 288, 291-295, 63 Am. St. Eep. 108, 51 Pac. 2, 542. Compare Bank of Ukiah v. Eeed, 131 Cal. 597, 603, 63 Pac. 921. § 386 A PRIMARY SECURITY. 613 of the right to a personal recovery^ against the mortgagor or his surety.^ 387. Failure to Foreclose does not Impair Reme- dies Against Secondary Parties. ^^ Failure to foreclose a mortgage given to se- cure an obligation does not impair the right to maintain a personal action against any guaran- tor^^ or indorser^^ of the secured obligation ; but a surety is discharged thereby. ^''^ 8 Right to Personal Recovery Lost by Waiver.— A mortgagee is not authorized to waive the security and bring an action upon the indebtedness: Barbieri V. Eamelli, 84 Cal. 154, 156, 157, 23 Pac. 1086; Hi- bernia Sav. etc. Soc. v. Thornton, 109 Cal. 427, 50 Am. St. Eep. 52, 42 Pac. 447; 123 Cal. 62, 55 Pac. 702; 127 Cal. 575, 60 Pac. 37; Woodward v. Brown, 119 Cal. 293, 63 Am. St. Eep. 108, 51 Pac. 2, 51 Pac. 242; Savings Bank v. Central Market Co., 122 Cal. 28, 35, 54 Pac. 273. The personal liability of the mortgagor being con- tingent upon the fact that a foreclosure sale of the premises fails to satisfy the debt and costs, a fail- ure to enforce the security or waiver thereof results in a loss of personal remedy: Biddel v. Brizzolara, 64 Cal. 354, 362, 363, 30 Pac. 609; Hall v. Arnott, 80 Cal. 348, 355, 22 Pac. 200. 9 As to surety, see section 387. 10 Code of Civil Procedure, section 726 (Prac- tice Act, sec. 246, as amended 1860 and 1861): * ' There can be but one action for the recovery of any debt, or the enforcement of any right secured by mortgage.'' 11 May be Maintained Against Guarantor: Adams V. Wallace, 119 Cal. 67, 71, 51 Pac. 14. Rationale.— ^ ' The contention that the action can- not be maintained at all, as being violative of the 614 MORTGAGE. § 387 provisions of section 726 of the Code of Civil Pro- cedure, is not well taken. This is not an action for the collection of the mortgagor's debt as such, even if it be conceded that this debt was secured by mortgage. It is an action upon an independent con- tract of the defendant [the guarantor], with which the mortgagor has nothing to do, and which might have been entered into by the parties to it with- out his knowledge or against his wishes. There is no privity, or mutuality, or joint liability between the principal debtor and his guarantor'': Adams v. Wallace, 119 Cal. 67, 71, 51 Pac. 14. 12 May be Maintained Against Indorser: Carver V. Steele, 116 Cal. 116, 58 Am. St. Eep. 156, 47 Pac. 1007. In Carver v. Steele the facts were that a sec- ond mortgagee, joined as a party defendant in an action to foreclose a first mortgage, failed to set up and foreclose his mortgage whereby his security was lost. He then brought this action against the indorsers of the secured note to enforce their lia- bility. This case would clearly come under the prin- ciple of section 388, subdivision 1, below, and of Savings Bank v. Central Market Co. there cited; but the court argued it on the hypothesis that the mortgagee . had failed to enforce his mortgage, not that the mortgage had been lost without his fault, and said: ''The rule is that the creditor loses no rights against the indorser, whose liability has be- come fixed, by simple failure to enforce his lien against property mortgaged for security of the debt. .... It is a familiar provision of our statutes that there can be but one action for the recovery of any debt, or the enforcement of any right secured by mortgage upon real estate or personal property, which action must be first directed' to the exhaus- tion of the security [But] the promise of the maker of the note is one thing and the promise of an indorser is another; and their [the indorsers'] promise was not secured by the mortgage held by Montgomery [the mortgagee] The loss of personal remedy against the maker, or of the lien § 387 A PRIMARY SECURITY. 615 Upon the mortgaged property, following as a con- sequence of mere inaction on the part of the holder, is of no moment in the case. The court therefore erred in holding that the indorsers had been re- leased. ^ ' 13 Surety Discharged.— A*dams v. "Williams, 119 Gal. 67, 70, 51 Pac. 14. Civil Code, section 2831: ''A surety is one who, at the request of another and for the purpose of securing to him a benefit, becomes responsible for the performance by the latter of some act in favor of a third person, or hypothecates property as se- curity therefor. ' ' Section 2849: ^'A surety is entitled to the benefit of every security for the performance of the prin- cipal obligation held by the creditor, or by a co- surety at the time of entering into the contract of suretyship, or acquired by him afterward, whether the surety was aware of the security or not." Section 2850: ^^ Whenever property of a surety is hypothecated with property of the principal, the surety is entitled to have the property of the prin- cipal first applied to the discharge of the obliga- tion. '^ In discussing the difference between the position of a surety and of a guarantor, the court, in Adams V. Williams, said: '^Were she [the defendant] a mere surety, as distinguished from a guarantor, she would have the unquestioned right to demand that plaintiff [the mortgagee] should first apply to the discharge of the debt the property of the principal, which had been mortgaged. Upon the other hand, if she be a guarantor for the payment of the debt upon default, then it would matter not whether there were other security for the payment of that debt; the principal creditor would have the right to prose- cute his action against the guarantor without pro- ceeding to realize upon other securities, or without going into equity to foreclose his mortgage." Also compare Commercial Bank v. Kershner, 120 Cal. 495, 500-501, 52 Pac. 848. 616 MORTGAGE. § 388 388. Loss of Security Without Fault of Mort- gagee does not Bar Personal Action. When, without the fault of the mortgagee, (1) the mortgagor's .title has become extin- guished subsequent to the execution of the mortgage by title paramount/^ or 14 Mortgagor's Title Extinguished.— Where a sec- ond mortgagee, though duly joined as defendant^ took no part in the action to foreclose the first mortgage, and the property sold for less than suffi- cient to satisfy the first mortgage, a personal action is maintainable. The second mortgagee *'has no longer a lien upon the property, and his debt is not secured by mortgage. He did not voluntarily re- lease his security. He has not waived nor lost it by his negligence. It was lost by the fault of the mort- gagor in not paying the first mortgage. If there had been a surplus and the plaintiff [second mort- gagee] had failed to get it by his neglect, it might be different. .... The particular mode of entering the judgment for the deficiency is not an important matter in the policy inaugurated by section 726. The important matter was to prevent a multiplicity of suits and to compel the creditor to first exhaust his security. The mode provided for the entry of judgment is a mere matter of convenience — is, in fact, a privilege given to the mortgagee' ': Savings Bank v. Central Market Co., 122 Cal. 28, 36, 54 Pac. 273. Likewise where such a second mortgagee took no part in the foreclosure action upon the first mort- gage, and some property remained unsold, he may thereafter maintain an action to foreclose his mort- gage on such property: Greenebaum v. Davis, 131 Cal. 146, 148, 82 Am. St. Rep. 338, 63 Pac. 165. Where, however, the second mortgagee makes him- self an actor in the action to foreclose the first mort- gage, he cfinnot maintain a separate piersonal action, although the security was exhausted in satisfaction § 388 A PRIMARY SECURITY. 617 (2) the mortgaged property has heen destroyed or has ceased to exist or has become valueless after the execution of the mortgage/^ or (3) by mistake^ the mortgagee does not obtain a mortgage upon anything/^ a personal action upon the principal obligation is in the first instance maintainable. of the first mortgage (see section 390, below) : Brown V. Willis, 67 Cal. 235, 7 Pac. 682, as interpreted in Savings Bank v. Central Market Co., at page 34. 15 Property Destroyed or Become Valueless.— When the mortgaged property has been destroyed or has ceased to exist, a personal action is in the first instance maintainable: Tobv v. Oregon Pacific E. E. Co., 98 Cal. 490, 495, 33 Pac. 556. It also seems that if the security should become valueless after the mortgage was taken, without the fault of the mortgagee, a personal action could be maintained in the first instance. Code of Civil Pro- cedure, section 537, permits an attachment when the security of an obligation for the direct payment of money, originally secured by mortgage, has '^with- out the act of the plaintiff, or the person to whom the security was given, become valueless' ': Barbieri V. Eamelli, 84 Cal. 154, 23 Pac. 1086. If, however, the security is worthless when taken, the personal action cannot be maintained: Barbieri V. Eamelli, 84 Cal. 154, 23 Pac. 1086; Savings Bank V. Central Market Co., 122 Cal. 28, 35, 54 Pac. 273. 16 By Mistake no Mortgage Obtained.— *^ A fort- closure and sale is the special mode provided for determining whether there is anything for a par- ticular mortgagee in the property subject to the lien The liability of a mortgagor is only to pay any deficiency which there may be after fore- closure and sale of the mortgaged premises To inquire whether there is any such property an that which the mortgage purports to cover, or 618 MORTGAGE. § 388 -whether, for any reason, it failed to create a lien, is not to violate .... the policy of the statute. If it can be made to appear that there is no such property as that which the mortgage purports to describe, it would demonstrate that there was no lien, and the debt would not be one secured by mort- gage upon real estate. If, when the mortgagor exe- cuted the mortgage, he had neither possession, nor any estate, title, or interest of any kind or character in the mortgaged premises, and never at any time acquired any, it is equally evident that the debt is not one secured by a lien upon real estate. One can- not by his contract create a lien upon property which he does not possess, or to which he had no title of any character whatever. If the mortgagor was in good faith asserting a claim to the property, or had color of title, or was asserting an equity in reference to it, perhaps the mortgagee would be compelled to foreclose. Here, confessedly, the mortgagor had no claim of title. Nor was the mistake, if one there was, such as could be corrected in a court of equity. .... Under such circumstances it does not violate the policy established by section 726 to allow a personal action If, however, without the fault on the part of the mortgagee the lien be lost, he [the mortgagor] may be held for thel entire debt. And if by some mistake the mortgagee does not get a lien upon anything, the rule should be the same. Why should he go through the senseless form of fore- closure, when confessedly he does not really have a lienr' Otto v. Long, 127 Cal. 471, 476, 477, 59 Pac. 895. Where a husband attempted himself alone to execute a mortgage on the homestead of himself and wife, although the mortgage is void, the obliga- tion attempted to be secured remains good and is enforceable as though the mortgage liad never been executed: Kraemer v. Eevalk, 8 Cal. 66, 74, 68 Am. Dec. 304 (decided before the amendment of 1861 to Practice Act, sec. 246; see page 607, note 1, above). ENFORCEMENT THEREOF. 619 AETICLE 9. ENFOECEMENT OF MORTGAGE OBLIGATION. SuMivision 1. Modes of Enforcement. 389. Modes of enforcing obligation secured by mort- SuMivision 2. Enforcement hy Judicial Proceeding, 390. Multiplicity of actions against mortgagor must be avoided. 391. Plurality of actions permitted in case of ne cessity. 392. Plurality of actions permissible against secon- dary parties. 393. Foreclosure action must be commenced within four years. 394. Enlargement of time of commencing action by continuance of principal obligation. 395. Enlargement of time of commencing action by renewal of security. 396. Expiration of time for commencing action is affirmative defense. 397. Receiver may be appointed wlien security pre- carious or insufficient. 398. Attorney's fee when allowable to be fixea by court. ^uMivision 3. Enforcement hy Exercise of Power of Sale. 399. Power of sale cannot be exercised when secured obligation uncertain or disputed. 620 ENFORCEMENT OF MORTGAGE. § 389 400. Sale when exaggerated amount claimed to be due generally valid. 401. Person selling for article of fluctuating value chargeable with highest value of property sold. 402. Eecitals in deed to purchaser binding on mort- gagor or trustor. 403. Sale made notwithstanding injunction voidable. 404. Sale to person selling voidable. 405. Person selling to himself and afterward resell- ing must account for profits. 406. Mortgagee must account for surplus realized. 407. Mortgagee may maintain action for deficiency. Subdivision 1, Modes of Enforcement. 389. Modes of Enforcing Obligation Secured by Mortgage. An obligation/ the performance of which is secured by mortgage, may, when performance is dne,^ be enforced 1 Secured Obligation must "be Proved.— A mortgage being a mere incident of the principal obligation, as a prerequisite to a foreclosure of the mortgage, the obligation must be first proved: Bennett v. Tavlor, 5 Cal. 502. 2 When Performance is Due.— A judgment for the principal of a note secured by mortgage and for the sale of the encumbered property for its satisfaction cannot be rendered before the note becomes due: Hunt v. Dohrs, 39 Cal. 304. But where an action is brought to foreclose a su- perior mortgage which is due, although an inferior encumbrance against the same property is not yet due, the holder of the superior encumbrance has the right to have the sale made: Hawkins v. Hill, 15 Cal. 499, 76 Am. Dec. 499. Compare Orange Growers^ Bank V. Duncan, 133 Cal. 254, 256, 65 Pac. 469. § 389 IN GENERAL. 621 (1) in every ease, by a judicial sale of the mort- gaged property obtained in a foreclosure ac- tion,^ or (2) in case of a movable property mortgage, by a sale of the property by the mortgagee made in the manner and upon the notice prescribed for the sale of pledged property,^ or Where a foreclosure action is brought on a superior encumbrance which is due and on an inferior encum- brance upon the same property which is not yet due, and during the continuance of the action the inferior encumbrance becomes due, and thereafter the mort- gagor tenders the amount of the superior encumbrance, the right to continue the action and foreclose the in- ferior encumbrance is not thereby abated: Hawkins V. Hill, 15 Cal. 499, 76 Am. Dec. 499. See section 96, above. 3 May be Enforced by Foreclosure Action.— Civil Code, section 2931: *'A mortgagee may foreclose the right of redemption of the mortgagor in the manner prescribed by the Code of Civil Procedure." The only sort of action by which a mortgage can be foreclosed is a foreclosure action under the Code of Civil Procedure, section 726: Combs v. Hawes (Cal.), 8 Pac. 597, 598. See sections 91 through 185, above. Averment of Complaint.— In an action to foreclose a mortgage, the mortgagee need not aver that the obligation secured by the mortgage was also other- wise secured, if in fact it was otherwise secu ed, as by pledge: Savings Bank of St. Helena v. Middle- kauff, 113 Cal. 463, 466, 45 Pac. 840; McArthur v. Magee, 114 Cal. 126, 129, 45 Pac. 1068. 4. Sale as of Pledged Property.— Civil Code, sec- tion 2967: ''A mortgagee of personal property, when the debt to secure which the mortgage was executed becomes due, may foreclose the mortgagor's right of redemption by a sale of the property, made in 622 ENFORCEMENT OF MORTGAGE. § 389 (3) in case of express agreement by the parties ■ to that effect, by the exercise of a power of sale by the person entitled to do so in the mode and manner agreed upon.^ But without a sale, a contract of mortgage cannot provide for the termination of the rights of the mortgagor in the property in satisfaction of the secured obligation.^ the manner and upon tlie notice prescribed by the title on Pledge [see sections 232 to 240, above], or by proceedings under the Code of Civil Procedure/' 5 By Exercise of Power of Sale: See sections 255 and 256. A power of sale contained in a mortgage is a mere cumulative reanedy, not in the lesat impairing the right to a foreclosure at judicial sale: Cormerais v. Genella, 22 Cal. 116, 125; Felton v. Le Breton, 92 Cal. 457, 465, 28 Pac. 490; Godfrey v. Monroe, 101 Cal. 224, 227, 35 Pac. 761. 6 Mortgage cannot Provide for Forfeiture in Sat- isfaction Thereof: See sections 335 and 336, above. Code of Civil Procedure, section 744 (Practice Act, sec. 260), provides: ^^A mortgage of real propsrty shall not be deemed a conveyance, whatever its terms, so as to enable the owner of the mortgage to recover possession of the real property without a foreclosure and sale.'' ''The object of the provision .... was to pre- clude any arrangement between the mortgagor and mortgagee by which the former's right to the prop- erty could be cut of!; without a sale of the same. It therefore held that the mortgage should not operate as a conveyance, whatever its termS; until a fore- closure and sale. The foreclosure might be by ju- dicial proceedings in equity or by any other regular proceedings which resulted in extinguishing the mort- gagor's right of property by sale": Bell etc. Min. § 390 BY JUDICIAL PROCEEDING. 623 Subdivision 2, Unforcemmt hy Judicial Pro- ceeding. 390. Multiplicity of Actions Against Mort- gagor must be Avoided^ The mortgagee must in a single action ex- haust every remedy for the collection of the se- Co. V. First Nat. Bank of Butte, 156 U. S. 470, 475, 476, 15 Sup. Ct. Eep. 440, 39 Law ed. 497. This statutory provision does not preclude a mort- gage from containing a power of sale: See note 5, above. 7 Multiplicity of Actions Must be Avoided.— Code of Civil Procedure, section 726, provides: '* There can be but one action for the recovery of any debt, or the enforcement of any right secured by mortgage." One object of this provision is '*to prevent mul- tiplicity of suits and the attendant annoyance and additional cost to the debtor": Commercial Bank v. Kershner, 120 Cal. 495, 500, 52 Pac. 848. On its object see, also, page 607, note 1, above. Where a person holding a mortgage upon certain property commences an action to foreclose it, in which he joins as party defendant another person holding a subsequent mortgage covering the same property and certain other property, the second mort- gagee may rightfully file a cross-complaint to fore- close his mortgage upon all the property affected thereby. It is evident that if he should not be per- mitted by his cross-complaint to foreclose his mort- gage upon the entire property affected thereby, ho would lose part of his security because he must ob- tain all his relief in a single action, and also would be barred from personal remedy against his mort- gagor: Stockton Sav. etc. Soc. v. Harrold, 127 Cal. 612, 60 Pac. 165. Likewise, where a second mortgagee commences an action to foreclose his mortgage upon an undivided 624 ENFORCEMENT OF MORTGAGE. § 390 cured obligation*^ whether in rem or in personam, obtainable against the primary debtor and the mortgagor in the judicial forum in which such action has been commenced. But where an ob- iuterest in certain property, and joins therein as party defendant the first mortgagee, whose mort- gage covers the remainder of the property as well, the first mortgagee may rightfully file a cross-com- plaint to foreclose his mortgage upon the entire prop- erty and bring in as party defendant a second mort- gagee upon the other undivided interest in the property; and all the parties will be bound by the judgment: Newhall v. Bank of Livermore, 136 Cal. 533, 69 Pac. 2^48. ''It frequently occurs that a mortgage or trust deed executed to secure' an indebtedness embraces several tracts of land lying in different counties, and in such case they must all be embraced in one action, as it is declared by the code that there can be but one action for the recovery of any debt or the enforcement of any right secured by mortgage Unless the creditor in his action includes in his action all the property on which there is a lien to secure the debt, he waives the lien as to the property not included in the action .... and cannot bring a separate action to enforce a lien thereon '*: Murphv v. Superior Court of Los Angeles County (Cal.), 70 Pac. 1070, 1070B. 8 Every Remedy must be Exhausted in a Single Action. — Where mortgages executed upon various pieces of land owned by various parties are given to secure the same obligation, there is no misjoiner in foreclosing them all in the same action; but they not only may, but must, be foreclosed in one action or the security is irrevocably lost: Security Loan and Trust Co. V. 'Mattern, 131 Cal. 326, 331, 63 Pac. 482. Where a mortgage covers several items of property, but is enforced against part only, the lien on the re- mainder of the property is thereby irrevocably lost: Mascarel v. Eaffour, 51 Cal. 242; Bull v. Coe, 77 Cal. 54, 11 Am. St.Kep. 235, 18Pac. 808;Hallv. Arnott, § 390 BY JUDICIAL PROCEEDING. 625 ligation secured by mortgage is also secured by other encumbrance, the mortgagee may, after having maintained an action merely to preserve such other security,^ maintain a second action 80 Cal. 348, 354, 22 Pac. 200; Commercial Bank v. Kershner, 120 Cal. 495, 500, 52 Pac. 848; Stockton Sav. etc. Soc. V. Harrold, 127 Cal. 612, 616, 60 Pac. 165; Geri^ v. Loveland, 130 Cal. 512, 514, 62 Pac. 830; Bank of Ukiah V. Eeed, 131 Cal. 597, 603, 63 Pac. 921; New- hall V. Bank of Livermore, 136 Cal. 533, '536, 69 Pac. 248. What Does not Amount to Foreclosure so as to Bar Action. —Where a person holding a mortgage upon cer- tain property commenced an action to foreclose it, and joined as party defendant another person holding a subsequent mortgage covering the same property and certain other property, and the second mortgagee answered asking that the surplus proceeds of the sale after the satisfaction of the prior mortgage be applied in liquidation of his own, this does not amount to a foreclosure of his mortgage so far as to bar a subse- quent action to foreclose it: Brill v. Shively, 95 Cal. 674, 29 Pac. 324; Pauly v. Eogers, 121 Cal. 294, 296, 53 Pac. 808 (this case holding that a so-called cross- complaint was merely an answer). Compare Stockton Sav. etc. Soc. v. Harrold, 127 Cal. 612, 619, 620, 60 Pac. 165. Likewise, where the second mortgagee made de- fault in the action to foreclose the first mortgage, he may maintain a second action in which his prayer was, in substance, that any portion of the lands not sold to satisfy the prior mortgage be sold, and that &ny surplus proceeds paid into court (as was ordered to be done) under the judgment foreclosing the prior mortgage to be paid to the plaintiff: Green ebaum V. Davis, 131 Cal. 146, 148, 82 Am. St. Eep. 338, 63 Pac. 16o. May After Action to Preserve Security Proceed to Foreclose.— Where a note secured by mortgage was Liens — 40 G26 ENFORCEMENT OF MORTGAGE. § 390 for the foreclosure of his mortgage. Moreover, a mortgagee who fails by mistake of fact to foreclose upon the entire mortgaged property in the first instance may, as against everyone ex- cept a person prejudiced by such mistake, main- tain a second action to cause the sale to be set aside and a foreclosure judgment to be rendered against the entire property.*® [Where a mort- gagee voluntarily dismisses his foreclosure action, and the dismissal is not intended as a final dis- position of the controversy, the dismissal is not a bar to a second action.]** given as collateral security for a note and mortgage, and the mortgagee enforced the collateral security first, he may afterward resort to the mortgaged prop- erty, as the first action was in its nature an action to preserve the security, and the fact that part pay- ment was thereby received was but an incident, and moreover two actions were necessary in any event, the mortgage not securing the entire obligation. Mercel Security Sav. Bank v. Casaccia, 103 Cai. 641, 645, 37 Pac. 648; McArthur v. Magee, 114 Cai. 120, 130, 45 Pac. 1068. 10 Gerig v. Loveland, 130 Cai. 512, 62 Pac. 830. 11 Voluntary Dismissal not Bar to Subsectuent Ac- tion: Westbay v. Gray, 116 Cai. 660, 668, 48 Pac. 800. Thus where a mortgagee commenced an action to foreclose his mortgage, and after certain proceedings were had the axjtion was dismissed at the plaintiff ^s instance, the judgment of dismissal reciting that the dismissal was made ^'without prejudice at plaintiff ^s costs,'' the mortgagee may afterward maintain a second action against the mortgagor to foreclose this mortgage, the first judgment not being a bar to a § 391 BY JUDICIAL PROCEEDING. 027 391. Plurality of Actions Permitted in Case of Necessity. Where the mortgage obligation cannot be satisfied in a single action against the mortgaged property, the mortgagee may maintain other sub- sequent actions against the primary debtor and the mortgagor.^^ subsequent action: Hibernia Sav. etc. Soc. v. Por- tener, Cal., May 13, 1903, in department. In neither of these decisions was section 726 of the Code of Civil Procedure referred to; but in view of the fact that one of its principal objects is to confine the recovery to one action and to prevent a multiplicity of actions, these decisions seem er- roneous. 13 Plurality of Actions Permitted in Case of Ne- cessity.— The code *^does not prohibit successive foreclosures — when required by the circumstances — for distinct debts secured by the same mortgage": Stockton Sav. etc. Soc. v. Harrold, 127 Cal. 612, 620, 621, 60 Pac. 165. See, also, McDougal v. Downey, 45 Cal. 16'5. Where personal service of summons and a valid deficiency judgment is not obtainable in the fore- closure action, a subsequent personal action in main- tainable when the primary debtor comes within the nurisdiction: Blumberg v. Birch, 99 Cal. 416, 37 Am, St. Eep. 67, 34 Pac. 102. See, also, Merced Security Sav. Bank v. Casaccia, 103 Cal. 641, 643, 644, 37 Pac. 648. Where the encumbrancer was obliged to foreclose in another state, as in Oregon, the mortgaged proj) erty being there situate, a personal action for a re- sulting deficiency is afterward maintainable in this state, the mortgagor residing here: Felton v. West, 102 Cal. 266, 36 Pac. 676. Where a mortgagor personally liable for the mort- gage obligation was nonresident at the date of the 028 ENFORCEMENT OF MORTGAGE. § 392 392. Plurality of Actions Permissible Against Secondary Parties. A plurality of actions is permissible against a guarantor or an indorser of the secured obliga- tion>4 foreclosure of the mortgage, after his death an ac- tion may be maintained against his resident admin- istrator (who had rejected the claim) for the recov- ery of the deficiency which arose at the foreclosure sale of the mortgaged property: Chapman v. Pennie (Cal.), 39 Pac. 14, 15A. 14 Plurality of Actions Permissilsle Against Sec- ondary Parties. Where an unsatisfied deficiency remains after the sale of the mortgaged property, an action may be maintained against an indorser for such sum: Vande- water v. McEae, 27 Cal. 596; Allins v. Williams, 97 Cal, 403, 406, 407, 32 Pac. 441. See, also, Merced Se- curity Sav. Bank v. Casaccia, 103 Cal. 641, 643, 37 Pac. 648. And against a guarantor of the second obligation: County Bank v. Greenberg, 127 Cal. 26, 59 Pac. 139. Rationale,— CodiQ of Civil Procedure, section 72o (Practice Act, sec. 246, as amended 1860 and 1861) provides: *' There can be but one action for the recov- ery of any debt, or the enforcement of any right se- cured by mortgage. '^ ^^The words ^secured by mortgage' are descriptive of the right or personal liability contemplated by the section, and any per- sonal liability not so secured is manifestly without its purview The promise of the maker of a note is one thing, and the promise of the indorser is another. One is primary and the other is secondary; one is absolute and the other turns upon conditions; each may be secured by a separate mortgage, or one mortgage may be so framed as to secure both of them. But a mortgage which by its terms is made appli- cable to the promise of the maker only can in no just sense be regarded as collateral to the personal § 393 BY JUDICIAL PROCEEDING. 629 393. Foreclosure Action must be Commencecl Within Four Years.^^ Subject to the usual circumstances enlarging the time of commencing an action, an action to foreclose a mortgage executed in this state must (unless the principal obligation has been con- tinued or the mortgage renewed) be com- menced^^ within four years^'' after the ma- liability or to the 'right' of which the contract of indorsement is the source. On the ground, then, that an action against an indorser is brought to enforce a right which is unsecured by mortgage, we consider that the indorsers may be pursued in personam on their contract of indorsement'': Yandewater v. Mc- Eae, 27 Cal. 596, 602, 60o. 15 Time of Commencement in General.— Code of Civil Procedure, sections 335 and 337 (as amended in effect July 1, 1874): *'The periods prescribed for the commencement of actions other than for the re- covery of real property are as follows: Within four years: An action upon any contract, obligation, or liability, founded upon an instrument in writing exe- cuted in this state.'' See, also. Stats. 1850, p. 343, c. 127, sec. 17. Where there is no written agreement for the pay- ment of the principal obligation, the remedy there- on is barred in two years; but the action to fore- close is deemed to be founded on the written agree- ment of mortgage, and so is not barred for four years, although a personal deficiency judgment can- not be levied after the principal debt is barred: Union Water Co. v. Murphy's Flat Fluming Co., 22 Cal. 620, 627, 632; Newhall v. Sherman, Clay & Co., 124 Cal. 509, 57 Pac. 387. 16 When Action Commenced.— Where an action was commenced on a promissory note, and after the lapse of the statutory time an amended complaint was filed seeking for a foreclosure of a mortgage se- 630 ENFORCEMENT OF MORTGAGE. § 393 turity*® of the principal obligation. After the mortgaged property has heen transferred by the mortgagor or aif ected by an inferior encumbrance^ curing Buch note, the foreclosure action is not barred, because the ^' cause of action '^ is the principal ob- ligation, and the amendment merely seeks a different remedy: Frost v. Witter, 132 Cal. 421, 426-428, 84 Am. St. Rep. 53, 64 Pac. 705. But where certain necessary parties defendant were not joined when the action was commenced, the statute of limitations as to them is not stopped running thereby; and the expiration of four years after the maturity of the secured obligation before such parties are joined by supplemental complaint bars the right of action against them. For the ac- tion as to them is not commenced until the filing of the supplemental complaint: Jeffers v. Cook, 58 Cal. 147; Spaulding v. Howard, 121 Cal. 194, 198, 53 Pac. 563. 17 Within Four Years After the Maturity of the Principal Obligation.— This rule applies when the property has been transferred to a purchaser before the maturity of the principal obligation, the same as in any other case. So in a case where a purchaser to whom the prop- erty was transferred before the maturity of the se- cured obligation assumed the payment of the obliga- tion, the court held that, as he is deemed the prin- cipal debtor (section 368, above), the right of ac- tion against him is not barred upon the expiration of four years after his written promise to pay the mortgage obligation, but not until four years after the maturity of the mortgage: Eoberts v. Fitzallen, 120 Cal. 482, 483, 484, 52 Pac. 818. When the purchaser's agreement' to assume the mortgage is made after the maturity of the principal obligation, it amounts to a continuance thereof: Sec section 394, note 25, below. 18 When Principal Obligation Matures.— Where an obligation secured by mortgage and payable a § 393 BY JUDICIAL PROCEEDING. 631 with actual or constructive notice thereof to the "mortgagee, the absence of the mortgagor from the state does not enlarge the time of commenc- ing the action.^^ In general^ where the owner of the mortgaged property is within the state, the time of commencing the action is not en- specified time after date, provides that upon default in the payment of any amount which may become due thereon, the whole sum of principal and inter- est shall immediately become due and the mortgagee may proceed to foreclose, the cause of action, never- theless, does not accrue in the sense of the statute of limitations until the expiration of the credit fixed in the note, the acceleration in the time of payment being in the nature of a penalty for the sole bene- fit of the creditor. Thus the statute does not begin to run until the expiration of the full period of cred- it fixed in the note: Belloc v. Davis, 38 Cal. 242, 248- 255; Mason v. Luce, 116 Cal. 232, 236, 237, 48 Pac. 72; Eichards v. Daly, 116 Cal. 336, 48 Fac. 220. This rule holds although upon a default the mort- gagee brings a foreclosure action which is afterward dismissed by him: California Sav. etc. Soc. v. Culver, 127 Cal. 107, 112, 59 Pac. 292. Compare Moore v. Eussell, ia3 Cal. 297, 299, 300, 85 Am. St. Eep. 166, 65 Pac. 624. 19 Absence of Mortgagor from State When Prop- erty Transferred does not Enlarge Time.— This is so when the mortgagee has actual notice of the trans- fer: Wood V. Goodfellow, 43 Cal. 185, 189, 190. Or constructive notice through the recordation of the transfer: Filipini v. Trobock, 134 Cal. 441, 66 Pac. 587, per Beatty, C. J., Yan Dyke, Temple, and Harrison, JJ.; McFarland, J., dissenting. Likewise when the property is affected by a sub- sequent encumbrance, as an attachment lien, the ab- sence of the mortgagor from the state is said not to enlarge time: Watt v. Wright, 66 Cal. 202, 206, 207, 5 Pac. 91. C32 ENFORCEMENT OF MORTGAGE. § 393 larged by the absence of the principal obligor therefrom.^^ 394. Enlargement of Time of Commencing Ac- tion by Continuance of Principal Obliga- tion.^i An action to foreclose a mortgage executed in this state and given to secure an obligation 20 Absence of Principal Obligor from State.— When property is mortgaged for accommodation, and the principal obligor is absent from the state, the time is not enlarged: Low v. Allen, 26 Cal. 141. -1 Distinction Between Continuance and Renewal. ''When a debtor makes a new promise before an action is barred upon the original contract .... the old promise is not merged into the new; he merely continues his original liability for a longer term. In other words, he merely waives so much of the period of limitations as has run in his favor. But when his legal obligation is at an end by reason of the lapse of the full period of limitation .... a new promise creates a new obligation, and is itself the basis of the action. A clear recognition of this distinction reconciles all seeming conflict in the de- cisions of this courf : Southern Pacific Co. v. Prosser, 122 Cal. 413, 417, 55 Pac. 145; Daniels v. Johnson, 129 Cal. 415, 417, 79 Am. St. Rep. 123, 61 •Pac. 1107; Concannon v. Smith, 134 Cal. 14, 17, 66 Pac. 40; Wilcox v. Gregory, 135 Cal. 217, 220, 221, 67 Pac. 139. See, also, Rodgers v. Byers, 127 Cal. 528, 530, 60 Pac. 42. In German Sav. etc. Soc. v. Hutchinson, 68 Cv\. 52, 8 Pac. 627, where shortly after the maturity of a note secured by mortgage the parties entered into an agreement postponing the time of maturity of the note, the court said that "this agreement was a renewal of the note and mortgage, within section 2922 of the Civil Code,'' but plainly it was merely § 394 BY JUDICIAL PROCEEDING. 633 which has been continued by a new promise in writing to pay the secured obligation,^^ made an extension of the maturity of the obligation, or at most a continuance, but not a renewal at all. Illustration of Contmitance.— Where a mortgagor acknowledges the secured obligation after the trans- fer *of the property to a third party, and thereafter, before the statutory time has run upon such ac- knowledgment, the property is retransferred to him, the mortgage may be enforced against him: Lent v. Morrill, 25 Cal. 492, 500. 22 Obligation may be Continued by New Promise in Writing. See Code of Civil Procedure, section 360 (Stats, 1850, p. 343, c. 127, sec. 31), which provides: *'No acknowledgment or promise is sufficient evidence of a new or continuing contract, by which to take the case out of this title, unless the same is contained in some writing, signed by the party to be charged thereby. ' ' Object of this Enactment.— ** The object of our stat- ute was to change a rule of evidence, and now to require written, where verbal testimony was for- merly sufficient. The matter to be proved is the acknowledgment or promise, and the only competent evidence is a writing signed by the party to be charged. But whether the acknowledgment or prom- ise, when proved, be sufficient to take the case out of the operation of the act, is left to depend upon reason and authority, as it did before'^ (p. 91). "The object of the statute was to avoid the mischief arising from parol testimony to prove either an ex- press promise, or facts from which a promise would follow as a legal and logical resulf (p. 92): ±'air- banks v. Dawson, 9 Cal. 89, 92. ''This section does not purport to make any change in the effect of acknowledgments or promises, but to rJter the mode of their proof; and is directed, prin- cipally at least, against the admission of oral acknowl- edgments and promises Its chief object was 654 ENFORCEMENT OF MORTGAGE. § 394 to require that to be evidenced by writing which pre- viously consisted of verbal declarations only'': Bar- ron V. Kennedy, 17 Cal. 474, 477. Its purpose is to establish a rule, not with respect to the character of the promise or acknowledgment from which a promise may be inferred, but with re- spect to the kind of evidence, by which the promise or acknowledgment may be proved: Biddel v. Brizzolara, 56 Cal. 374, 380; Tuggel v. Minor, 76 Cal. 96, 101, 18 Pac. 131. **The statute does not prescribe any form in which the acknowledgment or promise shall be made The imperative thing is, that it shall be * contained in some writing, signed by the party to be charged thereby' ": Concannon v. Smith, 134 Cal. 14, 20, 66 Pac. 40. A writing signed by the party to be charged is in- dispensable. Thus, a payment on account is insuifi- cient to establish a promise to pay: Fairbanks v. Daw- son, 9 Cal. 89; Pena v. Vance, 21 Cal. 142; Heinlein V. Castro, 22 Cal. 100. What Amounts to a Promise to Pay.— ^* To take a case out of the operation of the statute, there must have been either an express promise to pay, or an admission of the debt in terms so distinct as that a promise might reasonably be inferred therefrom. If, however, the admission was accompanied by qualify- ing words, then it would not amount to a promise": Fairbanks v. Dawson, 9 Cal. 89, 91. **If the debtor simply acknowledges an old debt, the law implies from that simple acknowledgment a promise to pay it, for which promise the old debt is a sufficient consideration. But if the debtor promises to pay the debt when he is able, or by installments, etc., the creditor can claim nothing, more than the promise gives him": Curtis v. City of Sacramento, 70 Cal. 412, 414, 11 Pac. 748. In order to amount to a promise to pay, an acknowJ- edgment must be a distinct, direct, unqualified admis- sion of an existing debt, which the party is willing to pay: McCormick v. Brown, 36 Cal. 180, 185, 95 Am. § 394 BY JUDICIAL PROCEEDING. 635 Dec. 170; Biddle v. Brizzolara, '56 Cal. 374, 382; Pierce v. Merrill, 128 Cal. 473, 476, 79 Am. St. Eep. 63, 61 Pac. 67. ^'The ^promise' referred to [in Code of Civil Pro- cedure, section 360] is not necessarily a promise to pay the debt. A promise not to plead the statute [of limitations] comes equally within the language used, and .... will equally operate to prevent the bar of the statute'': State Loan etc. Co. v. Cochran, 130 Cal. 245, 251, 62 Pac. 466, 600. '^Any acknowledgment of the mortgage was an ac- knowledgment of the indebtedness secured thereby. It was not necessary that -respondents [the persona to be charged with the acknowledgment] should prom- ise to pay the indebtedness in order to establish a new date for the statute to commence running as to the mortgage. All that was required was a plain and distinct acknowledgment in writing of the existence of the mortgage'': Foster v. Bowles (Cal., Jan. 19, 1903), 71 Pac. 494. No particular form of writing is necessary. ^*The expression, ^contained in some writing/ clearly in- dicates that it is not essential that the acknowledg- ment or promise would be formal, such as that *I hereby acknowledge,' or ^hereby promise.' It is suf- ficient if it shows that the writer regards or treats the indebtedness as subsisting, and from this acknowl- edgment the law implies a promise to pay, and for which promise the old debt is a sufficient considera- tion": Concannon v. Smith, 134 Cal. 14, 20, 66 Pac 40. But an acknowledgment must be distinguished from a mere conditional promise to pay. ^'In the case of a new promise, made while the original obligation is legally enforceable, if that promise be not a gen- eral promise to pay the obligation according to its tenor and terms, but is a promise coupled with any condition, and an action is brought after the statute of limitations would have barred the remedy upon the original obligation, the action of plaintiff is then upon the substituted conditional promise and not upon the original obligation. Such substituted, conditional G36 ENFORCEMENT OF MORTGAGE. § 394 within four years after its maturity and signed^^ by every party to be charged thereby ,^^ must be commenced within four years after such contin- promise must be pleaded, the breach of it averred, and the recovery had after such showing'^: Rodgers V. Byers, 127 Cal. 528, 530, 60 Pac. 42; Curtis v. City of Sacramento, 70 Cal. 412, 414, 11 Pac. 748. In State Loan etc. Co. v. Cochian, 130 Cal. 245, 251, 62 Pac. 466, 600, it is said that there are other ways of avoiding the operation of. the statute of limitations besides acknowledgments and promises. That is true. The maturity of the obligation may be postponed, and thus the time within which an action can be brought placed at a later time, as was done in Smith v. Lawrence, 38 Cal. 24, 28, 29, 99 Am. Dec. 344. But there is no other way of establishing a new ptromise and thereby continuing the obligation except by com- plying with the formalities set forth in the Code of Civil Procedure, section 360. Writings Gonsfitutin(j Acknowledgments.— A jjayment of interest by a check, accompanied by a letter stating that the payment was on account of the interest due on the indebtedness, is sufficient: Barron v. Kennedy, 17 Cal. 474, 477. Where mortgaged property had been conveyed sub- ject to the mortgage by the mortgagor to a second party, who in turn had conveyed a part thereof to a third party, who had executed a trust deed upon it, a writing subsequently given by the trustee to the second party, recitmg that, whereas the second party would thereafter advance moneys for the payment of the interest accrued, or thereafter to accrue, upon the said mortgage, and for other purposes, the trustee would pay to the second party the entire income of the property so far as necessary to pay such advances, clearly acknowledges the existence of the mortgage; Foster v. Bowles (Cal., January 19, 1903), 71 Pac. 491. 23 ** Signed,** not Subscribed.— The writing is not required to be subscribed by the party to be charged, but merely to be signed. So an acknowledgment in § 304 BY JUDICIAL PROCEEDING. 637 nance. A new promise so made by a transferee of mortgaged property to the transferor after the maturity of the secured obligation may be availed of by the mortgagee so long as binding as between the transferor and transferee,^^ yet the handwriting of the party to be charged and con- taining his name is sufficient: Auzerais v. Naglee, 74 Cal. 60, 69, 15 Pac. 371, per Searles, C. J., McFarland, Sharpstein and Paterson, JJ.; Temple and Thornton, J J., dissenting; Concannon v. Smith, 134 Cal. 14, 20, 21, 66 Pac. 40. ' 24 Signed by Every Party to be Charged.— The following persons must sign the acknowledgment to make it valid: Where property is mortgaged for accommodation, the owner of the property (as distinguished from the person personally liable) : Low v Allen, 26 Cal. 141. Where a subsequent mortgage has been executed before the continuance, by the subsequent mort- gagee: California Bank v. Brooks, 126 Cal. 198, 59 Pac. 302. See, also, Lent v. Shear, 26 Cal. 361, 369- 371. Where a homestead is declared on property pre- viously mortgaged, the wife of the mortgagor: Barber v. Babel, 36 Cal. 11, 20, 21. Where the property is charged with a subsequent encumbrance, the subsequent encumbrancer: Watt V. Wright, 6Q Cal. 202, 206, 5 Pac. 91. But where the mortgage has been continued by the acknowledgment of the principal obligation, a subsequent transferee of the mortgaged property without notice of the continuance is nevertheless bound by the mortgage during the period running from the acknowledgment: Lent v. Morrill, 25 Cal. 492, 501; Newhall v. Hatch, 134 Cal. 269, 275, 66 Pac. 266. Com- pare, however, section 276, above. 25 New Promise by Transferee of Property to 638 ENFORCEMENT OF MORTGAGE. § 394 is not a contract between the transferee and mortgagee, but may be rescinded by the trans- feror and transferee at their pleasure, and can- not then be availed of by the mortgagee.^^ 395. Enlargement of Time of Commencing Ac- tion by Renewal of Security.^'' An action to foreclose a mortgage executed in this state given to secure an obligation which is Mortgagor Available to Mortgagee.— Thus where tho purchaser of mortgaged property acknowledges or promises to • pay the secured obligation (it having already matured) by recital in the deed under which he obtained the property, the mortgage is en- forceable for four years thereafter: Daniels v. Johnson, 129 Cal. 415, 79 Am. St. Eep. 123, 61 Pac. 1107. 2G Such Promise May be Rescinded by Agreement of Transferee and Mortgagor.— The y-romise of the purchaser to pay the mortgage obligation is a promise for the benefit of the mortgagor, simply for his indemnity, and is not to be regarded as a contract with the mortgagee for his benefit. Thus the parties to the contract may rescind and extinguish it at their pleasure. The mortgagee, however, can only be entitled to be subrogated to an existing remedy of his debtor, the mortgagor, upon a legal existing stipulation; so that, when the promise has been extinguished (as by a reconvey- ance of the mortgaged property from the purchaser to the mortgagor-vendor), it cannot be used by the mortgagee as an acknowledgment to take the mat- ter out of the statute of limitations: Biddel v. Briz- zolara, 64 Cal. 354, 30 Pac. 609. 27 Renewal.— When the secured obligation has once been barred, the mortgage is extinguished (sec- tions 84 and 375, above), and can only be renewed by a writing executed with the formalities required in § 395 BY Judicial proceeding. 639 barred by lapse of time, which mortgage has been renewed by a writing executed with the for- malities required in case of the execution of a case of the execution of a mortgage. Where the new promise is made after the bar of the statute has accrued, the action is based on the new promise: Wells V. Harter, 56 Cal. 342; London and San Fran- cisco Bank v. Bandmann, 120 Cal. 220, 223, 224, 65 Am. St. Eep. 179, 52 Pac. 583; Weinberger v. Weid- man, 134 Cal. 599, 600, 66 Pac. 869. See, also, Southern Pacific Co. v. Pressor, 122 Cal. 413, 417, 418, 55 Pac. 145; Conway v. Supreme Council Cath- olic Kiiights, 137 Cal. 384, 70 Pac. 222, 224. Historical.— Before the adoption of the code, a mortgage could be renewed by the acknowledgment of the owner of the property to be charged without the formalities required in the execution of the mortgage, the same as it can now be continued: Lord V. Morris, 18 Cal. 482, 490; McCarthy v. White, 21 Cal. 495, 82 Am. Dec. 754. See, also, Heinlein V. Castro, 22 Cal. 100, 102. Rationale of Renewal.— * ^ The moral obligation growing out of the original liability is suffi- cient to sustain the new promise to pay .... the debt barred by the statute; and doubtless this is the more consistent theory upon which the new promise can be sustained, .... and this does away with the solecism of a supposed subsisting debt without legal liability; for the idea that the debt still subsists can only mean that the moral obligation still continues; for, in law, the debt is not recog- nized as subsisting, except as a valid consideratioa for a new promise, and the moral obligation is suffi- cient for that, and is universally recognized as the ground upon which the new promise is sustained The moral obligation to pay the debt does not de- pend at all upon the question whether we consider the debt itself barred by the statute, or only the rem- edy, but upon the fact that the debtor has received and the creditor parted with the consideration for 640 ENFORCEMENT OF MORTGAGE. § 395 mortgage^^ and signed by every party to he charged therehy^^^ must be commenced within four years after such renewal. 396. Expiration of Time for Commencing Ac- tion is Affirmative Defense. That the time within which an action can be commenced has expired is a plea in bar of such action which must be asserted^^ by the mort- gagor or any person deriving any right in respect to the encumbered property from him,^* or otherwise is deemed to be waived. the debt, that it has never been in fact paid, and that in foro conscientiae it ought to be paid, notwithstand- ing the bar'': Chabot v. Tucker, 39 Cal. 434, 437, 438. 28 Formalities of Execution of Mortgage: See sec- tion 242, above. 29 Signed by Every Party to be Charged: See sec- tion 394, note 24, and section 8, above. 30 Must be Asserted, or is Deemed to be Waived: Grattan v. Wiggins, 23 Cal. 16, 25. 31 Persons Who may Assert This Defense. Junior mortgagees: Lord v. Morris, 18 Cal. 482, 491; Lent V. Shear, 26 Cal. 361, 365, 366; California Bank V. Brooks, 126 Cal. 198, 200, 59 Pac. 302. Bona fide purchasers for value of the mortgaged property: McCarthy v. White, 21 Cal. 495, 82 Am. Dec. 754; Grattan v. Wiggins, 23 Cal. 16, 25; Jeffers v. Cook, 58 Cal. 147, 151. Purchasers at foreclosure sale of subordinate encum- brances may intervene and assert it: Coster v. Brown, 23 Cal. 142. The wife of a mortgagor who after the execution of the mortgage declared a homestead upon the mort- gaged property: Hefner v. Urton, 71 Cal. 479, 12 Pac. 486; Watts v. Gallagher, 97 Cal. 47, 51, 31 Pac. 626. § 397 BY JUDICIAL PROCEEDING. 641 397. Receiver may be Appointed when Secudty Precarious or Insufficient.^^ A receiver may be appointed by the court or judge thereof in which a foreclosure action is pending when it appears (1) that the mortgaged property is in danger oi being lost, removed, or materially injured, or (2) that the condition of the mortgage-has not been performed, that the rents and profits of the property are subject to the mortgage, and that the property is probably insufficient to dis- charge the mortgage obligation.^^ 32 See Code of Civil Procedure, section 564, subd. 2. The court has no power to appoint a receiver ex- cept as provided for by statute. The parties cannot confer such jurisdiction by stipulation: Scott v. Ilotchkiss, 315 Cal. 89, 94, 47 Pac. 45; Baker v. Yar- ney, 129 Cal. 564, 79 Am. St. Eep. 140, 62 Pac. 100. 33 The Code reads: ^'That the condition of the mortgage has not been performed, and that the prop- erty is probably insufficient to discharge the mortgage debt.'' (It was applied in Societe Francaise v. Sel- heimer, 57 Cal. 623, and Montgomery v. Merrill, 65 Cal. 432, 4 Pac. 414.) But in Locke v. Klunker, 123 Cal. 231, 235-238, 55 Pac. 993, the court pointed out that although the mortgaged property was probably insufficient to satisfy the secured obligation, in the absence of a provision in the mortgage by which it was to include the rents and profits, the court was not authorized to appoint a receiver. And in other cases it is held that the receiver could not be appointed in the absence of such an agreement, as the estate re- mains in the mortgagor in his character of owner, and must continue to remain so, with all the incidents of ownership, until by a foreclosure and sale a new Liens — 41 642 ENFORCEMENT OF MORTGAGE. § 398 398. Attorney's Fee When Allov/able to be Fixed By Court.^'* Where a mortgage secures an attorney's fee to be paid the mortgagee in case of foreclosure, owner is substituted: Guy v. Tde, 6 Cal. 99, 65 Am. Dec. 490; San Jose etc. Bank of Sav. v. Bank of Ma- dera, 12 J Cal. 543, 54 Pac. 85; Baker v. Varney, 129 Cal. 564, 79 Am. St. Rep. 140, 62 Pac. 100. Likewise, during the period of redemption, although the mortgagor is insolvent, the purchaser of land has no right to have a receiver of the rents and profits of the land appointed, but is restricted to an action to recover them: West v. Conant, 100 Cal. 231, 34 Pac. 705. See sections 167 and 324, and 285 through 287. Contra, Shores v. Scott River Co., 21 Cal. 135. In Bank of Woodland v. Stephens, 137 Cal. 458, 70 Pac. 293, where a receiver had been appointed of the rents, income and profits of mortgaged land during the pendency of the foreclosure action, the question of the regularity of the appointment was not raised. 34 Stats. 1873-74, p. 707, c. 474, effective March 27, 1874, entitled ''An act to abolish attorneys' fees and other charges in foreclosure suits,'' provides: ''In all cases of foreclosure of mortgages the attorneys' fees shall be fixed by the court in which the proceedings of foreclosure are had, any stipulation in said mortgage to the contrary notwithstanding." In view of its title, this act is construed to refer to attorneys' fees pro- vided for in the mortgage, and to have no applica- tion where none are provided. The act merely gives the court power to fix the fee at any sum not exceed- ing the amount stipulated for by the mortgagee; it cannot allow a fee greater than that amount: Monroe V. Fohl, 72 Cal. 568, 14 Pac. 514; Hewitt v. Dean, 91 Cal. 5, 14, 27 Pac. 423; Hotaling v. Monteith, 128 Cal. 556, 61 Pac. 95. Compare Hildreth v. Williams (Cal.) 33 Pac. 1113. See, also, Alden v. Pryal, 60 Cal. 215, 220, and Bone- stell V. Bowie, 128 Cal. 511, 516, 61 Pac. 78, cited sec- tion 260, note 42, latter part, above. § 398 BY JUDICIAL PROCEEDING. 643 the court on rendering judgment may^ at its dis- cretion, allow the mortgagee a reasonahle. sum not exceeding that agreed upon by the parties^'^ to reimburse him for any special expense actu- This statute was codified by the amendment to Code of Civil Procedure, section 726, effective February 26, 1901, as follows: ^ ^ In such action the court may, by its judgment, direct the sale of the encumbered property (or so much thereof as may be necessary), and the application of the proceeds of the sale to the payment of the costs of court, and the expenses of the sale, and the amount due plaintiff, including, where the mort- gage provides for the payment of attorneys' fees, such sum for such fees as the court shall find reasonable, not exceeding the amount named in the mortgage. ' ' Attorney's fees stipulated to be paid are not the cause of action, but, like the costs, a mere incident to it: Carriere v. Minturn, 5 Cal. 432; Monroe v. Fohl, 72 Cal. 568, 571, 14 Pac. 514; White v. Allatt, 87 CaL 245, 248, 25 Pac. 420. See section 604 and note, below. 35 The fee is to be fixed by the court at its dis- cretion, not exceeding the stipulated sum: Carriere v. Minturn, 5 Cal. 432; Monroe v. Fohl, 72 Cal. 568, 571, 14 Pac. 514. Compare Gronfier v. Minturn, 5 Cal. 492; Moran v. Gardner, 82 Cal. 96, 101, 23 Pac. 6; Wood- ward V. Brown, 119 Cal. 283, 309, 63 Am. St. Eep. 108, 51 Pac. 2. So a stipulation of the parties as to what is a rea- sonable sum is not controlling: Grangers' Business Assn. V. Clark, 84 Cal. 201, 206, 23 Pac. 1081. Where an attorney brought an action and tried it, no further evidence of employment is necessary. ''The duty of fixing the amount of an attorney's com- pensation is cast upon the court, and nO evidence of the value of services is necessary": Woodward v. Brown, 119 Cal. 283, 309, 63 Am. St. Eep. 108, 51 Pac. 2: Edwards v. Grand, 121 Cal. 254, 257, 53 Pac. 796; Security etc. Co. v. Mattein, 131 Cal. 326, 333, 63 Pac, 644 ENFORCEMENT OF MORTGAGE. § 398 ally ineurrecF^ for an attorney's services in the foreclosure action. Where the sum fixed by the trial court is unreasonable, it will be corrected 482; Hellier v. Bussell, 136 Cal. 143, 68 Pac. 581; Mc- Namara v. Oakland Bldg. etc. Assn., 131 Cal. 336, 347, 63 Pac. 670; Montgomery v. Merrill, 62 Cal. 385, 393. The fact that a case was commenced in and tried before the court rendering the judgment afforded suf- ficient evidence of the services of an attorney, and the court had the discretion to fix the fee without call- ing for the opinion of witnesses to assist it: Hotaling V. Monteith, 128 Cal. 556, 558, 61 Pac. 95. A verdict of the jury is merely advisory: Stockton Sav. etc. Soc. v. Donnelly, 60 Cal. 481, 494. Neither an averment nor a finding of fact as to what is a reasonable fee is necessary: Carriere v. Min- turn, 5 Cal. 435; First Nat. Bank of Eiverside v. Holt, 87 Cal. 158, 161, 25 Pac. 272; White v. Allatt, 87 Cal. 245, 248, 25 Pac. 420; McNamara v. Oakland Bldg. etc. Assn., 131 Cal. 336, 347, 63 Pac. 670. See, also. Orange Growers^ Bank v. Duncan, 133 Cal. 254, 257, 65 Pac. 469. Where an averment in a complaint that a certain sum, not exceeding the amount stipulated for, is a reasonable sum is supported by the evidence at the trial, and the answer denies its reasonableness, but no evidence is offered to support the denial, the court is justified in allowing the sum claimed: Avery v. Maude, 112 Cal. 565, 44 Pac. 1020. See, also, Ogden V. Packard (Cal.), 35 Pac. 642, where the appellate court held that it could not from the judgment-roll alone determine the fee allowed to be unreasonable. 36 Merely Fee Actually Incurred to be Allowed.— So where the action is brought and prosecuted by the plaintiff personally, a counsel fee cannot be allowed: Patterson v. Donner, 48 Cal. 369, 380; Bank of Wood- land V. Treadwell, 55 Cal. 379. ^^Nor is such allowance in the nature of a penalty, but only a provision against an actual expense to be § 398 BY JUDICIAL PROCEEDING. 645 by the supreme court on appeal.^'' Where judg- ment is taken by default, an attorney's fee can- not, in the absence of a special prayer therefor, be allowed.^® incurred by the creditor on account of the failure of the debtor to fulfill his contract'': Carriere v.'Min- turn, 5 Cal. 435. A mortgagee *' cannot be allowed any sum for coun- sel fees for services rendered or to be rendered to it [in a foreclosure action], unless that attorney be entitled to recover it to himself. The object of the law allowing counsel fees is not to afford an oppor- tunity, under cover of the name, for a speculation on the part of the creditor, but to reimburse him, in a proper amount, for a sum which he pays, or be^ comes liable to pay, or to relieve him of the burden of paving counsel fees'': Bank of Woodland v. Tread- well, "^55 Cal. 379. So where a corporation mortgagee employed an attorney at a fixed salary to attend to its legal busi- ness, and it appears that any fee allowed would be- long to the mortgagee, no fee is allowable: Bank of Woodland v. Treadwell, 55 Cal. 379. The signature of an attorney to the complaint in foreclosure, however, authorizes the presumption that he was employed by the plaintiff to prosecute the action and that he had become liable to pay him a reasonable fee for his services: Avery v. Maude, 112 Cal. 565, 44 Pac. 1020; Woodward v. Brown, 119 Cal. 283, 309, 63 Am. St. Eep. 108, 51 Pac. 2. 37 Grangers' Business Assn. v. Clark, 84 Cal. 201, 207, 23 Pac. 1081. 38 Judgment by Default.— Where judgment in a foreclosure action is taken by default, and there is no special prayer for attorney's fees, but merely for '^ costs of suit," none are allowable: Brooks v. For- ington, 117 Cal. 219, 48 Pac. 1083. 646 ENFORCEMENT OF MORTGAGE. § 399 Subdivision 3, Enforcement hy Exercise of Power of Sale.^^ 399. Power of Sale cannot be Exercised When Secured Obligation Uncertain or Disputed, A sale under a power of sale must not be made when the amount of the secured obligation is un- certain or in dispute; if made, it may be set aside, or if attempted, it may be enjoined until the amount due has been ascertained by judicial proceeding and may thereafter be controlled by the court.^ 39 This subdivision applies to sales under power contained in deeds of trust in the nature of mort- gages as well as to sales under powers contained in mortgages. In some California cases (for instance, Copsey V. Sacramento Bank, 133 Cal. 659, 661, 85 Am. St. Eep. 238, 66 Pac. 7) the law as regards sales under trust deeds and mortgages with powers of sale are treated as indistinguishable. *' Sales under powers in deeds of trust and mort- gages are a harsh mode of foreclosing the rights of the mortgagor. They are scrutinized by courts with great care, and will not be sustained unless conducted with all fairness, regularity, and scrupulous integrity. Upon very slight proof of fraud or unfair conduct, or any departure from the terms of the power, they win be set aside'': More v. Calkins, 85 Cal. 177, 188, 24 Pac. 729. 40 More v.^ Calkins, 85 Cal. 177,-188, 24 Pac. 729. Where a mortgagee or trustee advertised the en- cumbered property for sale, but the mortgagor or trustor filed a complaint setting forth that a consid- erable portion of the secured demand is unliquidated and uncertain, that ten thousand dollars of the liqui- dated portion is disputed on the ground that it is § 400 BY POWER OF SALE. 647 400. Sale When Exaggerated Amount Claimed to be Due Generally Valid. A sale under a power of sale, where the amount claimed to be due is greater than the true amount due, is valid in the absence of proof oi fraud, or that the property or the rights of the mortgagor or trustor were injuriously aifected, or that bidders were deterred from attending the sale.'*^ The purchaser is not required to insti- without consideration, and that the value of the portion of the property offered for sale greatly ex- ceeds the amount of the just and lawful demand against the mortgagor, the court might properly (1) order an accounting, (2) control the mode of sale as to the notice to be given, the limitation of the amount and portions of the property to be sold and whether or not it should be sold in parcels, (3) appoint its own commissioner to conduct the sale if deemed nec- essary to secure a fair sale for the highest obtain- able price, and (4) pending these proceedings, en- join a sale by the mortgagee or trustee: More v. Cal- kins, 85 Cal. 177, 189, 190, 24 Pac. 729. 41 Savings etc. Soc. v. Burnett, 106 Cal. 514, 536, 39 Pac. 922 (trust deed). It is not absolutely necessary to state with cer- tainty the exact amount legally due, for a party under a mistake of law or fact may honestly claim more than by law he would be entitled to, and, if the other party is not shown to be prejudiced thereby, the sale will not be disturbed. The mortgagee may estimate the amount according to the strict terms of the contract, or may err simply in a computation of the interest, and if, under such circumstances, he claims more than he can legally recover, it does tnot necessarily vitiate the sale. Perhaps any amount within the terms of the contract may, in good faith, be claimed without affecting the legality of tne no- I 648 ENFORCEMEJyT OF MORTGAGE. § 400 tute an examination of the accounts of the mort- gagee or trustee under penalty of losing the property if it should ultimately appear on a final settlement that the secured obligation had in fact been satisfied before the sale.^^ 401. Person Selling for Article of Fluctuating Value Chargeable with Highest Value of Property Sold. A person selling under a power of sale^ not for money^ but for an article of fluctuating value is chargeable with the highest market value of the property sold.^^ 402. Recitals in Deed to Purchaser Binding on Mortgagor or Trustor. In relation to a bona fide purchaser for value, recitals in a deed given by a person selling mort- gaged or trust property to the effect that the sale was made according to the power are bind- ing upon the mortgagor or trustor, notwithstand- ing any irregularity in the exercise of the power.^** tice. And even if the excess be arbitrarily and wan- tonly claimed, it will not affect the sale, unless its amount was such as to deter bidders: Savings etc. Soc. V. Burnett, 106 Cal. 514, 534, 535, 39 Pac. 922. 42 Thompson v. McKay, 41 Pac. 221, 231. 43 Benham v. Eowe, 2 Cal. 387, 408, 56 Am. Dec. 342. 44 Recitals in Deed to Purchaser Binding on Mort- gagor or Trustor: Simson v. Eckstein, 22 Cal. 580, § 403 BY POWER OF SALE. 649 403. Sale Made Notwithstanding Injunction Voidable. A sale made under a power of sale to a pur- chaser with notice, in satisfaction of a mortgage or trust obligation, after the mortgagee or trustee had been served with an injunction prohibiting the sale, is voidable, not void, and may be set aside at the instance of the mortgagor or trustor upon a proper showing being made.^^ 404. Sale to Person Selling Voidable. A sale under a power of sale made either di- rectly or indirectly to the person selling is void- able at the option of the mortgagor or trustor,^^ 592, 593 (sale of mortg^aged property). Compare Carey v. Brown, 62 Cal. 373, 375 (sale of trust prop- erty). Rationale.— The mortgagee is the agent of the mortgagor for the purposes of the sale, and the repre- sentations and admissions of the a^ent made as a part of the transaction of sale are binding upon the mortgagor. If the principal is injured by the mis- conduct of the agent, his remedy is against the agent himself: Simson v. Eckstein, 22 Cal. 580, 592, 593. So in a sale by a trustee under a power in a trust deed, in which trust deed it was not provided that the recitals in a deed which might be given by the trustee upon a sale should be prima facie evidence of the facts recited, it was held that nevertheless, as to a bona fide purchaser for value, such recitals were prima facie evidence of a due sale and entitled him to the possession of the trust property: Sav- ings etc. Soc, V. Deering, 66 Cal. 281, 5 Pac. 353. 45 Powen V. Bank of Lemoore, 125 Cal. 468, 472, 58 Pac. 83 (sale of trust property). 46 Sale to Party Selling Voidable.— A sale by a 650 ENFORCEMENT OF MORTGAGE. § 404 who may^ within a reasonable time after being apprised of the sale, maintain an action to com- pel a reconveyance of the property upon the sat- isfaction of the secured obligation.^'' trustee of property affected by a trust deed, when made to a corporation in which the trustee became interested after the creation of the trust, is void- able at the mere instance of the trustor: Herbert Craft Co. V. Bryan, 68 Pac. 1020. A sale, however, by trustees to a bank in which they were stockholders at the time of the creation of the trust is not a sale to themselves so as to render the sale voidable, unless the trustor shows himself damaged by the sale: Copsey v. Sac- ramento Bank, 133 Cal. 659, 662, 85 Am. St. Eep. 238, 66 Pac. 7; Sacramento Bank v. Copsey, 133 Cal. 663, 665, 85 Am. St. Eep. 242, 66 Pac. 8. In Herbert Craft Co. v. Bryan, the court attempts to distinguish these cases. (It should be noted that in each case the sale was made to the beneficiary of the trust.) 47 May Redeem the Encumbered Property: Copsey V. Sacramento Bank, 133 Cal. 659, 662, 85 Am. St. Eep. 238, 66 Pac. 7. ^^ Where a power of sale is contained in a mort- gage, and under a sale by virtue of such power the mortgagee becomes the purchaser, the equity of re- demption still attaches to the property in favor of the mortgagee '': Benham v. Eowe, 2 Cal. 387, 407, 56 Am. Dec. 342. ^'A mortgagee who sells under a power contained in the mortgage and becomes himself the purchaser indirectly by having the mortgaged premises bid in for himself, cannot hold it against the mortgagor if the latter chooses to file his bill to set aside the sale or to redeem, provided this be done within a reasonable time after being apprised of the sale. But the sale is not void. It is onlv voidable'': Blockley V. Fowler, 21 Cal. 326, 82 Am. Dec. 747. § 405 BY POWER OF SALE. 651 405. Person Selling to Himself and Afterward Keselling must Account for Profits. A person who sells mortgaged or trust property to himself and afterward resells the same to a third party at an advanced price must account to the mortgagor or trustor for the profits de- rived from the resale as of the time of the re- sale.^^ 406. Mortgagee must Account for Surplus Real- ized. A mortgagee or trustee must account to the mortgagor or trustor for any surplus which may remain after the satisfaction of the secured obli- gation.^^ 407. Mortgagee may Maintain Action for Defi- ciency. A mortgagee or cestui que trust may maintain a direct action for the recovery of any portion of the secured obligation which may remain un- satisfied after the exhaustion of the mortgaged or trust property.^^ 48 Herbert Craft Co. v. Bryan, 68 Pac. 1020 (case of trust deed). 49 So where a mortgagee under an absolute deed sold the mortgaged property, the mortgagor may maintain an action to recover such surplus: Scranton V. Begol, 60 Cal. 642; Bettis v. Townsend, 61 Cal. 333. 50 Sacramento Bank v. Copsey, 133 Cal. 663, 66"'}, 85 Am. St. Eep. 242, 66 Pac. 8 (case of trust deed). CHAPTER 2. EQUITABLE LIEN" IN NATURE OP MORT- GAGE. 408. Equitable lien in nature of mortgage created by informal writing. 409. Validity of equitable lien. 410. Eecordation of equitable lien as constructive notice. 411. Equitable lien assignable. 412. Enforcement of equitable lien. 413. Waived by suing on principal obligation. 408. Equitable Lien in Nature of Mortgage Created by Informal Writing.^ Every agreement in writing, whereby the in- 1 Higgins V. Manson, 126 Cal. 467, 469, 77 Am. St. Eep. 192, 58 Pac. 907. Rationale. — '/The maxim of equity upon which this doctrine rests is, that equity looks upon things agreed to be done as actuall}^ performed; the meaning of which is, that equity will treat the subject matter as to collateral consequences and incidents in the same manner as if the final acts contemplated by the parties had been executed exactly as they ought to have been'': Daggett v. Eankin, 31 Cal. 321, 327; Racouillat v. Sansevain, 32 Cal. 376, 389; Love v. Sierra Nevada etc. Min. Co., 32 Cal. 639, 653, 91 Am. Dec. 602. (652) § 408 EQUITABLE MORTGAGE. 653 Civil Code, section 2922, providing: ^^A mortgage can be created, renewed, or extended only by writ- ing, executed with the formalities required in the case of a grant of real property,'^ cannot be held to deprive a court of equity of the power, in a proper case, of declaring an instrument which is not a mort- gage in form one in effect: Dingley v. Bank of Ven- tura, 57 Cal. 467, 471. Illustrations.— An assignment of a certificate of purchase of land issued by the state, by way of se- curity for a debt due, operates as an equitable mort- gage on the interest in the land which the assignor acquired bv virtue of the certificate: Hill v. Eldred, 49 Cal. 398. Compare San Jose etc. Bank of Savings V. Bank of Madera, 121 Cal. 539, 542, 54 Pac. 83, where an assignment of a sheriff's certificate of pur- chase at foreclosure sale was held to create an equi- table mortgage. A promissory note executed with an instrument at- tached providing that the United States patent of Cjsrtain lands should be deposited with the payee, the intention being that the land should stand as security for the debt, creates an equitable mortgage: Higgins V. Manson, 126 Cal. 467, 77 Am. St. Eep. 192, 58 Pac. 907. An agreement to convey property containing a provision that ''the said property, so to be conveyed, as is hereinabove set forth, is to be chargeable only with the debts of [certain parties] .... exceptinqr an indebtedness due the Anglo-Calif ornian Bank,'' creates an equitable lien in the nature of a mortgage upon the propertv to secure the debt due the bank: Kreling v. Kreling, 118 Cal. 413, 419, 50 Pac. 546. , An agreement between an irrigation company and a land owner, by which the water was to be furnished to the owner during a series of years at a stated annual price, and containing a provision that ''the water furnished under this agreement is intended to form a part of the appurtenances to said sections or quarter sections of land, and the right thereto shall be transferable only with, and run with, said 654 EQUITABLE MORTGAGE. § 408 tention is clearly indicated^ to make some par- ticular immovable property^ therein described a security for the performance of an obligation, cre- ates a specific equitable lien or inchoate mortgage against such property. land, and that the party of the first part is bound by this instrument to all subsequent owners of said land, but to no other person^ ^; also, that ^^this agree- ment, and the covenants therein contained on the part of the party of the second part [the land owner], shall run with and bind the land,'' creates a lien against the land which also binds any successor in interest in the land with notice of it, but does not create any personal liability on the part of sucn successors in interest: Fresno Canal etc. Co. v. Eowell, 80 Cal. 114, 116j 118, 13 Am. St. Eep. 112, 22 Pac. 53; Presno Canal etc. Co. v. Dunbar, 80 Cal. 530, 535, 22 Pac. 275. 2 Intention to Hypothecate Property must Appear. The form of the writing is not important, provided it sufficiently appears that it was intended thereby to create a security. If that intention appears, it will create a mortgage in equity, or a specific lien on the property so intended to be mortgaged: Hig- gins V. Manson, 126 Cal. 467, 469, 77 Am. St. Eep. 192, 58 Pac. 907. So an agreement in writing to give a mortgage, or a mortgage defectively executed, or an imperfect attempt to create a mortgage, or to appropriate spe- cific property to the discharge of a particular debt, will create a mortgage in equity, or a specific equi- table lien on the property intended to be mortgaged: Daggett V. Eankin, 31 Cal. 321, 326, 327; Eacouillat V. Sansevain, 32 Cal. 376, 389; Love v. Sierra Nevada etc. Min. Co., 32 Cal. 639, 653, 91 Am. Dec. 602; Hig- gins V. Manson, 126 Cal. 467, 470, 77 Am. St. Eep. 192, 58 Pac. 907; Peers v. McLaughlin, 88 Cal. 294, 297, 22 Am. St. Eep. 306, 26 Pac. 119. Compare Thurber v. Meves, 119 Cal. 35, 39, 50 Pac. 1063. § 409 EQUITABLE MORTGAGE. 055 409. Validity of Equitable Lien. An equitable lien in the nature of a mortgage is valid between the parties'* thereto, and as against all third parties^ with notice thereof. 410. Recordation of Equitable Lien as Con- structive Notice. The recordation of an equitable lien in the na- ture of a mortgage, which lien is contained in an informal writing, does not impart constructive notice,^ but when contained in an instrument of conveyance which is duly acknowledged and re- corded becomes notice to all third parties.'' Although the defective execution of a mortgage is caused by a mistake of law, the defective execution can be aided; for where there is a defective execu- tion of a power, it is a matter of no equitable mo- ment whether the error came from a mistake of law or a mistake of fact. It is enough that the power existed, and that there was an attempt to act under it: Love v. Sierra Nevada etc. Min. Co., 32 Cal. 639, 653, 654, 91 Am. Dec. 602; Eemington v. Higgins, 54 Cal. 620. 3 But a mere deposit of a deed without an in- tention to fix a lien upon the land, but merely upon the deed, is not sufficient: Higgins v. Manson, 126 Cal. 467, 470, 77 Am. St. Eep. 192, 58 Pac. 907. 4 Between the parties thereto: Eacouillat v. San- sevain, 32 Cal. 376, 389, 390; Daggett v. Eankin, 31 Cal. 321, 326, 327. 5 Against third parties with notice: Eacouillat v. Sansevain, 32 Cal. 376, 389, 390. 6 Eacouillat v. Eene, 32 Cal. 450, 457. 7 Dingley v. Bank of Ventura, 57 Cal. 467, 471, 472. Where in a contract of an irrigation com- pany to furnish water to a certain tract of land a 656 EQUITABLE MORTGAGE. § 411 411. Equitable Lien Assignable. The assignment of an obligation secured by an equitable lien in the nature of a mortgage carries with it the security.^ 412. Enforcement of Equitable Lien. An equitable lien is enforceable by a foreclos- ure action^ and the sale thereunder is subject to redemption where redemption is allowable.^ 413. Waived by Suing on Principal Obligation. An equitable lien is waived by the commence- ment of an action upon the principal obliga- tion.io lien was created against the land to secure the pay- ment of the stated annual price of the water fur- nished, the acknowledgment of the contract by the owner of the land alone without the acknowledgment of the irrigation company is sufficient to entitle the contract to a recordation valid as against the succes- sors in interest of the land owner: Fresno Canal etc. Co. V. Eowell, 80 Cal. 114, 117, 13 Am. St. Eep. 112, 22 Pac. 53. 8 Dingley v. Bank of Ventura, 57 Cal. 467, 472. 9 Dingley v. Bank of Ventura, 57 Cal. 467, 471. 10 Campan v. MoHe, 124 Cal. 415, 417, 57 Pac. 208. (Is not the truth, rather, that the security must be first exhausted (sections 385 and 424) ?) CHAPTER 3. TEUST DEED IN JSTATURE OF MORT- GAGE.i 414. Trust deed defined. 415. Trust deed valid. 416. Presumption against trust deed. 417. Parol evidence admissible to show absolute deed ^ trust deed. 418. Trust deed conveys legal title. 419. Trustor has use of trust property. 420. Certain provisions concerning mortgages applica- ble to trust deeds. 421. Barring of secured obligation by lapse of time does not entitle trustor to recover property back. 422. Action to compel sale of trust property main- tainable. 423. Trust ceases with its purpose. 424. Trust property a primary security. 425. Enforcement of trust obligation. 1 A trust deed to secure the payment of a debt is an anomaly in our system and inconsistent with the policy of the statute in regard to mortgages. It is at least doubtful if they would now be sus- tained but for a line of decisions made before they were severely questioned. The doctrine will not be extended to deeds that are not expressly of that character: Hodgkins v. Wright, 127 Cal. 688, 692, 60 Pac. 431. Liens— 42 (657) 658 . TRUST DEED. § 414 414. Trust Beed Defined ^ An instrument^ conveying property to a sec- ond party merely as security for the future per- 2 Definition of Trust Deed: Powell v. Patison, 100 Cal. 234, 34 Pac. 676. For instruments held to be trust deeds, see Koch v. Briggs, 14 Cal. 256, 73 Am. Dec. 651; Fuquay v. Stickney, 41 Cal. 583, 587; Grant v. Burr, 54 Cal. 298; Bateman v. Burr, 57 Cal. 480; Partridge v. Shepard, 71 Cal. 470, 477, 478, 12 Pac. 480; Savings etc. Soc. V. Burnett, 106 Cal. 514, 528, 39 Pac. 922. Trust Beed and Assignment for the Benefit of Credi- tors Distinguished.— If a conveyance is to a trustee, and the debtor intends to devest himself not only of the title to the property, but of all control over it; if it is intended as an absolute conveyance of all his property (in Sabichi v. Chase, the conveyance was of a part of his property only), and is made for the purpose of securing a distribution of its proceeds among his creditors, or a portion of them, in legal effect it is an assignment for the benefit of credi- tors, no matter what name or designation the parties may have given it. If the intention of the debtor is merely to secure his debt to one or more of his creditors, and the con- veyance is not intended as an absolute disposition of his property, but he reserves to himself a right therein, the conveyance will be treated as a mortgage, even though the debtor is insolvent at the time and it covers all his property and but a portion of his debts are secured by it. A provision that a surplus of proceeds remaining after the satisfaction of the claims of the creditors named should be returned to the grantor does not, of itself, distinguish the contract as one of security only. The reservation of an interest in the possible surplus— not in the property itself— makes the trans- action more clearly an assignment for the benefit of creditors: Sabichi \. Chase, 108 Cal. 81, 87, 41 Pac. 29. § 414 TRUST DEED. 659 formancG by the first party of an obligation [in favor of a third party] ,^ whether previously ex- isting or contemporaneously made or thereafter to arise^ and the conveyance being defeasible on 3 Must be Created in Writing.— Trusts in real es- tate other than resulting trusts can be created only by writing: Hodgkins v. Wright, 127 Cal. 688, 692, 60 Pac. 431. 4 Beneficiary was a Third Party in the Following Cases: Felton v. Le Breton, 92 Cal. 457, 465, 28 Pac. 490 (cited at section 255, above) ; Godfrey v. Mon- roe, 101 Cal. 224, 227, 35 Pac. 761; Banta v. Wise, 135 Cal. 277, 67 Pac. 129. Thus, in Levy v. Burkle (Cal.), 14 Pac. 564, the distinction was said to be that to a trust deed there were three parties while in a mortgage but two. The court said: ^^Both are securities only. The difference is only in form. In one case the mortgagee is the trustee; in the other a third person.^' In More v. Calkins, 95 Cal. 435, 538, 29 Am. St. Eep. 128, 30 Pac. 583, however, it was said that the beneficiary need not be a third party. '^Whether the conveyance is to be treated as a mortgage or as a deed of trust must depend upon its essential char- acter, as shown by its terms, and not whether the grantee is a creditor whose debt is to be paid out of the proceeds to arise from the execution of the trust which is declared.'' This, however, was a case of a true trust deed, there being a third party who was the beneficiary (see Hull v. Calkins, 137 Oal. 84, 69 Pac. 838). In line with this reason- ing, see, also, Thompson v. McKay, 41 Cal. 221, 230, 231; also Mayhall v. Eppinger, 137 Cal. 2, 69 Pac. 489, where the trustee was also the beneficiary. But compare Cormerais v. Genella, 22 Cal. 116, where it was held that a conveyance to a second party on an express condition of defeasance to secure obligations due third parties was a mortgage, not a trust deed. 660 TRUST DEED. § 414 the satisfaction of the secured obligation,^ and authorizing the second party ,^ upon a default of the first party in satisfying the secured obligation as agreed, to sell the property and apply the pro- ceeds to the satisfaction of the secured obliga- tion, is a trust deed in the nature of a mortgage. 415. Trust Deed Valid. A trust deed is a valid form of security,'' and will be supported by the courts.® s Defeasible on Satisfaction.— This is characteristic of a trust deed: Herbert Craft Co. v. Bryan, 68 Pac. 1020. 6 Authority to Sell.— The decisions declaring a con- veyance to one person to secure an obligation to an- other person a trust deed ''apply only to cases where, by the terms of the deed, the trustee is authorized to sell and to apply the proceeds to the payment of the debt, and not to deeds where there is no power of sale expressed^': Banta v. Wise, 135 Cal. 277, 67 Pac. 129. 7 Trust Deed Valid.— A trust deed is not void upon the ground that it creates a trust in violation of the statute against perpetuities. Notwithstanding that a trust is invalid when not dependent upon the dura- tion of life (Civil Code, sees. 715, 716, 771), a trust in the nature of a mortgage has been upheld in nu- merous decisions that should not be disturbed. The court cannot correct the evil without producing wide- spread distrust and confusion: Sacramento Bank v. Alcorn, 121 Cal. 379, 385, 53 Pac. 813; Camp v. Land, 122 Cal. 167, 170, 54 Pac. 839; Staacke v. Bell, 125 Cal. 309, 315, 57 Pac. 1012. 8 So an injunction will not issue to prevent a sale under a power of sale in a trust deed: Grant V. Burr, 54 Cal. 298; Bateman v. Burr, 57 .Cal. 480; Durkin v. Burr, 60 Cal. 360. § 416 TRUST DEED. 661 416. Presumption Against Trust Deed. If there is any doubt as to, whether an instru- ment was intended as a mortgage or a trust deed, such doubt should be resolved in favor of the mortgage with power of sale.^ 417. Parol Evidence Admissible to Show Abso- lute Deed a Trust Deed. The acts and declarations of the parties are admissible in evidence to show that a deed abso- lute in form is intended as a trust deed in the nature of a mortgage.^^ 418. Trust Deed Conveys Legal Title. A trust deed conveys the legal title to the trustee^ but only so far as to enable the trustee to convey the property, the trustor retaining the right to a reconveyance upon the satisfaction of the secured obligation or to a sale of the trust property upon default therein.^^ 9 Godfrey v. Monroe, 101 Cal. 224, 227, 35 Pac. 761; Banta v. Wise, 135 Cal. 277, 280, 67 Pac. 129. 10 Raynor v. Lyons, 37 Cal. 452, in which case certain certificates of purchase of land were conveyed to a second party by absolute conveyance, there being a parol agreement between the parties that the land was held as security for the payment of a debt due a third party from the grantor. The grantee sold the property, and the grantor brought an action to enforce an accounting. 11 Conveys Legal Title: Koch v. BriggSj 14 Cal. 256, 264, 73 Am. Dec. 651; Thompson v. McKay, 41 Cal. 221, 230; Fuquay v. Stickney, 41 Cal. 583, 587; 662 TRUST DEED. § 419 419. Trustor has Use of Trust Property. Until the execution of the trust, the trustor is entitled to the possession of the trust prop- erty and the full beneficial use thereof.^^ 420. Certain Provisions Concerning Mortgages Applicable to Trust Deeds. The provisions of sections 343-351, inclusive, are applicable to the assessment and taxation of Bateman v. Burr, 57 Cal. 480, 483; Savings etc. Soc. V. Deering, 66 Cal. 281, 286, 5 Pac. 353; Partridge V. Shepard, 71 Cal. 470, 478, 12 Pac. 480; Savings etc. Soc. V. Burnett, 106 Cal. 514, 528, 39 Pac. 922; Sac- ramento Bank v. Alcorn, 121 Cal. 379, 53 Pac. 813; Hazen v. Mcholls, 126 Cal. 327, 329, 58 Pac. 816. ''The passing of the legal title .... is mostly ideal. It is deemed to have passed only for the purpose of enabling the trustee to convey a title. In all other respects the title remains in the trustor, and is still the right by which he holds that which is his'^ Herbert Craft Co. v. Bryan, 68 Pac. 1020. To the estate of the trustee none of the incidents of ownership attach except such as will enable him to convey: Sacramento Bank v. Alcorn, 121 Cal. 379, 384, 53 Pac. 813. 12 The trustor is entitled to possession until the execution of the trust: Bostwick v. McEvoy, 02 Cal. 496, 500. Thus the trustor ''may maintain an action to re- cover possession, even when the trust deed is silent upon the subject of possession^': Sacramento Bank v. Alcorn, 121 Cal. 379, 383, 53 Pac. 813.' The trustee cannot maintain a possessory action against the trustor to get possession of the property: Tyler v. Granger, 48 Cal. 259, 269, 270. See, also, Sacramento Bank v. Alcorn, 121 Cal. 379, 384, 53 Pac. 813; Herbert Craft Co. v. Bryan, 68 Pac. 1020— both cited in note 11 above. § 420 TRUST DEED. 663 property affected by a trust deed. Sections 307- 314^ inclusive, are applicable to trust deeds given in whole or in part to secure future advances.^*'^ A trust deed is practically, though not in legal effect, little more than a mortgage with a power of sale.^^ 421. Barring of Secured Obligation by Lapse of Time does not Entitle Trustor to Recover Property Back. Although the secured obligation is barred by lapse of time, the trustor cannot cause the trust property to be reconveyed to him without satis- fying the secured obligation, nor prevent the sale thereof by the trustee in satisfaction of such ob- ligation. ^^ 422. Action to Compel Sale of Trust Property Maintainable. Although the secured obligation is barred by lapse of time, the debtor may maintain an action to compel the sale of the trust property, and to 13 Saving etc. Soc. v. Burnett, 106 Cal. 514, 533, 39 Pac. 922. 14 Sacramento Bank v. Alcorn, 121 Cal. 379, 53 Pac. 813; Hodgkins v. Wright, 127 Cal. 688, 69?, 60 Pac. 431. 15 Compare sections 216 and 338 and notes, above. The expiration of the statutory time for bringing an action to recover a debt, or to enforce any personal obligation, does not operate either as an extinguish- ment or payment: Grant v. Burr, 54 Cal. 298. 664 TRUST DEED. § 422 cause an 3^ surplus arising from such sale to be paid to him.^^ 423. Trust Ceases with Its Purpose. When the purpose for which the trust is cre- ated ceases^ the estate of the trustee also ceases.^'' 424. Trust Property a Primary Security. The proceeds of the sale of the entire trust property constitute a primary fund for the satis- faction of the secured obligation which must first be exhausted before recourse may be had against the general assets of the primary obligor.^^ . 425. Enforcement of Trust Obligation. An obligation^ the performance of which is se- cured by trust deed, may, when performance is due, be enforced (1) in every case by a foreclosure action con- ducted in all respects the same as in the case of mortgaged property/^ or 16 Whitmore v. Savings Union, 50 Cal. 145, 150. 17 See Civ. Code, sec. 871. Thus upon the satisfaction of the trust before a sale of the trust property, the trustee must reconvey: Bostwick V. McEvoy, 62 Cal. 496, 501. 18 The trust property is the primary fund for the satisfaction of the secured obligation, and must first be exhausted: Powell v. Patison, 100 Cal. 236, 239, 34 Pac. 677; Illinois Trust etc. Bank v. Pac. Ey. Co., 117 Cal. 332, 342, 49 Pac. 197; Herbert Craft Co. V. Bryan (Cal.), 68 Pac. 1020. 19 Obligation Secured by Trust Deed may be En- forced by Foreclosure Proceedings: Herbert Craft § 425 TRUST DEED. 665 (2) by the exercise of the power of sale in the mode and manner agreed upon and in accord- ance with the principles laid down in sections 399-407 for a sale under a power contained in a mortgage.^^ Co. V. Bryan (Cal.), 68 Pac. 1020. See, also, Powell V. Patison, 100 Cal. 234, 34 Pac. 676. Compare Felton V. Le Breton, 92 Cal. 457, 465, 28 Pac. 490. An instance where a deed of trust was foreclosed: Illinois Trust etc. Bank v. Pac. Ey. Co., 115 Cal. 285, 47 Pac. 60, 117 Cal. 332, 49 Pac. 197. The statement to the contrary in Koch v. Briggs, 14 Cal. 256, 264, 73 Am. Dec. 651, is overruled in Herbert Craft Co. V. Bryan. 20 Although a trustee under a trust deed (the trustee being also the cestui que trust) has com- menced an action for the foreclosure of the deed, he may thereafter without dismissing such action pro- ceed to sell the trust property under the power of sale therein contained; and an injunction will not under such circumstances be granted to prevent the sale under the power: Mayhall v. P^ppinger,^ 137 Cal. 5, 69 Pac. 489. :^ CHAPTER 4. VENDORS SECUEITY.i AETICLE 1. VENDOE'S SECURITY PROPER. . 426. Vendor's rights upon sale and change of. posses- sion of immovable property without transfer of title. 427. Vendor's security assignable. 428. Payment of secured demand extinguishes se- curity, but trust continues. 429. In proper case vendee may recover back pay- ments made. 430. Vendor's security a cumulative remedy. 431. Security continues until vendor's demand satis- fied. 432. Enforcement of secured obligation against se- curity. 426. Vendor's Rights upon Sale and Change of Possession of Immovable Property With- out Transfer of Title ^ TJpon an executory sale of immovable property, coupled with a change of possession thereof, but 1 **The vendor's security is something stronger than a mortgage, because the legal title is retained as security": G§ssner v. Palmateer, 89 Cal. 89, 92 (24 Pac. 608), 26 Pac. 789. (666) § 426 vendor's security. 667 without a transfer of title/ the vendor retains an indefeasible*"^ interest in the property as se- cnrity for the payment of the purchase price. 427. Vendor's Security Assignable. The vendor^s security may he assigned by tho assignment of the notes or other written instru- The possession of a vendor who holds the title as security for the purchase money is in some respects similar to that of a mortgagee: Sparks v. Hess, 15 Cal. 186, 194; Hill v. Grigsby, 32 Cal. 55, 58, 59. 2 Where the vendor holds the title, he is the trus- tee of the vendee, but can be compelled to convey the title only upon the payment of the purchase price: Longmaid v. Coulter, 123 Cal. 208, 215, 55 Pac. 791. From the time of the contract for the sale of the land, the vendor, as to the land, becomes a trustee for the vendee, and the vendee, as to the purchase money, a trustee for the vendor, who has a lien upon the land therefor: Willis v. Wozencraft, 22 Cal. 607, 616. See, also, Truebody v. Jacobson, 2 Cal. 269, 287. 3 Vendor has Indefeasible Interest.— The vendee cannot prejudice such title or in any way devest it except by the performance of the act for which the vendor holds it: Longmaid v. Coulter, 123 Cal. 208, 213, 55 Pac. 791; Gessner v. Palmateer, 89 Cal. 89, 02 (24 Pac. 608), 26 Pac. 789. So the transfer of the 'property from the vendee to a bona fide purchaser for value cannot defeat such title: Longmaid v. Coulter, 123 Cal. 208, 213, 55 Pac. 791. The interest of a bona fide assignee of the vendee for value can only be protected by the payment of tne purchase money to the vendor at the right time: True- body V. Jacobson, 2 Cal. 269, 286, 287. The rights of the vendor cannot be affected by the equities of third parties claiming under the vendee: Truebody v. Jacobson, 2 Cal. 269, 286. 668 vendor's security. § 427 ments given for the purchase money,^ or of the contract of purchase together with the convey- ance of the property.^ 428. Payment of Secured Demand Extinguishes Security, but Trust Continues. Upon the pa3rment of the purchase price by the vendee^ while the title does not ipso facto pass to the vendee^ the property is no longer held by the holder of the legal title as security for the performance of an obligation, but merely as trustee for the purchaser.® 4 **The assignee of notes given for the purchase money, like the assignee of notes secured by mortgage, is entitled to the benefit of the security'': Gessner v. ]?almateer, 89 Cal. 89, 93 (24 Pac. 608), 26 Pac. 789. 5 Taylor v. McKinney, 20 Cal. 618; Baum v. Grigs- by, 21 Cal. 172, 177, 178, 81 Am. Dec. 153; Averv V. Clark, 87 Cal. 619, 625, 22 Am. St. Eep. 272, 25 Pac. 919. 6 Where a third party advances the purchase price of certain land direct to the vendor, receiv- ing a conveyance of the land from the vendor as security for the payment by the purchaser of the sum advanced to his use, upon the repayment of the sum loaned, the person receiving the legal title had no further right in the property except that he held the legal title in trust for the purchaser, the relation of beneficiary and trustee existing between them. After the repayment of the advance the legal title did not at once pass to the purchaser, but remained just vrhere it was when the transfer was first made, and is held in trust for the purchaser. The relation of the parties was a trust relation, and not a mere mortgage relation. The payment of the purchase price by one and the transfer of the property to the § 429 vendor's security. 669 429. In Proper Case Vendee may Recover Back Payments Made. Where the vendee has made certain payments as agreed^ and is ready to complete the perfor- mance of his obligation as agreed, but the vendor is in default, the vendee must, as a prerequisite to maintaining an action to recover back the pay- ments already made, offer to perform his part of the agreement.'' 430. Vendor's Security a Cumulative Remedy. The right to maintain an action against the property in satisfaction of the secured obligation is a cumulative remedy, in no, manner impairing the right to a direct action for the recovery of the purchase money, and after offering a deed and demanding performance of the contract, such ac- other established a *' resulting trust." When the pur- chase price advanced had been repaid by the pur- chaser, the mortgage feature of the transaction was extinguished and eliminated, and thereafter the land was held by the person advancing the money, not as mortgagee at all, but only as trustee: White v. Costi- gan (Cal., March 10, 1903), 72 Pac. 178. 7 Leach v. Rowley, Cal., March 30, 1903. ''The general rule is, that the vendee is not entitled to a conveyance until full payment of the purchase money, and the acts of payment and conveyance being mutual and dependent, neither party is in default un- til after tender and demand by the other": Laffey v. Kaufman, 134 Cal. 391, 393, 86 Am. St. Eep. 283, 66 Pac. 471. 8 Vendor's Security a Cumulative Remedy: Glock V. Howard & Wilson Colony Co., 123 Cal. 1, 6, 69 Am. 07 vendor's security. § 430 tion may be maintamed^^ but an attachment can- not be issued therein.^ St. Eep. 17, 55 Pac. 713. ^^A vendor retaining the title may .... sue at law for the balance of the pur- chase monev, or file his bill in equity '^ Sparks v. Hess, 15 Cal. 186, 194. Although time is essential, the failure of the vendee to make the payments provided for does not make the contract void, so far as the vendor is concerned, but the vendor has the option to avoid or enforce the con- tract, and may, if he so elects, after offering a deed and demanding performance, maintain an action for the recovery of the unpaid balance of the purchase money: Wilcoxson v. Stitt, 65 Cal. 596, 52 Am. Eep, 310, 4 Pac. 629; Smith v. Mohn, 87 Cal. 489, 498, 25 Pac. 696; Newton v. Hull, 90 Cal. 487, 494, 27 Pac. 429; North Stockton Town Lot Co. v. Fisher (Cal., Dec. 18, 1902), 70 Pac. 1082. ''It has been held that until a conveyance has been made the lien constitutes such security as will prevent the creditor from suing out an attachment, but it has also been uniformly held that such contract does not establish the relation of mortgagor and mortgagee. There is, therefore, no statutory prohibition upon the right to a personal action to enforce the debt when it becomes due. The action is for money due, as much as though the suit were upon a promissory note. It is not, therefore, a local action^': Samuel v. Allen, 98 Cal. 406, 408, 33 Pac. 273; North Stockton Town Lot Co. V. Fisher (Cal., Dec. 18, 1902), 70 Pac. 1082. 9 Attachment cannot Issue.— The vendor's security is a lien within the meaning of the Code of Civil Pro- cedure, sec. 537 (Practice Act, sec. 120), which dis- allows an attachment to issue upon a- demand secured bv lien: Hill v. Grigsby, 32 Cal. 55; Gessner v. Palma- teer, 89 Cal. 89 (24 Pac. 608), 26 Pac. 789; on rehear- ing in bank (reversing first decision), per Paterson, De Haven, Garoutte, and Harrison, JJ., and Beatty, C. J.; McFarland, J., dissenting. See, also, Samuel V. Allen, as quoted in preceding note. § 431 vendor's security. 671 431. Security Continues Until Vendor's Demand Satisfied. So long as the secured obligation remains un- satisfied^ the vendor^s security is not waived nor impaired by recourse to remedies in personam/^ nor by taking^* nor enforcing^^ independent se- 10 Not Waived by Recourse to Remedies in Per- sonam. — ^'The sum of the decisions .... is that the vendor may sue at law on the debt or in equity to enforce the contract, or he may pursue both remedies concurrently; that the right to pursue the property is not waived by taking independent security, or by other acts which would operate as a waiver of the im- plied [vendor's] lien, and that so long as he retains the title the vendor clearly manifests an intention to rely upon it as security for his debt, and equity will not compel him to part with his title until his debt has been paid; and that the institution of proceedings at law for the purchase price, whether evidenced by notes or not, and the recovery of judgment and the issuance of execution thereon, do not affect the right of the vendor to satisfy his claim for the purchase price out of the property, except so far as such judg- ment may have been satisfied' ': Longmaid v. Coulter, 123 Cal. 208, 213, 214, 55 Pac. 791. In this respect Code of Civil Procedure, section 726 /see sections 385-388 and 390-392 above), is inapplica- ble, because the relation of mortgagor and mortgagee does not exist: Samuel v. Allen, 98 Cal. 406, 33 Pac. 273; Longmaid v. Coulter, 123 Cal. 208, 214, 215, 55 Pac. 791. 11 Not Waived by Taking Independent Security.— Taking a note for the purchase money does not affect this lien; and even if part is paid, the lien is good as to the residue: Truel?ody v. Jacobson, 2 Cal. 269, 286. Taking a mortgage to secure the payment of the purchase price does not waive the vendor ^s security: Kent V. Williams, 114 Cal. 537, 542, 46 Pac. 462. 12 Not Waived by Enforcing Independent Security. 672 vendor's security. § 431 CTirity, nor by an extension^^ of the time of pay- ment of the secured obligation. 432. Enforcement of Secured Obligation Against Security. Upon the default^^ of a vendee in possession in the performance of his contract of purchase, the vendor may, after offering a deed and demand- ing the performance of his contract by the ven- Wliere an obligation secured by vendor's security is also secured by mortgage, the commencement of an action to foreclose the mortgage does not vs^aive the securitv: Kent v. San Francisco Sav. Union, 130 Cal. 401, 407, 62 Pac. 420. 13 Not Waived by Extension of Time of Payment.— The extension of the time of payment for land be- yond the period mentioned in the title bond given by the vendor to the vendee does not release the se- curity: Truebody v. Jacobson, 2 Cal. 269, 286. 14 What Amounts to Default.— Where the parties to a contract expressly declare time to be essential, the vendee must perform on the day fixed within rea- sonable hours. It is none the less so in equity than at law, unless equitable grounds in excuse of the de- fault are shown: Grey v. Tubbs, 43 Cal. 359; Clock v. Howard & Wilson Colony Co., 123 Cal. 1, 9, 69 Am. St. Eep. 17, 55 Pac. 713. ''Where an equitable showing is not made to ex- cuse the breach, the vendor has the right in equity, as he always has at law, to retain the moneys paid by the vendee '^ Clock v. Howard & Wilson Colony Co., 123 Cal. 1, 11, 69 Am. St. Eep. 17, 55 Pac. 713. Where a vendee gave three notes in part payment for land, which were never presented for payment, the vendee is not put in default by such nonpayment: Gouldin v. Buckelew, 4 Cal. 107. Where a contract for the sale and purchase of land was made, the title to remain in the vendor until pay- § 432 vendor's security. 673 dee/^ but without rescinding the contract nor re- turning any payments which may have been mad:^ by him/^ maintain an action^ either, (1) to recover the possession of the property, the vendor having first demanded and been refused possession except where the contract provides that the vendee's right to possession shall terminate upon his default/'' and also to ment by the vendee of the full purchase price, and the payments were to be at certain times, but only in case the title was satisfactory, and if not so made, the payments to be forfeited, where the vendor failed to give good title, he cannot declare the payments for- feited and maintain an action to quiet title: Leach v. Eowley, Cal., March 30, 1903. See, also, Benson v. Shotwell, 87 Cal. 49, 60, 25 Pac. 249; Birch v. Cooper, 134 Cal. 636, 639, 69 Pac. 420. 15 Vendor must Offer Deed and Demand Perform- ance. The demand of payment is not required to De written nor formal, but any language is sufficient which is so clear as to leave no doubt nor misunder- standing as to what is intended by the demand: Will- iams V. Long, Cal., May 29, 1903. 16 Hoffman v. Eemnant, 72 Cal. 1, 2, 12 Pac. 804; Hannan v. McNickel, 82 Cal. 122, 126, 127, 23 Pac. 271; Williams v. Long, Cal., May 29, 1903. 17 First, may Maintain Action to Recover Posses- sion: Thorne v. Hammond, 46 Cal. 530; Whittier v. Stege, 61 Cal. 238, in bank; Hicks v. Lovell, 64 Cal. 14, 20, 49 Am. Eep. 679; 27 Pac. 942. The vendor ^'is not bound to wait indefinitely after the failure of the purchaser to comply with the terms of his agreement. If the payments are not made when due, he may, if out of possession, bring his eject- ment and recover the possessj-on^': Keller v. Lewis, 53 Cal. 113; 56 Cal. 466. Liens— 43 674 vendor's security. § 432 recover the value of the rents and profits accru- ing after the demand was made without deduct- ing therefrom the value of improvements made/® or (2) to quiet his title and recover possession un- less within a certain time to he fixed by tho court the vendee shall perform his contract.^^ Where, however, a contract for the sale of property- provides for possession by the purchaser, and does not provide that upon failure to comply with its condi- tions his right to the possession should cease, the vendor cannot maintain an ejectment upon default of payment (pp. 618, 619). But as the possession of the vendee is lawful, an ejectment will not lie against the purchaser without a demand of possession and a refusal to quit (p. 616) : Willis v. Wozencraf t, 22 Cal. 607. The statement of Keller v. Lewis is subject to the limitation of the Willis case: Central Pac. E. E. Co. V. Mudd, 59 Cal. 585, 590. Compare, however, the remark in Gouldin v. Buck- elew, 4 Cal. 107, that the vendor ^^ might have recov- ered possession of the premises, in which case he could only have held until the rents and profits had paid the purchase money, and then equity would have compelled him to convey to the purchaser. '^ 18 Hannan v. McNickel, 82 Cal. 122 127-128, 23 Pac. 271. 19 Second, may Quiet Title, etc., Unless Perform- ance Made: Fairchild v. Mullan, 90 Cal. 190, 194, 27 Pac. 201; Odd Fellows' Sav. Bank v. Brander, 124 Cal. 255, 257, 56 Pac. 1109. See, also. Southern Pac. E. E. Co. V. Allen, 112 Cal. 455, 462, 463, 44 Pac. 796. The vendor may (2) '^institute proceedings to fore- close the right of the vendee to purchase, '' the judg- ment to fix * * a day . within which the defendants should pay the balance due upon the contract, and costs, etc., or be forever foreclosed of all right or in- § 432 vendor's security. 675 terest in the lands, or to a conveyance thereof": Keller v. Lewis, 53 Cal. 113. *'The court may make a decree, as in a case of strict foreclosure, .... that if the vendee does not pay the purchase money in such time as may be lim- ited for that purpose by the court, he shall be barred and foreclosed of his right to claim a specific perform- ance afterward": Sparks v. Hess, 15 Cal. 186, 194. *'The decree .... should be in the alternative": Sparks v. Hess, 15 Cal. 186, 194. An assignee of the vendee can have no cause of complaint at such a decree: Odd Fellows' Sav. Bank V. Brandon, 124 Cal. 255, 257, 56 Pac. 1109. Certain early cases give an apparently different statement of the vendor's rights upon default of ven- dee. Thus in Gouldin v. Buckelew, 4 Cal. 107, it is said that the vendor ''might have enforced his lien in a court of equity, and obtained a decree to sell the land, in which case, if the sale had produced more than the purchase money, the surplus would belong to the ven- dee." And in Sparks v. Hess, 15 Cal. 186, 194, 195, the court said: ''In the present case, the vendors have retained the legal title, and evidently as security for the purchase money. Their position is in some re- spects similar to what it would have been had they executed a conveyance to the vendee and taken from him a mortgage upon the property. A mortgage is in form a conveyance of the legal title, though intended only as security for the debt. Here the title is re- tained by the vendee for a similar purpose of security. A mortgagee may pursue his remedy at law, or pro- ceed in equity for a sale of the premises. A vendor retaining the title may in like manner sue at law for the balance of the purchase money, or file his bill in equity for the specific performance of the contract, and take an alternative decree that if the purchaser will not accept the conveyance and pay the purchase money, the premises be sold to raise such money, and that the vendee pay any deficiency remaining after 67^ vendor's security. § 432 Except where the contract is mntnally abandoned or rescinded as permitted by law^^^ a vendee in the application of the proceeds upon such sale The vendor is at liberty to ask either for a decree directing performance, and in case of refusal, a sale of the premises, or a decree barring the right of the vendee to claim a conveyance under the contract. He may, however, insist upon the sale, where the perform- ance is refused, and is not bound to take a mere fore- closure of the vendee's right to a deed.'' 20 Abandonment or Rescission of Contract.— When a contract of sale and purchase of lands is mutually abandoned or rescinded by the parties, and in this case alone, the vendee, whether or not in default, is entitled to recover back, less the actual damages to the vendor occasioned by his breach of contract when such there is, such installments of the purchase money as have been paid: Cleary v. Folger, 84 Cal. 316, 321, 18 Am. St. Eep. 187, 24 Pac. 280; Phelps v. Brown, 95 Cal. 572, 574, 575, 30 Pac. 774; Bradford v. Park- hurst, 96 Cal. 102, 105, 31 Am. St. Eep. 189, 30 Pac. 1106; Shively v. Semi-Tropic Land etc. Co., 99 Cal. 259, 260, 261, 33 Pac. 848; Glock v. Howard & Wilson Colony Co., 123 Cal. 1, 13, 19, 69 Am. St. Eep. 17, 55 Pac. 713; Gwin v. Calegaris, Cal., June 20, 1903. See, also. Drew v. Peddlar, 87 Cal. 443, 449, 450, 22 Am. St. Eep. 257, 25 Pac. 749, as interpreted in Glock v. Howard & Wilson Colony Co., 123 Cal. 1, 13-16, 19, 69 Am. St. Eep. 17, 55 Pac. 713. Where the vendee is in default, a sale and convey- ance of the property by the vendor to a third party does not amount to an abandonment by the vendor, although he has never tendered a deed nor demanded performance by the vendee: Joyce v. Shafer, 97 Cal. 335, 32 Pac. 320; Shively v. Semi-Tropic Land etc. Co., 99 Cal. 259, 261, 33 Pac. 848. The principle of these cases was thus limited in Birch v. Cooper, 136 Cal. 636, 639, 69 Pac. 420. The earlier case of Garberino V. Eoberts, 109 Cal. 125, 129, 41 Pac. 857, on the con- trary had extended it. But where, before a default of the vendee, the ven- dor entered into a second contract for the sale of the § 432 vendor's security. 677 default is not entitled to a repayment of moneys paid.^^ property to another vendee, ''not only from familiar principles of the law, but from the contract [of sale to the first vendee] itself, which provides for forfeit- ure for nonperformance, ' except in case of failure of title on the part of the vendors,' " the default of the first vendee to pay or offer to pay any part of the purchase price or interest is excused, and the vendor cannot quiet title against him, for the second vendee might claim adversely, and hence prevent a clear title being given to the first vendee: Birch v. Cooper, 136 Cal. 636, 638, 639, 69 Pac. 420. Contra, Garberino v. Boberts, 109 Cal. 125, 41 Pac. 857, where before default on the part of the vendee, the vendor sold and conveyed the property to a third party, and this was held not to amount to an abandon- ment. Yet where the vendee is not in default, the entry of judgment against the vendor in an action brought against him by a third party, defeating his title to a part of the land sold, does not of itself amount to an abandonment of the contract of sale, for the vendor might have procured such title from the third party before the time of performance of his contract of sale: Latimer v. Capay Valley Land Co., 137 Cal. 286, 70 Pac. 82, 84A. 21 Vendee cannot Recover Payments Made.— The vendee, whether in default or not, cannot, while the vendor insists upon the contract and is in no wise in default, repudiate the contract and recover the portion already paid: Scott v. Glenn, 87 Cal. 221, 25 Pac. 405 (vendor in possession, purchaser in default); Dennis v. Strassburger, 89 Cal. 583, 26 Pac. 1070 (ven- dor in possession, purchaser not in default); Bradford V. Parkhurst, 96 Cal. 102, 31 Am. St. Eep. 189, 30 Pac. 1106 (purchaser in possession, and in default); Joyce V. Shafer, 97 Cal. 335, 337, 338, 32 Pac. 320 (vendor in possession, purchaser in default) ; Garberino v. Eob- erts, 109 Cal. 125, 41 Pac. 857 (vendor in possession, 678 vendor's security. § 432 purchaser not in default); Eayfield v. Van Meter, 120 Cal. 416, 52 Pac. 666 (purchaser in possession of movable property, and in default); Glock v. Howard & Wilson Colony Co., 123 Cal. 1, 9, 69 Am. St. Rep. 17, 55 Pac. 713 (vendor in possession, purchaser in de- fault); Odd Fellows' Sav. Bank v. Brander, 124 Cal. 255, 258, 56 Pac. 1109 (purchaser in possession, and in default). '^This is true whether or not the contract provides for a forfeiture of payments made in case of the vendee's refusal to complete the purchase'': Odd Fel- lows' Sav. Bank v. Brander, 124 Cal. 255, 258, 56 Pac. 1109; Glock v. Howard & Wilson Colony Co., 123 Cal. 1, 12, 69 Am. St. Rep. 17, 55 Pac. 713. The failure to tender a deed and demand payment on the day fixed, although time is essential, does not put the vendor in default, the stipulation for time being for the benefit of the vendor alone: Newton v. Hull, 90 Cal. 487, 492-494, 27 Pac. 429; Bradford v. Parkhurst, 96 Cal. 102, 104, 105, 31 Am. St. Rep. 189, 30 Pac. 1106; North Stockton Town Lot Co. v. Fisher (Cal., Dec. 18, 1902), 70 Pac. 1082. The case of Cleary V. Folger, 84 Cal. 316, 319, 18 Am. St. Rep. 187, 24 Pac. 280, to the contrary being overruled. 433 vendor's security. 679 AETIOLE 2. SECUEITY OF GEANTEE OF YENDOE IN TEUST. 433. Transfer from vendor to third party as security for obligation of vendee equivalent to ven- dor's security. 433. Transfer from Vendor to Third Party as Security for Obligation of Vendee Equiva- lent to Vendor's Security. An agreement by which a person about to pur- chase immovable property procures a third per- son to advance the purchase money to the ven- dor and receive as security for such advance a conveyance of the property, the right of posses- sion to be in the purchaser, causes the grantee to become the holder of the legal title to the prop- erty in trust for the purchaser and his mortgages for the purchase money.^ The grantee and pur- chaser possess the same rights between them- selves as the vendor and vendee in case of a ven- dor's security.® 1 Low V. Henry, 9 Cal. 538, 549, 550; Woodward V. Hennegan, 128 Cal. 293, 300, 301, 60 Pac. 769. Compare Freeman v. Campbell, 99 Cal. 546, 34 Pac. 114. 2 Woodward v. Hennegan, 128 Cal. 293, 301, 302, 60 Pac. 769. 680 vendor's security. § 433 In Jones v. Sanders, 138 Cal. 405, 71 Pac. 506, where the purchaser of immovable property caused it to be conveyed by the vendor direct to a third party as security for a portion of the purchase money which was loaned by the third party, and the agreement also provided that the purchaser might sell any of the property, the purchase money to be paid to the trans- feree and to be credited upon the secured obligation until it was fully paid, the transferee to convey the lots to the purchasers upon receipt of the purchase money, the court, in passing, said, referring to this agreement: *'We think that it is not a matter of importance whether the transaction [between the purchaser and the transferee] .... be held to be a trust or a mort- gage. As between themselves, it was a mere security, and therefore a mortgage; and as to the direction to convey to purchasers it would seem to be a trust, though that power was in aid of the security. In either case*, however, [the purchaser] .... was the owner, with possession and the sole right to sell, use and control the property, with the limitation that it must not be so used as to materially impair the se- curity of [the transferee] .... who had no other in- terest therein.'' PART THREE. ENCUMBRANCES IMPOSED BY OPER- ATION OF LAW. LIENS. PEOPOSITIONS COMMON TO ALL LIENS. 434. Lien defined. 435. Division of liens. 436. General lien defined. 437. Special lien defined. 438. Time when lien arises. 439. Exempt property lienable. 440. Waived by taking mortgage. 434. Lien Defined. A lien is a charge imposed by operation of law^ upon specific property, by which it is made se- curity for the performance of an obligation. 1 In this definition the meaning of the word is limited to charges imposed by operation of law. Compare Civil Code, sections 2872 and 2881, where charges created by contract are also embraced with- in the scope of the term. (681) 682 LIENS. § 435 435. Division of Liens. Liens are (1) dependent on possession of property charged or independent of possession of property charged, and (2) general or special.^ 436. General Lien Defined. A general lien is one which the holder thereof is entitled to enforce as a security for the per- formance of all the obligations, or all of a par- ticular class of obligations, which exist in hi^ favor against the owner of the property.^ 437. Special Lien Defined. A special lien is one which the holder thereof can enforce only as security for the performance of a particular act or obligation, and of such ob- ligations as may be incidental thereto.^ 438. Time When Lien Arises. . E'o lien arises by mere operation of law until the time at which the act to be secured thereby ought to be performed.^ 3 Liens are General or Special: Civ. Code, sec. 2873. 3 Civ. Code, sec. 2874. 4 Civ. Code, sec. 2875. 5 Civ. Code, sec. 2882. § 439 LIENS. 683 439. Exempt Property Lienable. Property exempted by law from forced sale i3 nevertheless subject to the operations of liens.® 440. Waived by Taking Mortgage. Whenever a mortgage is received as security for the payment of an obligation secured by lien, the lien is no longer available as security for such obligation, but is waived in respect thereto.'' 6 "Code of Civil Procedure, section 690, last clause, as amended by Statutes of 1903, March 10, page 114, chapter 103, in effect May 9, 1903, provides: '*No article or species of property mentioned in this sec- tion is exempt from execution issued upon a . . . . judg- ment of foreclosure of a mortgage [ 03n \- or other lien^ n03^ thereon.'' 7 ''When the legislature declared that there should be but one action to enforce a debt secured by mortgage, it did not mean that payment could be en- forced against the consent of the mortgagor by giv- ing a bank the right to enforce payment under a general banker's lien upon some other property, and that, too, without any legal proceedings whatever. The lien given on the mortgaged premises I think was intended to be in lieu and exclusive of all implied liens. I do not see, either, why a bank should be given a right to forcibly, and against the consent of the depositor, appropriate his money, when, if it came into court to do so, the action would not lie, and we have seen it would not lie as counterclaim, setoff, or in whatever other form it may be presented ' ' : McKean V. German-American Sav. Bank, 118 Cal. 334, 340, 341, 50 Pac. 656. See sections 385-388, above; also 527-529, below. TITLE 1 LIENS DEPENDENT ON POSSESSION OF PEOPEETY CHAEGED AGAINST MOVABLE PEOPEETY. 441. Lienor may retain possession until secured de- mand satisfied. 442. Attachment of liened property, how made. 441. Lienor may Retain Possession Until Se- cured Demand Satisfied. A lienor may retain possession of the whole or any part of property subject to a lien dependent on possession until the entire demand secured thereby is satisfied.^ Offering to give good se- 1 Compare Civil Code, section 1861, last clause, and section 3052. So a marine carrier of goods may retain them until the freightage is paid: Frothingham v. Jenkins, 1 Cal. 42, 52 Am. Dec. 286; Brown v. Howard, 1 Cal. 423. A carrier has a lien on any part. of the goods for the whole freightage; thus the surrender of a part of the goods does not proportionately reduce the amount of lien upon the remainder, but they may be held for the whole sum of the freightage: Frothingham v. Jenkins, 1 Cal. 42, 52 Am. Dec. 286; Mayo v. Stansbury, 3 Cal. 465. (684) § 441 DEPENDENT ON POSSESSION. 685 curity, or giving good security, is not payment, and does not discharge the lien.^ 442. Attachment of Liened Property, How Made. In case of the attachment of, or the levy of an execution upon, property in the possession of a lienor holding it under a lien dependent on pos- session, upon a demand against the owner of the property, the attaching officer can- not take the property from the lienor, but must reach the interest of the owner by. serving a gar- nishment upon the lienor. Where the property is capable of manual delivery, the court may, after an examination of the lienor, on such terms as may be just, having reference to his lien, or- der the property to be delivered to the officer.^ 2 Frothingham v. Jenkins, 1 Cal. 42, 52 Am. Dec. 286. 3 See section 206, and notes above. Illustrations.— Where .property was affected by a livery-stable keeper's lien, in whose possession it was, the property cannot be taken from his possession on attachment: Johnson v. Perry, 53 Cal. 351, 353. AVhere a person in possession of movable property has a lien thereagainst for services performed thereon, he is entitled to the possession of the property, and may maintain an action against a sheriff who seizes the property under a writ of execution issued against the owner of the land upon which the property (rail- road ties and shakes) is cut: Douglass v. McFarland, 92 Cal. 656, 28 Pac. 687. CHAPTEE 1. BANKERS UEN. 443. Nature of banker's lien. 443. Nature of Banker's Lien. A banker has a general lien, dependent on pos- session, upon all the property in his hands be- longing to a customer, for the balance due to him from such customer in the course of business.^ 1 Civil Code, section 3054, as enacted 1872. (686) CHAPTER 2. FACTOE^S LIEN. 444. Nature of factor's lien. 445. Enforcement. 444. Nature of Factors Lien. A factor has a general lien, dependent on pos- session, for all that is due to him as such, upon all articles of commercial value that are intrusted to him by the same principal.^ A factor^s lien may be transferred by a written assignment of the lien coupled with a transfer of the liened property to the assignee. The assign- ment of the lien necessarily involves a delivery of the possession of the liened property.^ 3 Civil Code, section 3053, as enacted 1872. 2 Assignable under Conditions Stated.— Davis, Be- lau & Co. V. National Surety Co., Cal., June 4, 1903. Averment.— But conceding that a transfer of the liened property is essential to an assignment of the lien, it does not follow that it is necessary to aver the delivery of the possession of the property, for the ultimate fact is the assignment of the lien, and while the delivery of the possession must be proved in order to establish the assignment, the pleading is complete without an averment of delivery; and no finding on such fact is necessary although the issue is raised by the pleadings: Davis, Belau & Co. v. National Surety Co., Cal., June 4, 1903. (687) ' 688 factor's lien. • § 445 445. Enforcement. A factor, forbidden by his principal to sell at the market price, may nevertheless sell for his re- imbursement, after giving to his principal rea- sonable notice of his intention to do so, and of the time and place of sale, and proceeding in all respects as a pledgee.^ 3 Civil Code, section 2027, latter clause, as en- acted 1872, reads substantially as above. As to sale by pledgee see sections 232 through 240, above. CHAPTER 3. LAUNDEYMAN^S LIEN. 446. Nature of laundryman's lien. 446. Nature of Laundryman's Lien. Laundry proprietors and persons conducting a laundry business have a general lien, dependent on possession, upon all movable property in their hands belonging to a customer, for the balance due them from such customer for laundry work.^ 3 Civil Code, section 3051, last clause; new pro- vision, in effect March 12, 1901. Liens— 44 (689) CHAPTER 4. LIENS OF VAEIOUS TRUSTEES. 447. Lien exists for compensation and reimburse- ment. 448. Executor has lien for advances. 447. Lien Exists for Compensation and Reim- bursement.^ Any person holding property in a fiduciary 1 Various Trustees Have Lien.— In McLane v. PlacerviUe etc. B. R. Co., 66 Cal. 606, 622, 623, 6 Pac. 748, the court says: ''It is objected that the expenses of the trustee and receiver mentioned in the findings and decree are not a lien upon the road and piroperty conveyed. If the expenses were reasonably incurred in the dis- charge of the trust, we see no reason why they should not be a lien. Trustees are entitled to a lien on the corpus of the trust property for all such disburse- ments. ''The law on this subject is so clearly laid down in Renssalaer and Saratoga E. Co. v. Miller, 47 Vt. 152, that we insert here what is said in that case on the point: " 'The expenses of a trustee in the execution of the trust are a lien upon the estate, and he will not be compelled to part with the property until his dis- bursements are paid If the trust fund is in- sufficient for such reimbursement, he may call upon the cestui que trust, in whose behalf and at whose request he acted, and recover from him personally ! (690) i § 447 trustees' liens. 691 reasonable compensation for the time, and trouble, and money expended Trustees have an inherent and equitable right to be reimbursed all expenses which they reasonably incur in the execution of the trust, and it is immaterial that there is no provision for such expenses in the instrument of trust. If a person undertakes an office for another in relation to prop- erty, he has a natural right to be reimbursed for all money necessarily expended in the performance of the duty The cost of winding up a trust and distributing the money, and all expenses for docu- ments, deeds and other papers, must be paid from the trust fund The trustee 's lien cannot be allowed to control the estate in such a manner as to destroy the trust; but no conveyance will be ordered or allowed until he is repaid.' '' In Glide v. Dwyer, 83 Cal. 477, 488, 23 Pac. 706, where a trustee of certain mortgaged property held in trust for the benefit of the holders of the secured notes had expended certain moneys in order to discharge a prior encumbrance upon the property, the court said: '^For the moneys so expended, the party was en- titled to a return, with interest and costs necessarily incurred in that behalf, and to have the same re- turned out of the whole trust fund. It was as much a first lien on that trust property as any other ex- pense legitimately incurred by the trustees, and could not, in law or in equity, be so limited as to be a lien upon a moiety only of the trust property. The amount to be allowed on account of that expenditure was for the court to determine.'' In Adams v. Haskell, 6 Cal. 475, the court said that receivers ''are entitled to the protection of the court against all loss for disbursements which were neces- sary and proper, and such as a reasonable and prudent man, acting as receiver, would have been justified and sustained in expending." That a receiver has a lien, see Garniss v. Superior Court, 88 Cal. 413, 418, 26 Pac. 351 j Ephraim v. Pacific Bank, 129 Cal. 589, 592, 62 Pac. 177. Thus the certificates of a receiver are a first lien upon the property of a street railway company operated by C92 trustees' liens. § 447 him: Illinois Trust etc. Bank v. Pac. Ry. Co., 115 Cal. 285, 292, 295, 47 Pac. 60. In Illinois Trust etc. Bank v. Alvord, 99 Cal. 407, 410, 33 Pac. 1131?, where a receiver had been appointed in an action to foreclose a mortgage, the court said: '^The appointment of a receiver is for the benefit of the mortgagee, and is made upon his application. It carries with it, therefore, the necessarily implied condition that he is to be answerable for the legiti- mate costs of the receivership, that — as against him, at least— the receiver shall have a preferred lien upon the funds and estate which came into his hands, and that the rents and income of the property may be applied to the payment of the necessary and proper expenses of the receivership*. ^ ' The court in Finnerty v. Pennie, 100 Cal. 404, 407, 34 Pac. 869, in effect recognizes that an administrator has such a lien. In that case the trial court had ad- judged in a judgment of distribution of an estate of a deceased person that the property be distributed sub- ject to the claim of the administrator for his compen- sation, and the appellate court affirmed this judgment, and stated that it created a lien on the property by operation of law in favor of the administrator. As, however, a lien is a right of property and not a mat- ter of procedure, this is, in effect, an adjudication that the administrator has such a lien as the court declared, for its province is not to create legal rights for people, but to declare and protect those which they already have. An assignee in insolvency has such a lien. ' ' Section 32 of the Insolvent Act [of 1895] allows receivers [that is, assignees in insolvency] *to charge and re- ceive for their services commissions upon all sums of money coming into their hands and accounted for by them,' at certain rates therein specified. The evident contemplation of the statute is that this allowance shall be made, upon the settlement of each account presented, upon the amount of moneys accounted for in such account; and, as this charge is a preferred demand upon the funds in the hands of the assignee, it should be allowed and satisfied before the funds are § 447 trustees' liens. 693 capacity under warrant of law^^ as an adminis- trator, executor, guardian, receiver, or other trus- tee, who faithfully discharges his trust,^ except, however, an involuntary trustee who becomes such through his own fault,'* (1) has a lien against the trust property in his possession as security for used to pay creditors. In this respect the method of procedure differs from that in the settlement of estates of deceased persons, where the representative is usually not allowed his commissions until final settlement'': Estate of Ealey, 123 Cal. 38, 40, 41, 55 Pac. 790. See Insolvent Act of 1880, sec. 28. 2 Receiver must be duly appointed in order to be entitled to lien. So where the appoint- ment of a receiver was irregular and' unauthorized, he must look to the parties at whose instance he was appointed for his compensation: Ephraim v. Pacific Bank, 129 Cal. 589, 592, 62 Pac. 177. 3 Trust Must be Faithfully Discharged as a Con- dition Precedent to Becoming Entitled to a Lien.— Thus in In re Thompson, 101 Cal. 349, 355, 35 Pac. 199, 36 Pac. 98, '508, where a trustee had been appointed by will, the court said: *' Compensation is allowed in cases of this kind only to faithful stewards for their care, trouble, and and responsibility in the management of an estate, and it matters not that the will itself po-ovided for com- pensation, which is conditioned upon a faithful per- formance of the trust. There are many reported cases in which the courts have refused to allow com- missions, where the negligence exercised by the trustees was not so great as that shown by the trustees in the case at bar.'' 4 An Involuntary Trustee, Through His Own Fault, not Entitled to Lien.— Compare Civil Code, section 2275, which deprives such a trustee of any right to compensation or reimbursement. 694 TRUSTEES* LIENS. § 447 (a) the compensation,^ if any, to which he is entitled for his services, and (b) reimbursement^ of all proper expenses actually incurred in the execution of his trust, and also (2) has a lien against any profits which may ac- crue from any undertaking beyond the lawful 5 Compensation. — The compensation of a trustee is regulated by Civil Code, section 2274, and Code of Civil Procedure, section 1700. That a trustee is entitled to compensation, see Beattv V. Clark, 20 Cal. 11, 37; More v. Calkins, 95 Cal. 435, 441, 29 Am. St. Kep. 128, 30 Pac. 583. Compensation of an assignee for the benefit of creditors: See Civ. Code, sees. 2274 and 3471. Also Menke v. Miller, 56 Cal. 628. Of an executor or administrator: See Code Civ. Proc, sec. 1618; and sec. 1616, last clause. Of a guardian: See Code Civ. Proc, sec. 1776. O Reimbursement.— Civil Code, section 2273, in part: ''A trustee is entitled to the repayment, out of the trust propierty, of all expenses actually and properly incurred by him in the performance of his trust'': See, also, Beatty v. Clark, 20 Cal. 11, 37; More v. Calkins, 95 Cal. 435, 441, 29 Am. St. Eep. 128, 30 ir^ac. 583. Reimbursement of an executor or administrator: See Code Civ. Proc, sec 1616. Of a guardian: See Code Civ. Proc, sees. 1771 and 1776. Of a receiver: Items for the following may be in- cluded in the expenses of a receiver: (a) reasonable counsel fees expended by him to aid in the proper dis- charge of his trust; (b) costs of litigation; (c) ex- penses of taking care of, protecting, and repairing the property in his charge: McLane v. Placerville etc. E. R. Co., 66 Cal. 606, 623, 624, 6 Pac 748. § 447 trustees' liens. 695 scope of his powers in which he may engage, for compensation earned and reimbursement for ex- penses actually incurred therein.'' 448. Executor has Lien for Advances. An advance made by an executor or adminis- trator to a legatee of the decedent whose estate he is administering may, by order of court, be constituted a lien against the distributive share of such legatee.^ T Trustee to be Reimbursed and Compensated in Unlawful Undertakings, When Successful.— Civil Code, section 2273, in piart provides: '*He [a trustee] is entitled to the repayment of even unlawful expen- ditures if they were productive of actual benefit to the estate.'' A trustee who enters an undertaking outside the scope of his powers must look to the results of sucn undertaking for his reimbursement for expenses in- curred, and a suitable allowance for his services therein: Beatty v. Clark, 20 Cal. 11, 37. 8 In re Moore, 96 Cal. 522, 527-530, 31 Pac. 584. CHAPTER 5. LIEN OF YENDOE OF MOVABLE PROP- ERTY. 449. Nature of vendor's lien. 450. Property held for purposes of lien by stoppage in transit. 451. Insolvency defined. 452. Transit when ended. 453. Stoppage effected by notice to carrier. 454. Carrier must redeliver goods upon demand. 455. Eight of stoppage paramount. 456. Stoppage does not rescind sale. 457. Methods of enforcement of lien. 449. Nature of Vendor's Lien.^ A person selling movable property and trans- ferring the title^ thereto has a lien thereon, de- 1 Civil Code, section 3049, as enacted 1872: '*One who sells personal property has a special lien thereon, dependent on possession, for its price, if it is in his possession when the price becomes payable." This section ''contains nothing which changes the common-law rule upon the subject; it was a mere statement in a convenient form of what the common law is'': Eads v. Kessler, 121 Cal. 244, 246, o3 Pac. 656. 3 Title must be Transferred.— ''The only cases in which a vendor can have a lien on the goods are those in which the title to the goads passes to the (696) § 449 vendor's lien. 697 pendent on possession,^ for so much of the price as remains unpaid. 450. Property Held for Purposes of Lien by Stoppage in Transit.^ Except as against a bona fide purchaser or en- cumbrancer for value, taking the muniment of title to the sold property from the vendee in the usual course of business,^ a seller or consignor vendor without delivery of possession The lien exists only when the property has passed to the buyer, while the goods themselves are still in the actual or constructive possession of the seller It would he an incongruous conception that the vendor might have a lien upon his own goods^': Eads v. Kessler, 321 Cal. 244, 246, 53 Pac. 656. 3 pependent on Possession.— Where the goods are sold, and the possession transferred to the vendee, the lien is lost: Hewlet v. Flint, 7 Cal. 264. 4 Civil Code, section 3076, provides as this sec- tion, omitting the exception in favor of the bona fide purchaser or encumbrancer: *^ Stoppage in transit is a right which a vendor of goods on credit has to recall them, or retake them, upon the discovery of the insolvency of the vendee, before the goods liave come into his possession, or any third party has acquired bona fide rights in them'': Jones v. Earl, 37 Cal. 630, 632, 99 Am. Dec. 838. 5 Bona Fide Purchaser Taking Muniment of Title Protected Against Stoppage in Transit. Civil Code, section 2127, provides: ^'All the title tc the freight which the first holder of a bill of lad- ing had when he received it passes to every •subse- quent indorsee thereof in good faith and for value, in the ordinary course of business, with like effect 098 vendor's lien. § 450 of property^ whose claim for its price or proceeds has not been extinguished, "niay, upon the insol- vency of the buyer or consignee becoming known to him after parting with the property, stop it while on its transit to the buyer or consignee and resume possession thereof. and in like manner as in the case of a bill of ex- change. ' ' Section 2128 provides: "When a bill of lading is made to 'bearer/ or in equivalent terms, a simple transfer thereof, by delivery, conveys the same title as an indorsement." Where the consignee of certain goods from a vendor to whom the purchase money was not paid pledged the bills of lading thereof, the pledgee having no notice of the insolvency of the consignee, the right of possession to the goods becomes vested in the pledgee under the Civil Code, section 2127, and, upon thp dis- covery of the insolvency of the consignee, the vendee cannot exercise his right of stoppage in transit, at least, without first obtaining an accounting and tend- ering the amount advanced by the pledgee on the credit of the goods: Sheppard v. Newhall, 47 Fed. (G. 0.) 468. As Civil Code, sections 2127 and 2128, merely de- clare that the title to goods described in bills of lad- ing drawn to order passes by indbrsement, or in bills drawn to bearer by delivery, the right of the vendor of goods to stop the goods in transit upon discovering the insolvency of the vendee is perfect, not only as against the vendee, but as against all others (includ- ing a pledgee of a bill of lading drawn to order, but not indorsed by him) except a purchaser for value, taking by indorsement of the bill of lading in the usual course of business, and without notice: Shep- pard V. Newhall, 54 Fed. 306, 311, 4 C. C. A. 352, 9th Cir. § 451 MOVABLE PBOPEBTY. 699 451. Insolvency Defined. A person is insolvent, within the meaning of section 450, when he ceases to pay his debts in the manner nsnal with persons of his business, or Avhen he declares his inability or nnwillingne&s to do so.^ 452. Transit, When Ended. The transit of property is at an end when it comes into the possession of the consignee, or into that of his agent, unless snch agent is em- ployed merely to forward the property to the consignee. '' G See Civ. Code, sec. 3077. T Civ. Code, sec. 3078. The right to stop goods in transit exists until they arrive at the termination of their journey, or have come into possession of the consignee: Mark- wald V. Creditors, 7 Cal. 213. Illustrations. — Depositing goods at an intermediate point, with the agent of the purchaser, for the purpose of being forwarded, does not terminate the transit: Markwald v. Creditors, 7 Cal. 213; Blackman v. Pierce, 23 Cal. 508. When goods come into the possession of a ware- houseman, the agent of the consignee at an inter- mediate point, the transit is not ended: Blackman v. Pierce, 23 Cal. '508. Where goods have reached their destination, and the vendee has, by his personal and affirmative act, disposed of them, and his assignee has given bond for the payment of the duties upon them, and de- posited them in his own name in a bonded warehouse, and holds the warehouse receipt for them, the transit has ended, and the goods are not subject to stoppage in transit: Sheppard v. Newhall, 54 Fed. 306, 310, 4 C. C. A. 352, 9th Cir. 700 vendor's lien. § 453 453. Stoppage EffCQted by Notice to Carrier. Stoppage in transit can be effected only by notice to the carrier or depositary of the prop- erty, or by taking actual possession thereof.® The notice is sufficient if the carrier is clearly in- formed that it is the intention and desire of the vendor to exercise his right of stoppage in tran- sit, although without an express demand to re- deliver the goods.® 454. Carrier must Redeliver Goods upon De- mand. Upon demand of the vendor made during the continuance of the right of stoppage in transit, the carrier or depositary must redeliver the prop- erty to the vendor.^^ 455. Eight of Stoppage Paramount. The right of stoppage in transit is paramount to any charge upon the property claimed by third ^ 8 Civ. Code, sec. 3079. * « Jones V. Earl, 37 Cal. 630, 632, 99 Am. Dec. 338. 10 **Upon demand of the vendor, while the right of stoppage in transit continues, the carrier will be- come liable for a conversion of the goods, if he declines to deliver them to the vendor, or delivers them to the vendee*': Jones v. Earl, 37 Cal. 630, 632, 99 Am. Dec. 338. '*The right to retake possession of the property, where the right to stop it in transit exists, necessarily implies the right to maintain an action for its re- covery, where resort to suit is necessary'': Sheppard V. Newhall, 54 Fed. 306, 309, 4 C. C. A. 352, 9th Cir. § 455 MOVABLE PROPERTY. 701 persons against the ]Durehaser/^ unless the muni- ment of title to the property has passed from the vendee to a bona fide purchaser or encum- brancer for value in the usual course of busi- ness. -'^^ 456. Stoppage does not Rescind Sale. Stoppage in transit does not, of itself, rescind a sale, but is a means of enforcing the lien of the seller.^^ 11 **The right of stoppage in ti-ansitu is para- mount to any lien on the goods claimed by third persons against the purchaser. Thus it may be used to defeat an attachment or execution levied upon the goods by a creditor of the vendee, for the lien ac- quired by the levy operates only upon the interest acquired by the debtor but cannot defeat the para- mount right of a stranger": Blackman v. Pierce, 23 Cal. 508. 12 See section 450, above, especially note 5. 13 Civ. Code, sec. 3080. "It is now well settled both in this country and in England, that the true nature and effect of the right of stoppage in transitu is simply to restore the goods to the possession of the vendor, so as to enable him to exercise his rights as an unpaid vendor, not to rescind the sale In California it is, in effect, ' so provided by statute To enforce his rights, the vendor must be, and is, entitled to retake the possession of the property, and must hold it until the expiration of the credit, so as to be able to deliver it upon the payment of the price, for up to that time the vendee has the right to pay the price and take the property' ': Sheppard v. Newhall, 54 Fed. 306, 309, 4 C. C. A. 352, 9th Cir. 702 vendor's lien. § 457 457. Methods of Enforcement of Lien. A vendor's lien is enforced (1) by a foreclosure action^ or (2) by a sale by the vendor after actual notice to the vendee conducted as prescribed in case of pledged property.^^ 14 Civil Code, section 3049: ^^One who sells per- sonal property .... may enforce his lien in like manner as if the propter ty were pledged to him for ita price.'' Sale of pledged property: See sections 232 through 240, above. CHAPTER 6. LIEN FOE IMPEOYEMENT OF MOVABLE PEOPEETY. 458. Who lienor. 459. Enforcement of lien. 460. Disposition of proceeds of sale. 458. Who Lienor. x^ny person who makes, alters, or repairs any article of movable property, at the request of the owner or legal possessor thereof, has a lien against the same for his reasonable charges for work done and materials furnished.^ 1 See Civil Code, section 3052, first clause, as enacted 1872. Stats. 1867-68, page 589, chap. 448, sec. 15, gave the lien to '*any mechanic, artisan, or la- borer.^' Under Stats. 1862, page 384, chap. 297, sec- tion 20, the word *' laborer '' was replaced by *^ ma- chinist.'' Stats, of 1850, p. 211, chap. 87, sec. 13, Stats. 1855, p. 156, chapter 130, section 11, and Stat. 1856, page 203, chapter 134, section 10, gave the lien solely to *'any mechanic or artisan.'' Compare Civil Code, section 3051, first sentence: ''Every person who, while lawfully in the possession of an article of personal property, renders any service to the owner thereof, by labor or skill employed for the protection, improvement, safekeeping, or carriage thereof, has a special lien thereon, dependent on pos- session, for the compensation, if ^ny, which is due to (703) 704 mechanic's lien. § 459 459. Enforcement of Lien. If such charges are not paid within two months after the work is done^, the lienor may proceed to sell the property at public auction, after giving ten days^ public notice of the sale by advertising in some newspaper published in the county in which the work was done; or, if no newspaper is published in such county, then by posting notices of the sale for ten days previous thereto in three of the most public places in the town where the work was done.^ him from the owner for such service.'' As enacted 1872. In Lewis v. Tyler, 23 Cal. 364, it was declared that this lien existed independent of statute in favor of one who by his labor and skill imparts additional value to goods. Illustration.— A person who enters upon the land of another, under a contract with the owner, for the purpose of manufacturing railway ties anc. shakes for the owner, at a certain fixed compensation, and who, after manufacturing them, piles them up on the land in piles of a certain number each, and marks each pile, and remains in possession thereof, has a lien against the property for the amount due him for manufacturing them, and the right to retain possession thereof until the lien is discharged by the payment of the amount due him: Douglass v. McFarland, 92 Cal. 656, 28 Pae. 687. S See Civil Code, section 3052, second sentence. Historical.— Stats. 1867-68, page 589, chap. 448, sec- tion 15, reads substantially the same. The statute of 1862 omits the phrase, near the end, '^for ten days previous'' to the sale. By the statutes of 1850, 185'o, and 1856, three weeks' notice of the auction was re- quired, instead of ten days. By statute of 1855, the § 460 MOVABLE PROPERTY. 705 460. Disposition of Proceeds of Sale. The proceeds of the sale mnst be applied to the discharge of the lien, and the cost of keeping and selling the property; the remainder, if any, must be paid over to the owner thereof.^ enforcement by sale was only permitted after the lapse of six months, instead of two months. 3 Civil Code, section 3052, last sentence, as enacted 1872. Previous statutes contained a similar provision. Liens — 45 CHAPTER 7. LIEN" OF CARRIER OF GOODS. 461. Who lienor. 462. Enforcement by common carrier of lien upon perishable property. 461. Who Lienor. Every person who^ while lawfully in possession of an article of movable property, renders any service to the owner thereof, by labor or skill em- ployed for the carriage thereof, has a special lien thereagainst, dependent on possession, for the compensation, if any, which is due to him from the owner for such service.^ 1 See Civil Code, section 3051, first sentence, quoted at section 458, note 1, above. Civil Code, section 2144, provides: ''A carrier has a lien for freightage which is regulated by the title on liens.*' As enacted in 1872. The owner of a chartered vessel has no general lien on the cargo for the charter price: Mayo v. Stansbury, 3 Cal. 465. Compare Brown v. Howard, 1 Cal. 423. This lien is within the provisions of Practice Act, sec. 120, Code of Civil Procedure, sec. 537, prohibiting the issuing of attachments upon debts secured by lien: Wingard v. Banning, 39 Cal. 543, 549. (706) § 462 LIEN OF CARRIER OF GOODS. 707 462. Enforcement by Common Carrier of Lien upon Perishable Property. If, from any other cause than a want of ordi- nary care and diligence on his part, a common carrier is unable to deliver perishable property transported by him, and collect his charges there- on^ he may cause the property to be sold in open market to satisfy his lien for freightage.^ 2 Civ. Code, sec. 2204. New section in effect July 1, 1874. CHAPTER 8. AGISTOE^S AND STABLE-KEEPER^S LIEN. 463. Who lienor. 463. Who Lienor.^ Livery or boarding or feed stable proprietors and persons pasturing horses or stock, at the in- stance of the owner or his agent,^ have a lien dependent on possession for their compensation in caring for, boarding, feeding, or pasturing snch horses or stock. 1 Civil Code, section 3051, second sentence, in effect May 28, -1878, so provides, omitting the phrase '*at the instance of the owner or his agent.'' Historical. —Statutes of 1869-70, chapter 494, in ef- fect April 4, 1870, provided: ^'The proprietors of sta- bles and ranches or farms shall have a lien on all livestock pastured, kept or fed by them, under con- tract with the owners thereof, for the amount and value of the care, feed or pasture of such livestock, and shall be entitled to recover and hold possession of such livestock until the amount of such lien shall be paid.'' Section 2 'of the same act provided for the foreclosure of the lien. In Johnson v. Perry, 53 Cal. 351, the court held that this statute was not repealed by the codes, so that it remained in force until suj^er- seded by the above code provision. At the common law an agistor had no lien. In Lewis V. Tyler, 23 Cal. 364, the court said: 'f An agis- (708) § 463 agistor's lien. 709 tor of cattle is under no legal obligation to take the charge of or keep any cattle that may be brought to him for that purpose. He may receive or refuse them without violating any duty or obligation imposed on him by the law; and he is at perfect liberty, there- fore, to impose such terms and conditions as he may deem proper. And he may require an agreement that he shall have a lien upon the animals for his reason- able charges, or for the agreed price, if he shall deem it necessary for his security; That class of bailees, however, who are required by law to take» the charge and custody of and to keep animals for others, have no right to impose conditions upon those who employ them; and the law, therefore, very properly gives them a lien upon the property for their security. That reason does not exist in the case of agistors of cattle, and therefore they have no lien, except where there -is a special agreement.'' 2 At Special Instance of Owner.— In order for the lien to attach, it is necessary that the animal be placed with the livery-keeper by its owner, or some- one having authority from him. ^^It has been held that the lien given by the common law to an inn- keepier upon the horse of a traveler who becomes his guest will attach, although the guest may have stolen the horse, but it is not believed that such a lien has ever been held to exist upon property placed with one who has a lien only by force of statute, by a person not the owner or the agent of the owner'': Lowe v. Woods, 100 Cal. 408, 410-412, 38 Am, St. Kep. 301, 34 rac. 959. CHAPTER 9. LIEN or DEPOSITAEY FOE HIRE. 464. Who lienor. 465. Enforcement of lien. 466. Enforcement against perishable property, bag- gage, and luggage. 464. Who Lienor. A depositary for hire has a lien for storage charges.^ 465. Enforcement of Lien. This lien is enforceable by a sale at public auction made in the same manner as a sale of pledged property.^ 1 Civil Code, section 1856: *'A depositary for hire has a lien for storage charges, which is regulated by the title on liens.'' New section, in effect March 31, 1891. Compare Civil Code, section 30'51, first sentence, as quoted under section 458, note 1, above. 3 See Civ. Code, sec. 1856, above. The sections in regard to the sale of pledged prop- erty by the pledgee are appropriate to the sale of deposited property, because of the general similarity between pledgeholders and depositaries: Stewart v. Naud, 125 Cal. 596, 599, 600, 58 Pac. 186. (710) § 466 LIEN OF DEPOSITARY FOR HIRE. 711 466. Enforcement Against Perishable Property, Baggage, and Luggage. If from any other cause than want of ordinary care and diligence on his part a depositary for hire is unable to deliver perishable property, bag- gage, or luggage received by him for storage, or to collect his charges for storage due thereon, he may cause such property to be sold, in open mar- ket, to satisfy his lien for storage ; provided, that no property except perishable property shall be sold under the provisions of this section upon which storage charges shall not be due and un- paid for one year at the time of such sale.^ Sale of pledged property: See sections 232 through 240, above. So actual notice to the owner of stored goods is es- sential to the validity of the sale of stored goods by the depositary: Stewart v. Naud, 125 Cal. 596, 600, 58 Pac. 186. 3 Civil Code, section 1857, new section in effect March 31, 1891. CHAPTER 10. LIBjSr OF FINDER OF LOST ARTICLES. 467. Lien may be enforced by sale in certain in- stances. 468. Conduct of sale. 467. Lien may be Enforced by Sale in Certain Instances. The finder of a thing may sell it, if it is a thing which is commonly the subject of sale, when the owner cannot, with reasonable diligence, be found, or, being found, refuses upon demand to pay the lawful charges of the finder, in the following cases: (1) when the thing is in danger of perishing, or of losing the greater part of its value ; or (2) when the lawful charges of the finder amount to two-thirds of its value.^ 468. Conduct of Sale. A sale under the provisions of the last section must be made in the same manner as the sale of a thing pledged.^ 1 Civil Code, section 1869, as enacted 1872. Compare Pol. Code, sees. 3136 tlirougli 3142. 2 Civil Code, section 1870, as enacted 1872. (712) CHAPTER 11. IIsrNKEEPEE^S LIEN.i 469. "Who lienor. 470. Sale of liened property cannot be made before expiration of certain time. 471. Notice of sale must be given. 472. Expense of advertising becomes lien ratably. 473. Distribution of proceeds of sale. 474. Disposition of surplus. 469. Who Lienor. A hotelman, or boarding-honse or lodging- house keeper has a lien, dependent on possession, 1 There is a noticeable divergence of terminology between sections 1861 and 1862 of the Civil Code, on which this chapter is based. The description of the persons to whom the lien is given is '^hotelmen, boarding-house and lodging- house keepers,'' while the persons who, by section 1862, may enforce the lien are described as ''the keeper of any hotel, inn, boarding-house, or lodging- house. '' The lien, by section 1861, is given on ''the bag- gage and other property of value of their guests, or boarders, or lodgers, brought into such hotel, inn, or boarding or lodging house, by such guests, or board- ers, or lodgers, ' ' while, by section 1862, it may be en- forced against "any trunk, carpet-bag, valise, box, bundle, or other baggage .... come into the posses- sion of the keeper of any hotel,'' etc. It might be questioned whether these phrases are equivalent one to the other. (713) 714 innkeeper's lien. § 469 upon the baggage and other property of value of his guests or boarders or lodgers, brought into such hotel, inn, or boarding or lodging house by such guests, or boarders, or lodgers, for the proper charges due from such guests, or boarders, or lodgers, for their accommodation, board and lodging, and room rent, and such extras as are furnished at their request.^ 470. Sale of Liened Property cannot be Made Before Expiration of Certain Time. Whenever any trunk, carpet-bag, valise, box, bundle, or other baggage comes into the posses- sion of the keeper of any hotel, inn, boarding, or lodging house, as such, and remains unclaimed for the period of six months, such keeper may proceed to sell the same at public auction after the expiration of four weeks from the first publi- cation of the notice of sale hereinafter required to be given.^ 471. Notice of Sale must be Given. The keeper must publish once a week for four successive weeks in some newspaper, daily or 2 Civil Code, section 1861, except the last clause, a new section, in effect April 1, 1876, so provides, with slight verbal changes, and omitting the phrase, '^dependent on possession. '' An innkeeper has a lien at common law: See Lewis V. Taylor, 23 Cal. 364. 3 Civil Code, section 1862, first sentence, first clause, with verbal changes. New section in effect April 1, 1876. § 471 innkeeper's lien. 715 weekly, of general circulation, published in or nearest the city, town, village, or place in which the hotel, inn, boarding or lodging house is situ- ated, a notice of sale containing (1) a description of each trunk, carpet-bag, va- lise, box, bundle, or other baggage, as near as may be, (2) the name of the owner of each, if known, (3) the name of the keeper, and (4) the time and place of sale.'* 472. Expense of Advertising Becomes Lien Rat- ably. The expenses incurred for advertising consti- tute a lien against each such trunk, carpet-bag, valise, box, bundle, or other baggage, in a ratable proportion, according to the value of such piece of property, or thing, or article sold.^ 473. Distribution of Proceeds of Sale. Out of the proceeds of such sale the keeper may retain the charges for storage, if any, and the ex- pense of advertising and sale thereof.^ 4 Civil Code, section 1862, last clause of first sentence, and first clause of second sentence, consoli- dated. 5 Civil Code, section 1862, second sentence, sec- ond portion, with verbal change. 6 Civil Code, section 1862, first sentence, last part of first clause. It is noticeable that there is no express provision giving the keeper the right to col- lect the amount due him for board and lodging out 716 innkeeper's lien. * § 474 474. Disposition of Surplus. In case any balance arising from such sale is not claimed by the rightful owner within one week from the day of such sale^ the same shall be paid into the treasury of the county in which such sale took place ; and if the same is not claimed by the owner thereof^ or his legal representatives^ within one year thereafter, the same shall be paid into the general fund of such county.''' of the piroceeds of such sale, notwithstanding that that is the object for which the lien is given. 7 Civil Code, section 1862, last clause, with ver- bal changes. CHAPTER 12. LIEN OF CAEEIEE OP PASSENGEES. 475. Lien and enforcement. 475. Lien and Enforcement.^ A common carrier has a lien upon the luggage of a passenger for the payment of such fare as he is entitled to from him. This lien is regulated by the general • provisions of law applicable to liens. ^ 1 Civil Code, section 2191, as enacted 1872. 3 Regulated by General Law of Liens.— The code language is: *'by the title on liens. ^' This title of the code concerns most of the subjects treated in sec- tions 1-22, 81-89, 186-384, and 434-476 of this book. A similar provision was interpret ed in Stewart v. Naud, 125 Cal. 596, 599, 600, 58 Pac. 186 (see section 466, above), to mean that the sale must be conducted as in case of a sale of pledged property. But, as in case of the lien of a carrier on the luggage of his passenger, the passenger may be wholly unknown to the lienor, the provision that actual notice must be given to the owner of the pledged property before the sale can be made would be inapplicable. (717) CHAPTER 13. SHERIFFS LIElSr. 476. Who lienor. 476. Who Lienor. An officer who levies an attachment or execu- tion upon movable property acquires a special lien, dependent on possession, upon such prop- erty, which authorizes him to hold it until the process is discharged or satisfied, or a judicial sale of the property is had.^ 1 See Civil Code, section 3057, as enacted 1872. (718) CHAPTER 14. LIENS AGAINST TEESPASSING ANI^ MALS.i Merely an Outline of the Statutes Creating These Liens is Presented in This Chapter. 477. Alpine, Colusa, El Dorado (part), Glenn, Hum- boldt, Los Angeles, Merced, Orange, Eiver- side (part), Sacramento, San Bernardino (part), San Joaquin, San Luis Obispo, Santa Barbara, Solano, Tehama (part). 478. Yolo. 479. Stanislaus. 480. Eiverside (part), San Diego. 481. San Bernardino (part), Yuba (part). 1 Political Code, section 19: "Nothing in either of the four codes affects any of the provi- sions of the following statutes, but such statutes are recognized as continuing in force, notwithstanding the provisions of the codes, except so far as they have been repealed or affected by subsequent laws: .... 23. All acts in relation to lawful fences, estrays, and the trespassing of animals upon private property.'' In 1901 the legislature passed ''an act relating to estrays, providing for taking them up, and giving a lien on them for all damages, costs, and expenses in- curred by reason of taking them up, and repealing all other acts and parts of acts now in force relating to estrays'': Stats. 1901, p. 603, c. 197. Sections 9 and 10 provided that all acts and parts of acts relat- (719) 720 TRESPASSING ANIMALS. 482. Marin, Mono (part). 483. Fresno, Inyo, Kern, Kings, Madera, Monterey, Napa, San Benito, Tulare, Ventura. 484. Butte (part), Calaveras (part). 485. Alameda, Contra Costa, Placer (part), San Fran- cisco, San Mateo. 486. Santa Clara, Santa Cruz. 487. Placer (part), Shasta, Tehama (part), Yuba (part)— inclosed lands. 488. Hog lien. 489. Goat lien in Tuolumne. 490. Turkey lien. 491. Distraint of estrays. ing to estrays, except as to poundkeepers, were re- pealed by it. This law might at first sight seem to repeal the laws as to trespassing animals, but such probably is not its effect, because from the earliest times the legislature has distinguished between laws concerning estrays and laws concerning trespassing animals, or ''the protection of agriculture, ' ' as they have often been termed. Thus, in Statutes of 1863, page '590, chapter 396, relating to estrays in Napa county, it was expressly provided by section 10 that nothing therein contained should be held to affect the operation of the act conferring a lien against tres- passing hogs: See section 488, below. Moreover, the terms ''trespassing animaP' and "estray'' are by no means synonymous; for an estray is an animal (1) wandering at large uncontrolled, (2) during a consid- erable space of time, (3) whose owner is unknown, while a trespassing animal may merely have tempo- rarily escaped from a known owner, or been purposely driven upon the land where it was distrained. Thus the laws concerning trespassing animals and the pro- tection of agriculture doubtless are not repealed by the above act. Rule of Construction.— In Trumpler v. Bemerly, 39 Cal. 490, the court says, referring to Statutes of 1863, page 697, chapter 425: "This statute, as all other pre- § 477 TRESPASSING ANIMALS. 721 477. Alpine, Colusa, El Dorado (part), Glenn, Humboldt, Los Angeles, Merced, Orange, Riverside (part), Sacramento, San Ber- nardino (part), San Joaquin, San Luis Obispo, Santa Barbara, Solano, Tehama (part) 2 Stats. 1877-78, p. 176, c. 136, in effect March 7, 1878. Stats. 1877-78, p. 878, c. 556, in effect Marcn 30, 1878. The owner or person lawfully in possession of land may take up and safely keep for two days, at the expense of the owner, any animal found scribing modes by which a party may be devested of his property without his consent, must be strictly con- strued; and a party claiming to have acquired a right and title to property by virtue of its provisions as against the original owner, must affirmatively allege and prove that the mode prescribed by the statuto for the acquisition of such title has, in every particu- lar, been strictly followed.'' As, however, the chief object of this statute is remedial, it seems that under section 4 of the codes this rule would be changed, and that these statutes should receive a liberal construction '^with a view to effect [their] objects and to promote justice." 2 Former enactments which have been superseded: Alpine.— Hog act as applying to that portion of Alpine county formed out of El Dorado county (see section 488, below). Colusa, Glenn.— Stats. 1871-72, p. 685, c. 458, amended 1873-74, p. 760, c. 525, except as to turkeys (section 490, below); Stats. 1859, p. 279, c. 266, sec. 2, relating to the distraint of certain animals when breaking into inclosures. Hog act, section 488, be- low. El Dorado (part).— Stats. 1875-76, p. 356, c. 269, relating to the distraint of trespassing animals in a Liens— 46 722 TRESPASSING ANIMALS. § 477 trespassing thereon,^ and has a lien against every such animal which expires upon the lapse of two days^ after the distraint for the reasonable cost of keeping the same and its pro rata of the portion of El Dorado county, was repealed by Stats. 1877-78, p. 557, c. 371, in effect March 26, 1878. Stats. 1873-74, p. 859, c. 615, in effect April 29, 1874, relating to Mud Springs township. Hog act, section 488 below. Humboldt.— Hog act, section 488, below. lios Angeles, Orange.— Stats. 1877-78, p. 164, c. 129, in effect March 4, 1878; Stats. 1871-72, p. 99, c. 107, as amended 1871-72, p. 241, c. 201, in effect, February, 14, 1872. Hog act, section 488, below. Merced.— Stats. 1871-V2, p. 563, c. 407, in effect March 27, 1872. Hog act, section 488, below. Eiverside (part), San Bernardino (part).— Stats. 1871-72, p. 99, c. 107, as amended 1871-72, p. 510, c. 356, in effect March 23, 1872 repealed Stats. 1873-74, p. 190, c. 149, in effect February 28, 1874, saving, how- ever, to a majority of the taxpayers of any township the right by their affirmative vote to cause such act to become applicable to such township. Stats. 1875- 76, p. 307, c. 233, relating to a portion of San Bernar- dino county (see section 481, below). Stats. 1859, p. 279, c. 266, sec. 2, relating to the distraint of cer- tain animals when breaking into inclosures. Hog act, section 488, below. San Joaquin.— Stats. 1871-72, p. 563, c. 407, in ef- fect March 27, 1872. Hog act, section 488, below. Sacramento.— Stats. 1865-66, p. 440, c. 361, as amend- ed Stats. 1875-76, p. 5, c. 7, in effect January 7, 1876; Stats. 1863-64, p. 170, c. 176, as amended Stats. 1863- 64, p. 532, c. 472, in effect April 1, 1874, relating to the distraint of trespassing animals in Sacramento county, except that portion south of the Cosumnea river, repealed by Stats. 1865-66, p. 440, c. 361, sec. 10, and Stats. 1865-66, p. 443, c. 362, in effect March 26, 1866. Hog act, section 488, below. § 477 TRESPASSING ANIMALS. 723 San Luis Obispo.— Stats. 1873-74, p. 50, c. 54, fully effective June 25, 1874; Stats. 1871-72, p. 749, c. 509, in effect April 1, 1872, relating merely to a portion of San Luis Obispo county. Hog act, section 488, be- low. Santa Barbara.— Stats. 1873-74, p. 50, c. 54, fully effective June 25, 1874; Stats. 1871-72, p. 749, c. 509, in effect April 1, 1872, relating merely to a portion of Santa Barbara county. Hog act, section 488, below. Solano.— Stats. 1871-72, p. 563, c. 407, in effect March 27, 1872; Stats. 1865-66, p. 440, c. 361, as amended 1875-76, p. 5, c. 7, in effect January 7, 1876; Stats. 1863-64, p. 170, c. 176, in effect March 15, 1864, repealed by Stats. 1865-66, p. 440, c. 361, sec. 10, in ef- feet May 1, 1866. Hog act, section 488, below. Tehama (part).— Stats. 1873-74, p. 853, c. 609, as amended 1875-76, p. 643, c. 447, in effect September 1, 1876, except as to turkeys (see section 490, below). Stats. 1859, p. 279, c. 266, sec. 2, relating to the dis- traint of certain animals when breaking into inclos- ures. Hog act, section 488, below. 3 Stats. 1877-78, p. 176, c. 136, sec. 13. 4 **The obvious purpose of the act is to af- ford the owner of land trespassed upon a speedy and somewhat summary remedy by giving an action both against the owner, if known, and against the animals if he is not known, and the attachment against the property may be given in both cases (sees. 3 and 10). .... The right to distrain is an option given to the land owner, which he may exercise for two days with- out instituting any legal proceedings whatever, the declared purpose being to enable the land owner, dur- ing that period, to ascertain the owner of the animals and determine which remedy given by the act the land owner will resort to. *'We cannot find any authority in the act for dis- training the animals beyond the two days; nor can we find any lien given upon the animals by the distraint to secure any claim of damage except as given in sec- tion 15, under the pirovisions of which * reasonable compensation for care and feed' may be recovered 'whenever any animal is lawfully distrained under 724 TRESPASSING ANIMALS. § 477 damages^ sustained by reason of the trespass.** At any time during the continuance of the lien, the owner may, upon (1) tendering the lienor section 13 ... . during the time of such lawful dis- trainment.^ This lawful distrainment, we think, is confined to two days. It seems to us that if the leg- islature had intended to give the land owner author- ity to hold under the distraint for an indefinite time and until he could obtain judgment in his action, there would have been no occasion for introducing the at- tachment feature of the act, and the limit of two days would seem to exclude the idea that any greater time was to be given for distraining the animals. *^The purpose of the attachment was to give the 'plaintiff a better security for the payment of any judgment he may recover in actions brought under the first two sections of this act'; and we must pre- sume that the same intention was in the minds of the legislature in enacting section 10, and that the attach- ment in actions in rem was to better secure any judg- ment obtained upder section '5 et seq. It may not al- ways be convenient for the land owner to take unto himself the custody of the animals pending suit in personam or in rem; and the statute would seem to afford him the opportunity in both forms of action to relieve himself of that responsibility by resorting to attachment, in which case the animals would then pass into the custody of the law [pp. 149, 150] '*If the plaintiff continues his possession of the an- imals after the statutory two days, it must be as keeper for the sheriff, who has served the writ and has taken the property*' (p. 152):Wigmore v. Buell^ 122 Cal. 144, 54 Pac. 600. 5 Has Lien for Pro Rata of Damages.— In Wigmore V. Buell, the court says: "Nor can we find any lien given upon the animals by the distraint to secure any claim of damages.'' But as a prerequisite to the reclamation of the animals from the distrainor, the owner is compelled to pay the damages sustained, as well as the cost of keeping (sec. 15). How, then, can it be said that there is no lien for damages? § 477 TRESPASSIXG ANIMALS. 725 the amoiml of his lien^ or (2) giving an adequate undertaking as security therefor^ recover back his animals.^ At any time after any trespass the person whose land was trespassed upon may com- mence an action for the recovery of the damage?? sustained by reason of the trespass, or, where the animals are distrained, for the amount of his lien, together with costs of suit in either case — the action to be commenced personally against the owner if known/ otherwise directly against the trespassing animals.^ In either type of action the plaintiff may cause the animals to be at- tached ;^ and no animal is for any reason exempt from such attachment.^^ In case of a sale of the animals, any surplus proceeds must be paid into court for the benefit of the party in good con- science entitled thereto.*^ This act applies in Alpine,^^ Colusa,^ ^ Glenn,^2, 11 Humboldt,^^ Los Angeles/^ Mer- ced,^^ Orange,*^' ^^ Sacramento,^^ San Joa- 6 stats. 1877-78, p. 176, c. 136, sec. 15. 7 Stats. 1877-78, p. 176, c. 136, sees. 2-4. 8 Stats. 1877-78, p. 176, c. 136, sees. 5-11. 9 Stats; 1877-78, p. 176, c. 136, sees. 3, 10. 10 Stats. 1877-78, p. 176, c. 136, sec. 4. 11 Stats. 1877-78, p. 878, c. 556. . IS Glenn county was formed out of the northern part of Colusa county, by Stats. 1891, p. 98, c. 94, in effect March 11, 1891. 13 Orange county was formed out of the southeast- ern part of Los Angeles county, by Stats. 1889, p. 123, rC. 110, in effect March 11, 1889. 726 TRESPASSING ANIM.VLS. § 477 quin/^ San Luis Obispo/^ Santa Barbara/^ and Solano^^ counties; to White Oak and Mud Springs townships, and that portion of Salmon Falls township south of the South Fork of the American river, in El Dorado^^ county; to that portion of Eiverside^^' ^^ county formed out of the southwestern part of San Bernardino county; to that part of San Bernardino^^ county lying south of a line drawn due east and west from the Colorado river to the western boundary line of said county, on the township line between townships 2 and 3 north, San Bernardino base line; and to that part of Tehama^^ county lying west of the Sacramento river and south of Eed Bank creek. 14 Riverside county was formed out of parts of San Bernardino and San Diego counties, by Stats. 1893, p. 158, c. 142, in effect March 11, 1893. 478. Yolo.i Stats. 1877-78, p. 360, c. 290 in effect, March 20, 1878. "The owner or possessor of lands^^ in Yolo county^^ whether inclosed or not, may take up 1 Former enactments as to Yolo county, which have been superseded: Stats. 1873-74, p. 343, c. 24.1 in effect March 11, 1874; Stats. 1871-72, pi. 563, c. 407, in effect March 27, 1872; Stats. 1863-64, p. 170, c. 176. in effect March 15, 1864, repealed Stats. 1865-66, p. 440, c. 361, sec. 10, in effect May 1, 1866. Hog act section 488, below. . 2 Stats. 1877-78, p. 360, c. 290, sec. 12. § 478 TRESPASSING ANIMALS. 727 and safely keep^^ at the expense of the owner,"*^ any horse, mare, mule, jack, jenny^ hog, sheep, goat, or head of neat cattle found trespassing thereon;^ and has a lien dependent on possession thereagainst for the cost of keeping any such animals and the damages sustained by reason of the trespass.^ The cost of keeping is deemed as follows: For each horse, mare, mule, jack, jenny, or head of neat cattle, twenty-five cents per day ; for each hog or goat, ten cents per day; for each sheep, ^Ye cents per day.^ Within three days after the distraint, the lienor must, if the owner or person in control is known or can be ascer- tained, notify him of the distraint.^ At any time before the animals are sold in satisfaction of the lien, the owner may, upon discharging the lien, recover back his animals.^ Within ten days after the distraint, the lienor must commence an action to foreclose his lien^ — against the owner or person in control, if the same is known or can be ascertained, otherwise directly against the ani- malsJ In case of a foreclosure judgment, any surplus proceeds from the sale of the animals must, if not claimed by the owner, be held by the clerk of the district court for the use of the 3 stats. 1877-78, p. 360, c. 290, sec. 2. 4 Stats. 1877-78, p. 360, c. 290, sec. 7. 5 Stats. 1877-78, p. 360, c. 290, sec. 1. 6 Stats. 1877-78, p. 360, c. 290, sec. 4. 7 Stats. 1877-78,. p. 360, c. 290, sec. 3. 728 TRESPASSING ANIMAl S. § 478 owner for one year, and thereupon, if not claimed, paid into the county school fund.^ This act does not "prohibit persons who may be driving stock from one place to another from driving the same across uncultivated lands not inclosed, nor from watering such stock at nat- ural watering-places on such lands/^^ 8 Stats. 1877-78, p. 360, c. 290, sec. 6. 9 Stats. 1877-78, p. 360, c. 290, sec. 9. 479. Stanislaus.^ stats. 1877-78, p. 164, c. 129, in effect March 4, 1878; Stats. 1877-78, p. 878, c. 556, sec. 2, in effect March 30, 1878. The owner or occupant of any land in Stanis- laus^ county may take up and safely keep at. the expense of the owner any animal found trespass- ing thereon;^ and has a lien on every such ani- mal for the expense of keeping it and the dam- ages sustained by reason of the trespass.'* The cost of keeping is deemed as follows: For horses, mares, jacks, mules, jennets, and horned cattle, twenty cents per day per head; for hogs, ten cents per day per head ; for sheep and goats, five 1 Superseded as to Los Angeles county, by Stats. 1877-78, p. 878, c. 556, sec. 2. Former enactment as to Stanislaus, which has been superseded. Hog act, section 408, below. 2 Stats. 1877-78, p. 164, c. 129, s^c. 15. 3 Stats. 1877-78, p. 164, c. 129, sec. 1. 4 Stats. 1877-78, p. 164, c. 129, sees. 7, 11. § 479 TKESPASSING ANIMALS. 729 cents per day per head.^ Within three days al- ter the distraint^ the lienor mnst cause the dam- age to be assessed by two disinterested residents of the connty.'' The lienor must notify the owner of the distraint if he is known — person- ally^ if residing within six miles, otherwise by post.^ The lienor must also within five days af- ter the distraint give a verified statement to a justice of the peace of the township, setting forth (1) a description of the animals and of their marks and brands, (2) the place and time of distraint, (3) the place of detention, (4) the amount of damages assessed by the viewers, and (5) whether the owner is known or unknown to the distrainor.^ The justice must post a notice in two designated places containing a copy of the lienor's statement, and also a statement that ^unless the animals are reclaimed within seven days thereafter, they will be sold the second day following.^^ The justice must order them sold at the appointed time by a constable, if not re- claimed.^^ Where the owner is unknown, the lien may be foreclosed by judicial sale.^^ At any 6 stats. 1877-78, p. 164, c. 129, sec. 2. r stats. 1877-78, p. 164, c. 129, sec. 3 8 Stats. 1877-78, p. 164, c. 129, sec. 4. » Stats. 1877-78, p. 164, c. 129, sec. 5. 10 Stats. 1877-78, p. 164, c. 129, sec. 6. 11 Stats. 1877-78, p. 164. c. 129, sec. 8.' 12 Stats. 1877-78, p. 164, c. 129, sec. 12. e 730 TRESPASSING ANIMALS. § 479 time before the sale the owner may pay to the justice an amount snlfieient to satisfy the lien and costs accrued, or file an undertaking with him to be approved by him as security for such payment, whereupon the lien is discharged and the owner entitled to receive back his animals.^ The proceeds of the sale must be applied (1) to the costs of sale, (2) to the lien, and (3) any surplus must be paid to the county treasurer to be held for the owner for one year, and there- after paid into the county school fund.^^ At any time within two months after the sale, the owner may redeem the animals upon paying to the purchaser, or the justice for him, the amount of his purchase money, together with ten per cent thereon and the expense of keeping the animals since the sale, estimated as above, in ad- dition.*^ 13 stats. 1877-78, p. 164, c. 129, sees. 10, 11, 14. 14 Stats. 1877-78, p. 164, c. 129, sec. 9. 480. Riverside (part), San Diego.* 1876; Stats. 1877-78, p. 245, c. 199, in effect March 14, 1878. ^^Any oT^oier or occupant of any land or pos- sessory claim" in San Diego county and that part of -"Riverside county formed out of the northern 1 Former Enactments Which Have Been Super- seded: Stats. 1871-72, p. 99, c. 107, as amended 1871- 72, p. 241, c. 201, in effect May 15, 1872. § 480 TRESPASSING ANIMALS. 731 part of San Diego county,^ whether inclosed or not;, may take up and safely keep^ at the expense of the owner, any horse, mare, colt, mule, jack, jennet, hog, goat, sheep, or horned cattle fonnd trespassing thereon;^ and has a lien on every such animal for its pro rata of ^*damages, charges, and fees'^ arisiiig by reason of the trespass.'* The cost of keeping is deemed as follows: For each horse, mare, colt, mule, jack, jenny, or head of horned cattle, twenty cents per day; for each hog, ten cents per day; for each sheep or goat, five cents per day.^ The lienor must notify the owner, if known, personally or by post, of the detention and the reason therefor; or, if not known, must post conspicuously in three public places in the township a notice ^^containing a de- scription of the animals, their marks and btands as near as can be reasonably ascertained, and stating the cause of detention.^^ ^ At any time before the animals are sold in satisfaction of the lien, the owner of any animal may, upon (1) proving his property and (2) discharging the lien thereon,^ or giving security for the pay- ment of any amount which may accrue against him,^ recover back his animals. Within ten days 3 Riverside county was formed out of parts of San Bernardino and San Diego counties by Stats. 1893, p. 158, c. 142, in effect March 11, 1893. 3 Stats. 1875-76, p. 458, c. 330, sec. 1. 4 Stats. 1875-76, p. 458, c. 330, sec. 5. 5 Stats. -1877-78, p. 245, c. 199, sec. 1. 732 TRESPASSING ANIMAI-S. § 480 after the distraint^ the lienor must cause the damage to be viewed and estimated by two resi- dents of the county, competent to be witnesses on the trial of the matter.^ Within the same time,^ the lienor must commence an action for the foreclosure of his lien — personally against the owner, if known, otherwise directly against the animals.''' ^ In case of a foreclosure judg- ment, any surplus proceeds must be paid to the owners if demanded within three months; and after the expiration thereof into the county school fund.'' At any time within three months after the sale, the owner, upon proving his prop- erty and paying the purchaser his purchase mone}^, together with ten per cent thereon and the expense of keeping from the date of the pur- chase at a specified rate, may redeem his ani- mals.** « Stats. 1877-78, p. 245, c. 199, sec. 6. 7 Stats. 3877-78, p. 24'5, c. 199, sec. 2. 8 Stats. 1877-78, p. 245, c. 199, sec. 3. 9 Stats. 1870-76, p. 458, c. 330, sec. 5. 481. San Bernardino (part), Yuba (part).^ San Bernardino: Stats. 1875-76, p. 307, c. 233, in effect March 16, 1876.2 Yuba: Stats. 1875-76, p. 210, c. 187, in effect March 11 1876.3 "Any owner or occupant of any land or pos- sessory claim,^^ whether inclosed or not, may take 1 Former Enactments Which Have Been Superseded: § 481 TRESPASSING ANIMALS. 733 up and safely keep at the expense of the owner any trespassing animal found thereon as fol- lows.'*' ^ In San Bernardino comity any horse, mare, colt^ nmle, jack, j^^^J? goat^ or head of horned cattle found trespassing on any portion of the land or possessory claim cultivated in good faith, or whereon there are growing crops, or hay being made, may be distrained.^' ^ In Yuba county, any horse, mare, mule, jack, jenny, sheep, goat, hog, head of horned cattle, or tur- key found trespassing on the land or possessory claim may be distrained.^ The distrainor has a lien on every such animal for its pro rata of ^^damages, charges, and fees^^ arising by reason of the trespass.'' The cost of keeping is deemed as follows: In San Bernardino county, for each horse, mare, colt, mule, jack, jenny, or head of horned cattle, twenty cents per day; for each goat, five cents per day; provided that the amount claimed must not exceed ten dollars per day for any number of goats.^ In Yuba county, San Bernardino: See section 477, note 2, above. Yuba: Stats. 1859, p. 279, c. 266, sec. 2, made ap- plicable thereto by Stats. 1863, p. 357, c. 274. (See section 487, below.) 2 Stats. 1875-76, p. 307, c. 233, sec. 11. 13 Stats. 1875-76, p. 210, c. 187, sec. 12 4 Stats. 1875-76, p. 307, c. 233, sec. 1. 5 Stats. 1875-76, p. 210, c. 187, sec. 1. 6 Stats. 1875-76, p. 307, c. 233, sec 8. ' 7 Stats. 1875-76, p. 307, c. 233, sec, 5; Stats. 1875- 76, p. 210, c. 187, sec. 5. I 734 TRESPASSING ANIMALS. § 481 for each horse^ mare, mule, jack, jenny, or head of horned cattle, twenty-five cents per day; for each hog, sheep, or goat, ten cents per day; pro- vided that the amount claimed must not exceed ten dollars per day for any number of sheep or goats ;^ and for each turkey, three cents per day.^ The lienor must notify the owner, if known, of the detention and the cause therefor — personally or by a written notice left at his usual residence when residing in or near the township, and when residing at a greater distance by post; or if the owner is not known, must post conspicuously in three public places in the township a notice "con- taining a description of the animals, their marks and brands as nearly as can be reasonably ascertained, and stating the cause of deten- tion^^ ;^» ^^ and in San Bernardino county must also deliver a copy of the notice to the justice of the peace.^ At any time before the animals are sold in satisfaction of the lien, the owner of any animal may, (1) upon proving his property and discharging the lien thereon,'^ or (2) in San Bernardino county only, upon giving security for the payment of any amount which may accrue against him by reason of the trespass,^ recover back his animals. Upon the expiration of ten 8 stats. 1870-76, p. 210, c. 187, sec. 8. 9 Stats. 1875-76, p. 307, c. 233, sec. 2. 10 Stats. 1875-76, p. 210, c. 187, sec. 2 § 481 TRESPASSING ANIMALS. 735 days after the distraint, the lienor must eom- inenee an action for the foreclosure of his lien — personally against the owner, if known/^ other- wise directly against the animals, the monition to be served therein by posting in three specified places for a specified time.^^ In case of a fore- closure judgment, any surplus proceeds must be paid to the owners if demanded within three months ; and after the expiration thereof into the county school fund.^^ At any time within three months after the sale, the owner, upon proving his property and paying the purchaser his pur- chase money with ten per cent thereon, and the expense of keeping from the date of the purchase at the rate, in San Bernardino county, of two dollars per month per head, and in Yuba county of three dollars per month per head, may redeem his animals.'' This act applies in that portion of San Ber- nardino county lying north of a line drawn due east and west from the Colorado river to the western boundary line of said county on the township line between townships 2 and 3 north, San Bernardino base, excepting, however, that portion thereof lying due north of a line com- mencing at the northeast corner of township 4 north, range 2 west, San Bernardino base and 11 Stats. 1875-76, p. 307, c. 233, sec. 3; Stats. 1875- 76, p. 210, c. 187, sec. 3. 12 Stats. 1875-76, p. 307, c. 233, sec. 4; Stats. 1875- 76, p. 210, c. 187, sec. 4. 736 TRESPASSING ANIMALS. § 481 meridian, and running due west to the western boundary line of said county ;^^ and in Marys- ville and Long Bar townships, Yuba county.^^ 13 stats. 1875-76, p. 307, c. 233, sec. 9. See, also, the provision of section 477, above, applicable to a part of San Bernardino county. • 14 Stats. 1875-76, p. 210, c. 187, sec. 12. 482. Marin, Mono (part).^ Stats- 1865-66, p. 440, c. 361, in effect May 1, 1866 ;2 Stats. 1867-68, p. 456, c. 369, in effect April 7, 1868 Stats. 1869-70, p. 410, c. 311, in effect March 26, 1870 Stats. 1871-72, p. 412, c. 304, in effect March 16, 1872 Stats. 1871-72, p. 940, c. 631, in effect April 1, 1872 Stats. 1873-74, p. 391, c. 283, in effect March 16, 1874 Stats. 1873-74, p. 845, c. 602, in effect March 30, 1874 Stats. 1875-76, p. 5, c. 7, in effect Jan. 7, 1876 Stats. 1877-78, p. 176, c. 136, sec. 17, in effect March 7, 1878. *^^Any owner or occupant of any land or posses- sory claim^\ in Marin^ county and in the first supervisor district in Mono^ county, whether in- closed or not, "may take up and safely keep," at the expense of the owner, any horse, mare, 1 This act was superseded as to Sacramento and Solano counties by Stats. 1877-78, p. 176, c. 136, sec. 17, in effect March 7, 1878. Former enactments which have been superseded: Marin.— Stats. 1871-72, p. 563, c. 407, in effect March 27, 1872; Stats. 1863-64, p. 170, c. 176, in effect March 15, 1864, repealed 1865-66, p. 440, c. 361, sec. 10, in effect May 1, 1866. Hog act, section 488, below. 2 Stats. 1865-66, p. 440, c. 361, sec. 12. 3 Stats. 1875-76, p. 5, c. 7. § 482 TRESPASSING ANIMALS. 737 mule, jack, jenny, horned cattle,^ hog,^ or goat,^ found trespassing thereon; and has a lien upon every such animal for its pro rata of "fees, charges, and damages^^ arising by reason of the trespass.^ The expense of keeping is deemed as follows: For each hog or goat, five cents per day;^ for each other animal, twenty cents per day.^ The lienor must forthwith notify the owner of the detention if he is known or "can be ascertained by a search of the records and brands in the office of the justice of the peace of the township^^ — personally if he resides in or near the township, or if at a greater distance by post; or, if the owner cannot be ascertained, must immediately post conspicuously in three " conspicuous public places a notice contain- ing a description of the animals, their marks and brands, ^nd stating the cause of their detention, and must deliver a copy thereof to the justice of the peace of the township.'' At any time before the prop- erty is sold in satisfaction of the lien, the owner of any animal may, upon proving his property and discharging the lien, receive back his prop- erty.^ If the lienor and owner cannot agree 4 stats. 1865-66, p. 440, c. 361, sec. 1. 5 Stats. 1873-74, p. 845, c. 602. 6 Stats. 1865-66, p. 440, c. 361, sec. 5. 7 Stats. 1865-66, p. 440, c. 361, sec. 2 ' Liens— 47 738 TRESPASSIXG ANIMAL.S. § 482 upon the amount of the lien, it is to be fixed by three arbitrators mutually chosen.^ Within ten days after the distraint, the lienor must com- mence an action for the foreclosure of his lien — personally against the owner if known, otherwise directly against the animals.^' ^ In case of a foreclosure judgment and sale, at any time within three months after the sale, the owner may, upon proving his property and paying the purchaser his purchase money, together with one per cent per month thereon in addition from the date of the purchase, redeem his animals. ^^ 8 stats 1865-66, p. 440, c. 361, sec. 3. Stats. 1865-66, p. 440, c. 361, sec. 4. 10 Stats. 1865-66, p. 440, c. 361, sec. 5. 483. Fresno, Inyo, Kern, Kings, Madera, Mon- terey, Napa, San Benito, Tulare, Ven- tura.^ Stats, 1873-74, p. 50, c. 54; Stats. 1873-74, p. 179, c. 139; Stats. 1873-74, p. 705, c. 471, fully effective June 25, 1874; Stats. 1877-78, p^ 176, c. 136, sec. 17, in effect March 7, 1878; Stats. 1873-74, p. 474, c. 326, in effect March 18, 1874; Stats. 1873-74, p. 824, c. 583, in effect April 15, 1875. "Any owner or occupant of any land or pos- sessory claim'^ in Fresno, Inyo,^ Kern, Kings,^ 1 This act was repealed as to San Luis Obispo and Santa Barbara counties by Stats. 1877-78, p. 176, c. 136, sec. 17, in effect March 7, 1878. (See Hanley v. Sixteen Horses and Thirteen Head of Cattle, 97 Cal. 182, 32 Pac. 10.) Former enactments which have been superseded; § 483 TRESPASSING ANIMALS. 739 Madera,^ Monterey, ^N'apa,^' San Benito,^ Tulare, and Ventura counties, whether inclosed or not, may take up and safely keep at the expense of the owner any horse, mare, colt, mule, jack, jenny, horned cattle, hog, sheep, or goat found trespassing thereon;^ and has a lien for the cost of keeping any such animals and the damages sustained by reason of the trespass. The cost of keeping is deemed as follows: For each horse, mare, colt, mule, jack, jenny, or head of horned cattle, twenty cents per day ; for each hog, sheep, or goat, five cents per dayJ The lienor must immediately, if the owner or his agent is known and is living within six miles of the place of tak- ing up, notify him ^^of the time and place of tak- Kern.— Hog Act, section 488, below. Monterey.— Stats. 1871-72^ p: 99, c. 107, as amended 1871-72, p. 241, c. 201, repealed 1871-72, p. 563, c. 407, sec. 20. Hog act, section 488, below. Napa.— Stats. 1871-72, p. 563, c. 407, in effect March 27, 1872. Hog act, section 488, below. Ventura.— Stats. 1871-72, p. 749, c. 509, in effect April 1, 1872, Ventura county then being a part of Santa Barbara county. Hog act, section 488, below. 2 Stats. 1873-74, p. 824, c. 583. 3 Kings county was formed out of the western part of Tulare county, by Stats. 1893, p>. 176, c. 150. 4 Madera county was formed out of the north- ern part of Fresno countv, by Stats. 1893, p. 168, c. 143. 5 Stats. 1873-74, p. 705, c. 471, sec. 1. 6 Stats. 1873-74, p. 474, c. 326. 7 Stats. 1873-74, p. 50, c. 54, sec. 1. 740 TRESPASSING ANIMALS. § 483 ing up, together with the number, character, and description thereof; also as nearly as he can, the marks and brands, if any, of each animal/^^ At any time before the animals are sold in satisfac- tion of the lien, the owner may, upon (1) prov- ing his property, and (2) tendering the amount of the lien, or giving an undertaking for the pay- ment thereof to be approved by the judge try- ing the ease, recover back his animals.^ The lienor must, within two days [after giving no- tice], unless the animals have been sooner re- claimed, commence a direct action against the distrained animals for the foreclosure of his lien.® The complaint must set forth the facts, nature, location, and amount of damages claimed, a description of all animals so taken up, the num- ber, marks and brands, if any, the supposed value of each animal or the supposed aggregate value of such animals, and the time and place of dis- traint.® Upon filing the complaint, a summons made returnable not less than fifteen nor more than twenty days after the issuance must be is- sued, and must forthwith be served by posting one copy in the courtroom for ten days and fil- ing another in the county recorder's office.® The recorder must compare the marks and brands, if any, with the record of marks and brands in his S stats. 1873-74, p. 50, c. 54, sec. 2. 9 Stats. 1873-74, p. 50, c. 54, sec. 3. § 483 TRESPASSING ANIMALS. 741 office, and if the owner can thus be determined notify him of the pendency of the action, and when the distrained property is worth fifty dol- lars or more, must publish notice in a designated paper.^ In case of a foreclosure sale, any sur- plus proceeds must be held for the owner for six months by the court, and if not demanded before the expiration of such time must thereupon be paid into the county school fund. At any time within sixty days after the sale, the owner may, upon proving his property and paying the pur- chaser his purchase money in gold coin, together with interest thereon at two per cent per month in addition, may redeem his property.^^ The lien herein provided is an additional and cumulative security, and does not impair the right to resort to a personal remedy.^^ This act does not prevent the free use for graz- ing purposes of all unoccupied lands not taxed, saving certain rights to actual settlers.*^ 10 stats. 1873-74, p. '50, c. 54, sec. 4. 11 Triscony v. Brandenstein, 66 Gal. 514, 516, 6 Ji'ac. 384. 12 Stats. 1873-74, p. 50, c. 54, sec. 9. 484. Butte (part), Calaveras (part).^ Butte.— Stats. 1873-74, p. 310, c. 213, in effect March 1 Former enactments as to Butte county: Stats. 1863-64, p. 170, c. 176, in effect March 15, 1864, relating to the distraint of trespassing animals in Butte, Marin, Solano, and Yolo counties, repealed 742 TEESPASSIXG ANIMALS. § 484 10, 1874; Stats. 1875-76, p. 314, c, 244, in effect March X6, 1876. Calaveras.— Stats. 1873-74, p. 597, c. 405, in effect March 24, 1874; Stats. 1875-76, p. 901, c. 603, in effect ^pril 3, 1876. "^^Any owner or occupant of cultivated land,-' whether inclosed or not, may take up and safely keep at the expense of the owner any animal found trespassing thereon to the injury of the cultivation ;^ and has a lien on every such animal for its pro rata of the "charges, fees, and dam- ages^^ arising by reason of the trespass.^ The lienor must forthwith notify the owner of the distraint — ^by written notice delivered to the own- er personally or by post, if known ;^ if un- known, by written notices posted in three of the most public places in the township containing a full description of the animals with marks and brands, and stating the cause of detention and the time of distraint.*^ Certain costs are allowed the distrainor.® At any time before the aul- as to Butte county by Stats. 1865-66, p. 311, c. 280, in effect March 20, 1866. a Stats. 1873-74, p. 310, c. 213, sec. 1: Stats. 1873- 74, pi. 579, c. 405, sec: 1. 3 Stats. 1873-74, p. 310, c. 213, sec. 8; Stats. 1873- 74, p. 579, c. 405, sec. 8. 4 Stats. 1873-74, p. 310, c. 213, sec. 2; Stats. 1873- 74, p. 579, c. 405, sec. 2. 5 Stats. 1873-74, p. 310, c. 213, sec. 3; Stats. 1873- 74, p. 579, c. 405, sec. 3. • 6 Stats. 1873-74, p.. 310, c. 213, sec. 4; Stats. 1873- 74, p. 579, c. 405, sec. 4. § 484 TRESPASSING x\NIMALS. 743 mals are sold in satisfaction of the lien, the owner of any of them may, upon proving his property and discharging the lien, recover back his prop- erty.^ The amount of the lien is, in case of a disagreement between the parties, to be deter- mined by three arbitrators mutually chosen.'' At any time after the expiration of ten days af- ter the distraint, the lienor may commence an action for the foreclosure of his lien.® In case of a foreclosure judgment, any surplus proceeds from the sale of the animals must, if not claimed by the owner, be held for his use for six months, and thereupon, if remaining unclaimed, must be paid into the county school fund.^ At any time within six months after the sale, the owner, upon proving his property and paying the purchaser his purchase money, together with one per cent thereon and the reasonable cost of keeping the animals since the sale in addition thereto, may redeem his animals.^ This act applies in that portion of Butte*^ county ^%ing west of Feather river and the main north fork of same,^^ and in that portion of Calaveras** county bounded as follows: Com- mencing at a point on the Stanislaus river where 7 stats. 1873-74, p. 310, c. 213, see. 5; Stats. 1873- 74, p. 579, c. 405, sec. 5. 8 Stats. 1873-74, p. 310, c. 213, sec. 7; Stats. 1873- 74, p. 579, c. 405, sec. 7. 9 Stats. 1873-74, p. 310, c. 213, sec. 9; Stats. 1873-74, p. 579, c. 405, sec. 9. 744 TRESPASSIXG ANIMALS. § 484 it crosses the Stanislaus county line; thence up the river to a point opposite the main summit of Bear mountain, thence along the summit to the Calaveras river; thence down said river to a point due east of Willett^s ranch; thence due west to the Mokelumne river; thence down said river to the San Joaquin county line; thence along the line between Calaveras county and San Joaquin and Stanislaus counties to the point of beginning. 10 stats. 1875-76, p. 314, c. 244. 11 Stats. 1873-74, p. 579, c. 405, sec. 1?. By Stats. 1875-76, p>. 901, c. 603, the question whether the electors of Calaveras county desired this law to be extended to the whole county or repealed was to be submitted to the electors for the informa- tion of the legislature. 485. Alameda, Contra Costa, Placer (part), San Francisco, San Mateo.^ Two principal statutes: First.— Stats. 1871-72, p. 563, c. 407, in effect March 27, 1872; Stats. 1875-76, p. 5, c. 7, in effect January 7, 1876; Stats. 1875-76, p. 173, c. 171, sec. 4, in effect May 1, 1876; Stats. 1877-78, p. 176, c. 136, sec. 17, in effect March 7, 1878; Stats. 1877-78, p. 360, c. 290, sec. 11, in effect March 20, 1878; Stats. 1873-74, p. 705, c. 471, sec. 2, fully effective June 25, 1874; Stats. 1873-74, p. 343, c. 243, in effect March 11, 1874.3 Second.— Stats. 1875-76, p. 542, c. 394, in effect September 1, 1876.2 1 This section is founded on two statutes, Stats. 1871-72, p. 563, c. 407, and Stats. 1875-76, p. 542, c. 394. Stats. 1871-72, p. 563, c. 407, originally applicable in Alameda, Contra Costa, Marin, Merced, Napa, San § 485 TRESPASSING ANIMALS. 745 ^^Any owner or occupant of any land or pos- sessory claim^' in Alameda,^ Contra Costa,^ and San Francisco^ connties, in Judicial townships N'os. 1 and 10 in Placer county ^^ and in San Ma- teo^ county subject to the qualification that any Francisco, San Joaquin, San Mateo, Solano, and Yolo counties, was superseded as to Marin county, by Stats. 1875-76, p. 5, c. 7; as to Merced and San Joaquin counties by Stats. 1877-78, p. 176, c. 136, sec. 17; as to Napa county by Stats. 1873-74, p. 705, c. 471, sec. 2; as to Solano county by Stats. 1875-76, p. 5, c. 7, and Stats. 1877-78, p. 176, c. 136; and as to Yolo county by Stats. 1873-74, p. 343, c. 243, and Stats. 1877-78, p. 360, c. 290. Stats. 1871-72, p. 563 c. 407, sees. jl6-18, provided that (except in certain counties enumerated in section 16), upon petition of one hundred qualified electors of any county other than those in which the legis- lature had made it applicable, the supervisors must submit it to the electors, and upon a majority vote in its favor, the act was to immediately become effective in such county. Barring counties for which other provision was subsequently made, this statute might be thus adopted in Lake, Lassen, Modoc, Plumas, Sierra, Sutter, and Tuolumne counties, in Mono county, except as provided in section 482, and in San Bernardino county, except as provided in sections 477 and 481. Whether it has been so adopted in any of these counties, I do not know. Stats. 1875-76, p. 542, c. 394, closely resembles the statute of 1871-72, above, and applies to a ptortion of Placer county only. It superseded section 487, below, as to a part of Placer county. This act superseded section 488, below, in Alameda, Contra Costa, Placer, San Francisco, and San Mateo counties. 2 Stats. 1875-76, p. 542, c. 394, sec. 16." 3 Stats. 1871-72, p. 563, c. 407, sec. 19. 4 Stats. 1875-76, p 542, c. 394, sec: 1. k 746 ' . TRESPASSING ANIMALS. § 485 owner or occupant who fails or refuses after due notice to repair or erect his proportion of any partition fence, cannot distrain any trespassing animal belonging to the party giving such no- tice,^ whether inclosed or not, ^^may take up and safely keep'^ at the expense of the owner any "horse, mare, mule, jack, jennet, horned cattle, sheep, goat, or hog,^^ found trespassing there- on;^' ^ and has a lien on every such animal for its pro rata of costs, charges, and damages arising by reason of the trespass. ''» ^ The expense of keeping is deemed as follows: For each horse, mare, jack, jennet, or head of horned cattle, twenty cents per day; for .each hog or goat, ten cents per day; for each sheep, five cents per day; provided that the aggregate cost of keeping any number of sheep or goats m_ust not exceed ^Ye dollars per day.^' ^ The lienor must notify the owner of each such animal of the detention and the rea- son therefor, if such owner is known or can be ascertained by an examination of the marks and brands in the records of the county — ^personally if residing in or near the township, or if at a greater distance, in Placer county in excess of 5 stats. ] 875-76, p. 173, c. 171, sec. 4. 6 Stats. 1871-72, p. 563, c. 407, sec. 1. 7 Stats. 1871-72, p. 563, c. 407, sec. 3; Stats 1875- 76, p. 542, c. 394, sec. 3. S Stats. 1871-72, p. 563, c. 407, sec. 8; Stats. 1875- 70, p. 542, c. 394, sec. 8. § 485 TRESPASSING ANIMALS. 747 ten miles^ by post; or if such owner cannot be ascertained, must in Placer county post con- spicuously for twenty days in three public places in the township a notice containing a complete description of the animals and stating the cause of detention, and must in all other counties, if a newspaper is published therein, publish for thirty days in such paper a like notice, or if not so published conspicuously post in three public places, in the township such notice, and deliver a copy thereof to the justice of the peace of each township of the county.^ At any time before the animals are sold in satisfaction of the lien, the owner of any of them may, upon proving his property and discharging the lien thereon, re- cover back his animals.''' *^ If the lienor and owner cannot agree upon the amount of the lien, it is to be fixed by three arbitrators mutually chosen.^^ If the owner fails to come forward within ten days, the lienor must "immediately notify a constable of the township wherein the trespass has been committed. ^^^^ The constable must sell after ten days' notice by notices posted in three public places in the township.^^' ^^ The purchaser at the sale must not remove the ani- 9 Stats. 1871-72, p. 563, c. 407, sec. 2; Stats. 1875- 76, p. 542, c. 394, sec. 2. 10 Stats. 1871-72, p. 563, c. 407, sec. 4; Stat«. 1875-76, p. 542, c. 394, sec. 4. 11 Stats. 1871-72, p. 563, c. 407, sec. 5; Stats. 1875-76, p. 542, c. 394, sec. 5. 12 A failure on the part of the constable to 748 TRESPASSING ANIMALS. § 485 irials from the county until after the expiration of the period of redemption.*^ The constable must immediately pay over the proceeds of the sale to the justice of the peace of the township.** The proceeds must be applied to the satisfaction of the lien/^ the amount of which is to be de- termined by two disinterested persons chosen by the justice^ and they may choose a third.** The justice must hold any surplus for the benefit of the owner for twenty days, and thereafter it must be paid to and held by the county treasurer for his benefit for one year, after the expiration of which time it must be paid into the county school fund.*^ At any time within three months after the sale, the owner of any of the animals, upon proving his property and paying the purchaser his purchase money, together with three per cent per month thereon, ' and, in Placer county, the reasonable expense of keeping from the date of the purchase in addition, may redeem his ani- mals.® This act does not "prohibit persons from driv- ing stock along the public highway, nor from watering stock at the natural watering-places. ^^*'^ give the notice of sale as required, renders the sale void: Chase v. Putnam, 117 Cal. 364, 49 Pac. 204. 13 Stats. 1871-72, p. 563, c. 407, sec. 15; 1875-76, p. 542, c. 394, sec. 15. 14 Stats. 1871-72, p. 563, c. 407, sec. 6; Stats, 1875-76, p. 542, c. 394, sec. 6. 15 Stats. 1875-76, p. 542, c. 394, sec. 11; compare 1871-72, p. 563, c. 407, sec. 11. § 486 TRESPASSING ANIMALS. 749 486. Santa Clara, Santa Cruz.^4^£gi^ii>^ Santa Clara.— Stats. 1863, p. 581, c. 393, in effect April 27, 1863; Stats. 1863-64, p. 98, c. 102, in effect February 20, 1864; Stats. 1871-72, p. 580, c. 411, in effect March 27, 1872. Santa Cruz.— Stats. 1869-70, p. 860, c. 561, in effect April 4, 1870. Any person may take up and safely keep any horse, mare, mule, jack, jenny, head of cattle, sheep, hog, or goat found trespassing on his farm or other prem- ises^ situate in Santa Clara or Santa Cruz counties, whether inclosed or not ;^' ^ and has a lien on every such animal for its pro rata of the costs and damages arising by reason of the trespass.^' ^ The following amounts are re- spectively deemed the damages caused by the trespass of each animal: In Santa Clara county, one dollar for each sheep, two dollars for each 1 In Santa Clara county, by Stats. 1871-72, p. 580, c. 411, sec. 1, as modified by Stats. 1873-74, pp. 453, 464, c. 320, sec. 37, and Stats. 1875-76, pp. 606, 608, c. 431, sec. 4, the roadmaster is required to take up like animals when running at large upon any public thor- oughfare and proceed with them the same as in case of a distraint. The act is not, however, intended to prevent a herder from driving any such animals along a public highway: Thompson v. Corpstein, 52 Cal. 653. 2 Whether Inclosed or not.— This is necessarily im- plied in Hahn v. Garratt, 69 Cal. 146, 10 Pac. 329. 3 Stats. 1871-72, p. 580, c. 411, sec. 1; Stats. 1869- ~ 70, p. 860, c. 561, sec. 1. 4 Stats. 1863, p. 581, c. 393, sec. 3; Stats. 1869-70, p. 860, c. 561, sec. 3. 750 TRESPASSING ANIMALS. § 486 hog or goat^ and four dollars for each other ani- mal above named ;^ and in Santa Cruz county, one-half the above amounts,^ provided also, in Santa Cruz county, that where more than ten animals belonging to the same person are dis- trained at once, the damages are deemed one- quarter the above amounts.'' The lienor must post notices containing a description of the ani- mals, with the marks and brands, if any, and stating the places of distraint and detention — one to be posted at the door of the schoolhouse of the school district of the distraint and one at the door of the nearest postoffice, and must file a similar notice with the county recorder.^' ^ The lienor must pay the recorder certain speci- fied fees, and the recorder must thereupon, if the mark or brand is recorded in his office, with- in two days in Santa Clara^ county, and in Santa Cruz^ county within three days notify the owner by post of the distraint. In Santa Clara county, the giving of these notices by the lienor and re- corder is declared directory, and a sale is not in- validated by any irregularity therein.^* ® At any time before the animals are sold in satisfaction of the lien, the owner of any of them upon dis- 5 stats. 1871-72, p. 580, c. 411, sec. 2. 6 Stats. 1869-70, p. 860, c. 561, sec. 2. 7 Stats. 1869-70, p. 860, c. 561, sec. 7. 8 This provision was doubtless inserted to avoid the strict rule of construction laid down in Trumpler v. Bemerly, 34 Cal. 490. § 486 TRESPASSING ANIMALS. 751 charging the lien thereon may recover back his animals.^ If the owner fails to come for- ward within ten days in Santa Clara^ county^, or in Santa Cruz^ county with- in twenty days^ the lienor must immedi- ately notify a constable. The constable must sell as such property is sold on execution.'* The constable must, if the owner is present at the sale and demands the same, pay any surplus of proceeds after the satisfaction of the lien and accrued costs to the owner upon proof of his right thereto ; and if the owner is not so present, must pay the surplus to the county treasurer.^ The treasurer must hold the surplus for the use of the owner subject to the order of the board of supervisors for one year , after the expiration of which it must be paid into the county school fund.^ At any time within six months after the sale, the owner of any of the animals, upon prov- ing his property and paying the purchaser his purchase money, together with five per cent thereon in Santa Clara county and in Santa Cruz county fifteen per cent thereon, and the reason- able cost of keeping his animals since the sale in addition, may redeem his animals.^^ 9 Stats. 1863, p. 581, c. 393, sec. 5; Stats. 1869-70, p. 860, c. 561, sec. 5. 10 Stats. 1863, p. 581, c. 393, sec. 3; Stats. 1869-70, p. 860, c. 561, sec. 3. 752 TRESPASSING ANIMALS. § 487 487. Placer (part), Shasta, Tehama (part), Yuba (part) — Inclosed Lands.^ Stats. 1859, p. 279, c. 266, sec. 2; Stats. 1863, p. 357, G. 274. The owner of any premises inclosed by a law- ful f ence^ in Shasta, county^ in Placer county ex- cept in judicial townships ISTos. 1 and 10 thereof,^ in Tehama county excepting that portion there- of lying west of the Sacramento river and south of Eed Bank creek,^ and in Yuba county except in Marysville and Long Bar townships thereof,^ may take upon and safely keep, at the expense of the owner thereof, any horse, mule, jack, jenny,' hog, sheep, goat, or any head of neat cattle found trespassing thereon, and has a lien against the distrained animals for the damages sustained by reason of the trespass, or in case of a second or subsequent trespass for double such damages, and all expenses of pasturing, keeping 1 This act was superseded as to Colusa and Glenn counties and a part of Riverside county by section 477 above; and as to San Bernardino county by sec- tions 477 and 481, above. It was extended to Yuba county bv Stats. 1863, p. 357, c. 274. 3 This act was superseded as to a part of Placer county by section 485, above. 3 This act was superseded as to a part of Tehama county by section 477, above. 4 This act was superseded as to a part of Yuba county by section 481, above. § 487 TRESPASSING ANIMALS. 753 and disposing of the animals. If the animals are not applied for and the lien discharged with- in ten days after the distraint, the animals may be posted and disposed of under the estray law of the state. 488. Hog Lien.i Three principal statutes with numerous affiliated acts.2 First.— Stats. 1856, p. 229, c. 1^, in effect April 21, 1856; Stats. 1857, p. 54, c. 56, in effect March 4, 1857 Stats. 1858, p. 17, c. 17, February 9, 1858; Stats. 1859. p. 176, c. 171, in effect April 8, 1859; Stats. 1859, p. 337, c. 312, in effect April 18, 1859; Stats. 1861, p. 4b5, c. 404, in effect May 17, 1861; Stats. 1862, p. 39, c. 49 in effect March 13, 1862; Stats. 1862, p. 330, c. 288, in effect April 24, 1862; Stats. 1863, p. 57, c. 62, in effect March 16, 1863; Stats. 1863, p. 580, c. 389, in effect April 25, 1863; Stats. 1863-64, p. 227, c. 228, in effect March 24, 1864; Stats. 1863-64, p. 290, c. 278, in effect April 1, 1864; Stats. 1865-66, p. 323, c. 290, in effect March 20, 1866; Stats. 1865-66, p. 567, c. 445, in effect March 31, 1866; Stats. 1867-68, p. 430, c. 360, in effect March 28, 1868; Stats. 1869-70, p. 305, c. 203, in effect March 14, 1870; Stats. 1875-76, p. 797, c. 526, in effect April 1, 1876; Stats. 1877-78, p. 184, c. 145, in ef'- feet March 8, 1878; Stats. 1877-78, p. 640, c. 435, in effect March 29, 1878. Second.— Stats. 1857, p. 106, c. 102, in effect March 26, 1857; Stats. 1858, p. 79, c. 96, in effect March 20, 1858; Stats. 1861, p. 271, c. 271, in effect May 2, 1861; Stats. 1862, p. 85, c. 90, in effect March 25, 1862; Stats. 1862, p. 214, c. 199, in effect April 10, 1862; Stats. 1863, 1 Constitutionality Affirmed.— In Eood v. McCargar, 49 Cal. 117, the constitutionality of the statute of 1857, so far as creating a lien, was affirmed, while no opinion was expressed as to the constitutionality of the procedure provided for its enforcement. 2 The body of these statutes is practically identical. Liens — 48, 754 TRESPASSING ANIMALS. § 488 p. 774, c. 534, in effect April 27, 1863; Stats. 1863-64, p. 448, c. 393, in effect April 4,1864; Stats. 1873-74, p. 517, c. 355, sec. 4, in effect March 23, 1874; Stats. 1877-78, p. Ill, c. 99, in effect February 25, 1878. Third.— Stats. 1867-68, p. 235, c. 234, in effect March 23, 1868. The owner or proprietor of any premises,** whether inclosed or not^ "may take up and safely keep^^ at the expense of the owner'' any hog 5 fonnd trespassing thereon; and has a lien* upon the hogs for "all costs, charges, and dam- ages sustained by reason of their trespass- ing.^^^ Such lienor must immediately post no- tices "in three of the most public places in the township^^ in which he resides, "containing a de- scription of the ear and other marks^^ of the hogs "whereby the owner may identify them.^^*^ 6 In Eood V. McCarger, 49 Cal. 117, the lien was enforced in favor of a person *'in actual possession of a tract of land in Butte county, which he was hold- ing and cultivating under an alleged lease from the ^ ' owner of the hogs taken, up. In Monterey and San Benito counties (until the act was superseded) the occupant of any premises was likewise entitled, by the terms of the statute, to take up trespassing hogs (Stats. 1867-68, p. 235, sec. 1). T Stats. 1856, p. 229, c. 148, sec. 1; Stats. 1857, p. 106, c. 102, sec. 1; Stats. 1867-68, p. 235, c. 234, sec. 1. 8 See Rood v. McCargar, 49 Cal. 117, 120. 9 Stats. 1856, p. 229, sec. 3; Stats. 1857, p. 106, sec. 3; Stats. 1867-68, p. 235, sec. 3. 10 Stats. 1856, p. 229, sec. 2; Stats. 1857, p. 106, sec. 2; Stats. 1867-68, p. 235, sec. 2. § 488 TRESPASSING ANIMALS. "755 At an}^ time before the property is sold in satis- faction of the lien, the owner may, upon proving his property and discharging the lien, receive back his hogs.^^ If the lienor and owner cannot agree upon the amount of the lien, it is to be fixed by three arbitrators mutually chosen.*^ If the owner fails to appear within five days after the notices are posted, the lienor ^^must immedi- ately notify a constable of the township wherein the trespass has been committed/^^^ The con- stable must sell the hogs after five days^ notice.^^ His fee is prescribed.^^ The proceeds of the sale must be applied to the payment of the lien,** the amount of which is to be determined by three disinterested persons.*^ The constable must hold any surplus for*^ fifteen days in*'' 11 Stats. 1856, p. 229, sees. 3 and 4; Stats. 1857, p. 106, sees. 3 and 4; Stats. 1867-68, p. 235, sees. 3 and 4. 12 Stats. 1856, p. 229, see. 5; Stats. 1857, p. 106, see. 5; Stats. 1867-68, p. 235, see. 5. 13 Stats. 1856, p. 229, sec. 4; Stats. 1857, p. 106, see. 4; Stats. 1867-68, p. 235, see. 4. 14 Stats. 1856, p. 229, see. 6; Stats. 1857, p. 106, see. 6; Stats. 1867-68, p. 235, sec. 6. 15 Stats. 1856, p. 229, e. 148, see. 7. 16 In Monterey and San Benito counties (until the act was superseded) the time was twenty days (Stats. 1867-68, p. 235, sec. 7). 17 Fifteen Days: Stats. 1857, p. 106, see. 7. Until superseded by section 477, above, in Co- lusa, Glenn, and Solano counties, by section 485, above, in Contra Costa county, and by section 483, above, in Napa county. 756 TRESPASSING ANIMALS. § 488 El Dorado^^s Lake^^' ^o Modoc.^i and Tehama^^ counties^ and for ten days^*"* in other counties^ for the use of the owner of the hogs; and after the expiration of that time must pay it into the school fund of the county.^^ If the constable does not so dispose of the surplus, he is guilty of a misdemeanor punishable by fine.^^ This act applies in Lassen,^'* Plumas,^* and Tu- olumne^*'^ counties; between March 1st and Sep- tember 1st each year, in Lake^^ county; from No- vember 15th each year to August 15th following in Sutter^^ county: in Butte^'' and Calaveras^'^ counties except as provided in section 484 above; in El Dorado"^® county except as provided in sec- 18 Stats. 1862, p. 85, c. 90. 19 Stats. 1857, p. 106, c. 102, sec. 7. 20 Lake county was formed out of the northern part of Napa county by Stats. 1861, p. 560, c. 498, in effect May 20, 1861. 21 Stats. 1873-74, p. 517, c. 355; Stats. 1877-78, p. 311, c. 99. 22 Stats. 1856, p. 229, sees. 7 and 8; Stats. 1857, p. 106, sees. 7 and 8; Stats. 1867-68, p. 235, sees. 7 and 8. 23 stats. 1856, p. 229, sec. 9; Stats. 1857, p. 106, sec. 9; Stats. 1867-68, p. 235, sec. 9. 24 stats. 1863-64, p. 290, c. 278; Stats. 1875-76, p. 797; Stats. 1877-78, p. 640. 25 Stats. 1857, p. 54; Stats. 1863-64, p. 227. 26 Stats. 1857, p. 106, sec. 1. Also note 20, above. 27 Stats. 1857, p. 106, sec. 1; Stats. 1863, p. 57. 28 stats. 1869-70, p. 305, c. 203. § 488 TRESPASSING ANIMALS. 757 tion 477 above ; in Placer^^ eoimty except as pro- vided in section 485 above; in San Bemardino^^ county except as provided in sections 477 and 481 above; in Sierra township, Sierra^^ county; in Liberty township, Siskiyon^^ county; with certain limitations in Sonoma and Vallejo townships, So- noma^^ county ; in the town of Weaverville, Trin- ity^^ county; in Yuba^^ county except as pro- vided in section 481 above; from May 1st to Oc- tober 1st each year in the portions of Modoc county which have been surveyed under authority of the United States, except Adin township ;^^ and between March 1st and September 1st each year in Tehama^^ county, except as provided in section 477 above.^^ 29 stats. 1865-66, p. 567, c. 445. 30 stats. 1861, p. 465, c. 404; Stats. 1869-70, p. 305, c. 203; by Stats. 1873-74, p. 755, c. 520, in effect March 28, 1874, the territory then forming Klamath county was annexed to Humboldt and Siskiyou counties. 31 Stats. 1857, p. 106, c. 102, sec. 1; Stats. 1858, p. 79, c. 96; Stats. 1859, p. 176, c. 171; Stats. 1863, p. 580, c. 389. 32 Stats. 1859, p. 179, c. 171; Stats. 1877-78, p. 184, c. 145. 33 Stats. 1856, p. 229, c. 148, sees. 1 and 9; Stats. 1859, p. 337, c. 312. 34 Stats. 1857, p. 106, c. 102, sec. 1. 35 This act formerly applied also in Alameda, Sac- ramento, San Francisco, Santa Clara, and Stanislaus counties (Stats. 1856, p. 229, sec. 1); in Marin county (Stats. 1856, p. 229, sees. 1, 9; Stats. 1865-66, p. 323)5 in Los Angeles county (Stats. 1857, p. 54) ; in Orange county (the territory now included in this county 'r58 TRESPASSING ANIMALS. 488 having constituted the southeastern, part of Los An- geles county until Stats. 1889, p. 123); in that por- tion of Kern county formed out of Los Angeles county (the territory now included in Kern county having constituted parts of Los Angeles and Tulare counties until Stats. 1865-66, p. 796); in San Joaquin, San Luis Ooispo, San Mateo, Santa Barbara, Santa Cruz, an.l Yolo counties (Stats. 1857, p. 54; Stats. 1863-64, p. 227); in Ventura county (the territory now included in this county having constituted the eastern part of Santa Barbara county until Stats. 1871-72, p. 484); in Merced countv (Stats. 1858, p. 17); in Monterey county (Stats. 1859, p. 176; Stats. 1861, p. 271; Stats. 1867-68, p. 235, sec. 1); in San Benito county (the ter- ritory now included in this county having constituted the eastern part of Monterey county until Stats. 1873- 74, p. 95); in Contra Costa county (Stats. 1861, p. 271; Stats. 1863, p. 774) ; between March 1st and Septem- ber 1st each year in Colusa and Napa counties (Stats. 1857, p. 106, sec. 1) ; and in Glenn county (the terri- tory now included in this county having constitute! the northern part of Colusa county until Stats. 1891, p. 98); from January 1st to August 15th each year in Solano county (Stats. 1859, p. 176; Stats. 1862, p. 214; Stats. 1863-64, p. 448); in that portion of Alpine county formed out of El Dorado county (Stats. 1862, p. 85); the territory now included in Alpine county having constituted portions of El Dorado and three other counties until Stats. 1863-64, p. 178; in Hum- boldt county excepting Klamath and Orleans town- ships and Hoopa Valley Eeservation (Stats. 1858, p. 17; Stats. 1861, p. 465; Stats. 1869-70, p. 305; the ex- cepted territory having constituted a portion of Klamath county until its disorganization by Stats. 1873-74, p. 755); and in that portion of Eiverside county formed out of the southwestern part of San Bernardino county (the territory now. included in Eiv- erside county having constituted parts of San Bernar- dino and San Diego counties until Stats. 1893, p. 158); but as to all these counties this act has been super- seded by the various provisions of sections 477-486, above. As to a portion of Amador county to which it once applied also (Stats. 1862, p. 39; Stats. 3862, p. 330), it has been repealed (Stats. 1867-68, p. 430). § 489 TltESPASSIIS'G ArsIMALS. 759 489. Goat Lien in Tuolumne. stats. 1865-66, p. 457, c. 375, in effect March 26, 1866. A lien in all respects similar to that given upon trespassing hogs is authorized against any goat found trespassing within an inclosure in Tu- olumne. In case of the sale of any goat in satis- faction of the lien^ the constable must hold the surplus proceeds for the use of the owner for fif- teen days, and after the expiration of that time must pay it into the county school fund. 490. Turkey Lien.^ Colusa.— stats. 1871-72, p.685, c. 458, in effect April 27, 1872;2 Stats. 1873-74, p. 760, c. 525, in effect March 28, 1874.3 Tehama.— Stats. 1873-74, p. 853, c. 609, in effect June 1, 1874;4 Stats. 1875-76, p. 643, c. 447, in effect Sep- tember 1, 1876.5 "The owner or occupant of any land^^ in Co- lusa^ county and in that portion of Tehama'' 1 This act as relates to Colusa county (Stats. 1871- 72, p. 685, c. 458) and to Tehama county (Stats. 1873- 74, p. 853, c. 609), originally applied to all kinds of animals as well as turkeys. It was superseded by Stats. 1877-78, p. 176, c. 136, and 1877-78, p. 878, c. 556, as to animals; but it does not seem to be neces- sarily repealed as regards turkeys. ^ 2 Stats. 1871-72, p. 685, c. 458, sec. 28. ' 3 stats. 1873-74, p. 760, c. 525, sec. 5. 4 Stats. 1873-74, p. 853, c. 609, sec. 27. 5 Stats. 1875-76, p. 643, c. 447, sec. 2. 6 Stats. 1871-72, p. 685, c. 458, sec. 27. 7 Stats. 1875-76, p. 643, c. 447, sec. 1. 760 TRESPASSING ANIMALS. § 490 county lying west of the Sacramento river and south of Eed Bank creek, whether inclosed or not, "may take up and safely keep^^ at the expense of the owner any turkey^ found trespassing thereon ; and has a lien payable in gold coin of the United States^ upon every such turkey for its propor- tionate amount of the "fees, charges allowances, and damages^^ accruing by reason of the tres- pass. ^^ The cost of keeping each turkey is deemed to be five cents per day.^» ^^ In Colusa county the lienor must forthwith notify the owners of the distrained turkeys of the detention, so far as such owners are known or can be ascer- tained; and if the owner cannot be ascertained, must post for at least ten days a complete description of the turkeys stating the kind, color, and the place of taking *up, (1) on the public highway nearest the place of taking up, (2) in two of the most public places in the township, and (3) on the bulletin board near the courthouse door of the county.*^ In Tehama county the lienor must post a description 8 stats. 1871-72, p. 685, c. 458, sec. 24; Stats. 1873- 74, p. 853, c. 609, sec. 22. 9 Stats. 1871-72, p. 685, c. 458, sec, 23; Stats. 1873- 74, p. 853, c. 609, sec. 21. 10 Stats. 1871-72, p. 685, c. 458, sec. 15; Stats. 1873- 74, p. 853, c. 609, sec. 13. 11 Stats. 1873-74, p. 760, c. 525, sec. 1; Stats. 1873- 74, p. 853, c. 609, sec. 1. IS Stats. 1873-74, p. 760, c. 525, sec. 2. § 490 TRESPASSING ANIMALS. , 761 of the turkeys upon the public highway nearest the place of trespass^ and file a copy thereof with the justice of the peace, who must file the copy with the recorder.^^ At any time before the turkeys are sold in satisfaction of the lien, the owner of any of them, upon proving his property and discharging the lien, may receive back his property.^^ He may also release the property by furnishing an adequate bond.^^' ^^ When in Co- lusa county the lienor and owner cannot agree upon the amount of the lien, it is to be fixed by three arbitrators mutually chosen subject to an appeal to a competent court.*^ If in Colusa county, after the expiration of ten days after the distraint, any turkeys remained unredeemed, the lienor must commence an action in rem to fore- close his lien.*^ In Tehama county the lienor must within Rye days after the distraint, com- mence an action to foreclose his lien, the form and mode of proceeding being prescribed.*^ In case a foreclosure judgment is rendered the tur- keys must be sold after not less than five nor more than ten successive days^ notice.^' ^'^ Any 13 stats. 1873-74, p. 853, c. 609, sec. 2. 14 Stats. 1871-72, p. 685, c. 458, sec. 16; Stats. 1873- 74, p. 853, c. 609, sec. 14. 15 Stats. 1873-74, p. 760, c. 525, sec. 3. 16 Stats. 1873-74, p. 853, c. 609, sees. 2, 3, 5-7. 17 Stats. 1871-72, p. 685, c. 458, sec. 11; Stats. 1873- 74, p. 853, c. 609, sec. 9. 762 TRESPASSING ANIMALS. § 490 surplus remaining after the satisfaction of the judgment with costs must be paid by the court to the owner on demand at any time within six months after the sale; at the expiration of such time it must be paid into the school fund of the county.^® 18 Stats. 1871-72, p. 685, c. 458, sec. 14; Htats. 1873- 74, p. 853, c. 609, sec. 12. 491. Distraint of Estrays.^ Stats. 1901, p. 603, c. 197, in effect March 23, 1901. Any person may^take up and safely keep^» ^ any estray domestic animal found upon any premises to which he has the right of possession, or upon any highway adjacent thereto; and has a lieyi 1 Stats. 1851, p. 299, c. 33, concerning estrays in certain counties was repealed by Stats. 1856, p. 186, c. 128, sec. 17; Stats. 1856, p. 186, c. 128, as amended by Stats. 1859, p! 147, c. 146, and Stats. 1863-64, p. 386, c. 343, relating to estrays in certain counties. Stats. 1863, p. 590, c. 396, relating to estrays in Napa county, Stats. 1863, p. 697, c. 425, as amended 1863-64, p. 29, c. 30, relating to estrays in certain other coun- ties, and Stats. 1865-66, p. 279, c. 255, relating to estrays in Sutter county, were repealed by Stats. 1897, p. 198, c. 137, sec. 10;" Stats. 1897, p. 137, relating to estrays in the whole state was repealed by Stats. 1901, p. 603, c. 197, sec. 10. In Trumpler v. Bemerly, 39 Cal. 490, it was held that the act of 1863, p. 697, c. 425, must be strictly construed, and that if the constable was notified by the lienor before the expiration of the statutory time, and made a sale under such notification, the sale was void. 2 Stats. 1901, p. 603, c. 197, sec. 3. 3 Stats. 1901, p. 603, c. 197, sec. 2. § 491 TRESPASSING ANIMALS. 763 against every such animal for the cost of filing the following prescribed notice and the cost of keeping.^'^ The cost of keeping is deemed a^ follows: For each horse, mule, jenny, ass, cow, bull, ox, steer, or calf, fifteen cents per day; and for each sheep, goat, hog, or other animal not hereinbefore specified, ^Ye cents per day.^ With- in five days after the distraint the distrainor must file with the county recorder a notice describing the animals, with the marks and brands, if any, and stating the probable value of each animal, and the places of distraint and detention.^ The fee for filing such notice is fifty cents.^ At any time within thirty days after filing such notice, any claimant of an animal may, upon satisfying the lien thereon, recover back such animal.^ In case of a disagreement as to the amount of the lien, the claimant must, within ten days, com- mence an action to determine it.^ At the ex- piration of thirty days after the filing without a redemption, the lienor must notify a constable.^ The constable must sell as on execution,® and must apply the proceeds of the sale to the pay- ment of the constable^s fees and then to the satis- faction of the lien, and must pay any surplus to 4 stats. 1901, p. 603, c. 197, sec. 1. 5 Stats. 1901, p. 603, c. 197, sec. 4. « Stats. 1901, p. 603, c. 197, sec. 5. 764 TRESPASSING ANIMALS. § 491 the county treasurer.'' The treasurer must hold such amount for the use of the owner subject to the order of the board of supervisors during one year, and upon the expiration thereof must pay it into the county school fund.'' T Stats. 1901, p. 603, c. 197, sec. 6. • TITLE 2. LIENS INDEPENDENT OF POSSESSION: 1. AGAINST MOVABLE PEOPERTY. CHAPTER 1. LOGGEE'S LIEN.i 492. Who lien-claimant. 493. Lien claim must be filed. 494. Maximum amount of liens. 495. Logger ^s lien a cumulative security.. 496. Mode of enforcement. 497. Time of commencing action. 498. Foreclosure actions against the same property may be united. 499. Costs and counsel fees are necessary incidents of foreclosure judgment. 492. Who Lien-Claimant.^ Every person who labors at cutting, hauling, 1 This chapter is founded on Stats. 1877-78, p. 747, c. 484, in effect March 30, 1878; with the amend- ments thereto of Stats. 1880, c. 49, in effect April 12, 1880, and Stats. 1887, c. 42, in effect March 8, 1887. 3 See Stats. 1877-78, p. 747, c. 484, sec. 1, in part, as amended by Stats. 1880, p. 38, c. 49, and Stats. 1877-78, p. 747, c. 484, sec. 9. (765) 766 logger's lien. § 492 rafting or driving logs or timber,^ or who per- forms any labor in or about a logging camp nec- essary for the getting out or transportation of logs or timber, has a lien-claim^ thereagainst for the amount due for his personal services, but which continues merely so long as the logs or timber remain within the county in which they were cut. 493. Lien Claim must be Filed. Within^ twenty days after the completion of the labor, every lien-claimant must, as a pre- requisite to securing a lien, file for record in the office of the county recorder of the county where the labor was performed a verified claim setting forth (1) the claimant's name,^ (2) the general character of the labor performed by claimant,'' 3 The phraseology of section 1 of the act, as amended, is *'logs or lumber'^; of sections 6 and 8, **such logs''; of sections 2, 4, and 9, **logs or timber"; and of section 6, *'logs and timber.'' 4 A Lien-claim is the individual privilege of se- curing a lien, and unassignable: See sections 550 and 563, below. 5 First paragraph is based on • Stats. 1877-78, p. 747, c. 484, sec. 2. 6 Claimant's name should be stated: See section 568, note 7, below. 7 Statutory language: ^^A statement of his de- mand, after deducting all just credits and offsets." This expression is resolved into the two provisions § 493 logger's LIEJS-. 767 (3) the amount claimed to be due after deduct- ing all just credits and offsets/ (4) the time within which the labor was done, (5) the name of every person for whom the labor was done, (6) the place where the logs or timber upon which the lien is claimed are believed to be situated, and the marks thereon, (7) the name of the owner or reputed owner thereof,^ and (8) the name of the owner or reputed owner of the land from which the logs or timber were cut and hauled.^ The recorder must record this claim in a book kept by him for that purpose, which record must be indexed as deeds and other conveyances are required by law to be indexed, and for which he may receive the same fees as are allowed by law for recording deeds and other instruments,^^ 494. Maximum Amount of Liens. The aggregate amount recoverable upon all liens enforced against logs or timber by lien stated in the text in the cases* cited in section 568, note 8, below. 8 Statutory language: *'The reputed owner there- of.'' » Statutory language; ^'The reputed owner of the land from which the same were cut and hauled.'' 10 Second paragraph: See Stats. 1877-78, c. 484, sec. 7; Code Civ. Proc, sec. 1189. 768 logger's lien. § 494 claimants furnishing personal services to a person in contractual relations with the owner of the logs or timber cannot exceed the amount unpaid such contractor by the owner at the time when the lien-claims were filed for record.^^ 495. Logger's Lien a Cumulative Security. A logger's lien is an additional and cumulative security which may be availed of by those author- ized to obtain it without impairing or affecting any right of action otherwise available; nor is it waived by recourse to other remedies.^^ 496. Mode of Enforcement. A logger's lien may be enforced by a fore: closure action.^^ 11 See section 591 and notes below. Averment.— A foreclosure complaint filed by a laborer employed by a person contracting with the owner of logs which does not aver that the lien in controversy Yv^as filed before the payment by the owner of his contractor in full does not state a cause of action: Wilson V. Barnard, 67 Cal. 422, 7 Pac. 845. See Shuf- fleton V. Hill, 62 Cal. 483. 12 Stats. 1877-78, c. 484, sec. 7; Code Civ. Proc, sec. 1195; section 600, and notes below. 13 The statute, S*ats. 1877-78, c. 484, sees. 4, 5, and 6, provides that the lienor may cause the logs or timber upon which his lien is claimed to be at- tached in the foreclosure action, and prescribes a form of affidavit to be used in the event of an attachment, which affirms, instead of the usual statement, that th© demand is not secured by mortgage, pledge, or lien, that it is secured by a logger's lien. The attachment may be discharged by filing an adequate undertaking, § 497 logger's lien. 769 497. Time of Commencing Action. Every action to foreclose any logger's lien must be commenced within twenty-five days after the claim of lien is filed for record>^ 498. Foreclosure Actions Against the Same Property may be United. Any number of lienors against the same logs or timber may join in one action to foreclose their liens thereon; and when separate actions are commenced the conrt may consolidate them into a single action. The various parties in the con- solidated action become actors against one an- other as well as against the owner of the logs or timber.^^ 499. Costs and Counsel Fees are Necessary In- cidents of Foreclosure Judgment. The money paid for filing and recording the lien claim and liabilities actually incurred for counsel fees in the superior and supreme courts the filing of which also releases the property from the lien. The foreclosure proceeding, however, seems to be independent of the attachment proceedings. Compare section 513, note 1, last paragraph, and section 519, note 10, below. 14 See Stats. 1877-78, p. 747, c. 484, sec. 3, i^s amended by Stats. 1880, p. 38, c. 49. 15 Stats. 1877-78, p. 747, c. 484, sec. 7, as amended 1887, p. 53, c. 42; Code Civ. Proc, sec. 1195, section 603, and notes, below Liens — 49 770 logger's lien. § 499 are necessary incidents of a judgment foreclosing a logger's lien, which must in every case be al- lowed by the superior court to each lienor whoso lien is established.^^ 16 stats. 1877-78, p. 747, c. 484, sec. 7, as amended 1887, c. 42; Code Civ. Proc, sec. 1195; section 604, and notes, below. CHAPTER 2. THKESHER^S LIEN> 500. Who lienor. 501. Lien assignable. 502. Time of commencing action. 503. Lienors entitled to pro rata distribution of fund. 500. Who Lienor.2 Every person performing any labor in, with, about, or upon any threshing machine, or the en- gine, horse-power, wagons, or other appurtenance thereof, while engaged in threshing, at the in- stance of anyone lawfully in possession thereof with the right to operate it,^ has a lien there- against to the extent of the value of his services. 1 This chapter is founded on Stats. 1885, p. 109, c. 125, in effect March 18, 1885. 2 See Stats. 1885, p. 109, c. 125, sec. 1. Upon the cessation of work there results by opera- tion of law a perfected and established lien which subsists for a period of ten days without the filing of notice or other affirmative action by the laborer: Duncan v. Hawn, 104 Cal. 10, 37 Pac. 626. 3 The actual ownership of the property is an im- material circumstance: Church v. Garrison, 75 Cal. 199, 16 Pac. 885; Lambert v. Davis, 116 Cal. 292, 48 Pac. 123. (771) L 772 thresher's lien. § 501 501. Lien Assignable. A thresher's lien is assignable.'* 502. Time of Commencing Action. Every action to foreclose any thresher's lien mnst be commenced in a proper court within ten days after the termination of labor by the lienor.^ 503. Lienors Entitled to Pro Rata Distribution of Fund. Should the proceeds of the sale of the property subject to the lien be insufficient to satisfy all established claims, such proceeds must be dis- tributed pro rata* among the lienors whose claims are established.® 4 **The object of the statute giving the lien is to make certain the payment for the labor, and it would detract much from the benefit designed to be conferred to hold that the laborer must necessarily in- cur all the delay and expense that not infrequentl;/ arise from the tedious litigation which follows an ef- fort to enforce a lien of this sort, at the peril of los- ing the lien altogether": Duncan v. Hawn, 104 Cal. 10, 12, 13, 37 Pac. 626. 5 Stats. 1885, p. 109, c. 125, sees. 2 and 4. Upon failure to bring such action within ten days the lien is lost: Blackburn v. Bell, 125 Cal. 171, 57 Pac. 775. 6 Stats. 1885, p. 109, c. 125, sec. 3. CHAPTER 3. lie:^ m FAVOE op owner of peopa- GATING AOTMAL.i 504. Who lien claimant and what lienable. 505. Notice of lien claim must be filed. 506. Lien valid against third parties during one year. 507. Mode of enforcement. 504. Who Lien-Claimant and What Lienable.^ Every owner or person in charge of any stallion, jack, or bnll, nsed for propagating pur- poses has a lien-claim for the agreed price of its service against any mare or cow served by such propagating animal, and against the offspring of such service.; but the right to claim a lien is for- feited by any willfully false representations con- cerning the breeding or pedigree of such stallion, jack, or bull made or published by the owner or person in charge thereof, or by any other person at the request or instigation of such owner or per- son in charge. 1 This chapter is founded on Stats. 1891, p. 90, c. «6, in effect March 11, 1891. 2 See Stats. 1891, p. 90, c. 86, sec. 1, first and last clauses. (773) 774 OWNER'S LIEN. § 505 505. Notice of Lien-Claim must be Filed.^ Within ninety days after snch service, every lien-claimant must, as a prerequisite to securing a lien, file for i;ecord in the office of the county recorder of the county where the mare or cow affected by the lien was served or is kept, a veri- fied claim setting forth ( 1 ) a particular description of such mare or cow, (2) the date and place of service, (3) the name of the owner or reputed owner of such mare or cow, (4) a proper description, by name or otherwise, of the stallion, jack, or bull performing such service, (5) the claimant's name, and (6) the amount claimed to be due. The^ recorder must record the claim in a book kept for that purpose, which record .must be in- dexed as deeds and other conveyances are re- quired by law to be indexed, and for which he may receive the same fees as are allowed by law for recording deeds and other instruments. 506. Lien Valid Against Third Parties During One Year. The notice of lien claim operates as notice to 3 First paragraph is based on Stats. 1891, p. 90^ c. 86, sec. 1, second clause. 4 Second paragraph is based on Stats. 1891, p. 90, c. 86, sec. 5; Code Civ. Proc, sec. 1189. § 506 PROPAGATING ANIMAL. 775 subsequent purchasers and encumbrancers of the mare or cow during one year after such filing.^ 507. Mode of Enforcement. A lien in favor of an owner of a propagating animal may be enforced by a foreclosure action, which may be commenced in any county in which the mare, or cow, or offspring is f ound.^ 5 See Stats. 1891, p. 90, c. 86, sec. 1, in part. 6 See Stats. 1891, 'c. 86, sec. 2, first clause. Sections 2, 3 and 4 of the statute permit an attach- ment to issue in the foreclosure action, similar to that permitted in case of the foreclosure of a logger ^s lien. See section 496, and note, above. CHAPTER 4. LIENS ESTABLISHED AGAUSTST VESSELS BY STATE LAW. AETICLE 1. J^^EDEEAL AND STATE CONTEOL OVEE LIENS AGAINST VESSELS. 508. Admiralty jurisdiction concerns navigation and navigable waters. 509. Federal government possesses admiralty juris- diction. 510. Liens may be created to secure obligations per- taining to admiralty jurisdiction. 511. Maritime liens enforceable solely in federal courts. 512. Nonmaritime liens enforceable in state courts. 508. Admiralty Jurisdiction Concerns Naviga- tion and Navigable Waters.^ The principal subjects of admiralty jurisdiction are 1 Admiralty jurisdiction concerns navigation and navigable waters: The Belfast, 7 Wall. (74 U. S.) 624, 637, 19 Law ed. 266; In re Garnett, 141 U. S. 1, 15, 11 Sup. Ct. Eep. 840, 35 Law ed. 631. Admiralty jurisdiction *^does not extend to ships merely because they are ships, but to commerce and navigation, and to ships only because they are, and (776) I 508 LIENS AGAINST VESSELS. 777 (1) contracts^ claims^ or service, purely mari- time^ and touching rights and duties appertain- ing to commerce and navigation,^ while they are, used in commerce and navigation. A ship while building is not an instrument of commerce, nor is she while out of commission, and being cared for to preserve her for possible future use. A ship injured by use, and only temporarily laid up for re- pairs, or being refitted that she may resume her voy- age, is considered still engaged in commerce' ': Olsen V. Birch, 133 Cal. 479, 483, 85 Am. St. Eep. 215, 65 Pac. 1032. ^^This law [admiralty] is commercial in its char- acter, and applies to all navigable waters, except to a commerce exclusively within a state. Many of our leading rivers are sometimes unnavigable; but this cannot affect their navigability at other times. A commerce carried on between two states is subject to the laws and regulations of Congress, and to the ad- miralty jurisdiction '^ : Nelson v. Leland, 22 How. (63 U. S.) 48, 56, 16 Law ed. 269. The jurisdiction in admiralty depends, not upon the ebb and flow of the tide, but upon the navigable char- acter of the water; if the water is navigable, it is deemed to be public, and if public, it is regarded as within the legitimate scope of the admiralty jurisdic- tion conferred by Congress: The Belfast, 7 Wall. 1^74 U. S.) 624, 639, 19 Law ed. 266. 3 What Contracts Maritime. — ''Maritime contracts have reference to navigation upon the sea, and in some way to vessels actually being used in commerce, or at least in navigation '' : Olsen v. Birch, 133 Cal. 479, 481, 482, 85 Am. St. Eep. 215, 65 Pac. 1032. ''The expression 'maritime character' or 'nature' is held to mean any act which contributes to the naviga- tion of the vessel, presently or prospectively '' (p. 228). "Merely keeping a vessel in safe custody, pro- tecting it from the depredation of thieves or the dan- ger of fire, or preserving her machinery from unneces- 778 LIENS AGAINST VESSELS. " § 508 (2) torts or injuries committed on navigable waters^ of a civil nature, including captures jure belli, and seizures on water for municipal and revenue forfeitures.^ Jurisdiction in the former case depends upon the nature of the contract, in the latter entirely upon locality. 509. Federal Government Possesses Admiralty Jurisdiction. The judicial power of the federal government extends to all matters of admiralty jurisdiction/* whether the cause of action arises on tide waters or on nontidal^ navigable^ waterways, natural or sary decay and deterioration, does not, of itself, con- stitute a maritime service'' (p. 229): The Sirius, 65 Fed. (D. C.) 226. 3 Tort must be Committed on Navigable Waters.— So a cause of action for an injury done by a steam tug to a building upon land is not a maritime tort: The Glide, 167 U. S. 606, 621, 17 Sup. Ct. Eep. 970, 42 Law ed. 296. The jurisdiction of courts of admiralty, in matters of contract, depends upon the nature and cha.racter of the contract, but in torts entirely upon locality: Phil- adelphia etc. E. E. Co. V. Philadelphia etc. Towboat Co., 23 How. (64 TJ. S.) 209, 215, 16 Law ed. 433. Locality is the test in cases of tort by which to de- termine the question whether the wrongful act is one of admiralty cognizance: Commercial Trans. Co. v. Fitzhugh, 1 Black (66 U. S.), 574, 579, 17 Law ed. 107. 4 Const. IT. S., art. 3, sec. 2 : 1. ^ ' The judicial power shall extend .... to all cases of admiralty and mari- time jurisdiction. ' ' 5 Whether Tidal or Nontidal.— The admiralty juris- diction is not limited to tide waters, but extends to § 509 LIENS AGAINST VESSELS. 779 all public navigable lakes and rivers: In re Garnett, 141 U. S. 1, 15, 11 Sup. Ct. Eep. 840, 35 Law ed. 631. The reason of the English rule that the limit of the admiralty jurisdiction is the ebb and flow of the tide was ^^that the limit of the tide in all the waters of England was at the same time the limit of practical navigation, and that as there could be no use for an admiralty jurisdiction where there could be no naviga- tion, this test of the navigability of those waters be- came substituted as the rule, instead of the navigabil- ity itself. Such a rule .... could have no perti- jiency to the rivers and lakes of this country, for here no such test existed. Many of our rivers could be navigated as successfully and as profitably for a thou- sand miles above tide water as they could below; hence the absurdity of adopting as the test of ad- miralty jurisdiction in this country an artificial rule, which was founded on a reason in England that did not exist here. The true rule in both countries was the navigable capacity of the stream; and as this was ascertained in England by a test which was wholly inapplicable here, we could not be governed bv if: The Ad. Hine v. Trevor, 4 Wall. (71 U. S.) 555, 565, 18 Law ed. 451; The Propeller Genesee Chief v. Fitz- hugh, 12 How. (53 U. S.) 443, 451-460, 13 Law ed. 1058; Fretz v. Bull, 12 How. 466, 468, 13 Law ed. 1068; Jackson v. The Magnolia, 20 How. (61 U. S.) 296, 301, 302, 15 Law ed. 909; The Belfast, 7 Wall. (74 U. S.) 624, 639, 640, 19 Law ed. 266; Commercial Trans. Co. V. Fitzhugh, 1 Black. (66 XL S.), 574, 580, 17 Law ed. 107. 6 Test of Navigability.— ''The true test of the navigability of a stream does not depend upon the mode by which commerce is, or may be, conducted, nor the difficulties attending navigation It would be a narrow view to hold that in this country, unless a river was capable of being navigated by steam or sail vessels, it could not be treated as a public high- way. The capability of use by the public for pur- poses of transportation and commerce affords the true criterion of the navigability of a river, rather than the extent and manner of that use 780 LIENS AGAINST VESSELS. § 509 artificial/ and whether the voyage or contract, if maritime in character, is to be performed wholly within a state or concerns interstate or foreign commerce. 510. Liens may be Created to Secure Obliga- tions Pertaining to Admiralty Jurisdic- tion. The performance of obligations pertaining to the admiralty jurisdiction is often secured by liens against vessels, these being the instruments of commerce and navigation. Certain maritime ''The vital and essential point is whether the nat- ural navigation of the river is such that it affords a channel for useful commerce. If this be so the river is navigable in fact, although its navigation may- be encompassed with difficulties by reason of natural barriers, such as rapids and sandbars' ': The Montello, 20 Wall. (87 TJ. S.) 430, 441, 443, 22 Law ed. 391. 7 Whether a Natural or Artificial Waterway.— A canal used as a highway for commerce between ports and places in different states, by canal boats, ''is pub- lic water of the United States, and within the legiti- mate scope of the admiralty jurisdiction conferred by the constitution and statutes of the United States, even though the canal is wholly artificial, and is wholly within the body of a state, and subject to its owner- ship and control; and it makes no difference as to the jurisdiction of the district court that one or the other of the vessels was at the time of the collision on a voyage from one place in the state of Illinois to an- other place in that state. "This case does not raise the question whether the admiralty jurisdiction of the district court extends to waters wholly within the body of a state, and from which vessels cannot so pass as to carry on commerce between places in such state and places in another § 510 LIENS AGAINST VESSELS. 781 liens are recognized by the general maritime law as adopted by the United States courts;^ and in the absence of positive enactment by Congress, maritime liens may be established by the statutes of the several states against vessels within their several territorial jurisdictions as security for the performance of obligations arising from matters occurring within such limits.^ state or in a foreign country; and no opinion is in- tended to be intimated as to jurisdiction in such a case'^ Ex parte Boyer, 109 TJ. . S. 629, 632, 3 Sup. Ct. Eep. 434, 27 Law ed. 1056; In re Garnett, 141 U. S. 1, 17, 11 Sup. Ct. Eep. 840, 35 Law ed. 631. 8 A Particularly full discussion of maritime liens, their origin, history and present status in the United States is found in The Underwriter, 119 Fed. (D. 0.) 713, the present United States admiralty law being stated at pages 750 through 759. 9 In Absence of Legislation by Congres?, Liens may be Created by State Law. ^ ' So long as Congress does not interpose to regulate the subject, the rights of materialmen furnishing necessaries to a vessel in her home port may be regulated in each state by state legislation. .... The district court of the United States, having jurisdiction of the contract as a mari- time one, may enforce liens given for its security, even where created bv state laws'': The Lottawanna, 21 Wall. (88 U. S.) 558, 580 (also pp. 579-582), 22 Law ed. 654; The J. E. Eumbell, 148 U. S. 1, 13, 13 Sup. Ct. Eep. 498, 37 Law ed. 345; The Glide, 167 U. S. 606, 620, 17 Sup. Ct. Eep. 930, 42 Law ed. 296; Pey- • roux V. Howard (The Planter), 7 Pet. (32 U. S.) 324, 341, 8 Law ed. 700; The St. Lawrence, 1 Black (66 U. S.), 52^, 529, 530, 17 Law ed. 180. The states may ^'create such liens as their legisla- tures may deem just and expedient, not amounting to a regulation of commerce'': The Belfast, 7 Wall. (74 U. S.), 624, 645, 646, 19 Law ed. 266. 782 LIENS AGAINST VESSELS. § 511 511. Maritime Liens Enforceable Solely in Fed- eral Courts.^*^ Whenever a controversy concerns rights and duties pertaining to the admiralty jurisdiction, original jurisdiction in any action which may be But a lien arising under a contract of carriage where the bill of lading was signed at San Francisco and the goods shipped from there to be delivered at San Diego after carriage on the high seas, is subject to the pro- visions of the general maritime law and not of sec. 813 of the Cal Code of Civil Procedure; Pacific Coast Steamship Co. v. Bancroft-Whitney Co., 94 Fed. 180, 188, 36 C. C. A. 135, 9th Cir. lO Revised Statutes of the United States, sec- tion 563: ^^The district courts shall have jurisdiction .... Eighth. Of all civil causes of admiralty and maritime jurisdiction, saving to suitors in all cases the right to a common-law remedy, where the com- mon law is competent to give it And such ju- risdiction shall be exclusive. '' Act of September 24, 1789, c. 20, sec. 8. Kevised Statutes of the United States, section 711: '^The jurisdiction vested in the courts of the United States in the cases hereinafter mentioned shall be ex- clusive of the courts of the several states Third. Of all civil causes of admiralty and maritime ju- risdiction, saving to suitors in all cases the right of a common-law remedy, where the common law is com- petent to give it.'' ^'The judicial power of the United States is in some cases unavoidably exclusive of all state authority, and .... in all others it may be made so at the election of Congress'': The Moses Taylor, 4 WaU. (71 U. S.) 411, 429, 18 Law ed. 397; The Ad. Hine v. Trevor, 4 WaD. (71 U. S.) 555, 568, 569, 18 Law ed. 451; The Belfast, 7 Wall. (74 U. S.), 624, 644, 19 Law ed. 266; The Lottawanna, 21 Wall. (88 U. S.) 558, 580, 22 Law ed. 654; The J. E. Kumbell, 148 U. S. 1, 13 Sup. Ct. Eep. 498, 37 Law ed. 345. § 511 LIENS AGAINST VESSELS. 783 brought thereabouts is vested in the United States district courts; and the United States courts have authority exclusive of the courts of the several states to enforce any liens whereby the performance of such obligations are secured, whether the liens are recognized by the general maritime law or established by act of Congress, or, in the absence of congressional regulation, by the statutes of the several states.^^ In such con- troversies the courts of the several states merely have authority to administer remedies which operate in personam.^^ 11 Jurisdiction of Federal Courts to Enforce Mari- time Lien Established by State Law is Exclusive. Thus in an action to foreclose a lien for materials for the equipment and repair, and supplies for the use of a bark, the cause of action is the breach of the maritime contract, and hence exclusively of federal cognizance. The fact that the action is upon a stat- utory lien unknown to admiralty does not make it less a civil cause of admiralty and maritime jurisdic- tion. It is the fact that it is a maritime contract which gives the court jurisdiction, and not the fact that a maritime lien is to be enforced. Hence an ac- tion to foreclose such lien cannot be maintained in the state court: Crawford v. Bark Caroline Reed, 42 Cal. 469, 474. Historical,— The early cases of Averill v. Steamer Hartford, 2 Cal. 308, and Taylor v. Steamer Columbia, 5 Cal. 268, holding the contrary, were overruled in The Moses Taylor, 71 U. S. (4 WaU.) 411, 427, 18 Law ed. 397. 12 Authority of State Courts.— * ^ That clause [in Rev. Stats., sees. 563 and 711, quoted note 10, above] only saves to suitors ^the right of a common-law rem- edy, where the common law is competent to give it.' 784 LIENS AGAINST VESSELS. § 511 It is not a remedy in the common-law courts, which is saved; but a common-law remedy. A proceeding in rem, as used in the admiralty courts, is not a rem- edy afforded by the common law; it is a proceeding under the civil law'^: The Moses Taylor, 4 Wall. (71 U. S.)411, 431, 18 Law ed. 397; The Glide, 167 U. S. 606, 617, 17 Sup. Ct. Eep. 930, 42 Law ed. 296; Craw- iord V. Bark Caroline Eeed, 42 Cal. 469, 473. The state courts have jurisdiction of actions for common-law remedies for sums due from the owners of vessels for supplies furnished them: Crawford v. Roberts, 50 Cal. 235, 241. Where an action was commenced in the state court to foreclose a lien for materials for the equipment and repair, and supplies for the use of a bark, the court held that the cause of action is the breach of the maritime contract, and hence exclusively of federal cognizance. The fact that the action is upon a stat- utory lien unknown to admiralty does not make it less a civil cause of admiralty and maritime jurisdic- tion. It is the fact that it is a maritime contract which gives the court jurisdiction, and not the fact that a maritime lien is to be enforced: Crawford v. Bark Caroline Reed, 42 Cal. 469, 474. The early cases of Averill v. Steamer Hartford, 2 Cal. 308, and Taylor v. Steamer Columbia, holding the contrary, were overruled in The Moses Taylor, 4 Wall. (71 U. S.) 411, 427, 18 Law ed. 397. Proceedings in Rem Defined.— ^^In a strict sense, a proceeding in rem is one taken directly against the property, and has for its object the disposition of the property, without reference to the title of individual claimants; but, in a larger and more general sense, the terms are applied to actions between parties, where the direct object of the action is to reach and dispose of property owned by them or of some interest there- in. Such are cases commenced by attachment against, the property of debtors, or instituted to partition real estate, foreclose a mortgage, or enforce a lien. So far as they affect property in the state, they are sub- stantially proceedings in rem in the broader sense § 511 LIENS AGAINST VESSELS. 785 which we have mentioned'': Pennoyer v. Neff, 95 IT. S. 714, 734, 24 Law ed. 565. A proceeding by attachment is a common-law pro- ceeding or a proceeding in rem according as the court has or has not jurisdiction of the owner of the at- tached property. * ^ If the defendant appears, the cause becomes mainly a suit in personam, with the added incident that the attached property remains liable, un- der the control of the court, to answer any demand which may be established against the defendant by the judgment of the court. But if there is no ap- pearance of the defendant, and no service of process on him, the case becomes in its essential nature a pro- ceeding in rem, the only effect of which is to subject the property attached to the payment of the demand which the court may find to be due to the plaintiff: Cooper V. Reynolds, 10 "Wall. (67 U. S.) 308, 318, 18 Law ed. 931; Pennoyer v. NefP, 95 U. S. 714, 725, 24 Law ed. 565; Freeman v. Alderson, 119 U. S. 185, 189, 7 Sup. Ct. Rep. 165, 30 Law ed. 372. Where jurisdiction of the person of the defendant has been obtained, attachment is a common-law rem- edy. ^^ Liens under state statutes, enforceable by at- tachment, in suits in personam, are of every-day oc- currence, and may even extend to liens on vessels, when the proceedings to enforce them do not amount to admiralty proceedings in rem, or otherwise con- flict with the constitution of the United States. There is no more valid objection to the attachment suit to enforce the lien in a suit in personam, by holding the vessel by mesne process to be subjected to execution on the p'ersonal judgment when recovered, than there is on subjecting her to seizure on the execution. Both are incidents of a common-law remedy, which a court of common law is competent to give'': Johnson v. Chicago etc. Elevator Co., 119 U. S. 388, 399, 400, 7 Sup. Ct. Rep. 254, 30 Law ed. 447; The Glide, 167 U. S. 606, 621, 17 Sup. Ct. Rep. 930, 42 Law ed. 296. Attachment may be a proceeding in rem, but exe- cution never. Where a nonresident has property with- in a state, it is argued that ^^it is immaterial whether the property is in the first instance brought under the Liens— 50 786 LIEXS AGAINST VESSELS. § 512 512. Nonmaritime Liens Enforceable in State Courts. Whenever a state has imposed liens against a vessel to secure obligations of a nonmaritime character^ in the creation of which the vessel is in some way involved^ the courts of the state have authority to enforce such liens according to their own rules of procedure.^^ control of the court by attachment or some other equivalent act, and afterward applied by its judg- ment to the satisfaction of demands against its own- er, or such demands be first established in a personal action, and the property of the nonresident be after- ward seized and sold on execution. But .... the ju- risdiction of the court to inquire into and determine his obligations at all is only incidental to its jurisdic- tion over the property. Its jurisdiction in that re- spect cannot be made to depend upon facts to be as- certained after it has tried the cause and rendered the judgment The validity of every judgment depends upon the jurisdiction of the court before it was rendered, not upon what may occur subse- quently'': Pennoyer v. Neff, 9o U. S. 714, 727, 728, 24 Law ed. 565. 13 '^To give a court of admiralty jurisdiction over contracts, the subject matter must be maritime. It is not enough that the service which sprang from the contractual relation be performed on water, or even that it be done on board, and for the benefit of a vessel which is afloat. These are not exclusive tests. The service arising from the contract must be of a maritime character, and, I might add, not nominally, but substantially so'': The Sirius, 65 Fed, (D. C.) 226, 228. A process in rem to enforce a lien given by a state statute for building a ship or supplying engines and materials in the course of its construction, is within § 512 LIENS AGAINST VESSELS. 787 the jurisdiction of the state courts, solely because such a contract is not a maritime contract: Edwards V. Elliott, 21 Wall. (88 U. S.) 532, 553-556, 22 Law ed. 487; The Glide, 1C7 U. S. 606, 620, 17 Sup. Ct. Eep. 930, 42 Law ed. 296. Where the contract is not maritime, the district court has no jurisdiction: People's Ferry Co. v. Beers, 20 How. (61 U. S.) 393, 402, 15 Law ed. 961; Koach v. Ohapman (The Capitol), 22 How. (63 U. S.) 129, 16 Law ed. 294. 788 LIENS AGAINST VESSELS. § 513 ARTICLE 2. MAEITIME LIENS ESTABLISHED BY STATE LAW. 513. Maritime liens established by state law. 514. "Have same priority as maritime liens recog- nized by general law. 515. Eelative priorities. 516. Enforcement. 513. Maritime Liens Established by State Law.^ Every obligation of a maritime character of a 1 Maritime Liens Established "by State Law in General.— Code of Civil Procedure, section 813: ''All steamers, vessels, and boats are liable: (1) For services rendered on board at the request of, or on contract with, their respective owners, masters, agents, or consignees; (2) For supplies furnished j- 73-4n j- in this state ■{ n73-4-{ for their use, at the request of their re- spective owners, masters, agents, or consignees; (3) For work done or materials furnished \- 73-4n j- in this state ■{ n73-4^ for their construction, re- pair, or equipment; (4) For their wharfage and anchorage within this state; (5) [■ 73-4n \- For nonperformance, or malperf orm- ance, of any contract for the transportation of persons or property between places within the state, made by their respective owners, masters, agents, or consignees ■{ n73-4^ ; (6) For injuries committed by them to persons or property [►73-4n|in this state -[ n73-4^ . § 513 MARITIME LIENS. 789 ■{ 73-4f }■ Demands for these several causes ■{ f73-4^ constitute liens upon all steamers, vessels and boats, and have priority in the order herein enumerated, and have preference over all other de- mands; but such liens only continue in force for the period of one year from the time the cause of action accrued.'' Enacted 1872; amended, in effect July 1, 1874. Interpretation of Statute.— In The Columbus, 6 Fed. Cas. (D. C.) 184, 184B, No. 3044, the court states the rule of interpretation of this statute: **The state laws may prescribe the mode in which the lien they create may be acquired or perfected. They may also limit their continuance to a specified period. But, except where the state law otherwise in terms pro- vides, the lien is to be regarded as maritime, and to be subject, as to its origin and incidents, to the same rules by which liens on foreign vessels are gov- erned.'' Interpreting this section accordingly, the court in a number of cases treats the lien which is authorized by the code as arising from a fictitious implied con- tract between the parties, and thus, instead of deal- ing with it as a lien which the law has in every case established for the benefit of a certain class of per- sons, considers it as the result of a supposed con- tractual relation the existence of which may be re- butted by certain circumstances. (See especially notes 8 and 9, below.) This scheme of interpretation may be analogous to that by which maritime liens con- ferred by the general law are interpreted, but it cer- tainly does not accord with the intentions of the California legislature. Historical.— 'PisiQtiee Act, sec. 317 (Cal. Stats. 1851, c. 5, sec. 317, in effect July 1, 1851), and the amendment thereto. Stats. 1860, c. 314, sec. 25, in effect April 28, 1860, contained a similar specification of demands for which a vessel was liable, omitting the words ' * in this state" where they were inserted by the amendment of 1874, and also the phrase in the fifth subdivision *^ between places in this state." See, also, a cor- responding provision in Stats. 1850, c. 75, sec. 1, in effect April 10, 1850. 790 LIENS AGAINST VESSELS. § 513 value of not less than fifty dollars^ arising (1) for^ services rendered on board^ any vessel (except the services of the master compensated by his wages), ^ or for supplies (reasonable in quantity and kind)^ furnished in this state for the use of such vessel, when rendered Under the statute of 1850 and also under the stat- ute of 1851, before the amendment of 1860, these de- mands were not declared uy the statute to * ' constitute liens. '^ Construing the whole chapter on actions against vessels, the court, in Averill v. Steamboat Hartford, 2 Cal. 308, and Meiggs v. Scannell, 7 Cal. 405, held that it was not the intention of the legisla- ture that a lien should only be obtained by resort to the attachment proceedings provided for in the chap- ter, as that would virtually deny a remedy to cred- itors for small sums, as they would not be able to put up the attachment bond. But service of process in the manner provided for by the statute is equivalent to seizure and gives a lien against subsequent purchasers. This lien, however, attached not from the time of the accrual of the cause of action, but from that of ser- vice of process upon a person standing in the pre- scribed relation to the vessel: Fisher v. White, 8 Cal: 418. 2 Amounting to at Least Fifty Dollars.— Civil Code, section 3060, provides: ^' Debts amounting to at least fifty dollars, contracted for the benefit of ships, are liens in the cases provided for by the Code of Civil Procedure. '' As enacted 1872. In Perry v. Washburn, 20 Cal. 318, 350, it is said: *'A debt is a sum of money due by contract, express or implied ''; in Dunsmore v. Furstenfeldt, 88 Cal. 522. 529, 22 Am. St. Kep. 331, 26 Pac. 518: *^Any kind of obligation of one man to pay money to another is a debt.'' § 513 MARITIME LIENS. 791 3 This subdivision of the section of the text is founded on subdivisions 1 and 2 of Code of Civil Procedure, section 813 (see note 1, above). 4 The phrase ^^ services rendered on board ^^ '^ would not include the services of musicians hired for the master ^s amusement, or those of a nurse or physician to attend his child, who might happen to be on board '^ The Columbus, 6 Fed. Cas. (D. C.) 184, 186A, No. 3044. 5 Except Services of Master.— Civil Code, section 3055, provides: ^^The master of a ship has a general lien, independent of possession, upon the ship and freightage, for advances necessarily made -or liabili- ties necessarily incurred by him for the benefit of the ship, but has no lien for his wages. ^ ^ '^Section 813 contains the expression of the general rule upon the subject of liens for services on ship- board. Section 3055 contains the law upon the sub- ject of the master's lien for advances and wages, and, so far as his lien for wages is concerned, it con- tains the only exception to the general rule contained in section 813 '': The Louis Olsen, 57 Fed. 845, 6 C. C. A. 608, 9th Cir., overruling the opinion of the dis- trict court in the same case (52 Fed. 652). Historical. — Before the enactment of the codes and of Civil Code, sec. 3055, when Practice Act, sec. 317, expressed the law upon this subject, the master had. a lien for his wages: Whitney v. The Mary Gratwick, 29 Fed. Cas. (D. C.) 1093, No. 17,591, affirmed in the circuit court without a written opinion. « Supplies must be Reasonable in Quantity and Kind. — '^It will not, I think, be disputed that the supplies must be reasonable in quantity and kind, and apparently, at least, necessary and proper for the ser^ vice in which the vessel is engaged '\- The Columbus, 6 Fed. Cas. (D. C.) 184, 186A, No. 3044. Illustrations. — The character of the following sup- plies and labor indicate that they were necessary for the vessel: Utensils for use in the galley; materials and labor for calking and painting the vessel; repair of sails; board of crew (furnished to them on land 792 LIENS AGAIXST VESSELS. § 513 or furnished at the request of the owner,'' or of the master, agent, or consignee, unless the master, agent, or consignee is forbidden to procure services or supplies on the credit of the vessel, and the person render- ing the services or furnishing the supplies has notice of such limitation of authority,^ or un- while the vessel was at a wharf) ; meat supplied on board the vessel for the crew: The Templar, 59 Fed. (D. C.) 203, 205, 208. 7 Maritime liens created by state law being of the same maritime character as those established by the general law, and subject to the same limitations and enforced by the same rules of procedure, the same presumptions arise as to the master's authority to con- tract for necessary supplies and repairs, and the same rule would obtain as to the authority of part owners who by the general law may bind the whole Vessel for necessary supplies or repairs furnished, except in case of the express dissent of other part owners: The Templar, 59 Fed. (D. C.) 205, 207. 8 When Master Forbidden to Procure Services on Credit of Vessel and Notice of Such Limitation is Had, Lien cannot Arise. Where a materialman furnished supplies to a ves- sel in her home port at the request of the master with notice that the vessel had been let to the master to be run on shares, and to be manned and victualed by him, and that any supplies furnished must be fur- nished exclusively on the personal credit of the mas- ter, no lien is conferred on the materialman. ^^The lien conferred by the statute [subdivisions 1 and 2] .... is tc^ be tested by the same principles as those which apply to liens for supplies furnished to a foreign vessel, and .... was not intended to confer upon a 'master, agent, or consignee^ an irrevocable power to hypothecate the vessel for supplies in tho port where the owner resides, contrary to his instruc- § 513 MARITIME LIENS. 793 less the vessel is operated by a charterer and the person rendering the services or furnishing the supplies has notice thereof;^ tions, and in spite of his protest, and .... the mate- rialman who, with full notice of the circumstances, furnishes supplies to the master, must look to him personally, and not to the owner of the vessel for re- payment. '^It is suggested that the establishment of a fixed certain and inflexible rule, as to the rights of mate; rialmen, would promote the interest of commerce. But those interests have not been found to require the adoption of such rule in the case of supplies fur- nished in foreign ports. In those cases good faith and reasonable diligence are exacted of the materialman, while the master is strictly confined within the limits of his actual or apparent authority'': The Columbus, 6 Fed. Cas. (D. C.) 184, 186A, No. 3044. 9 When Vessel Operated by Charterer, and this Fact Known, Lien cannot Arise. One who intrusts another with the full possession, control, and management of a vessel is deemed to con- sent that liens for necessary supplies, materials, or re- pairs may be created against it. He is charged with notice that they may accrue. This is nothing but fair and equitable to the domestic supply or materialman, who may know nothing of the real relation existing between the general and special owner, and be de- ceived by taking the ostensible owner for the real owner. But, by giving notice to the supply or ma- terialman of the fact that the vessel is in the hands of a charterer, the general owner may protect his prop- erty from maritime liens. Thus if a supply or materialman knows of the character or the relation in which the ostensible owner holds the vessel, or if he is advised of the real status of such relatioQ by the general owner or the charterer, or is placed in possession of such facts as would put or ought to put, a reasonably prudent man on inquiry, the piresamption arises that the supplies, materials, or 794 LIENS AGAINST VESSELS. § 513 (2) for work done or materials furnished in this state for the repair or equipment thereof ;^® repairs were furnished upon the credit of the char- terer himself, and there is no lien. And the onus lies on the supply or materialman to remove this presump- tion: The Alvira, 63 Fed. (D. C.) 144, 155, 156. Illustrations. — Where supplies and materials were furnished to the charterer of a vessel navigating the internal waterways of California on the credit of the vessel (under Code Civ. Proc, sec. 813, subds. 2 and 3), although the vessel had been chartered under an agree- ment that the charterers ''would surrender and de- liver the possession of the vessel .... absolutely free and clear from all liens and encumbrances accruing, etc., between June 14, 1880, and the time of such de- livery,'/ but the lien claimants had no notice of such agreement, the vessel is affected by a lien for the amounts due the persons who furnished the supplies and materials: The S. M. Whipple, 14 Fed. (D. C.) 354. Where the charterer of a vessel ran it, hired the captain, officers and crew, paid the running expenses, and engaged persons to make the necessary repairs and alterations, there is nothing which would tend to put a reasonable man upon inquiry, and the owner of the vessel cannot avoid liens accruing against it: The Alvira, 63 Fed. (D. C.) 144, 157. Likewise where in New York the statute (Laws 1862, p. 956, c. 482) similarly gives a lien for sup- plies, and coal was furnished for the use of a chartered vessel, the United States supreme court said: ''The statute of New York, reasonably construed, does not assume to give a lien where supplies are furnished to a foreign vessel upon the order of the charterer, with knowledge upon the part of the person or corporation furnishing them that the charterer does not represent the owners, but by contract with them has undertaken to furnish such supplies at his own cost": The Kate, 164 U. S. 458, 471, 17 Sup. Ct. Eep. 135, 41 Law Ed. 512. 10 This subdivision is founded on subdivision 3 of the Code of Civil Procedure, section 813. The code § 513 MARITIME LIENS. 795 (3) for wharfage or anchorage in this state, or (4) for damages resulting from the nonperform- ance of any contract for the transportation of persons or property between places in this state, made by the owner, master, agent or con- signee thereof ; constitutes a lien against snch vessel for the period of one year after the accrual of the cause of action^^ upon the secured obligation. provision also concerns '^ work done or materials fur- nished in this state for their construction/' but the construction of a vessel involves matters purely non- maritime and thus does belong in this portion of the text. ^'The preceding subdivisions of the same section [of the code], relating to 'supplies' and 'services/ gives a lien when such are furnished and rendered 'at the request of their respective owners, masters, agents, or . consignees, ' thus specifying the persons at whose in- stance debts for 'supplies' or 'services' may become liens. The subdivision relating to 'liens' for work done or materials furnished in this state makes no such specifications The effect of the subdivision is to make all persons, who possess the authority, com- petent to contract for work or materials, including, of course, charterers. Therefore, whatever question there may be whether, under the peculiar phraseology of the local lien law, a 'charterer' would be competent to contract for 'supplies' or 'services' for which a lien would attach in this state, there would seem to be no doubt that such a person may contract for 'repairs'^ or 'materials,' and that a lien would vest therefor": The Alvira, 63 Fed. (D. C.) 144, 159, 160. 11 After the Accrual of the Cause of Action.— So where the materials for the construction of a vessel were furnished on a six months' credit, the. cause of action does not accrue until the expiration of the 796 LIENS AGAINST VESSELS. § 513 Every vessel with its tackle, apparel, and furni- ture is liable for the pilotage fees accruing by law for the services of pilots in respect thereto.^^ 514. Have Same Priority as Maritime Liens Recognized by General Law. Maritime liens established by state law have the same preference over and relation to non- maritime liens as do maritime liens recognized by the general law.^^ 515. Relative Priorities.^^ Different maritime liens established by state law have priority among themselves in the fol- lowing order: (1) the lien of the mate and seamen for their wages/^ (2) other liens for services rendered on board, credit, and the action to foreclose a lien therefor may then be begun at any time within one year thereaf- ter: Edgerly v. Schooner San Lorenzo, 29 Cal. 418. See section 438, above^ 12 See Political Code, section 2432, which sec- tion was based upon Stats. 1870, p. 349, c. 243, sec. 22. 13 So a maritime lien created by local stat- ute has like preference as other maritime liens over a prior mortgage: The J. E. Eumbell, 148 U. S. 1, 19, 13 Sup. Ct. Rep. 498, 37 Law Ed. 345; The Glide, 167 U. S. 606, 622, 623, 17 Sup. Ct. Eep. 930, 42 Law Ed. 296. 14 See latter part of Code of Civil Procedure, section 813 as quoted, note 1, section 513. 15 Civil Code, section 3056, provides: *^The mate and seamen of a ship have a general lien, independent § 515 MARITIME LIENS. 797 (3) liens for supplies, (4) for work done and materials furnished for the repair or equipment, (5) for wharfage and anchorage, and (6) for damages for nonperformance or malper- f ormance of contracts of carriage. 516. Enforcement. Such liens are enforceable exclusively in the United States district courts according to their own rules of procedure.^^ of possession, upon the ship *and freightage, for their wages, which is 'superior to every other lien." 16 Enforcement of Liens. '^When a right, maritime in its nature, and to be enforced by process in the nature of admiralty pro- cess, has been given by the statute of a state, the ad- miralty courts of tiie United States have jurisdiction, and exclusive jurisdiction, to enforce that right ac- cording to their own rules of procedure": The J. E. Kumbell, 148 U. S. 1, 12, 13, -13 Sup. Ct. Bep. 498, 37 Law ed. 345; The Lottawanna, 21 Wall. (88 U. S.) 558, 579-582, 22 Law ed. 654; The Glide, 167 U. S. 606, 617, 624, 17 Sup. Ct. Eep. 930, 42 Law ed. 296. ^^ While the courts of admiralty are held to have exclusive jurisdiction to enforce these state liens upon vessels, yet, in enfor Every obligation of a nonmaritime character amounting to at least fifty dollars^ for (1) services rendered on board any vessel at the request of the own'er, master^^ agent, or con- signee thereof;^ or 1 See section 513, note 1, above. 2 See section 513, note 2, above. 3 At the Request of the Master.— '^ The master's power is presumed, in the absence of evidence to the contrary, to extend to making contracts for supplies in the home port which shall bind the - owners. What- ever the doctrine of the maritime law, by the anal- ogies of the common law, the duties and relations of the master furnish presumptive evidence of his au- thority to purchase supplies' ': Crawford v. Eoberts, 50 Cal. 235, 241. 4 Illustrations.— Claims for services rendered on a vessel which had never been in commission or in § 517 KONMAPvITIME LIENS. 799 (2) supplies furnished in this state for the use thereof at the request of the owner, master, agent, or consignee thereof; or (3) work done or materials furnished in this state for the construction or repair thereof ;^ or (4) wharfage or anchorage in this state ;^ or (5) injuries committed thereby to persons or property in this state;'' active use in navigation do not arise upon a maritime contract: Olsen v. Birch, 133 Cal. 479, 481, 482, 85 Am. St. Eep. 215, 65 Pac. 1032. A mere shipkeeper, in charge of a vessel in her home port, out of commission, and laid up, not en- gaged in navigation, and having no voyage in con- templation, performs services of a nonmaritime char- acter. Therefore, he has no maritime lien either by the general admiralty law or by the state statute: The Sirius, 65 Fed. (D. C.) 226, 235. 5 **A contract to build a ship, being a contract made on land and to be performed on land, is not a maritime contract, and .... a lien to secure it, given by a local statute, is not a maritime lien, and cannot, therefore, be enforced in admiralty' ': The J. E. Eumbell, 148 U. S. 1, 11, 13 Sup. Ct. Eep. 498, 37 Law ed. 345. <> An action for wharfage, when the fact doe^ not appear in the pleadings that the vessel was engaged in navigating the high seas, does not fall within the admiralty and maritime jurisdiction: Peo- ple V. Steamer America, 34 Cal. 676, 679, a case which was decided exclusively on the pleadings. In order to take the case out of the jurisdiction of the state courts, an averment that the vessel was engaged in commerce and navigation is essential, this being a fact of jurisdictional consequence: People v. Steamer America, 34 Cal. 676, 679. 7 A cause of action for an injury done by a steam tug to a building on land is not a maritime 800 LIEXS AGAINST VESSELS. § 517 constitutes a lien against such steamer, vessel, or boat for the period of one year after the accrual of the cause of action upon the secured obliga- tion. 518. Priorities. Such nonmaritime liens have priority among themselves in the order above enumerated, and have preference over all other demands against the vessel.® 519. Parties Defendant in Poreclosure Action.^ An action to foreclose such a nonmaritime lien^^ must be brought against the owner of the vessel by name, if known; but if not known, tort: The Glide, 167 U. S. 606, 621, 17 Sup. Ct. Eep. 930, 42 Law ed. 296. 8 See Code of Civil Procedure, section 813, last sentence, quoted under section- 513, note 1. 9 See Code of Civil Procedure, section 814, as amended in eifect July 1, 1874. Practice Act, sec. 318, and the code as enacted 1872, in effect July 1, 1851, to July 1, 1874, provided: *' Ac- tions for damages, arising upon any of the grounds specified in the preceding section, may be brought di- rectly against such steamers, vessels, or boats." Com- pare Stats. 1850, c. 75, sees. 2 and 3. 10 Foreclosure Action may be Maintained.—**! do not think that it was the intention of the legislature to provide that a lien should only be acquired by at- tachment; this would virtually be denying a right to creditors for small sums. It would be almost impos- sible for a mechanic or merchant of small capital or credit, who had a claim of a few hundred dollars against one of our large river steamers, or some sea- § 519 NON MARITIME LIENS. 801 that fact must be stated in the complaint^ and the defendants be designated as unknown owners. Any person holding a lien against the vessel may be made a defendant in such action, the nature and amount of his lien being stated in the com- plaint. 520. Complaint must be Verified. The complaint must designate the steamer, vessel, or boat by name, and must be verified by the oath of the plaintiff, or someone on his be- half.ii 521. Service of Complaint and Summons. The summons and copy of the complaint must be served on the owners if they can be found; otherwise, they may be served on the master, mate, or person having charge of the vessel.^^ going vessel, to give the necessary bonds to detain her until his suit could be determined, and, in the mean- time, she might be run off and sold free of all such debts or encumbrances ^^ Meiggs v. Scannell, 7 Cal. 405. 11 Code of Civil Procedure, section 815, as enacted 1872. Practice Act, sec. 319, is the same. Compare Stats. 1850, c. 75, sec. 4. 12 Code of Civil Procedure, section 816, as amended, in effect March 10, 1880. Practice i^ct, sec. 320, and Code of Civil Procedure section 816, as enacted 1872 (with amendment, in ef- fect July 1, 1874), provided: ^^ The summons, attached to a certified copy of the complaint }■ 73-4n \- must be served on the owners, if they can be found; otherwise it ■{ n73-4^ may be served on the master, mate, or Liens— 51 802 LIENS AGAINST VESSELS. § 522 522. Sale to be Made to Satisfy Liens.^^ If judgment is rendered in favor of any lienor, the sheriff must, after ten days' publication of a notice of sale containing a statement of the measurement and tonnage of the steamer, vessel, or boat, and a general description of her condition,^^ sell at public auction the steamer, vessel, or boat, with its tackle, ap- parel, and furniture, or such interest therein as may be necessary. person having charge of the steamer, vessel, or boat against which the action is brought." 13 Compare Code Civ. Proc, sec. 824, Practice Act, sec. 328. 14 Code of Civil Procedure, section 827 (Prac- tice Act, sec. 331): ''The notice of sale published bv the sheriff must contain a statement of the measure- ment and tonnage of the steamer, vessel, or boat, and a general description of her condition." CHAPTER 5. LIEI^ OF COEPOEATION ON ITS OWN STOCK.* 523. Lien conferred for assessments levied. 1 Corporation does not Have Seller's Lien.— A cor- poration, after issuing a certificate to a stockholder prior to full payment for the stock, does not have a seller's lien thereon, as the certificate 'gives the stock- holder complete possession of the shares: Anglo-Cali- fornian Bank v. Grangers' Bank, 63 Cal. 359, 364; Lankershim Eanch Land etc. Co. v. Herberger, 82 Cal. 600, 603, 23 Pac. 134. Lien Created by By-latc.—A lien, independent of the possession of the certificate of stock of a cor- poration, created thereon by a by-law of the corpora- tion providing that the stock is not transferable un- til after the satisfaction of any demand due the corporation from the person in whose name the stock stands, even if valid at all, is not valid as against a purchaser of the stock for value without notice of the by-law: Anglo-Calif ornian Bank v. Grangers' Bank, 63 Cal. 359. Lien Created hy Contract.— ^ ^ A. lien not dependent upon possession of the certificate of stock may, by a contract between a corporation and its stockholders, be created in favor of the corporation, to secure the indebtedness of the stockholders to the corporation'': Lankershim Eanch Land etc. Co. v. Herberger, 82 Cal. 600, 603, 23 Pac. 134; Jennings v. Bank of Cali- fornia, 79 Cal. 323, 12 Am. St. Eep. 145, 21 Pac. 852. In a number of cases it has been held that under (803) 804 LIEN OF CORPORATION. Civil Code, section 324, and former statutes which were ^* substantially the same as section 324 '^ (Win- ter V. Belmont Min. Co., 53 Cal. 428, 431), that 'transfers of stock which have not been entered in the books of the company, as provided in the statute, are nevertheless valid as against all the world, ex- cept subsequent purchasers in good faith, without notice '^ People v. Elmore, 35 Cal. 653; Weston v. Bear Eiver etc. Min. Co., 6 Cal. 425; Naglee v. Pacific Wharf Co., 20 Cal. 529; Parrott v. Byers, 40 Cal. 614, 625; Winter v. Belmont Min. Co., 53 Cal. 428, 431; Brown v. San Francisco Gas Light Co., 58 Cal. 426. The statement, then, in the Jennings case, that under Civil Code, section 324, the assignee of stock before the transfer thereof on the books of the cor- poration has *^a mere equity '^ seems to rest upon a misconception of the scope of the section of the Civil Code. Si;ibject to a single limitation, the as- signee has full ownership of the stock, and the lien in favor of the corporation should not have been sustained. Moreover the lien sustained in the Jen- nings case seems to come within the class of liens conclusively deemed to be fraudulent under Civil Code, section 3440 (see section 201, above). Yet until the transfer is entered upon the books of the corporation the transferor may vote the stock: People V. Kobinson, 64 Cal. 373, 375, 1 Pac. 156 (in which case the court also said that the transfer until entered had no validity outside the parties). The acceptance, without objection, of a certificate of stock with the condition written thereon, that the stock is not transferable, at the option of the cor- poration, until after the payment of all indebtedness due the corporation by the person in whose name the stock stands upon the books of the corporation, coupled with the subsequent borrowing of money from the corporation by the holder of such certificate, without anything to exclude the idea that the condi- tion was to be binding, gives rise to an equitable lien upon the stock, valid as against all third per- sons for the amount of such indebtedness, on the § 523 LIEN OF CORPORATION. 805 523. Lien Conferred for Assessments Levied.^ A corporation for profit has a lien upon each share^ of its subscribed capital stocky independ- ent of the possession of the certificate thereof,'* ground that the conduct of the holder of the cer- tificate amounts to an assent to its conditions so far as the particular loan was concerned: Jennings v. Bank of California, 79 Cal. 323, 12 Am. St. Eep. 145, 21 Pac. 852, in department (the court saying (p. 331) : *^The case of the Anglo-Calif ornian Bank v. Grangers' Bank, 63 Cal. [359] 362, is not in conflict with this'O; Ealston v. Bank of California, 112 Cal. 208, 214, 44 Pac. 476. But the mere acceptance by a stockholder of a cer- tificate of stock with the condition written thereon as above is not held to constitute a contract for such lien in the absence of subsequent dealings with reference thereto: Jennings v. Bank of California, 79 Cal. 323, 326, 12 Am. St. Eep. 145, 21 Pac. 852. 2 The only lien given to corporations for profit upon their subscribed capital stock, and which does not depend upon the possession of the certificate of stock, is to secure the payment of assessments levied for the purpose of paying expenses, conduct- ing business, and paying debts^': Lankershim Eanch Land etc. Co. v. Herberger, 82 Cal. 600, 603, 23 Pac. 134. The enforcement of this lien, as regulated by Civil Code, sections 331-349, directly concerns the law of corporations, and hence is not here set forth. 3 The lien of a corporation is upon the shares, and not upon the certificate: Craig v. Hesperia Land etc. Co., 113 Cal. 7, 12, 54 Am. St. Eep. 316, 45 Pac. 10. 4 "I can discover no difference between the right of a corporation to collect a valid assessment, and its right to collect a stipulated part of a subscrip- tion to stock, nor how the nonpossession of the cer- tificate affects the right in either case'': Craig v. Hesperia Land etc. Co., 113 Cal. 7, 13, 54 Am. St. Eep. 316, 45 Pac. 10. 806 LIEN OF CORPORATION. § 523 valid as against all persons,^ to secure the pay- ment of any valid assessment which may be levied thereon. Notwithstanding the existence of any such lien^ the corporation must, upon demand, enter a transfer upon its books of the stock af- fected by the lien.^ 5 Valid Against All Persons.— A purtehaser of stock subject to a lien takes it subject to all the equities in favor of the corporation. He can inform himself from the stock-book whether the shares are free from liens or liabilities in favor of the corporation: Craig V. Hesperia Land etc. Co., 113 Cal. 7, 12, 13, 54 Am. St. Rep. 316, 45 Pac. 10. Whether a transferee upon the books would take his stock discharged of any lien undisclosed by the corporation at the time of the transfer and the issu- ance of a new certificate to him— query: Craig v. Hesperia Land etc. Co., 113 Cal. 7, 13, 54 Am. St. Rep. 316, 45 Pac. 10. 6 Must Transfer Liened Stock upon Demand.— As the transfer of shares upon the books of a corpora- tion and the issuance of a new certificate does not affect the power of the corporation to collect a de- linquent assessment on such shares by the sale there- of, such delinquency does not justify a refusal to make a transfer (p. I'd). By such refusal **the holder of stock may not only be deprived of the benefit of an advantageous sale, which he would desire to make under any circumstances, but he would be denied the right to dispose of his stock to avoid personal liability for debts about to be incurred which he did not approve, and which in his judgment would be ruinous not only to the corporation, but to himself as a stockholder ' ' (p. 14): Craig v. Hesperia Land etc. Co., 113 Cal. 7, 54 Am. St. Rep. 316, 45 Pac. 10. Thus a refusal to make such a transfer amounts to a conversion: Craig v. Hesperia Land etc. Co., 113 Cal. 7, 54 Am. St. Rep. 316, 45 Pac. 10. TITLE 3. LIENS INDEPENDENT OP POSSESSION: 2. AGAINST IMMOVABLE PEOPEETY. CHAPTER 1. LIEN OP VENDOE OP IMMOVABLE PEOP- EETY.i 524. Who lienor. 525. Vendor's lien a personal privilege. 526. Lien inures to personal representatives. 527. Lien extinguished by intention not to look to it. 528. Evidence of waiver must be clear and convinc- ing. 529. Taking additional security prima facie evidence of waiver. 530. Sale of personal obligation of vendee waives lien pro tanto. 531. Vendor's lien an additional security. 532. Enforcement of vendor's lien. 1 Vendor's Lien Distinguished.— ' ^ There is a marked distinction between the lien of a vendor after absolute conveyance and the lien of a vendor where the contract of sale is unexecuted. In the latter case the vendor holds the legal title as security for the purchase money. He can assign his contract with the conveyance of the title; and in such case his as- (807) 808 vendor's lien. § 524 524. Who Lienor 2 When upoii the conveyance^ of immovable property by a vendor to his purchaser -there re- mains unpaid upon the purchase price any abso- signee will acquire the same rights and be subject to the same liabilities as himself. In the former case, the vendor retains a mere equity, which to become of any force or effect must be established by the decree of the court ^': Baum v. Grigsby, 21 Cal. 172. 177, 178, 81 Am. Dec. 153. 2 See Civil Code, section 3046: ''One who sells real property has a vendor ^s lien thereon, independ- ent of possession, for so much of the price as re mains unpaid and unsecured otherwise than by the^ personal obligation of the buyer. ^' ''This section is but a repetition of the common law When it uses the term 'vendor's lien,' it refers to the same vendor's lien proper that is: treated of in the text-books, both modern and an- cient": Claiborne v. Castle, 98 Cal. 30, 34, 32 Pac. 807. See, also, Salmon v. Hoffman, 2 Cal. 138, 142, 143,. 56 Am. Dec. 322; and Cahoon v. Kobinson, 6 Cal. 225. "A vendor's lien is not the result of any agree- ment or any intention of the vendor and vendee, but is a simple equity raised by the courts for the benefit of the vendor of real estate": Avery v. Clark, 87 Cal. 619, 623, 22 Am. St. Eep. 272, 25 Pac. 919; Baum V. Grigsby, 21 Cal. 172, 176, 81 Am. Dec. 153; Will- iams V. Young, 21 Cal. 227; Woolley v. Wickerd, 97 Cal. 70, 31 Pac. 733; Claiborne v. Castle, 98 Cal. 30,. 34, 32 Pac. 807. It is not repugnant to the record- ing laws: Cahoon v. Eobinson, 6 Cal.' 225. "The lien which the vendor of real property re- tains, after an actual conveyance, for the unpaid purchase money, is not a specific and absolute charge upon the land, but a mere equitable right to resort to it upon failure of payment by the vendee": Fit- I § 524 IMMOVABLE PROPERTY. 809 zell V. Leaky, 72 Cal. 477, 484, 14 Pac. 198; Spark? V. Hess, 15 Cal. 186, 193; Baum v. Grigsby, 21 Cal. 172, 176, 81 Am. Dec. 153; Longmaid v. Coulter, 123 Cal. 208, 212, 55 Pac. 791. See Gessner v. Palmateer, 89 Cal. 89, 92 (24 Pac. 608), 26 Pac. 789. A vendor's lien ^'is a mere hold or a claim to subject the property to sale— the title and the right of possession remaining with the debtors until such sale'^ Williams v. Young, 17 Cal. 403. Rationale. — ^^The principle upon which this lien has been established by courts of equity is that the person who has gotten the estate of another ought not in conscience, as between them, be allowed to keep it and not pav the full consideration money'': Selna v. Selna, 125 Cal. 357, 360, 78 Am. St. Kep. 47, 58 Pac. 16; Bancroft v. Cosbv, 74 Cal. 583, 584, 16 Pac. 504; Burt v. Wilson, 28 Cal. 632, 638, 87 Am. Dec. 142. ^*It is founded on the natural justice of allowing the vendor to subject the property, with which he has parted, to the satisfaction of the debt which consti- tutes the consideration of the transfer": Sparks v. Hess, 15 Cal. 186, 193; Baum v. Grigsby, 21 Cal. 172, 176, 81 Am. Dec. 153; Williams v. Young, 21 Cal. 227. The vendor's lien is * ^founded upon the equitable presumption that where the vendor has parted with his title and taken no security for the payment of the purchase money, the parties intended that the property should itself remain as a pledge for the payment of the purchase price of the land": Gess- ner V. Palmateer, 89 Cal. 89, 92 (24 Pac. 608), 26 -r^ac. 789. 3 Title must Pass in Order to Cause the Lien to Arise. — So where the owner of certain lands con- veyed it by an absolute deed intended as a mort- gage> and the grantee subsequently reconveyed it to the grantor without the debt being paid, no vendor's lien arises in favor of the first grantee, as the first transaction was in effect a mortgage and no title ever vested in the grantee: Wenzel v. Schultz, 100 Cal. 250, 34 Pac. 696. 810 VENDOR'S LIEN. § 524 lute liquidated^ indebtedness secured solely by the personal obligation of the purchaser, the vendor has a lien against the property, independ- ent of possession, enforceable against every person claiming under the vendee except a bona fide purchaser or encumbrancer for value,^ as security for such indebtedness. 4 Indebtedness must be Absolute, Liquidated.— "The grantor ^s lien, wherever recognized, is only per- mitted as a security for the unpaid purchase price, and not for any other indebtedness or liability. There must be a certain, ascertained, absolute debt owing for the purchase price; the lien does not exist in behalf of any uncertain, contingent, or unliquidated demand'': Gard v. Gard, 108 Cal. 19, 22, 23, 40 Pac. 1059. So an agreement to pay as consideration for certain land three-quarters of the rent thereof, or if occu- pied in person fifteen dollars per month, in either case the payments to extend through the life of the grantor, does not create a vendor's lien in his behalf: Gard v. Gard, 108 Cal. 19, 40 Pac. 1059. 5 Lien Enforceable Against All Except Bona Fide Purchasers for Value.— Civil Code, section 3048 pro- vides: "The liens defined in sections 3046 and 3050 are valid against everyone claiming under the debtor, except a purchaser or encumbrancer in good faith and for value. ' ' See Kuschel v. Hunter, 50 Pac. (Cal.) 397, 398 A; Burgess v. Fairbanks, 83 Cal. 215, 17 Am. St. Eep. 230, 23 Pac. 292. Thus the lien is enforceable against the personal representatives and heirs of the vendee: Cahon v. Eobinson, 6 Cal. 225; Burt v. Wilson, 28 Cal. 632, 638; 87 Am. Dec. 142: Selna v. Selna, 125 Cal. 357, 361, 73 Am. St. Eep. 47, 58 Pac. 16. Yet ''the fee is in the purchaser, and he may de- feat the lien by a conveyance to a bona fide pur- § 525 IMMOVABLE PROPERTY. 811 525. Vendor's Lien a Personal Privilege. . A vendor's lien is a purely personal privilege of the vendor^ available to him alone, and the as- signment of an obligation secured thereby does not carry the security.^ chaser for value ^^ Gessner v. Palmateer, 89 Cal. 89, 92 (24 Pac. 608), 26 Pac. 789; Longmaid v. Coulter, 323 Cal. 208, 212, 213, 55 Pac. 791. As to who is a bona fide purchaser or encumbrancer for value see section 281, note 32, above. 6 Vendor's Lien a Personal Privilege. The vendor's lien '^is founded upon the natural justice of allowing a party to reach the property, which he has transferred, to satisfy the debt which constitutes the consideration of the transfer. It is, therefore, the personal privilege of the vendor. The assignee of a note given for the purchase money stands in a very different position [from the vendor]. He has not parted with the property which he seeks to reach, in consideration of the note which he has received. He has never held the property, and has, therefore, no special claims upon equity to subject it to a sale for his benefit. The particular equity of the vendor in this respect cannot, in the nature of things, be asserted by another '': Baum v. Grigsby, 21 Cal. 172, 176, 81 Am. Dec. 153; Williams v. Young, 21 Cal. 227. The vendor's lien **is in its nature a personal privilege, unassignable, which the vendor can assert only in a suit brought for the purpose of having it decreed and enforced'': Fitzell v. Leaky, 72 Cal. 477, 484, 14 Pac. 198; Longmaid v. Coulter, 123 Cal. 208, 212, 55 Pac. 791. The vendor's lien '^is personal to the vendor, and does not pass by a transfer of his claim for the pur- chase money": Gessner v. Palmateer, 89 Cal. 89, 92 (24 Pac. 608), 26 Pac. 789. It is a privilege purely personal, and cannot exist in favor of any but the vendor It is not as- 812 vendor's lien. § 526 526. Lien Inures to Personal Representatives. The lien of a vendor is not extinguished by his death, but passes to his personal representatives. ''' signable, even by express contract, nor does it pass to the assignee of the vendee's obligation for the purchase money": Avery v. Clark, 87 Cal. 619, 623, 22 Am. St. Eep. 272, 25 Pac. 919. A vendor's lien is not assignable: Lewis v. Covil- laud, 21 Cal. 178, 189; Boss v. Heintzen, 36 Cal. 313, 321; Bancroft v. Cosby, 74 Cal. 583, 584, 16 Pac. 504. In Bonney v. TiHey, 109 Cal. 346, 350, 42 Pac. 439, it was said to be a well-settled rule that a vendor's lien is not assignable. On page 351, however, it was shown that the case did not turn at all upon the question of vendor's lien; and in Tilley v. Bonney, 123 Cal. 118, 123, 5 Pac. 798, the court said that in the Bonney case above *^this court did not distinctly decide that the vendor's lien was lost by assignment." Thus the assignee of the right to recover the money for which the land was sold cannot enforce the lien: Woolley V. Wickerd, 97 Cal. 70, 31 Pac. 733. '^The equitable lien held by a vendor of .real prop- erty after absolute conveyance thereof is not subject to levy and sale on execution, nor is it the subject of private transfer. The indebtedness for purchase price of real estate may be levied upon and trans- ferred, but the equitable lien which attaches to the land by virtue of the indebtedness in the hands of the vendor is extinguished by a transfer of the in- debtedness": Eoss V. Heintzen, 36 Cal. 313, 321. An agreement, however, to assign or transfer the judgment in the foreclosure action, when recovered, is not a transfer of the cause of action and does not waive the vendor's lien: Woolley v. Wickerd, 97 Cal. 70, 31 Pac. 733. 7 Selna v. Selna, 125 Cal. 357, 361, 73 Am. St. Eep. 47, 58 Pac. 16. § 527 IMMOVABLE PROPEETY. 813 527. Lien Extinguished by Intention not to Look to It. A vendor^s lien is extinguished by any act or omission manifesting an intention^ to abandon it or not to look to it for security,^ without the necessity of a consideration/^ especially when 8 **The question is as to the intention of the ven- dor, which is as weH shown by an informal act as one regularly clone'^: Hunt v. Waterman, 12 CaT. 301. 9 Extinguished by Intention to Abandon.— ^^ The silent lien of the vendor [is] extinguished whenever the vendor manifests an intention to abandon or not to look to if: Hunt v. Waterman, 12 Cal. 301. '^This lien is lost by any act on the part of the vendor manifesting an intention on his part not to rely upon the lien'': Avery v. Clark, 87 Cal. 619, 623, 624, 22 Am. St. Rep. 272, 25 Pac. 919; Selna v. Selna, 125 Cal. 357, 361, 73 Am. St. Rep. 47, 58 Pac. 16. In Austin v. Pulschen, 112 Cal. 528, 532, 533, 44 Pac. 788, where the vendor of certain land who held a vendor's lien thereagainst also remained in posses- sion thereof, and the vendee conveyed the land to a third person to whom the original vendor for a con- sideration surrendered the possession and executed certain conveyances of the land, the court held that such vendor cannot assert a vendor's lien against the land when so held by the third person. The reason of this decision is not clear, because the vendor's lien is independent of possession and the conveyance of the title is a prerequisite to its existence and it is valid against everyone except a bona fide pur- chaser or encumbrancer for value, which the third person does not appear to have been. Acts may he Shotvn hy Parol.— ^^ The acts and con- duct of a vendor which indicate a waiver of the lien may be shown by parol": Claiborne v. Castle, 98 Cal. 30, 34, 32 Pac. 807. 10 No Consideration Necessary.— As a vendor's lien 814 : vendor's lien. § 527 the act or omission is of such a character sl^ would make it inequitable to permit the vendor to assert his lienA* 528. Evidence of Waiver must be Clear and Convincing. The presumption, however, is that the lien has not been waived, and the evidence necessary to establish a waiver must be clear and convincing. ^^ 529. Taking Additional Security Prima Facie Evidence of V/aiver. The acceptance of a distinct and separate se- curity for the purchase money, whether in the shape of an encumbrance against the same or other property or of the personal obligation of a third party, prima facie establishes a waiver of the lien.^^ The vendor may, however, by express *'is a simple equity or privilege, purely personal, something not dependent for life upon any agreement of the parties, a consideration is unnecessary to sup> port a waiver of if: Claiborne v. Castle, 98 Cal. 30, 34, 32 Pac. 807. 11 See Selna v. Selna, 125 Cal. 357, 361, 73 Am. St. Rep. 47, 58 Pac. 16. 12 **The burden of proof is upon the poirchaser to establish that in the particular case the lien has been intentionally displaced or waived. If, under all the circumstances, it remains in doubt, the lien at- taches. And so long as the debt exists courts will not presume that the lien has been waived except upon clear and convincing testimony'': Selna v. Selna, 125 Cal. 357, 362, 73 Am. St. Eep. 47, 58 Pac. 16. 13 Taking Security Prima Facie Waiver.— Whenever § 529 IMMOVABLE PROPERTY. 815 the vendor takes other and independent security upon the same land, or a portion of the same land, or on other land, he manifests an intention to abandon his vendor's lien: Hunt v. Waterman, 12 Cal. 301. ''Any conduct which shows an intention to give up the lien will be a bar to its assertion, and the ac- ceptance of collateral security is sufficient to raise the presumption of such an intention'': Griffin v. Blanchar, 17 Cal. 70. ''The acceptance of a distinct and separate se- curity for the purchase money is prima facie a waiver of the vendor's lien. But it is only prima facie evi- dence of it, and may be rebutted": Per Sharpstein, J., in Eemington v. Higgins, 54 Cal. 620, 625. Instances of Waive7\— Where the vendor of land, upon conveying it to trustees in trust for a third person, took the notes of the trustees in payment therefor, the acceptance of the collateral security waives the vendor's lien, as the cestui que trust was the primary debtor: Griffin v. Blanchar, 17 Cal. 70. A vendor 's lien is waived by taking a mortgage on the land, affected by the vendor's lien, as the purchase price does not thereafter remain unsecured otherwise than by the personal obligation of the buyer: Avery v. Clark, 87 Cal. 619, 626, 22 Am. St. Eep. 272, 25 Pac. 919; Lee v. Murphy, 119 Cal. 364, 372, 51 Pac. 549, 51 Pac. 955; Wells v. Hunter, 56 Cal. 342. A vendor whom it is agreed is to remain in pos- session of the sold property until paid has other se- curity and thus is not entitled to a vendor's lien; Austin V. Pulschen, 112 Cal. 528, 533, 44 Pac. 788. Circumstances not Amounting to Waiver.— '^ The lien .... is not waived, in the absence of express agree- ment to that effect, by the fact that the vendor takes the note of other personal security of the vendor for the money. Such personal security is considered as only intended to meet and overcome the acknowledg- ment of the receipt of the money in the deed": Baum V. Grigsby, 21 Cal. 172, 175, 81 Am. Dec. 153. 816 vendor's lien. § 529 agreement for that purpose, retain the lien after taking further security.^* A recital of payment in a deed is not conclusive so that the lien is not thereby waived, nor by the receipt of the vendee's notes: Cahoon v. Eobinson, 6 Cal. 225. Where a vendor makes out and files a claim against the estate of a deceased vendee, in which no refer- ence was made to the vendor's lien, and the claim was allowed, the lien was not waived (though it would„ have been better practice to state that the claim was so secured) : Selna v. Selna, 125 Oal. 357, 361, 362, 73 Am. St. Eep. 47, 58 Pac. 16. Where a vendor sold land to a vendee to whom he conveyed the title, the conveyance being made under an agreement that the vendor was to receive a pur- chase money mortgage upon the sold property, but where through the fraud of the vendor's agent and the negligence of the vendee the vendor failed to receive the mortgage he contracted for, the vendor's lien may be asserted for the balance of the purchase price: Eavmond v. Glover (Cal.), 37 Pac. 772, 775A, 37 Pac. 918. 14 Lien may be Retained by Express Agreement.— '^ Where an independent security is taken— as a mort- gage on the land, or upon other property, or the per- sonal responsibility of a third person— the lien is held to be waived, unless there is at the time an express agreement for its retention": Baum v. Grigsby, 21 Cal. 172, 175, 81 Am. Dec. 153; Camden v. Vail, 23 Cal. 633, 636. ''This lien is lost by any act on the part of the vendor manifesting an intention upon his part not to rely upon the lien, and .... although it is compe- tent for him to take security for the payment of the purchase price of the land, and by an express agree- ment not lose the right to resort to this lien, yet hi& taking such security is prima facie a waiver of the lien, and, in the absence of some agreement to the contrary, the vendee will hold the land discharged f 530 IMMOVABLE PROPERTY. 817 530. Sale of Personal Obligation of Vendee Waives Lien Pro Tanto. An absolute sale by a vendor of a personal ob- ligation of his vendee given by him in part or full payment of the purchase price of any prop- erty suspends the vendor^s lien to the extent of the sum for which such obligation has been given, but if the vendor is compelled to take up the ob- ligation upon its nonpayment at maturity, the lien revives in his favor.^^ from such lien'': Avery v. Clark, 87 Cal. 619, 623, 624, 22 Am. St. Rep. 272, 25 Pac. 919. The insertion of a clause in a mortgage that it is ^^ given in part payment of the purchase price of the within described property" does not constitute or imply any agreement or intention for a reserva- tion of a vendor's lien: Avery v. Clark, 87 Cal. 619, 626, 22 Am. St. Rep. 272, 25 Pac. 919. 15 Civil Code, section 3047, provides: "Where a buyer of real property gives 'to the seller a written contract for payment of all or part of the price, an absolute transfer of such contract by the seller waives his lien to the extent of the sum payable under the contract; but a transfer of such contract in trust to pay debts, and return the surplus, is not a waiver of the lien." ^^We think that it is not doing violence to the lan- guage [of the section] to hold that a transfer of the note [given by a vendee] by an indorsement which makes the vendor liable for the debt is not an absolute transfer within the meaning of the section, and that in such case the lien is merely suspended, and revives when the note is taken up by the vendor" (p. 586). "Every consideration which induced courts of equity to create the lien in the first instance operates to its application to such a case. For if the note was trans- Liens— 52 818 vendor's lien. § 531 531. Vendor's Lien an Additional Security. A vendor^s lien is an additional security, which may be resorted to either independently of, ou concurrently with, remedies otherwise available, but which is probably waived by taking a gen- eral judgment against the vendee for the secured obligation.^^ ferred in satisfaction of a debt, the debt would re- vive upon the nonpayment, and the vendor would be in precisely the same situation that he was in before the transfer. And if he is compelled to pay the note to some subsequent holder, he has still stronger grounds for relief^' (p. 585): Bancroft v. Cosby, 74 Cal. 583, 16 Pac. 504. So where a vendor received the vendee's promissory note as security for the balance of the purchase money, and indorsed it for value to a third party, but the note not being paid came back to the vendor, the vendor's lien thereupon revives: Bancroft v. Cosby, 74 Cal. 583, 16 Pac. 504. 16 There is a conflict of opinion as to whether a vendor's lien is waived by taking a common-law judgment against the vendee. Lien is Waived.— A vendor ^^has waived his lien by taking a general judgment, which, if docketed, was a lien on all the real property of the plaintiff [vendee] ": Fitzell V. Leaky, 72 Cal. 477, 484, 14 Pac. 198; Long- maid T. Coulte/, 123 Cal. 208, 212, 55 Pac. 791. Lien not Waived. — *'If the vendor recover a judg- ment at law and has not exhausted his remedy by exe- cution, he is not precluded thereby from proceeding to enforce his equitable lien for the purchase money": Selna v. Selna, 125 Cal. 357, 363, 73 Am. St. Jiep. 47, 58 Pac. 16. This subject is discussed at length in an early case, which throws the weight of its argument in favor of the proposition that the lien is waived by taking a I 531 IMMOVABLE PROPEBTT. 819 general judgment, although the court for certain rea- sons did not apply the rule in that case. Where a vendor first pursued a personal action against his ven- dee to judgment, and obtained an execution thereon which was returned unsatisfied because of the insol- vency of the vendee, and afterward brought an action to foreclose his vendor ^s lien, the court said: ^' Under a system where law and equity were administered in different suits, and in different tribunals, it has uni- formly been held, that a mortgagee might first sue at law upon the note, and afterward proceed in equity to foreclose the mortgage. The remedies were different, anjd while the party could not proceed upon both at the same time, he might make his election, and first proceed at law, and afterward in equity. And tne privileges of two remedies was as open to a vendor as to a mortgagee. But under our system of practice where law and equity are both administered by me same tribunal, and may be in the same suit, the reason of the former rule does not exist, and the rule itself should cease. Why should the purchaser be harassed by the costs of two separate suits to obtain the end that might as well be reached by one. The whole spirit of our system, and its leading intent, is to avoid a multiplicity of suits. This is the best feature in the system In this case, the plaintiff should have stated all the facts, in the suit upon the notes, and asked for the proper relief, and the court could have given him such a decree as he was entitled to have. But as this is only a question of practice, and one that was not settled at the time the first suit was com- menced, and the only injury that the defendant can suffer will arise from the costs of the second suit, we will not turn the plaintiff out of court for that rea- son^ ^: Walker v. Sedgwick, 8 Cal. 398, 403, 404. A Foreclosure Action may he Resorted to in the First Instance, A vendor's lien ''can be enforced without previous recourse to proceedings at law. We can see no ob- jection to the suit in equity in the first instance, and many reasons for it. It will furnish a more simple and efficacious remedy, and, in many cases, the only 820 vendor's lien. § 532 532. Enforcement of Vendor's Lien. ^'' This lien is enforceable by a foreclosure ac- tion.^^ Where the secured obligation is evi- adequate protection against the absolute loss of the right to enforce the lien. Pending the action at law, the property might be transferred to a bona fide pur- chaser without notice, and thus be placed beyond the reach of the vendor. By the suit in equity, and the filing of notice of lis pendens, information of his claim may be imparted to purchasers, and protection against transfers pendente lite thus secured. The court, after determining the amount of the lien, can by its decree either direct a sale of the property in the first instance for its satisfaction, and execution for any deficiency, or award an execution in the first place, and a sale only in the event of its return unsatisfied, as the jus- tice of the case and the equities developed in its prog- ress may require^': Sparks v. Hess, 15 Cal. 186, i93. ''There is nothing in the point that the remedies at law must first be exhausted before a bill in equity to enforce a vendor ^s lien can be resorted to'': Bur- gess V. Fairbanks, 83 Cal. 215, 216, 17 Am. St. Eep. 230, 23 Pac. 292. 17 Where a personal action is brought upon the secured obligation, an attachment will issue, as the vendor's lien is not a lien within the meaning of Practice Act, sec. 120, Code of Civil Procedure, sec- tion 537, which disallows an attachment to issue upon a demand secured by a lien. At any rate this is true when the liened property has been transferred, so that it is problematical whether the lien continues: Porter v. Brook, 35 Cal. 199,' per Crockett and Sprague, J J., and Sawyer, C. J.; Sanderson and Ehodes, JJ., dissenting. 18 ^^The title which comes from the enforce- ment of the [vendor's] lien can only inure after pro- ceedings to enforce the lien; and there must be a pro- ceeding in the nature of a chancery suit to settle the sum due, and have the lien declared and a sale de- creed": Williams v. Young, 17 Cal. 403. § 532 IMMOVABLE PROPERTY. 821 clenced by writing, such action must be com- menced within four years after the maturity of the obligation ;^^ otherwise within two years thereafter.^^ 19 Where the purchase price of land is payable on demand, the commencement of an action to fore- close a vendor's lien therefor is a sufficient demand: California Sav. Bank of San Diego v. Parrish, 116 Cal. 254, 259, 48 Pac. 73; Gallagher v. Mars, 50 Cal. 23. 20 Code Civ. Proc, sec. 339, subd. 1. CHAPTEE 2. LIEN OF PURCHASEE OF IMMOVABLE PEOPERTY. 533. Who lienor. . 534. Prerequisites to enforcement of lien. 533. Who Lienor.^ A purchaser of immoyable property under an executory contract of purchase, not in default in the performance thereof, has a special lien,^ in- dependent of possession, valid against every per- son claiming under the vendor except a bona fide purchaser or encumbrancer for value,^ for such payments as he is entitled to recover back in case of a failure of consideration. 1 Civil Code, section 3050, provides: '^One who pays to the owner any part of the price of real prop- erty, under an agreement for the sale thereof, has a special lien upon the property, independent of posses- sion, for such part of the amount paid as he may be entitled to recover back, in case of a failure of con- sideration.'' As enacted 1872. This section ^^is intended to secure a party from in- jury through the wrong or inability to perform of the other party, it the vendee did to himself the injury, he is not injured in the eye of the law In equity a vendee had a lien when in possession under a contract, if the consideration failed. It was the (822) § 534 pukchaser's lien. 823 534. Prerequisite to Enforcement of Lien. The purchaser must, as a prerequisite to the enforcement of his lien, surrender the possession of the property if already obtained by him.^ counterpart of the lien given the vendor, and the rule in equity is that no such lien exists in favor of one who is in default. One who has himself abandoned the contract, or has refused to perform it according to its terms, is not afforded a lien to secure him from loss because of his own breach of the contract'': Mer- rill V. Merrill, 103 Cal. 287, 293, 294, 35 Pac. 768, 37 i^sic. 392. For the amount paid on account of the sale of im- movable property a vendee **has a lien upon the prop- erty, in case of failure on the part of the vendor to make good his part of the contract, unless the vendee is himself first in default'': Benson v. Shotwell, 87 Cal. 49, 54, 55, 25 Pac. 249. So where a vendor repudiates a sale upon default by the vendee in the payment of the purchase money, the vendee has no lien for the amount already paid: Merrill v. Merrill, 103 Cal. 287, 35 Pac. 768, 37 Pac. 392. 2 Civil Code, section 3048: *'The liens defined in sections 3046 and 3050 are valid against everyone claiming under the debtor, except a purchaser or en- cumbrancer in good faith and for value." On what constitutes bona fide purchaser, see section 281, note 32, above. 3 Where a purchaser in possession under an agreement for the purchase of lands relies upon the agreement as being in force, and as entitling him to remain in possession of the land, and pleads a full performance on his part and the default of the vendor, he is not entitled to recover the amount paid by him, so long as he treats the contract of purchase as in ■ force. He cannot retain the possession and at the same time recover the amount paid under the contract. And until he is entitled to recover back such pay- ments he cannot enforce his purchaser's lien: Haile v. Smith, 113 Cal. 656, 664, 45 Bac. 872. CHAPTER 3. LIENS FOE IMPEOVEMENTS TO IMMOV- ABLE PEOPEETY. (MECHANICS' LIENS.) "The principle upon which liens are allowed in favor of mechanics and materialmen is, that their la- bor and materials have given value to the buildings upon which they have been expended, and that it is inequitable that the owner of the land, who has con- tracted with them for such improvement, or has stood by and seen the improvement in progress without making objection, should have the benefit of their ex- penditures without making compensation therefor'': Avery v. Clark, 87 Cal. 619, 628, 22 Am. St. Eep. 272, 25 Pac. 919. The statute contemplates throughout that the privi- leges it allows to those who furnish materials or labor for the execution of improvements shall be exercised with promptitude, and so as not to hamper either con- tracting owner, original contractor, or those who deal with them in the free disposition of the property rights affected by or arising from the contract, beyond such time as may be convenient for the assertion of those privileges: First Nat. Bank v. Perris Irr. Dist., 107 Cal. 55, 62, 63, 40 Pac. 45. (824) § 535 PRELIMINARY PROVISIONS. 825 AETICLE 1. PEELIMINAEY PROVISIONS. 535. Contracting owner defined. 536. Improvement defined. 537. Classification of persons engaged upon improve- ment. 538. Original contra-ctor defined. 539. Subcontractor defined. 540. Materialman defined. 541. Materials about to be used in improvement exempt from execution. 535. Contracting Owner Defined. A person who causes personal services or ma- terials to be bestowed upon an improvement in which he owns any interest is a contracting owner. 536. Improvement Defined. Any specified^ fixed object upon which personal services or materials are bestowed, and against which a lien for such services or materials may be claimed, as a structure, a mining claim, or a lot in an incorporated city or town, is called an improvement for the purposes of this chapter.^ 1 In sections 1183, 1184, 1185, and 1187, of the Code of Civil Procedure, *'and others might be men- tioned, the term 'improvement' is evidently used as 826 mechanics' liens. § 536 (The making of any valuable alteration or ad- dition to specific immovable property, or the valuable alteration or addition which is made, is also sometimes referred to as an improvement.) 537. Classification of Persons Engaged upon Improvement.^ All persons bestowing personal services or ma- terials upon any improvement are divided into four classes: (1) laborers, including all persons of every class furnishing their own personal services exclu- sively, equivalent to the object upon which the labor has been performed, and it would be an unwarranted ap- plication of the term to construe it as equivalent to the labor itself, or to that particular class of labor for which the claimant was employed '': Davis v. Mac- Donough, 109 Cal. 547, 551, 42 Pac. 450. ^*In Davis v. MacDonough .... the improvement upon which a lien is authorized by section 1183 is held to refer to the objects enumerated in that section upon which the labor was performed, or for which the ma- terials were furnished'': Warren v. Hopkins, 110 Cal. 506, 510, 42 Pac. 986. 2 See Code of Civil Procedure, section 1194: ''In every case in which different liens are asserted against any property, the court in the judgment must declare the rank of each lien, or class of liens, which shall be in the following order, viz: (1) all persons per- forming manual labor in, on, or about the same; (2) persons furnishing materials; (3) subcontractors; (4) original contractors. ' ' "The law recognizes a clear distinction between these classes of persons'': Hinckley v. Field's Bis* cuit etc. Co., 91 Cal. 136, 139, 27 Pac. 594. § 537 PRELIMINARY PROVISIONS. 827 (2) materialmen, (3) subcontractors, (4) original contractors.^ 538. Original Contractor Defined. Any person who, pursuant to the terms of a contract with a contracting owner, furnishes to such owner, in connection with the execution of his contract and directly'* upon any improve- ment, the services of other persons under his exclusive control,^ with or without materials, is 3 When the labor is employed under a direct employment by the contracting owner, or where the original contract is void, there is no original con- tractor: Davis V. MacDonough, 109 Cal. 547, 42 Pac. 450. 4 Directly.— In Sparks v. Butte Co. Gravel Min. Co., bo Cal. 389, 392, it was said that unless the employees of a person furnishing materials would themselves have liens, such person is not an original contractor, but a materialman. And McCormick v. Los Angeles Water Co., 40 Cal. 185, holds that no lien is given for indirect and remote services, as for cooking for men engaged in excavating a reservoir. 5 Must Employ Other Persons under His Control.— A person furnishing and hanging paper on the interior walls of a building is an original contractor, for as such person and his employees are both entitled to liens in order to distinguish their status the former must be designated as original contractors: La Grill V. Mallard, 90 Cal. 373, 27 Pac. 294 (to the same pur- port, see Sparks v. Butte Co. Gravel Min. Co., 55 Cal. 389); and in Bennet v. Davis, 113 Cal. 337, 54 Am. St. Eep. 354, 45 Pac. 684, the further reasons are given that in the La Grill case (1) the materials were trifling in value compared to the labor, and (2) the contract- 828 ■ mechanics' liens. § 538 an original contractor, provided, however, that if the labor bestowed in affixing materials into an improvement is trifling in comparison with the value of the materials, the contracting owner's contract is one of sale, and the seller is a materialman.^ 539. Subcontractor Defined. Any person who, pursuant to the terms of a contract with an original or other sub-contractor, furnishes work, with or without materials, as set forth in the preceding section, is a subcontrac- tor. ing owner was to pay the original contractor the value of the labor. A person contracting to paint a hotel and to fur- nish the necessary materials therefor is an original contractor: Baird v. Peall, 92 Cal. 235, 28 Pac. 28o. A person to be paid for his individual labor and also to be paid a further fixed sum for the labor of other persons which he might furnish is an original contractor: Malone v. Big Flat Gravel Min. Co., 76 Cal. 578, 585, 18 Pac. 772. 6 Where Labor Trifling in Comparison with Value of Materials, it is Materialman's Contract.— A con- tract to furnish a new plant of machinery— as for steam-power: Hinckley v. Field's Biscuit etc. Co., 91 Cal. 136, 27 Pac. 584; or as an electrical plant com- plete: Eoebling Sons Co. v. Humboldt etc. Co., 112 Cal. 288, 44 Pac. 568; or as for ice-works: Bryson v. Mc- Cone, 121 Cal. 153, 155-157, 55 Pac. 637— such plant to be placed in a building and upon foundations fur- nished by the contracting owner, is a materialman's contract. In such case the work done on the premises of the contracting owner is only the completion of de- livery. § 540 PRELIMINARY PROVISIONS. 829 540. Materialman Defined. Any person who, under contract therefor, fur- nishes materials only, to be used, and which are used, in the execution of a particular improve- ment, is a materialman.'' 541. Materials About to be Used in Improve- ment Exempt from Execution.^ All materials [not exceeding one thousand dol- A contract to furnish and set up tile mantels is a materialman's contract because the labor involved is comparatively trifling in value compared to the mate- rials: Bennett v. Davis, 113 Cal. 337, 54 Am. St. Eep. 354, 45 Pac. 684. 7 A materialman who furnishes materials di- rectly to the contracting owner is not an original con- tractor in the sense of the statute for the reason tnat in such case there could be no subcontractor nor other intervening lienor: Sparks v. Butte Co. Gravel Min. Co., 55 Cal. 389, 392; Schwart v. Knight, 74 Cal. 432, 16 Pac. 235; Santa Monica etc. Co. v. Hege, 119 Cal. 376, 378, 51 Pac. 555. See section 538, note 5. S Code of Civil Procedure, section 1196: '^When- ever materials shall have been furnished for use in the construction, alteration, or repair of any building or other improvement, such materials shall not be sub- ject to attachment, execution, or other legal process, to enforce any debt due by the purcnaser of such ma- terials, except a debt due for the purchase money, so long as in good faith the same are about to be applied to the construction, alteration, or repair of such build- ing, mining claim, or other improvement. ' ' New sec- tion, in effect May 29, 1874. A similar provision is found in Code of Civil Pro- cedure, section 690, subdivision 16. Historical.— Stats. 1867-68, 448, sec. 12, in effect. 830 mechanics' liens. § 541 lars in valine] ^ furnished to be used, and which are about in good faith to be used, in the con- struction, alteration, or repair of any improve- ment, are exempt from attachment, execution, or other legal process to enforce any debt ex- cept a debt for the purchase money due by the purchaser thereof. March 30, 1868, superseded by code of January 1, 1873, was substantially the same. Stats. 1862, c. 297, sec. 16, in effect June 25, 1862, repealed March 30, 1868, gave the exemption solely ^* whenever any ma- terials shall have been furnished and delivered by any materialman,'' but in such case omitted the limi- tation contained in the proviso * * except a debt for the purchase money thereof.'' Previous enactments con- tained no similar provision. 9 Not Exceeding One Thousand Dollars.— No such limitation is found in Code of Civil Procedure, section 1196, but was inserted in the similar provision, Code of Civil Procedure, section 690, subdivision 16, by an amendment, in effect February 23, 1901. § 542 THE IMPROVEMENT CONTRACT. 831 AETICLE 2. THE IMPROVEMENT CONTRACT. SuMivision 1. Contracts Subject to Provisions of Article. 542. Original contract defined. 543. Certain original contracts exempt from the usual requirements. Subdivision 2, Requisites of Contract, 544. Requirements as to form and contents of thou- sand dollar original contracts. Subdivision 3. Record of Contract, 545. Original thousand dollar contract, or memoran- dum thereof, must be recorded. 546. Requirements of sufficient memorandum. Subdivision 4' Void Contracts. 547. Contract when nonconformable to statute in certain cases void. 548. Nature of recovery when contract void. 549. When contract void, original contractor is con- tracting owner's agent. SuMivision 1. Contracts Subject to Provisions of Article. 542. Original Contract Defined. Any contract between contracting-owners and original contractors for the improvement of im- 832 mechanics' liens. § 542 movable property is an original contract. In the execution of a single improvement, there may be a number of original contracts for the dif- ferent departments of the work.^ 543. Certain Original Contracts Exempt from the Usual Requirements. ]N"o original contract for the improvement of any lot in any incorporated city or town or of an adjoining sidewalk or street, or of any vault, cel- lar, or room under such sidewalk, is subject to the provisions of the four next succeeding sec- tions.^ 1 **Tlie chapter in the code relating to mechan- ic's liens does not contemplate that there can be no original contractor except lor the entire work of con- structing the building. For the purpose of construct- ing the building, the owner may enter into different original contracts for the different departments of work involved therein '^ Pacific Mutual Life Ins. Co. V. Fisher, 106 Cal. 224, 232, 39 Pac. 758. ''It is a common practice for a party desirous of erecting a building to let different contracts to vari- ous parties for the building of certain portions of it; these parties would all be original contractors '^ : La- Grill V. MaHard, 90 Cal. 373, 375, 376, 27 Pac. 294. 2 A contract for the construction of a bulkhead and sidewalk in a city, the contract price exceeding one thousand dollars, is not required to be in writing. Code of Civil Procedure, section 1183, ''does not, by its terms, expressly relate to contracts for building sidewalks in cities, and we are unwilling to construe the section as applying to any contract not clearly within its letter as well as its reason' ': Kreuzberger V. Wingfield, 96 Cal. 251, 257, 31 Pac. 893. § 544 THE IMPROVEMENT CONTRACT. 833 Snddivision 2. Requisites of Contract, 544. Requirements as to Form and Contents of Thousand Dollar Original Contracts.^ Every original contract^ (except as provided in section 543 above) in which the contract price 3 Necessity of Observing Eectuirements.— * ' The only safe course for one desiring to have a house built by contract, when the price exceeds one thousand dollars, is to have the contract written and recorded, as pro- vided by section 1183 of the Code of Civil Procedure, and to follow the contract in his payments of money. This is, no doubt, a hardship to owners of land who desire to improve it, and limits, to them, the general control which men generally have over their own property. But it is quite evident that the legislature has industriously endeavored by extreme means not only to protect and favor mechanics and laborers who actually work on buildings (which seems to have been the original notion of a 'mechanic's lien'), but also certain merchants who are brought in under the cate- gory of 'materialmen.' And as long as the provisions of the present lien law are held to be constitutional (and they seem to have been so held by the court)^ owners of buildings must protect themselves by the written contract provided by the code — unless they can induce the leigislature to change the law": Per McFarland, J., in Booth v. Pendola, 88 Cal. 36, 42, 2a Pac. 200, 24 Pac. 714, 25 Pac. 1101. Other Requirements as to original contracts were for- merly required by section 1183^/4 which was enacted in 1901 (Stats. 1901, p. 817, c. 272), but was repealed by Stats. 1903, p. 21, c. 19. 4 Requirement Applies to Original Contracts.— Code of Civil Procedure, section 1183, second and third sen- tences: ''In case of a contract for the work between the [- 87n \- reputed ■{ n87^ owner and his contractor the lien shall extend to the entire contract price All such contracts shall be in writing when the amount Liens— 53 834 mechanics' liens. § 544 exceeds one thousand dollars-'^ must, in its en- tirety, be in writing,^ and subs-cribed by the par- agreed to be paid thereunder exceeds one thousand dollars, and shall be subscribed by the parties there- to.'' New provision, in effect May 17, 1885; amended, in effect JViarcn 15, 1887. IIlstorical.—VndeT Stats. 1862, c. 297, sec. 2, in ef- fect June 25, 1862, repealed March 30, 1868, all original contracts in which the contract price exceeded two hundred dollars were required to be in writing and subscribed by the parties thereto, and penalties simi- lar to those prescribed under the existing statute were provided for failure to comply with its provisions (see sections 547, subd. 1, 548, and 594, below). This Code Provision Refers to Original Contracts jbjxclusively.—^' The section in requiring the contract 'between the owner and his contractor ' to be in writ- ing and recorded, has for its object the giving of no- tice of the terms of the contract to those who may be employed by or furnish materials to the contractor, in the course of its performance, so as to enable them to judge whether the contract price, to which they liave a right to look for their security, is sufficient for that purpose. But the reason for giving this notice does not apply to the case of one who contracts only to furnish materials, as his employees have no lieu upon the price which he is to receive therefor, and for that reason the statute does not require that contracts under which materials are furnished shall be in writ- ing and recorded.'' Thus the contract referred to as *'a contract between the reputed owner and his con- tractor" is the original, not a materialman's, contract: Hinckley v. Field's Biscuit etc. Co., 91 Cal. 136, 140, 27 Pac. 594. 5 But where the contract price is less than one thousand dollars, the contract i^ not required to be in writing and filed: Santa Monica Lumber etc. Co. V. Hege, 119 Cal. 376, 51 Pac. 555. 6 Contract in Entirety must be in Writing.— ''By the terms of the contract, the contractor was to fur- § 544 THE IMPROVEMENT CONTRACT. 835 nish the material and do the work mentioned in the specifications, and shown in the drawings, ^ which drawings and specifications/ it is recited, *are identi- fied by the signatures of the parties hereto.' The ma-, terial which the contractor was to furnish, and the work he was to do, are shown only in the specifications and drawings ^^If the writing which is signed by the parties does not of itself determine what constitutes the contract, then it is not wholly in writing as required, and can- not be filed as a whole in the recorder's office. ''On the other hand, to permit the parties to prove that plans and specifications which do not correspond with the reference are the plans and specifications re- ferred to, is to make a different contract, or at least to open the door for so doing ''What occurred after the contract was signed by way of putting it beyond doubt as to what plans and specifications were intended, such as by attaching them together, and filing them as one document, and building a house upon the lots indicated according to tne plans and specifications, can have no bearing upon the question whether the whole contract was reduced to writing and signed by the parties.'' So where specifications as described by the contract were not recorded, but others according to which the improvement was made had been recorded, the con- tract is not reduced to writing as required: West Coast Lumber Co. v. Knapp, 122 Cal. 79, 82-84, 54 Pac. 533. Where the specifications connected to a building contract, instead of setting forth the details of the work in full, referred to portions of the work on an adjoining building as patterns or samples of the work to be done, and such specifications were filed for record together with the contract and drawings, the contract in its entirety was reduced to writing and the filing is sufficient. The objection is not tenable that the other building thereby became a part of the specifi- cations, and hence that the whole contract was not filed. "All written contracts refer to matters dehors the instrument, but such matters (except where, as in 836 MECIIAJN'ICS' LIENS. § 544 West Coast Lumber Co. v. Knapp, 122 Cal. 79 [54 Pac. 533, above], the matter referred to is another writing) do not become a part of the instrument. Thus monuments and natural objects called for in a deed cannot with any propriety be said to be a part of the deed; nor, where goods are sold by sample, can the sample be said to be part of the contract, though conformity to the sample doubtless is'': California Iron Construction Co. v. Bradbury, 138 Cal. 328, 71 Pac. 346. Illustration.— {1%Q2) Where a contract provided for the construction of a barn ^'agreeable to the draft, plan, and explanation hereto annexed, marked A,"' payment to be made ^'upon the completion of said barn, as per specifications,'' but no draft, plan, or specifications were attached to the contract, but an unsigned paper was produced, and testimony was of- fered that it was the plan or specifications referred to, the court held that in this case the plans are an es- sential part of the contract and are as material as the price or the terms of payment, for the contract price was not to be paid until the barn was completed according to the specification^. The specifications must be referred to with certainty, and where the ref- erence is false it cannot be helped out with oral evi- dence. For the written contract can neither be con- tradicted nor added to. The admission of such evidence would violate the statutory provision requiring the contract to be in writing and signed by the parties: Warden v. Hammond, 37 Cal. 61. See, also, Willamette etc. uo. V. Los Angeles College Co., 94 Cal. 229, 29 Pac. 629. A misreference in such a contract, as to plans and specifications said to have been signed by the parties, but which have not been signed, or to the same as at- tached to the contract when they have not been at- tached, renders the contract incomplete, and as the misreference or misdescription cannot be aided by oral evidence void: Donnelly v. Adams, 115 Cal. 129, 46 Pac. 916, 127 Cal. 24, 59 Pac. 208. § 544 THE IMPROVEMENT CONTRACT. 837 ties thereto^ and must set forth the actual con- tract price when a contract price has been agreed upon.'' Ko such contract may^, by its terms^ pro- vide that any of the contract price be payable be- fore the commencement of work; but not less than twenty-five per cent of such price must be made payable not sooner than thirty-five days after the final completion of the work; and the remainder must be made payable either at spe- cified times after the commencement of work, or on the completion of specified portions of the work;, or on the completion of the whole work;^ 7 Must Set Forth Actual Contract Price When Agreed Upon. See section 547, subdivision 2 and notes, below. The obvious intention of the legislature in enact- ing that ^Hhe said contract, or a memorandum there- of, setting forth .... the total amount to be paid thereunder, and the amounts of all partial payments, .... shall .... be filed'' was to provide what por- tions of the contract would be set forth in the mem- orandum. *^The legislature merely assumed that building contracts would usually state the whole con- tract price, and in view of that general condition, enacted the provisions concerning the memorandum. Had it been the purpose to compel persons to state in every contract the whole amount that could in any event become payable under its terms, or, failing to do so, suffer the penalty imposed, we must suppose that so serious an invasion of the right of property would have been expressly and unequivocally stated, and not left to inference.'' Thus the portion of sec- tion 1183 setting forth the requirements of the mem- orandum cannot be held to prescribe requirements for the contract: Snell v. Bradbury, Cal., June 20, 1903. 8 Contract Price must be Payable in Installments at Specified Times. 838 mechanics' liens. § 544 Code of Civil Procedure, section 1184, first sen- tence: ''No part of the contract price shall, by the terms of any such contract, be made payable, nor shall the same or any part thereof be paid in advance of the commencement of work, but the contract price shall, by the terms of the contract, be made payable in installments at specified times after the commence- ment of work, or on the completion of specified por- tions of the work, or on the completion of the whole work; provided, that at least twenty-five per cent of the contract price shall be payable at least thirty- five days after the final completion of the [87o] [a] contract. New provision, in efPect May 17, 1885; amended, in effect March 15, 1887. (a) Here was omitted: ''Work and.'' Interpretation.— The phrase at the beginning of 1184, "any such contract,'' refers to the contracts which have just been considered in the immediately preced- ing provision of 1183, which were contracts in which the contract price exceeded one thousand dollars. "It was not intended, we think, that in order to preserve the right of lien the contracting parties should be put to the trouble of entering into a written contract, and reserving twenty-five per cent of the contract price for thirty-five days after the completion of the work, in cases where the contract price" does not ex- ceed one thousand dollars. "There is nothing in the statute which render^ void as between contractor and owner a contract under which the amount to be paid does not exceed the sum of one thousand aollars, whatever may be its terms in other respects": Sid- linger V. Kerkow, 82 Cal. 42, 44, 45, 46, 22 Pac. 932; Kerckhoff-Cuzner etc. Lumber Co. v. Cummings, 86 Cai. 22, 24, 25, 24 Pac. 814; Denison v. Burrell, 119 Cal. 180, 182, 51 Pac. 1; Southern Cal. Lumber Co. v. Jones, 133' Cal. 242, 243, 244, 65 Pac. 378. A compliance with the provisions of code, section 1184, that the contract price must be made payable in installments at specified times, and that twenty- five per cent must be payable at least thirty-five days after the completion of the work, does not require a statement either of the amount of each payment, or the total amount of them all. § 544 THE IMPROVEMENT CONTRACT. 839 Thus where the work consisted in remodeling an old building and constructing additions thereto, a duly recorded contract for lathing and plastering the additions at nineteen cents a square yard, and for removing the old plastering and replacing it with new where directed by the owner at thirteen cents a square yard is valid, although the amount of plas- tering was left indeterminate and although the con- tract did not state the total amount to be paid there- under nor show on its face whether or not the work would exceed one thousand dollars in value (when in fact the value of the work done did exceed one thousand dollars but the value of the new lathing and plastering was not shown to exceed one thou- sand dollars). "In case of the removal of a building, or in any case where alterations are made to an old building, the performance of the new work may in itself dam- age the old one, and make it impossible to know or determine in advance how much of the old plaster- ing may need to be removed. In such a case it may be necessary to make the contract for a fixed price per yard, or to merely contract for the work, in either event leaving the total amount to be deter- mined by the performance, and, if no measure of value is fixed, by the reasonable value of the work. The right to make such contracts under such cir- cumstances is necessary to the full enjoyment of property which is protected by the constitution. To take away this right, would be an infringement of the constitutional guaranty. There is nothing in the statute which expressly forbids such a contract, and the court cannot construe it to have an effect which would make it unconstitutionaP ^ Snell v. Bradbury, €al., June 20, 1903. Rationale Twenty-five Per Cent Reservation.— ^^ This provision was evidently inserted for the protection of subcontractors, materialmen, and laborers, thus giving them, if unpaid, ample time after the work is com- pleted to file their claims of lien and secure payment of the sums of money due them'': De Camp Lumber €o. V. Tolhurst, 99 Cal. 631, 635, 34 Pac. 438. 840 mechanics' liens. § 544 Huhstantial Conformity with this provision, sufficient to afford the safeguard afforded to lienors, is all that is required: Brill v. De Turk, 130 Cal. 241, 243, 62 Pac. 242. ^^The section, in terms, only requires a substantial compliance'^: Yancy v. Morton, 94 Cal. 558, 561, 29 Pac. 1111. '^ Every reasonable intendment is indulged to avoid a penalty '^ Stimson Mill Co. v. Eiley (Cal.), 42 Pac. 1072, 1074 A; Brill v. De Turk, 130 Cal. 241, 243, 62 Pac. 242. Original Contracts Held to Comply with Statute.-- XX contract providing that the final payment of twen- ty-five per cent was payable thirty days after the final completion of the contract. For every reason- fible intendment is indulged to avoid a penalty, and no one was injured by the fact that the payment became due in thirty days: San Diego Lumber Co. v. Wool- dredge, 90 Cal. 574, 579, 27 Pac. 431. A contract providing that upon the written order of the original contractor the contracting owner will pay (1) the materialmen for materials furnished as soon as they are actually worked into the building, and (2) the mechanics and laborers on the building for work actually done at the end of every week, provided that the contracting owner may retain twenty-five per cent of the contract price until thirty-five days have expired after the final completion of the contract: Eeed v. Norton, 90 Cal. 590, 601, 26 Pac. 767, 27 Pac. 426. A contract providing that the final twenty-five per cent should be paid thirty-five days after the com- pletion of the building, ^^ provided that payment may be made at any time between the date of completion and the said thirty-five days, in case said contractor shows receipts, and gives bonds that all bills will be paid, and that no liens or other claims exist against said premises, such payment to be optional with the owner. ^' " The proviso found in this contract was un- doubtedly inserted for the benefit of the contractor, yet at the same time it was in no way detrimental to the interests of any lien claimant, for the section § 544 THE IMPROVEMENT CONTRACT. 841 [i. e., Code Civ. Proc, sec. 1184] expressly so pro- vides'': Yancy v. Morton, 94 Cal. 558, 561, 29 Pac. 1111. The contract was, however, declared invalid on other grounds. A contract in which the contract price was two thou- sand one hundred and eighty dollars, and the contract reserved five hundred and thirty dollars for thirty-five days, the amount being fifteen dollars less than twenty-five per cent of the contract price, the de- ficiency being trivial in comparison with the amount reserved, and especially as no one was injured there- by: Stimson Mill Co. v. Eiley (Cal.), 42 Pac. 1072, 1074A. A contract providing that the last payment of twen- ty-five per cent ^^ shall be made within thirty-six days after the contract is fulfilled.'' For when the debtor is allowed a certain period within which to make pay- ment, the debt is not due until the expiration of that period: West Coast Lumber Co. v. Knapp, 122 Cal. 79, 81, 82, 54 Pac. 533. A contract in which the contract price was nineteen hundred and seventy-five dollars, which provided that ^^all bills for material and labor, when indorsed by the contractor, will be paid on demand, provided that said bills for material and labor do not exceed seventy- five per cent of the value of the material and labor em- ployed in the erection of said building up to the date of the said bills, four hundred and ninety-five dollars to be paid thirty days after the building is com- pleted and accepted." The sum reserved is more than twenty-five per cent of the contract price: Brill V. De Turk, 130 Cal. 241, 242, 243, 62 Pac. 462. Contract Violative of Statutory Requirement.— A con- tract providing that ^ * seventy-five per cent of the cost of material and work completed at the time of payment is to be paid on the first and third Saturdays of each month as the work progresses," and ^Hhe last and final payment is to be made thirty-five days after the completion of the work according to the contract, ' ' but not providing that twenty-five per. cent of the con- tract price should be payable not less than thirty-five days after completion. For there is a manifest differ- 842 mechanics' liens. § 544 nor may any of the contract price be prematurely paid.i^ Subdivision 3. Record of Contract. 545. Original Thousand Dollar Contract, or Memorandum Thereof, must be Recorded. Every original contract (except as provided in section 543 above) in which the contract price exceeds one thousand dollars^ or a memorandum thereof conformable to the next succeeding sec- tion, must, before the commencement of work, be filed in the office of the county recorder of the county, or city and county, where the property is situated.*^ ence between stating that a certain amount is to be paid at any given date and that a certain percentage of the cost is to be then paid, for there is no neces- sary connection between the cost or labor and ma- terial and the contract price. When seventy-five per cent of cost was paid there might be less than twenty- five per cent of contract price remaining: Willamette etc. Co. V. Los Angeles CoUege Co., 94 Cal. 229, 235, 29 Pac. 629. 10 What Amounts to Premature Payment.— Where the installments were to be paid as work progresses, a substantial completion to the required stage is all that is required to render the payment valid (not premature): Stimson Mill Co. v. Eiley (Cal.), 42 Pac. 1072, 1074B. Effect of Premature Payment: See section 592, below. 11 Recordation Rectuired.— Code of Civil Procedure, section 1183, third sentence: ^^All such contracts shall be in writing .... and shall be subscribed .... and \ 87n \ the said contract, or a memorandum thereof . . . . ^ n87 \ shall, before the work is commenced, be § 545 THE IMPROVEMENT CONTRACT. 843 filed in the office of the county recorder of the county, or city and county, where the property is situated, who shall receive one dollar for such filing/' New provision in effect May 17, 1885; amended, in effect March 15, 1887. Object of Recordation.— '' The object of the statute in requiring contracts in excess of one thousand dollars to be filed with the recorder seems to be twofold: (1) as a security to the [contracting] owner, who is there- by shielded from liability to subcontractors, laborers, and materialmen beyond his contract price, (2) to af- ford information to all others furnishing materials or performing services in and about the contemplated im- provement, upon which to predicate an opinion founded upon the value of the property, the price to be paid, and the dates of payment, as to whether the contract price is such as will probably be adequate security, and the lien given to them by the statute, sufficient to warrant them in bestowing their labor or furnishing materials for the proposed improvement'': Greig v. Eiordan, 99 Cal. 316, 319, 320, 33 Pac. 913. The Entire Contract must be Recorded.— In the follow- ing instances the filing was defective. Where by the terms of the contract the plans and specifications were made a part thereof, but were not filed therewith: Barker v. Doherty, 97 Cal. 10, 31 Pac. 1117; Kuhlman v. Burns, 117 Cal. 469, 49 Pac. 585. Where a contract provided for the erection of a building '^conformable to. the drawings and specifica- tions made by , architect, and signed by the parties, and hereunto annexed," the drawings and specifications not in fact being annexed and the con- tract being filed without them: Yancy v. Morton, 94 Cal. 558, 562, 29 Pac. 1111. See, also, Willamette etc. V.O. V. Los Angeles College Co., 94 Cal. 229, 233, 29 Pac. 629. An original contract providing that the improve- ment should be done ''in conformity with the plans, drawings and specifications for the same made by , the authorized architect employed by the owner. 844 mechanics' liexs. § 546 546. Requirements of Sufficient Memorandum.^'^ The memorandum permitted by the preceding section to be filed in lieu of the original contract must set forth: and which are signed by the parties hereto and are to be kept and remain in the office of said architect subject to the inspection, of the parties hereto and others concerned in said erection'': Pierce v. Birkholm, 115 Cal. 657, 47 Pac. 681. Where the original contract did not in terms re- cite that the plans and specifications were made a part thereof, but where without them such contract is so indefinite and uncertain as not to comply with the requirement (prescribed in case of a memorandum) that it should contain a statement of the general char- acter of the work: Greig v. Eiordan, 99 Cal. 316, 320, 33 Pac. 913. See, also, California Iron Construction Co. V. Bradbury, 138 Cal. 328, 71 Pac. 346, as quoted under section 544, note 6, above. The Original Contract, not a Copy Thereof, is Re- quired to he Filed.— HenQe the filing of (1) the original agreement of the parties with their original signatures thereon, with (2) the original specifications referred to in the first instrument, also signed, and (3) a sun- print copy of the plans and drawings made by the authorized architect, is insufficient: San Francisco Lumber Co. v. O'Neil, 120 Cal. 455, 52 Pac. 728. 13 RecLuirements of Memorandum.— Code of Civil Procedure, section 1183, third sentence: ^'All such contracts shall be in writing .... and shall be sub- scribed .... and )■ 87n \- the said contract, or a memorandum thereof, setting forth (1) the names of all the parties to the contract, (2) a description of the property to be affected thereby, together with (3) a statement of the general character of the work to be done, (4) the total amount to be paid thereunder, and (5) the amounts of all partial payments, together with (6) the times when such payments shall be due and payable { n87^ , shall .... be filed.'' New provi- § 540 THE Ijiprcvement contract. 845 sion in effect May 17, 1885; amended, in effect March 15, 1887. Canon of Interpretation,— ^ ^ Th.Q statute, imposing as it does a liability upon the owner beyond the price he contracted to pay, in favor of a subcontractor with whom he has no contractual relations, is penal as well as remedial, and, therefore, whilst it must have such construction as will reasonably effectuate its remedial purposes, must be strictly confined to such purpose. Xo merely technical construction can be indulged for the purpose of visiting a penalty upon the owner, un- less there has been a substantial failure to comply with the law; such as, if continued, would defeat the remedial purpose of the statute; but if there be a reasonable doubt as to the construction of the statute, or as to whether the defendants [contracting owners] complied with it, they should have the benefit of if: Joost V. Sullivan, 111 Cal. 286, 296, 43 Pac. 896. The memorandum (like a contract which is to bo filed) must be complete within itself. Thus plans, drawings, or specifications referred to in a memoran- dum as those according to which the .work is to be done are an essential part thereof, and must be filed: Bunlop V. Kennedy, 102 Cal. 443, 445, 36 Pac. 765; Butterworth v. Levv, 104 Cal. 506, 38 Pac. 897; Wood V. Oakland etc. Transit Co., 107 Cal. 500, 503, 504, 40 Pac. 906. See, also, Willamette etc. Co. v. Los An- geles College Co., 94 Cal. 229, 235, 236, 29 Pac. 629. The provision that the memorandum should set forth the total amount to be paid under the con- tract and the amounts of all partial payments was made in view of the fact that building contracts usually make these statements, but was not intended to imply that a contract must contain them in order to be valid: Snell v. Bradbury, Cal., June 20, 1903. Illustration of Sufficient Memorandum, — Where a con- tract consisted of (1) an agreement, (2) plans an-i specifications, and (3) drawings, the filing of a ver- batim copy of (1) together with a copy of (2) ex- cept for the signatures, and a sun-print copy of (3) is sufficient: Blinn Lumber Co. v. Walker, 129 Cal. 62, 61 Pac. 664. S46 mechanics' liens. § 546 (1) the names of the contracting parties/^ (2) a description of the land upon which the improvement is to be made, (3) a statement of the general character of the work to be done/^ (4) the contract price, (5) the amounts of all partial payments, and (6) the times when such payments are due and payable. 13 Names of Contracting Parties.— While the mem- orandum is not required to be signed or subscribed by the parties, it must set forth their names: Joost v. Sullivan, 111 Cal. 286, 294, 43 Pac. 896; Blinn Lumber Co. V. Walker, 129 Cal. 62, 65, 66, 61 Pac. 664. 14 Statement of General Character of Work.— ''The words 'general character' do not mean a special, par- ticular, minute, or* detailed description of the work to be done'': Joost v. Sullivan, 111 Cal. 286, 295, 43 Pac. 896. Thus a statement of the size of the lot and that a frame building thereon is to be raised, repaired, added to, and converted into three-story fiats, is suffi- cient statement of its general character: Joost v. Sullivan, 111 Cal. 286, 295, 43 Pac. 896. Insufficient Statements of General Character of the Work Illustrated. A statement that a building three stories high, con- formable to certain drawings and specifications was to be erected is insufficient. "It does not set forth the material of which the building was to be constructed, or any item from which its 'general character' can be ascertained": Willamette etc. Co. v. Los Angeles College Co., 94 Cal. 229, 236, 29 Pac. 629. A statement that certain alterations and additions were to be made to a church building conformable to certain plans, drawings, and specifications kept in the § 547 THE IMPROVEMENT CONTRACT. 847 Subdivision J/.. Void Contracts. 547. Contract When Nonconformable to Statute in Certain Cases Void. (1) If any original contract in which the con- tract price exceeds one thousand dollars is not in writing and not duly subscribed/^ or architect's office is insufficient: Greig v. Eiordan, 99 Cal. 316, 320, 321, 33 Pac. 913. Also that a two-story building, 51 by 25, was to be erected conformable, etc. . It does not tell of what the building was to be constructed: Butterworth v. Levy^ 104 Cal. 506, 508, 38 Pac. 897. The statement in Dunlop v. Kennedy, 102 Cal. 443, . 445, 36 Pac. 765, was likewise insufficient. A statement that a frame building is to be con- structed is insufficient. ^^ While the law requires no description in detail of the general character of the work to be done, still it requires more than is here found. This statement is too general. To say that the building is to be a stone building or a brick build- ing, or a frame building entirely fails in essentials to give the notice to the public which the law contem- plates. By consulting the memorandum of contract it would be impossible to say whether the buildin,.^ is to be a diminutive cottage, or a large public cara- vansary, or whether the contract price is at all in proportion to the character of the buildings to be erected '^ Blyth v. Torre (Cal.), 38 Pac. 639, 639B- 640A (a rehearing was granted, but no opinion was filed.) IS Code of Civil Procedure, section 1183, third sentence: ^^All such contracts shall be in writing .... and shall be subscribed .... and J- 87n }■ the said contract, or a memorandum thereof -j n87 -{,.... shall, before the work is commenced, be filed; .... otherwise, they shall be wholly void, and no recovery shall be had thereon by either party thereto." New 848 mechanics' liens. § 547 (2) if, on account of any conspiracy or agree- ment in which a contracting party participates, the contract price set forth in the contract filed is less than the real price/^ or provision in effect Mav 17, 1885; amended, in effect March 15, 1887. This provision is * ^ highly penal in its character, a . violation of its mandates subjecting the owner to -i liability for debts which he never agreed to pay, an! tor which he may receive no benefit/' (See section 548, below.) ^^Such statutes should not receive a construction unduly favoring the imposition of a penalty or forfeiture. And in the case of a statute which deals with the constitutional right of an owner .of property to make contracts relating to its use and enjoyment, the restriction of the right can go only to the form of the contract, and cannot be extended by construction bevond what is expressed '\- Snell V. Bradbury, Cal., June 20, 1903. Historical.— Stsits. 1862, c. 297, sec. 2, contained a similar provision in regard to contracts in which the contract price exceeded two hundred dollars. l« Code of Civil Procedure, section 1202, third sentence: ^^If the owner and his contractor shall di- rectly or indirectly conspire to or agree that the writ- ten contract filed shall appear to show the contract price to be less than it really is, and it shall accord- ingly so show, then such contract shall be wholly void, and no recovery shall be had thereon by either party thereto." New provision in effect March 18, 1885. In California Iron Construction Co. v. Bradbury, Cal., Jan. 16, 1903, where the contract price of a building contract was stated to be eight thousand and fifty-two dollars in the written contract, and the evi- dence showed that the price originally agreed upon had been eight thousand one hundred and fifty-two dollars, but that the contractor had agreed to buy an old house on the premises for one hundred dollars, which sum had accordingly been deducted from the price orig- § 547 THE IMPROVEMENT CONTRACT. 849 inally agreed upon, the court held that the contract is not rendered invalid by reason of stating an erron- eous contract price. The court supported this con- clusion by the statement that ^Hhe transfer of the house — which was an executed transaction — was an- tecedent to the contract as executed, and formed no part of it. ^' On February 16, 1903, the court denied n petition for a rehearing. Beatty, C. J., dissented from the order denying the rehearing, saying in part: ■'^The contract for the erection of the building, as re- duced to writing and recorded, stated the contract price at eight thousand and fifty-two dollars. But the court found that the real price agreed to be paid for the improvement was eight thousand one hundred and fifty-two dollars. If the real consideration agreed to be paid was one hundred dollars more than the consideration states in the written and recorded con- tract, then it seems to me that the conclusion of the trial court was correct; that the contract under sec- tion 1183 of the Code of Civil Procedure was void as to the lienors, and that they were entitled to have a judgment for the full amount of their claims made a lien upon the property of the appellant [contracting- owner]. The difference between eight thousand and fifty-two dollars and eight thousand one hundred and fifty-two dollars is trifling, it is true, but the prin- ciple governing the case is just the same as of the difference between the actual price and the stated price was relatively much greater. The reason why the contract price was stated at one hundred dollars less in the written contract than as actually agreed was that the contractor was to take the old building at a valuation of one hundred dollars, and it was agreed that the price as stated in the written contract would be reduced in that amount. If the property owner agrees with the contractor that the proper cost of a proposed improvement is five thousand dollars, and because the contractor is already indebted to him m the sum of two thousand dollars, proposes, and the contractor agrees, that in consideration of the cancella- tion of that debt, the price in the written contract would be stated at three thousand dollars, no one Liens— 54 850 mechanics' liens. § 547 (3) if any such contract^ or a sufficient mem- orandum thereof, is not duly filed^'' [then as to all lien claimants whose liens attach as of a time prior to the filing thereof]^® such contract is void.^^ could doubt that the recording of the contract in that form would be a violation of the spirit and a transgression of the policy of the mechanic's lien law. No distinction can be drawn between the supposed case and this case, except upon the principle of de minimis, and that principle I think we have no right to apply/' 17' See code provision quoted in note 15. Actual notice of the existence of the contract is not equivalent to filing, as this is not a question of notice. *^The express provision of the statute is, that if the contract is not filed, it shall be void. This being so, there is in fact no contract of which the subcontractor is bound to take notice, and his knowledge that a contract was attempted to be made, but was not, can- not affect his rights'': Kellogg v. Howes, 81 Cal. 170, 179, 22 Pac. 509. 18 As to Lien Claimants v^itla. Prior Liens Only.— This is perhaps a limitation of doubtful validity. It is sustained in Giant Powder Co. v. San Diego Flume Co., 88 Cal. 20, 22, 25 Pac. 976; 97 Cal. 263, 265, 32 Pac. 172, where the court held that though the contract was not filed before the commencement of work, but was at a subsequent date filed, there existed from the latter date a valid contract. In Willamette Steam Mills Co. V. Kremer, 94 Cal. 205, 207, 208, 29 Pac. 633, and Willamette etc. Co. v. Los Angeles College Co., 94 Cal. 229, 236, 29 Pac. 629, the court, however, held that when the original contract was not filed be- fore the commencement of work, although it was sub- sequently filed, it was 'wholly void' for all purposes, and cannot be the basis of a recovery by the con- tractor against the owner, nor can it be looked to for the purpose of determining the amount for which § 548 THE IMPROVEMENT CCNTRACT. 851 548. Nature of Recovery When Contract Void.2o Upon a void contract no recovery can be had by any party thereto^ nor except where there is a substantia] compliance^^ with its terms, in quasi contract.^^ The amount recoverable by tne contracting owner is liable, nor the time of any payment. 1J> Contract Void. — This section contains an exhaus- tive enumeration of the circumstances rendering the contract void. So it is not void by reason of not con- taining a description of the property upon which the building is to be erected, as the statute does not re- quire that: Yancy v. Morton, 94 Cal. 558, 561, 29 Pac. 1111. 20 See Code of Civil Procedure, section 1183, and section 1202, as quoted under section 547, notes 15 and 16. 21 Substantial Performance Prerectuisite.— The would-be original contractor cannot recover unless he has completed the contract on his part, or its com- pletion is in some way waived or excused: Marchant V. Hayes, 117 Cal. 669, 671, 48 Pac. 840. A void contract may be used in evidence as the test of substantial performance. As between the orig- inal contractor and the contracting owner, **the con- tract must remain, not the basis of his recovery, but the measure and test of his right to recover. He must still show a substantial compliance with its terms, to warrant any recovery at all, and the measure of his recovery, even under implied assumpsit, must be limited, as to him, by the contract price ^': Laid- law V. Marye, 133 Cal. 170, 176, 65 Pac. 391. Eebman v. San Gabriel Land etc. Co., 95 Cal. 390, 395, 396, 30 Pac. 564, so far as at variance with this conclusion, is overruled in this case. 23 Recovery in Quasi Contract Permissible.— '* Nor does the statute expressly, or by necessary implication, 852 mechanics' liens. § 548 the would-be original contractor cannot exceed the contract price of the void original contract, less any disbursements that the contracting owner is compelled to make to relieve his prop- erty from liens arising in consequence of the con- tractor's failure to pay his debts.^^ prohibit an action upon such implied contracts, to re- cover the value of the labor or materials, though such value may exceed one thousand dollars. On the con- trary, section 1197 of the chapter on liens [see section t)UO, note, below] seems to except such contracts from the penalty of a failure to record '^ Eebman v. San Gabriel etc. Co., 95 Cal. 390, 394, 30 Pac. 564; Holland V. Wilson, 76 Cal. 434, 18 Pac. 412; Morris v. Wilson, 97 Cal. 644, 647, 32 Pac. 801. 33 Code of Civil Procedure, section 1193, in part: ''In all cases where a lien shall be filed, under this chapter, for work done or materials furnished to any contractor, he shall defend any action brought there- upon at his own expense .... and in ease of judg- ement against the owner or his property, upon the lien, the said owner shall be entitled to deduct from the amount due or to become due by him to the con- tractor, the amount of such judgm^ent and costs." New provision, in effect May 29, 1874.' Stats. 1867-68, c. 448, sec. 11, contains the same provision. This pro- vision applies equally where the original contract is void, to where it is valid: Macomber v. Bigelow, 1Z6 Cal. 532, 533, 534, 56 Pac. 449. In Every Case the Amoimt RecoveraUe is Limited hv the Contract Price of the Void Contract: Giant Powder Co. V. San Diego Flume Co., 78 Cal. 193, 197, 20 Pac. 419; Laidlaw v. Marye, 133 Cal. 170, 176, 65 Pac. 391. The latter case overrules Eebman v. San Gabriel Land etc. Co., 95 Cal. 390, 395, 396, 30 Pac. 564, so far as permitting a recovery in excess of the amount of the void contract. But with the proviso that the recovery cannot exceed such sum, the statement in the Eebman case that the void contract is merely § 548 THE IMPROVEMENT CONTRACT. 853 competent evidence, not conclusive evidence of the value of the services and materials furnished, would probably hold good. Where an original contract was void because not filed, and certain lienors who had furnished work and materials to the would-be original contractor had recovered at foreclosure the reasonable value thereof with costs and counsel fees, the contractor afterward commenced an action to recover the rea- sonable value of his work and materials, in which he contended that the costs and counsel fees allowed in the above-mentioned action should not be set off against his demand on the ground that the contract- ing owner should have avoided them by paying the liens without suit. The court held that had the owner ''paid the demands on which the materialmen had filed liens, without suit and without the request of the plaintiff, he would have done so at his peril of being adjudged to have paid them as a mere volun- teer, to the extent to which the demands paid may not have proved to be valid liens upon his property, and to this extent would have had no recourse to the plaintiff for indemnity He was never un- der any * obligation to plaintiff to pay plaintiff ^s debts to the materialmen. His only obligation to plaintiff was to pay him so much as the labor he had performed and the materials he had furnished and used on defendant's house were reasonably worth. Against this obligation he was entitled to set off plaintiff's obligation to indemnify him for all that he had been compelled to pay to relieve his property from the liens thereon to secure plaintiff's debts, in- cluding the attorney's fees and costs in the suits to enforce": Covell v. Washburn, 91 Cal. 560, 562, 563, 27 Pac. 859. The reasonable value of materials furnished by an original contractor under a void contract cannot exceed the price he paid therefor, for an agent can- not buy articles for his principal at one price and compel him to pay a higher price therefor: Kuhlman V. Burns, 117 Cal. 469, 472, 49 Pac. 585. 854 mechanics' liens. § 549 549. When Contract Void, Original Contractor is Contracting Owner's Agent.^^ When the original contract is void, all mate- rials and personal services furnished by any lien- claimant except the wonld-be original contractor are deemed to be furnished at the personal in- stanced^ of the contracting owner, except that such owner is not personally liable therefor.^^ The Contractor's Action in Quasi Contract cannot he Tried until after the claims of all lienors have been adjudicated, as the sum to be set off against his de- mand cannot be determined until such time. If the contractor wishes to avoid the delay thus arising, he can do so by paying his debts to the lienors claiming under him : Macomber v. Bigelow, 123 Cal. 532, 534, 535, 56 Pac. 449. 24 Code of Civil Procedure, section 1183, third sen- tence: ^^All such contracts, .... otherwise, .... shall be wholly void, .... and, in such . case, the labor done and materials furnished by all persons aforesaid [i. e., by all lien-claimants], except the contractor, shall be deemed to have been done and furnished at the personal instance of the owner, and they shall have a lien for the value thereof.^' New provision in effect May 17, 1885. Code of Civil Procedure, section 1202, third sen- tence: '^If the owner and his contractor shall di- rectly or indirectly conspire, .... then such con- tract shall be wholly void, .... and in such case the labor done and materials furnished by all per- sons, except the contractor, shall be deemed to have been done and furnished at the personal instance of the owner, and they shall have a lien for the value thereof: New provision, in effect March 18, 1885. 25 Personal Instance.— This provision brings every person, other than the original contractor, into direct contact with the owner as a contractor, and removes § 549 THE IMPROVEMENT CONTRACT. 855 the distinction made between those who contract di- rectly with the owner and subcontractors. By the terms of the statute they become, for the purposes of their liens, original contractors with the owner, but cannot recover against him personallv: Kellogg V. Howes, 81 Cal. 170, 179, 180, 22 Pac. 509, 6 L. R. A. 588. ^^If the contract is not filed as directed, it is void, and there being no contract, it would follow, even though the statute had not said so, that the owner is building himself. In that case, the so-called con- tractor is (as to other lienors) but the agent of the owner. This would be the natural result, and is not a forced conclusion made by the statute^': Gibbs v. Tally, 133 Cal. 373, 377, 65 Pac. 970. 20 No Personal Liability.— The contracting owner is not personally liable on a contract made by his statutory agent, but his property is subject to liens therefor: California Lumber Co. v. Schmitt, 74 Cal. 625, 627, 16 Pac. 516; Kellogg v. Howes, 81 Cal. 170, 180, 22 Pac. 509, 6 L. R. A. 588; Davies-Henderson Lumber Co. v. Gottschalk, 81 Cal. 641, 647, 22 Pac. 860; Santa Clara Val. etc. Lumber Co. v. Williams. 31 Pac. 1128, 1129B, 1130 A; First Nat. Bank v. Per- ris Irr. Dist., 107 Cal. 55, 65, 40 Pac. 45; Wood v. Oakland etc. Transit Co., 107 Cal. 500, 502, 40 Pac. 806; McMenomy v. White, 115 Cal. 339, 343, 47 Pac. 109; Kennedy & Shaw Lumber Co. v. Priet, 115 Cal. 98, 46 Pac. 903; Madera Flume etc. Co. v. Kendall, 120 Cal. 182, 184, 65 Am. St. Rep. 177, 52 Pac. 304; Gnekow v. Confer, 48 Pac. 331;, Marchant v. Hayes, 120 Cal. 137, 139, 52 Pac. 154; McClain v. Hutton, 131 Cal. 132, 144, 61 Pac. 273. In California Lumber Co. v. Schmitt, 74 Cal. 625, 627, 16 Pac. 516, it was held that the Code of Civil Procedure, section 1183, does not mean to establish the personal liability of the contracting owner to all these various lien claimants, but rather *' means to preserve the right of the materialman who has duly filed his lien according to the statute, in cases where the contractor has failed by reason of not filing his contract to preserve the materialman 's rights 856 mechanics' liens. § 549 thereunder; and the language of the statute an- nounces the law to be that where such is the case the materialman may duly file his lien, and enforce it just as if the owner of the building had bought from and contracted for the materials with the ma- terialman, in the beginning, instead of the contrac- tor/' THE LIEN-CLAIM. 857 AETICLE 3. THE LIEN-CLAIM. Subdivision 1. Definition, 550. Lien-claim defined. Subdivision 2. Extent of Lien-claims. 551. Who lien-claimant and what lienable in case of structure. 552. Who lien-claimant and what lienable in case of mining property. 553. Same, in respect to noncontracting owner. 554. Incidence of lien-claim against leased machinery upon mining property. 555. Mining claim defined. 556. Who lien-claimant and what lienable in case of certain city street and other improve- ments. 557. Certain persons presuined to be owner's agent for purposes of creating lien-claim. Subdivision 3. Limitations on Rights to Lien-claims, 558. Property of incompetent persons not lienable. 559. Property of estate usually not lienable. 560. Public property not lienable. 561. Bond required in lieu of lien in case of public works. 562. When contract void, original contractor for- feits lien. Subdivision ^. Assignment. 563. Lien-claim unassignable. 858 mechanics' liens. § 550 SuMivision 5. Waiver of Lien-claim. 564. Written consent essential to valid waiver. Snbdivkion 1. Definition. 550. Lien-Claim Defined. A lien-claim is the individual privilege, con- ferred by law upon certain persons, of securing a lien.^ Wliat persons are lien-claimants and the proceedings prerequisite to securing a lien are set forth in the following sections. Subdivision 2. Extent of Lien-Claims. 551. Who Lien-Claimant and What Lienable in Case of Structure. Every person^ who, pursuant to the terms of a contract therefor, furnishes personal services directly on^ any particular building, wharf, 1 Mills V. La Verne Land Co., 97 Cal. 254, 33 Am. St. Eep. 168, 32 Pac. 169. s Every Person (in Certain Relation to the Prop- erty) is a Lien Claimant.— Code of Civil Procedure, section 1183, as amended, in effect May 17, 1885, enumerates these persons exhaustively: ''Mechan- ics, materialmen, j^ 85n [ contractors, subcontract- ors, ] n85 ] artisans, architects, )■ 85n ]■ machinists, builders, miners, and all persons ■{ n85 ■{ and labor- ers of every class." The basis of this enumeration was section 1183 as amended, in effect April I'o, 1880, which very much restricted the persons to whom liens were allowed. Historical.— The code, as adopted 1872, in effect January 1, 1873, to April 15, 1880, read, ''every per- son"; while Stats. 1850, c. 87, sec. 1, in effect April § 551 THE LIEN-CLAIM. 859 15, 1850, repealed July 1, 1855; Stats. 1855, c. 130, sec. 1, and Stats. 1856, c. 134, sec. 1, in effect July 1, 1855, repealed June 25, 1862; and Stats. 1867- 68, c. 448, sec. 1, in effect March 30, 1868, repealed January 1, 1873, enumerated the lien-claimants ex- haustively. The statute of 1862 (Stats. 1862, c. 297, sees. 1, 3 and 17), in effect June 25, 1862, repealed March 30, 1868, in case of a valid contract with the contractor owner, gave a lien solely with those who contracted directly with such owner, but provided that this lien should inure primarily to the benefit of all persons who, as employees of the original contractor, furnish work or materials; and where there was no valid contract, everyone furnishing work and mate- rials had a lien for the value thereof (see Dore v. Sellers, 27 Cal. 588, 593, 594). 3 Personal Services must be Performed Directly upon Structure. — A person employed by an original contractor to cook for the men engaged in excavatins^ a reservoir, the cooking being done on the ground as the work progressed, is not entitled to a lien. Not the particular place where the cooking was done, but the nature of the services and their relation to the work which is being constructed, is the deter- mining factor. No lien is given for indirect and re- mote services (Stats. 1868) : McCormick v. Los Ange- les Water Co., 40 Cal. 185. A person employed by an original contractor for ''the hauling of materials used in the construction of [the] building'' has a lien. ''His labor was per- formed on the biTilding in the sajne sense as that of the men who lifted the brick from the' ground to the upper parts of the building'': McClain v. Hut- ton, 131 Cal. 132, 137, 138 (61 Pac. 273), 63 Pac. 182. A person, however, who does not "pterform labor upon the building or furnish materials therefor, but v^as employed by the brickmen to haul brick for them, and had no connection with the contractor, who owed him no liability," has no lien-claim. "His position is not different from that of laborers who made the brick": Adams v. Burbank, 103 Cal. 646, 051, 37 Pac. 640. 860 mechanics' liens. § 551 bridge, ditch, flume, aqueduct, well, tunnel, fence, machinery, railroad, wagon road, or other structure^ in any capacity whatever,^ or mate- 4 Objects for Work on Which Lien Claim Given.— Code of Civil Procedure, section 1183: **Any [o85o] [a] building, wharf, bridge, ditch, flume, aqueduct, [85o] [b] }^99ii|^ well ^ n99 -| , tunnel, fence, ma- chinery, railroad, wagon road, or other structure. ' * As enacted 1872; with amendments in effect April 15, 1880, May 17, 1885, and April 30, 1899. (a) Here was omitted: ''Mining claim." (b) Here was omitted: ''To create hydraulic power. ' ' Historical.— StSits. 1850, c. 87, sec. 1, in effect April 12, 1850, gave a lien claim merely on "any building or wharf (see Burt v. Washington, 3 Cal. 246), but was extended by amendment, in effect May 17, 1853 (Stats. 1853, c. 148) to include "any bridge, ditch, flume or aqueduct constructed to create hy- draulic power or for mining purposes." Stats. 1855, c. 130, sec. 1, effective July 1, 1855, changed the phraseology to "building, wharf, or other superstruc- ture," and this language was preserved in Stats. 1856, c. 134, sec. 1, in effect April 19, 1856. In Elli- son V. Jackson Water Co., 12 Cal. 542, 554, it was held that a ditch to carry water, with here and there connecting flumes over ravines and gulches, is in its general nature an excavation, and not a superstruc- ture, and hence no lien thereon is given under the acts of 1855 and 1856. See, also, Horn v. Jones, 28 Cal. 194, 203. By Stats. 1857, c. 87, in effect March 18, 1857, the act of 1856 was accordingly enlarged to include any "bridge, ditch, flume, or aqueduct, to create hydraulic power or for mining purposes," which was the same as the act of 1850 as amended May 17, 1853. By Stats. 1862, c. 297, sec. 1, in ef- fect June 25, 1862, the lien-claim was again enlarged to include any tunnel, fence, machinery, and, by amendment, in effect April 4, 1864 (Stats. 1863-64, c. § 551 THE LIEN-CLAIM. 861 411), to include any railroad or wagon road. By Stats. 1867-68, c. 448, sec. 1, in effect March 30, 1868, tlie phrase ^^ mining claim'' was included, making the enumeration the same as that included in the code as enacted 1872. Neither swings nor seats, part of the improvements on a park, are structures or buildings within the meaning of the code; hence, no lien is acquired for materials used in their construction: (Code 1878; Lothian v. Wood, 55 Cal. 159, 163. 5 Under What Circumstances Lien Claim Given for Labor. — Code of Civil Procedure, section 1183, gives the lien claim for ^^ performing labor upon or furnish- ing materials to be used in the construction, alteration, }► 87n [- addition to -|n87-{, or repair, [- 85n I either in whole or in part ■{ ii85 -\ , of any building,'' etc. As enacted 1872, with amendments in effect May 17, 1885, and March 15, 1887. Stats. 1867-68, c. 448, sec. 1, read the same as the code as amended in 1885. In the phrase *'all persons and laborers of every class performing labor upon," ^Hhe preposition 'upon' refers to and has for its objective the noun 'building,' and is to be read as though the word * building' with its qualifying word ^any' followed immediately upon the word ^upon. ' The lien-claiivi to materialmen is only given to those who furnish materials to be used in the * construction, alteration, addition to, or repair' of the building, etc.; but that to laborers is given to all who perform labor upon it, whether technically coming within the definition of construction, alteration, etc., or not": Palmer v. La- vigne, 104 Cal. 30, 31, 32, 37 Pac. 775. Historical. — Under Stats. 1850, c. 87, sec. 1; Stats. 1855, c. 130, sec. 1; and Stats. 1856, c. 134, sec. 1, in effect from April 12, 18'50, to June 25, 1862, the lien-claim was for '' performing labor or furnishing materials for the construction or repair, of any build- ing," etc.; and the court held that the work need not be done in the making or erection of a building; but 'Hhe alteration of a building to adapt to other tban the original uses, or even to change its form or 862 mechanics' liens. § 651 rials^ to be used'' and which have been nsed^ in the construction, alteration, addition to, or re- pair of the same, has a lien-claim structure, brings it within the provisions of the stat- ute^ ^: (Stats. 1856) Donahue v. Cromartie, 21 Cal. 80, 86. Under Stats. 1862, c. 297, sees. 1 and 17, the lien, as to persons contracting directly with the con- tracting owner was ^^for the construction, or part oP the construction, repair, or furnishing materials for the construction or repair of any building,'^ etc.; and when the contract is void, the same for all other persons. An original contractor who moves a dwelling-house has a lien thereon for such service: Palmer v. La- vigne, 104 Cal. 30, 31, 32, 37 Pac. 775. The lien of a subcontractor who grades a lot as a part of the general undertaking of constructing a building is authorized by this section, not section 556, below: Macomber v. Bigelow, 126 Cal. 9, 11, 58 Pac. 312. 6 Materials. — A lien is not allowed for the price of a building sold ready made and merely to be moved onto the premises: Selden v. Meeks, 17 Cal. 128. Where such a building is to constitute part of a larger structure, the erection of which was provided for by the same agreement, it may be regarded with propriety as material, and hence a lien therefor is allowable: Selden v. Meeks, 17 Cal. 128. Paper, or decorating a house with paper decora- tions, is as much the subject matter of a lien as painting or putting on the hard finish of plaster. The paper loses its character of personalty, becomes af- fixed to the building and its removal therefrom re- sults in the destruction of value: La Grill v. Mallard, 90 Cal. 373, 376, 27 Pac. 294. Where a materialman's contract provided that he should furnish iron couplings at a fixed price per pound, and should also be paid the reasonable value § 551 THE LIEN-CLAIM. 863 of all patterns for such couplings, and of the boxes in which they were shipped, the boxes and patterns arc too remote from the actual work of construction to permit their value to be made a lien, especially because they remained the property of the original contractor, were made the subject of separate charges by the materialman, and were not incorporated into the improvement, thereby differing from the cartage of materials: First Nat. Bank v. Ferris Irr. Dist., 107 Cal. 55, 66, 40 Pac. 45. A lien is allowed under this provision for mate- rials furnished for the construction of a cement side- walk constructed in connection with a building un- der circumstances showing it to be a part thereof- McGlain v. Hutton, 131 Cal. 132, 137, 63 Pac. 182. One who advances money as a loan, although ex- ])ressly for the payment of labor and material used in the erection of a building has no lien-claim: Godeffroy v. Caldwell, 2 Cal. 489, 56 Am. Dec. 360; Cardenasso v. Antonelle, 127 Cal. 382, 387, 59 Pac. 765. No materialman of a materialman has a lien-claim : Eoebling's Sons Co. v. Humboldt etc. Power Co., 112 Cal. 288, 291, 292, 44 Pac. 568; Wilson v. Hind, 113 Cal. 357, 45 Pac. 695. In West Coast Lumber Co. v. Newkirk, 80 Cal. 275, 280, 22 Pac. 231, in computing the value of materials furnished, it was thought that the cartage might be considered an element therein. Likewise, in Jones V. Kruse (Cal., March 13, 1903), where in a notice of claim of lien, tha value of lumber, ^ Hncluding cartage thereon,'' was stated to be a certain sum, the claim was held not to have been rendered void by the in- sertion of the italicized words, as ^Hhe cost of trans- portation of goods necessarily enters into their value.'' 7 Materials must be Furnished to be Used.— In or- der to be the ground of a lien, the materials must not only be used, but furnished to be used on the partic- ular building upon which the lien is claimed: Bot- tomly V. Grace Church, 2 Cal. 90; Donahue v. Crom- 864 mechanics' liens. § 551 (1) against the structure^ as aforesaid^ upon which the personal services or materials have been bestowed,'* artie, 21 Cal. 80; Roebling's Sons Co. v. Bear Yalley Iir. Co., 99 Cal. 488, 34 Pac. 80; Weatherly v. Van Wyck, 128 Cal. 329, 60 Pac. 846. Averment and Proof that the materials were ex- pressly furnished to be used on the building upon which they were used is essential: Bottomly v. Grace Church, 2 Cal. 90; Houghton v. Blake, 5 Cal. 240; Holmes v. Eichet, 56 Cal. 307, 310, 38 Am. Eep. 54; Cohn V. Wright, 89 Cal. 86, 88, 26 Pac. 643; Neihaus V. Morgan, 45 Pac. 2'55, 257A. A Finding to that effect must be made by the court: Wilson V. Nugent, 125 Cal. 280, 284, 57 Pac. 1008. Parol Proof of the intended use or purpose for which material is furnished is admissible in evidence when the written contract is silent on the subject. It does not contradict nor add any new term to the written contract; it merely shows the purpose to which work stipulated for in the written contract is or was designed to be applied: Donahue v. Cromar- tie, 21 Cal. 80. 8 Materials must be Actually Used.— In order to be the ground of a lien, the materials must not only be furnished to be used, but must be actually used on the particular building up-on which the lien is claimed: Barrows v. Knight, 55 Cal. 155, 159. J> Lien Attaches upon Structure.— The object of the statute is to give the mechanic a lien upon what- ever interest the contracting owner has, whether m the superstructure, or in the land and superstructure: (Stats. 1856) McGreary v. Osborne, 9 Cal. 119. Sa it is no objection to the lien-claim of an architect upon a structure that at the time the contract was entered into the contracting owner owned no interest in the land upon which the structure was to be con- structed: Pacific Mutual Life Ins. Co. v. Fisher, 10& Cal. 566, 569, 42 Pac. 154. § 551 . ,TITE LTEN-CLAIM. 865 Usually the Lien must he SonyM upon the Whole Structure.— Where the whole structure, as an aque- duct, ditch, flume, pipe line, or railway, is continu- ous and of contemporaneous construction, and the parts thereof are useless without one another, or arc so interdependent and intimately related that they must be regarded as an entirety, the lien-claim lies against the whole structure. In Willamette etc. Co. V. Krem.er, 94 Cal. 205, 210, 211, 29 Pac. 633, the court says: ^^The statute gives a lien upon the en- tire building for any portion of the labor done or materials furnished therefor, and there is no provi- sion for a lien upon a portion of a building, or for the sale of a part of a building to satisfy a lien upon the whole.'' Where materials were furnished an original con- tractor who had contracted to l?y the track on a nine-mile extension of the Sierra Valleys and Mo- hawk E'lilway westward to a point nine hundred feet west of Kirby Mill, the roadbed having been already graded, and where the whole railway consisted of this nine-mile stretch, together with fourteen miles then in operation, and seven miles soon afterward constructed, the materialman properly filed his lien claim for the materials furnished by him against the whole railway, including that already built and that projected, and against the land necessary for the con- venient use and occupation of the whole: Bringham y. Knox, 127 Cal. 40, 59 Pac. 198. Where an original contractor for the construction of a railway one hundred and twenty-three mile? long made a subcontract for the grading and other work of preparing for the ties and rails of a section seventy-four and one-quarter miles long, the contract price of which was to be paid from time to time as twenty-mile sections were completed, and where the original cod tractor failed to make the first payment Avhen due, and the subcontractor filed a lien on the twenty-mile section then completed, the court held that, as the subcontract was entire, and its perform- ance was not prevented, nor was it rescinded, a con- Liens— 55 866 mechanics' liens. . § 5 'I (2) against every interest of every contractiii^ owner in the land required for its convenient use and occupation^ the amount whereof is to be determined by the court on rendering judg- ments^ and tractor or subcontractor is not entitled to **file suc- cessive iiens for work and materials performed and furnished under an entire contract ^^; but he may ^* acquire only one lien, and for this purpose his claim must be filed within the time specified in the statute after the completion of the work'^ Cox v. Western Pac. E. E. Co., 44 Cal. 18, 28; affirmed, 47 Cal. 87, the court saying: ^^The amended complaint [in which was inserted an averment that plaintiffs were prevented from completing the contract] is in no respect better than the original complaint. It still counts on an entire contract, and seeks the fore- closure of a lien which was filed before the comple- tion of the work, and upon a portion of the road./' The court says the lien must be filed against the ''whole work,-' but does not spiecify whether it means the entire railway, one hundred and twenty- three miles in length, or the whole section, seventy- four and one-quarter miles in length, which was un- dertaken by the subcontractor. Sometimes a Lien is Allowed on Section of Structure. Where the different sections of a structure are con- structed at different times by different contractors, and the sections are in a measure independent, a lieu- claim is sometimes allowed against the section cov- ered by the original contract under which the work or materials were furnished. Where an irrigation company owning a reservoir and pipe line entered upon the construction of a lengthy canal, consisting of four divisions, to be constructed under separate contracts for each division, the plan of which did not include the pipe line as any part of the canal, but was to follow the route of the pipe line, and after two divisions were completed, they were temporarily connected with the pipe line, whereupon work ceased § 551 THE LIEN-CLAIM. 867 Upon the other two proposed divisions, and the whole property passed into the hands of a receiver, lien- claimants for materials used in the construction of the two completed divisions may file liens thereon without including the two uncompleted divisions or the pipe line or the reservoir: Pac. etc. Co. v. Bear Valley Irr. Co., 120 Cal. 94, 65 Am. St. Eep. 158, 52 Pac. "^136. Where an original contract embraced several out- buildings, but the claimi of certain lien-claimants other than the original contractor arose upon one of such buildings, a lien claim may properly be claimed by each claimant merely against the building upon which he bestowed labor or materials: Brunner v. Marke, 98 Cal. 374, 33 Pac. 265; Macomber v. Bige- low, 126 Cal. 9, 12, 58 Pac. 312. 3 Code of Civil Procedure, section 1185: ''The land upon which any building, improvement, |- 99n [ •well -{ n99^ , or structure is constructed, together with a convenient space about the same, or so much as may be required for the convenient use and occu- pation thereof, }■ 73-4n [ [a] to be determined by the court on rendering judgment ] n73-4^ , is also subject to the lien, if \- 73-4f }- at the commencement of the work, or of the furnishing of materials for the same -' f73-4-j , the land belonged to the person who caused said building, improvement, |^ 99n )■ well ■\ n99 ■{ , or structure to be constructed, altered, or repaired; but if such person owns less than a fee simple estate in such land, then only his interest therein is subject to such lien. ^' As enacted 1872, with amendments, in effect Mav 29, 1874, and April 24, 1899. (a) Before the insertion of this provision the rule was the same: Tibbetts v. Moore, 23 Cal. 208, 213. Provisions similar to the code as enacted 1872 are found in the Mechanic's Lien Laws of 1856, sec. 4; 1S62, sec. 3; and 1868, sec. 2; in effect since April 19, 1856. Before that date the amount of land nec- essary to the convenient use and occupation of the improvement was limited to five hundred square feet: See Stats. 1850, c. 87, sec. 6, and 1855, c. 130, sec. 5. 868 mechanics' lieas. § 551 (3) against^^ every interest of every other per- son in sueli land who^ having obtained knowl- edge of the actual improvement thereof fails to post within three days thereafter^ or having obtained knowledge of the intention to improve The land upon which the building is constructed is necessarily subject to the lien to the extent of the contracting owner ^s interest therein, but if the plain- tiii' would claim that more than that is necessary for the convenient use and occupation of the building, he must make appropriate averments to that effect in his complaint: Willamette etc. Co. v. Kremer, 94 Cal. 205, 211, 29 Pac. 633 j Sachse v. Auburn, 95 Cal. 650, 30 Pac. 800. Where a lien attaches to a leasehold interest which was forfeited or surrendered after such attachment, the estate is still subject to the burden of the lien; for, although the leasehold is thereby merged in the fee, yet the merger will not be allowed to operate to defeat the rights of third parties wliich have in- tervened before the merger took effect: Gaskill v. Trainer, 3 Cal. 334, 340. Amount of Land Necessary for Convenient Use.— ' * The uses to which a building is to b-e put must man- ifestly, many times, determine the quantity of land necessary to the convenient use and occupation thereof. If erected as a mill for sawing luipiber, the space required for a log and lumberyard would be re- garded as necessary to its use, while similar space around a building for a watch factory might not be at all necessary. This thing should be borne in mind; it is for the convenient use and occupation of the building that the land about the same is given by our statute; a flouring mill erected on a large grain ranch would require a given space about it for the purposes incidental to its operations; it might require the whole ranch to create business for it, -but it would not follow, under our statute, that the entire ranch would be subject to a lien for its erection'': Tunis v. I § 551 THE LIEX-CLAIM. 869 Lakeport Agr. Park Assn., 98 Cal. 285, 286, 287, 35 Am. St. Eep. 180, 33 Pac. 63. The statute means exactly what it says. It does not mean that sufficient land around the dwelling.- house to support the owner while living there should be set apart. Neither the productiveness nor non- productiveness of the soil, nor the profit derived from its cultivation are material elements in determining this question. This source of income or support of the owner or tenant of the building is a foreign matter: Cowan V. Griffith, 108 Cal. 224, 48 Am. St. Eep. 82, 43 Pac. 42. Aver7nent.— There is no material distinction between an averment that a lot is necessary for the convenient use and ^^enjoymenf of a building and that it is necessary for the convenient use and ^' occupations^ thereof: Ward v. Crane, 118 Cal. 676, 50 Pac. 839, 841 A. The amount of land thus to be made subject to the lien is an issuable fact. Willamette etc. Co. v. Kre- mer, 94 Cal. 205, 211, 29 Pac. 633. If this issue is not raised by the pleadings, the court cannot pass upon it in rendering judgment: Green v. Chandler, 54 Oal. 626. 11 Noncontr acting Owner With Know^ledge Must Disclaim Responsibility.— Code of Civil Procedure, sec- tion 1192: ^ ^ Every building or other improvement men- tioned in section 1183 of this code, constructed upon any lands with the knowledge of the owner, or the per- son having or claiming any therein, shall be held to bave been constructed at the instance of such owner or person having or claiming any interest therein, and the interest owned or claimed shall be subject to any lien filed in accordance with the provisions of this chapter, unless such owner or other person having or claiming any interest therein shall, within three days after he shall have obtained knowledge of the con- struction, alteration or repair, or the intended con- -struction, alteration, or repair, give notice that he will not be responsible for the same, by posting a notice in writing to that effect, in some conspicuous place upon said land, or upon the building or other 870 mechanics' liens. § 651 improvement situated thereon. New section, in effect May 29, 1874. Historical.— Stats. 1867-68, c. 448, sec. 4," in effect March 30, 1868, superseded by code January 1, 1873, reads substantially the same. In Johnson v. DeAvey, 36 Cal. 623, it was held that under the statute of 1862, no lien could be obtained on the interest of noncontracting owners in the land upon which the improvement was made. The same was* undoubtedly true concerning all the earlier statutes. Provision is Constitutional. — ^^The power of the legislature to enact this provision is not only free from doubt, but the justice and wisdom of the meas- ure are obvious. If the owner of land, or anyone claiming an interest in it, knowingly permits build- ings or improvements to be erected on it, without giving notice that it is done without his consent, it is eminently just that he shall be held to have acquiesced in if: Fuquay v. Stickney, 41 Cal. 583, 587. Constitutionality reaffirmed. Hicks v. Murray^ 43 Cal. 515, 521, 525, 526. Among the cases in which the liability has been enforced are: Moore v. Jack- son, 49 Cal. 109; Harlan v. Stufflebeem, 87 Cal. 508, 513, 25 Pac. 686; West Coast Lumber Co. v. Newkirk^ 80 Cal. 275, 22 Pac. 231, and Evans v. Judson, 120 Cal. 282, 52 Pac. 585. There is no conflict between section- 1185, on which the second subdivision of this section is founded, and section 1192, above: West Coast L-umber Co. v. Xewkirk, 80 Cal. 275, 278, 279, 22 Pac. 231; Phelps v. MaxwelPs Creek Gold Min. Co., 49 Cal. 336, 338. Every Owner of Every Interest Must Give Notice.— Thus a holder of a deed of trust must give notice. A deed of trust to secure an indebtedness is not a mortgage or other encumbrance, but a deed convey- ing the fee, defeasible on payment of the debt, and hence conveys an interest in the land. The holder thereof must give notice of nonresponsibility to pre- vent the lien from attaching to his interest: Fuquay V. Stickney, 41 Cal. 583, 587. But a Mortgagee is not Required to Give Notice.— A mortgagee does not own or claim any interest in § 551 THE LIEN-CLAIM. S71 the property subject to his mortgage, and does not Deed to disclaim responsibility: Williams v. Santa Clara Min. Assn., 66 Cal. 193, 200, 201, 5 Pac. 85. JSTor does a vendor holding a vendor ^s lien have such an interest in the property subject to his lien as requires him to disclaim responsibility: Kuschel V. Hunter, 50 Pac. 397, 398A. What Amounts to Knowledge.— Where the lessee of a quartz-mill undertook some impirovements, and the president of the corpioration owning the quartz-mill visited it during the progress thereof, and was informed of the repairs then in progrciss, this is prima facie sufficient to charge the corporation witli knowledge of the fact that work was going on, and no notice disclaiming responsibility being given, the interest of the corporation becomes subject to any liens which may be secured: Phelps v. Maxwell ^s Creek Gold Min. Co., 49 Cal. 336. Although a director of a corporation is an ageni: thereof, yet, if he acquires knowledge of the con- struction of an improvement on property in which such corporation owns an interest, either casually or privately or by rumor, and does not inform the cor- poration or its agents thereabouts, the corporation is not chargeable with knowledge thereof. Only when the director is engaged officially in the business of the corporation, is the corporation charged with his knowledge: Lothian v. Wood, 55 Cal. 159, 162. Where buildings were constructed, with the per- mission of the noncontracting owner, previously given, the fact that they may not have been con- structed in the particular form, or at the place, authorized, does not relieve such owner from knowl- edge: Santa Monica Lumber etc. Co. v. Hege, 119 Cal. 376, 379, 51 Pac. 555. Where a lessor makes a short term lease with notice that the lessee intends to make improvements, especially where the lessor may share in the benefits of such improvements, lien-claimants have a claim against his interest unless he posts a notice dis- claiming responsibility, on the ground that he has 872 mechanics' liens. § 551 sucli land fails to post before the expiration of three days after the actual commencement of the improvement/^ in some conspicnons place upon the land or some structure thereon, a notice disclaiming responsibility for the im- provement, as security for the payment of his compensation for the personal services or materials bestowed upon the structure by him under his contract.^^ A noncontracting owner is not, however, ren- dered personally liable to any lien-claimant by failing to post a notice disclaiming responsibil- ity.i* constructive notice of the improvement: Evans v.. Judson, 120 Cal. 282, 52 Pac. 58o. Averment in Complaint.— It is not necessary to aver in the complaint that the noncontracting owner diil not give notice of nonresponsibility in order to charge his interest with the lien: West Coast Lumber Co. v. Newkirk, 80 Cal. 275, 277, 22 Pac. 231. 12 Birch V. Magic Transit Co., Cal., July 2, 1903. 13 As Security for His Compensation.— ^^ That the protection of the mechanics' lien law is not confined to those who actually perform labor, but is extended to subcontractors and others, is settled by the lan- guage of the code: Code Civ. Proc, sees. -1183, 1184. A fair construction of these sections gives to the subcontractor a lien for the work done on the build- ing by his employees, and this, too, where the original contract is void. If it had been intended by the legislature that a subcontractor should have a lien for nothing except his own personal labor, they should have made the statute read, 'shall have a lien upon the property upon which they have performed labor.' Instead of the word 'performed' the legislature used % 552 THE LIEN-CLAIM. 873 552. Who Lien-Claimant and What Lienable in Case of Mining Property.^^ Every person who, pursTiant to the terms of a contract therefor, furnishes personal servicer the word ^bestowed'; which means 'used^ or ^placed/ and never means ^performed/ This language shows that it was intended to give a subcontractor a lien for the labor that he caused his employees to perform on the building. The fact that the original contract was void can m no wav affect the question under consideration' ': Macomber v. Bigelow, 126 Cal. 9, 14, 58 Pac. 312. ' 14 A Personal judgment cannot be rendered against a noncontracting owner: Phelps v. Maxwell's Creek Gold Min. Co., 49 Cal. 336. 15 Code of Civil Procedure, section 1183, first sen- tence, second clause, provides: ^^And any person who performs labor in any mining claim or claims, \- 03n j- or in or upon any 'real property worked as a mine, either in the development thereof, or in working thereon by the subtractive pTOcess ■{ n03 ^ has a lien upon the same, and the works owned and used bj the owners for reducing the ores from such min- ing claim or claims )■ 03n |- or real property so worked as a mine -| n03 ] , for the work or labor done or mat- erials furnished by each respectively, whether done or furnished at the instance of the owner [ 03n ]■ of such mining claim or claims or real property worked us a mine or days after the completion of or after thirty days^ cessation from labor npon^ any improvement,^ file for record with the recorder of the county, terest in the property at the time the notice should be filed, or subsequently thereto, unless his interest is not subject to the lien. It does not, however, af- fect a contracting owner who has transferred hi» interest before the expiration of the time within which the notice is required to be given, nor a non- contracting owner, who has no knowledge of the im- provement or who has ported a notice disclaiming responsibility therefor. The persons, then, who are required under penalty to file this notice are: Either a contracting owner or his successor in interest at the time the notice is required to be filed, or a non- contracting owner whose interest is subject to the lien. 4 Time When Notice must be Filed.— The statute at the outset says that the notice must be filed ^'within ten days after the completion'' of the im- provement, '^or within forty days after cessation from labor upon any unfinished contract, or upon any unfinished building, improvement, or structure, or the alteration, addition to, or the repair thereof. ' ' Where, however, there is a cessation from labor, the stat- ute provides that *'in case of cessation from labor for thirty days'' the notice must state the ^^date on which such cessation actually occurred"; and that *^ cessation from labor for thirty days upon any con- tract or upon any building, improvement, or struc- ture, or the alteration, addition* to, or repair there- of, shall be deemed equivalent to a completion there- of for the purposes of this chapter." In view of these provisions, the intention appears to be that in case of cessation from labor the notice must be filed not until after the expiration of thirty days after the cessation from labor, but within forty days thereafter; in other words, it must be filed within ten days after thirty days' cessation from labor. § 666 DUTIES OF OWNER. 903 Where a number of original contracts have been let in the course of the same improvement, and these contracts are completed at widely different times, or work upon some of them ceases for thirty days, while on others it is carried on continuously for more than thirty days after such cessation, the question arises: Is the notice of completion or cessation from labor to be filed within ten days after the completion of or after thirty days' cessation from labor upon each original contract, or upon the whole improvement? The answer is found in the fact that the statute ap- parently contemplates that but one notice of com- pletion should be filed in the course of any improve- ment, and this being the case, it must be evidently filed after the final completion of or cessation from labor upon the whole improvement, while if a notice was to be filed upon the completion of or cessation from labor upon each original contract, a plurality of notices would be required in many instances. 5 In Case of What Improvement Notice Should be Filed. — The opening clause of section 1187 of the code requires the notice to be filed in case of any improvement '^mentioned in section 1183 of this code.'' But if the notice is not filed, certain per- sons there enumerated are '^estopped in any proceed- ing brought to foreclose any mechanics' lien or liens, provided for in this chapter, from maintain- ing a defense therein based on the ground that said lien or liens have not been filed within the time provided in this chapter." The 'estoppel is broad and inclusive, and by its terms operates equally in the case of a lien for certain city street improvements under section 1191 of the code (see section 556 above), as in case of a lien under section 1183 of th« code, and is supported by the same reason in both cases. Moreover, the latter half of section 1187 of the code, in prescribing the time within which the lien claim must be filed, allows in every case in which a notice of completion of cessation from labor has not been filed a period of ninety days within which to 904 mechanics' liens. § 566 or city and county^ in which such property, or some part thereof, is situated, a verified notice® setting forth (1) the date of such completion or cessation from labor,'' (2) the name of the contracting owner,® (3) the nature of his interest in such improve- ment and in the property on which it is situ- ated,® and file the lien-claim, equally in the case of a city street improvement contract under section 1191 of the code as in that of an improvement under section 1183. The same inducement is thus offered for filing tho notice in every case. The opening clause of the stat- ute, then, should be considered elliptical, and inter- preted to require notice of completion or cessation from labor to be filed in every case where an im- provement lien is obtainable, whether under section 1183 or section 1191 of the code. 6 The code language is: ''File for record in the ofiice of the county recorder of the county, or city and county, in which such property or some part thereof is situated, a notice .... and said notice must be verified by said owner or some other per- son in his behalf.'' 7 Where a notice of cessation was filed about thirty- two days after the cessation from labor, an error of one day in the statement of the date of cessation, being (under the circumstances) nonprejudicial to lien-claimants, does not vitiate the notice: Boscow v. Patton, 136 Cal. 90, 68 Pac. 490. 8 The code language is: ''The name and the nature of the title of the person who caused the said build- ing, improvement, or structure, to be erected, or said alteration, addition to, or repair to be made." ^ 566 DUTIES OF OWNER. 905 (4) a description of such property sufficient to identify it with reasonable certainty.^ Such notice must be recorded by the recorder up- on receipt of a fee of one dollar therefor>^ ^ The code language is: *'A description of tlie property sufficient for identification/^ A similar expression is interpreted in section 568, note 15. 10 See Code of Civil Procedure, section 1187, third sentence. 906 mechanics' liens. AETICLE 5. THE PEKFECTED LIEN. Snhdivisio7i 1. P^^oceedings Whereby Lien is Perfected, 567. Every lien-claimant may perfect his lien by filing notice. 568. Eequisites of notice of claim of lien. 569. Time of filing notice when notice of completion or cessation filed. 570. Time of filing notice when notice of completion of cessation not filed. 571. Original contract as evidence of completion. 572. Matters treated as completion for purposes of filing notice. 573. Trivial imperfection to be disregarded. 574. Notice of claim of lien cannot be reformed or amended. 575. Substantial observance of requirements essen- tial. 576. Filing fraudulent notice works forfeiture of lien. 577. Claimant who files joint claim must segregate separate amounts claimed. 8 ithdi vision 2. Time of Attachment of Liens. 578. Contractor's lien attaches at commencement of work on contract. 579. Laborer's lien at commencement of labor. 580. Materialman'^ lien at commencement of fur- nishing materials. § 567 PERFECTING THE LIEN. 907 SuMivision 3. Operation of Perfected Lien. 581. Notice compels contracting owner to retain cer- tain moneys. Subdivision //. Assignment of Lien. 582. Assignment of lien. Subdivision 1. Proceedings WJierehy Lien is Per- fected. 567. Every Lien-Claimant may Perfect His Lien by Filing Notice. Each person upon whom the privilege of ob- taining an improvement lien is conferred may, in his own right/ perfect his lien by filing a no- tice of claim of lien as hereinafter set forth. C{1) the claimant's name/ )-> 568. Eequisites of Notice of Claim of Lien.^ Every notice of claim of lien^ must be verified by the oath of the claimant or some other per- son/ and filed for record with the recorder^ of the county, or city and county, in which some part of the property sought to be charged is situ- ated/ and must set forth C I Every Lien Claimant may File Notice in His Own Right. — Where a subcontractor filed a lien-claim in which he includes the value of work done by his employees, who are persons also entitled to lien claims, ^'they were not precluded by his filing a lien from filing a claim of lien in their own behalf, since they could not know whether he would prosecute his claim to judgment^' : Macomber v. Bigelow, 126 Cal. 9, 15, 58 Pac. 312. 908 mechanics' liens. § 568 (2) the general character of the work or mate- rials furnished by the claimant,^ (3) the amount claimed to be dne after deduct- ing all just credits and offsets,® (4) the name, if known, of each owner or re- puted owner at the time of filing the claim of any interest sought to be charged with the lien^ [and if not known, a statement to that ef- fect] ,i« (5) the name of the person by whom he was employed or to whom he furnished materials/"*- (6) the express^^ terms of claimant's contract, including price,^^ time of payment,^'* and con- ditions thereof, and (7) a description of the property sought to be charged with the lien sufficient to identify it with reasonable certainty.^^ The recorder must record each such notice in a book kept by him for that purpose, which record must be indexed as deeds and other conveyances are required by law to be indexed, and for which he may receive the same fees as are allowed by law for recording deeds and other instruments.^^ 2 See Code of Civil Procedure, section 1187, fourth sentence. Historical.— VndeT earlier statutes, there were some requirements in regard to the notice of lien, which are no longer in force. Under Stats. 1850, c. 87, sec. 7, Stats. 1855, e. 130, sec. 6, Stats. 1856, c. 134, sec. 5, the notice was required to state that it was the § 568 PERFECTIXG THE LIEN. 909 intention of the person filing the claim to hold a lien. By Stats. 1850, c. 87, sees. 10 and 11, Stats. 1855, c. 130, sec. 10, Stats. 1856, c. 134, sec. 9, the lien- or upon the satisfaction of his lien was required un- der penalty to file a satisfaction thereof. Other pro- visions required the lien-claimant to give the con- cracting owner or his agent a copy of the notice with- in five days if either of them was in the county, or else to post the same upon the improvement (Stats. 1855, c. 130, sec. 3; Stats. 1856, c. 134, sec. 2, amended 1858, c. 270, sec. 1). The code as enacted 1872 added the provision, repealed March 30, 1874, that '^ if his contract* or any part thereof is in writ- ing, a copy of such writing must be filed with and made a part of his claim.'' 3 It has been thought, apparently, that the notice must state that the benefit of the lien law. is claimed. ''The demand with which the claim of lien con- cluded — that the. claimant have the benefit of the law allowing the lien, was equivalent to a statement that he claimed a lien on the property he had described'': Bringham v. Knox, 127 Cal. 40, 44, 59 Pac. 198; Euss Lumber Co. v. Garrettson, 87 Cal. 589, 595, 25 Pac. 747. 4 Verification. — This section does not require that the verification shall be in form like that attached to a pleading; so where the afiidavit attached to the notice of claim stated that the same ''is true," omit- ting to state "of his own knowledge," it is not de- fective: Arata v. Tellurium Gold etc. Min. Co., 65 Cal. 340, 4 Pac. 195. A notice of claim of lien which is signed and veri- fied by the claimant's attorney, who states "that as such attorney he has knowledge of the facts" and makes the affidavit for the claimant on account of his absence from the state is sufficient in that re- spect: Jones V. Kruse, Cal., March 13, 1903. 5 Must be Filed.— Code of Civil Procedure, sec- tion 1187, fourth sentence, in part: "File }► 73-4n }- for record -| n73-4^ with the county recorder of the county, or city and county, in which such property or 910 mechanics' liens. § 568 some part thereof is situated, a claim .... which claim must be verified by the oath of himself or of some other person.^' Enacted 1872; amended in ef- fect May 29, 1874. Historical.— ±\ substantially similar provision has been effective since July 1, 1855. See Stats. 1855, c. 130, sec. 3; Stats. 1856, c. 134, sec. 2; Stats. 1862, c. 297, sec. 25, amended 1863-64, c. 262, sec. 3; and Stats. 1867-68, c. 448, sec. 5. (Stats. 1856.) After the statement has been re- corded by the recorder, the statement may be with- drawn from file by the lien-claimant. ^'The object of the statute is to give notice to the public of the existence of the lien, and this is as well accomplished by the record alone as by both record and account. As this object is not defeated, or in any manner af- fected, by the removal of the account after it has been recorded, to hold that such removal destroys the lien would be a harsh and illiberal construction of the statute. The fact that the filing of the account is a prerequisite to the bringing of a suit to enforce the lien, does not militate against this view": Mars V. McKay, 14 Cal. 127. 6 In County Where Soma Part of tlie Property is Situated.— The notice of claim of lien is not required to be filed in every county in which any part of the improvement is situated, but merely in one county in which some part is situate: Bringham v. Knox, 127 Cal. 40, 44, 59 Pac. 198. 7 The Claimant's Name.— (Stats. 1868.) The state- ment is not required to be signed by the claimant, provided it appears in the body of the statement who the claimant is and by whom the materials were fur- nished or the labor performed; and provided, also, the statement is verified by the claimant. These would sufficiently identify the claimant and authen- ticate the statement without the actual signature of the claimant to the bodv of the statement: Hicks v. Murray, 43 Cal. 515, 521, 522, 523. 8 General Character of Work— Amount Claimed to be Due.— Code of Civil Procedure, section 1187, fourth sentence, in part: '^A statement of his demand, after : § 568 PERFECTIXG THE LIEN. 911 deducting all just credits and offsets/^ As enacted 1872. Hist07^ical.—St2its. 1867-68, c. 448, sec. 5, in effect March 30, 1868, reads ^'a true statement,^' etc. Stats. 1862, c. 297, sec. 25, effective April 26, 1862, amended 1863-64, c. 262, sec. 3, ^^a just and true account of the demand due to him, after deductilig all proper credits and offsets.^' Stats. 1855, c. 130, sec. 3, and Stats. 1856, c. 134, sec. 2, substitute ^* assets'' for ^^ offsets.'' Stats. 1850, c. 87, sec. 7, required every iien-claimant to file for record within * ^ sixty days after the completion of the building or repairs, no- tice of his intention to hold a lien .... setting forth the amount claimed; upon his failure to do so, the lien shall be lost." The code phrase '^a statement of his demand, after deducting," etc., may be resolved into the two prop- ositions in the text. ^'It was unnecessary to set out the items of the account. Nothing more was required than a statement of the demand, showing [1] its na- ture and character, and [2] the amount due or ow- ing thereon": (Stats. 1856) Brennan v. Swasey, 16 Cal. 140, 76 Am. Dec. 507; (Stats. 1856) Selden V. Meeks, 17 Cal. 128; (Code) Jewell v. McKay, 82 Cal. 144, 150, 23 Pac. 139. Tlie General Character of the Work is All that is Required to he Stated.— "The particular character of the materials need not be stated in the notice": (Stats. 1862) Davis v. Livingston, 29 Cal. 283, 289. So in case of a contract for a gross sum, it is not necessary to place in the statement filed an account giving the items of work and materials: (Stats. 1856) Heston v. Martin, 11 Cal. 41. ^'It is unneces- sarv to state specifically the kind of materials fur- nished": McClain v. Button, 131 Cal. 132, 63 Pac. 182. The Amount Due After Deducting Just Credits and Offsets.— Where a notice failed to state the amount of the claim as affected by payments and offsets, it is invalid: (Stats. 1862) Davis v. Livingston, 29 Cal. 283, 286, 287. But where a notice was objected to 912 mechanics' liens. § 568 because stating the amount due, '^less payments and offsets,^' instead of less credits and offsets, the court held that the words are substantially equivalent to each other, and a lienor ought not to be deprived of his lien upon a philogical criticism of so flimsy a character: (Stats. 1868) Preston v. Sonora Lodge, 39 Cal. 116, 119. Tlie Notice is not Vitiated hij Including Erroneous Items. — The rule is that unless there is something to show a willful attempt to claim a lien for nonlienable articles which have been furnished, the lien is not lost by including them in the notice of lien claim: Gordon Hardware Co. v. E. E. Co., 86 Cal. 620, 622, 25 Pac. 125; Harmon v. San Francisco etc. E. E. Co., 86 Cal. 617, 619, 25 Pac. 124; Snell v. Payne, 115 Cal. 218, 222, 46 Pac. 1069. So where, as in the Gordon case, the lien-claim was in part for articles, as picks and shovels, not the subject matter of liens, or where as in Malone v. Big Flat Gravel Min. Co., 76 Cal. 578, 586, 18 Pac. 772, some small items, as for deer and bear meat, were included in the claim, their value should be deducted from the amount claimed and a lien declared for the balance. On the same principle it was held in Barber v. Eeynolds, 44 Cal. 519, 533, that notwithstanding that the claim filed was for too much, it would still be valid, unless it should appear that it was a willfully false claim within the meaning and intent of section 576, below. Sufficient Statements of Character of Work.— Where the roof and three sides of a building were removed, an addition erected on one side, a kitchen in the rear, and a porch on the front, with new roof, new parti- tions, and new ceiling joists, the evidence supports the statement of the notice that the lien was claimed for the ^ erection^ of a house, and an obiection to the notice that the work was merely *the altern- tion and repair of an old house' will not be sustained: Ward V. Crane, 118 Cal. 676, 50 Pac. 839, 840A. A notice of claim of lien for materials furnished is not required to state that the materials were § 568 PERFECTING THE LIEN. 913 furnished ^^to be used'^: Neihaus v. Morgan (Cal.), 45 Pac. 255, 257A. Sufficient Statement of Amount Claimed.— A. notice iiled against two buildings stating that the reasonable value of the materials furnished by the claimant for each house was one hundred and eighty-two dollars and seventy cents, no part of which had been paid, and that the sum of three hundred and sixty-five dollars and forty cents, ^'in gold coin of the United States, '* was still due on such buildings, after deducting all just credits and offsets, is not open to the objection that it does not state the amount of claimant's demand after deducting all just credits and offsets, because of the quoted words: Neihaus v. Morgan (Cal.), 45 Pac. 255, 257B. A subcontractor properly includes in his notice of claim the value of work done by employees of his, al- though they are also entitled to file notices: Macomber V. Bigelow, 126 Cal. 9, 15, 58 Pac. 312. o Name of Owner at Time of Filing Claim to be Stated.— Code of Civil Procedure, section 1187, fourth sentence, in part: ^^The name of the owner or re- puted owner, if known,'* as enacted 1872. The same provision has been effective since March 30, 1868 (Stats. 1867-68, c. 448, sec. 5). The earlier statutes contain no such proposition. ^^ There is no limitation upon the term 'owner,' as used in the above section of the code, nor does it refer to the owner with whom the contract for the im^provement was made, or to the owner at any other time than at the date of filing the claim The object of requiring the claim to be filed in order to perfect the lien is to give notice of the lien to those interested in the property upon which it is claimed, and, as the owner at the time of filing the claim is the party to be affected thereby, rather than one who has parted with the property subse- quent to the making of the original contract, it is reasonable to suppose that the legislature intended the name of the owner at the time the claim is filed, rather than that of any previous owner It Liens— 58 ' 914 MECHANICS' LIENS. § 568 intended the owner of the property who would be affected by the lien, rather than a prior owner who had authorized the improvement, and who by an in- tervening sale had ceased to have any interest in the property or in the lien thereon^ ^: Corbett v. Chambers, 109 Cal. 178, 180, 181, 182, 41 Pac. 873. Thus the person required to be named is the owner of an interest therein (1) at the time the claim is filed, (2) which interest is sought to be charged with the lien. « ^^The statute does not require the claimant to state the name of the actual owner, at the risk of losing his lien, but makes his statement of the name of the reputed owner as effective as that of the true owner '\- Kelly v. Lemberger (Cal.), 46 Pac. 8, 8B. If in good faith the claimant states the name of a reputed owner, he does not lose his lien although he afterward discovers that some other person was in fact the owner: - Corbett v. Chambers, 109 Cal. 178, 184, 41 Pac. 873; Bryan v. Abbott, 131 Cal. 222, ^24, 63 Pac. 363; Santa Cruz Eock Pavement Co. V. Lyons, 133 Cal. 114, 119, 65 Pac. 329. Where by mistake the claimant states the name of a person who has not any interest at all, the claim is not affected: McClain v. Hutton, 131 Cal. 132, 138, 63 Pac. 182. '^The statement of the same name as owner and as reputed owner does not deprive the. claimant of his lien'': Kelly v. Lemberger (Cal.), 46 Pac. 8, 8B; Arata v. Tellurium etc. Min. Co., 65 Cal. 340, 341, 4 Pac. 195. Averfnent.— The complaint in foreclosure must con- tain an averment setting forth the names of the owners or reputed owners: Hicks v. Murray, 43 Cal. 515, 521, 522. lo When Name Unknown, State that Fact.— There is doubt as to the validity of this clause. In West Coast Lumber Co. v. Newkirk, 80 Cal. 275, 277, 22 Pac. 231, and McClain v. Hutton, 131 Cal. 132, 138, 63 Pac. 182, the court says: '^f the names are not known the claim is sufficient, if it is silent I 568 PERFECTING THE LIE:;. 915 on the subject.'' This statement was not, however, necessary to the decision in either case: See. also, Kelly vl Lemberger (Cal.), 46 Pac. 8, 8B. But in Hooper v. Flood, 54 Cal. 218, 222, 223 (Stats. 186S,\. where a claim did not state the name of the owner or reputed owner of the property, nor that the name of such owner or reputed owner was unknown to the lien-claimant filing the claim, the claim was re- jected as insufficient on that ground, and the lien denied. In Corbett v. Chambers, 109 Cal. 178, 184, 41 Pac. 873, and Bryan v. Abbott, 131 Cal. 222, 224, 63 Pac. 363, the court says: ''The provision that the claimant shall give the 'name of the owner or reputed owner if known' implies that, if he does not know the name of the owner, he may state this fact, and perfect his lien without naming an owner." 11 Must State Name of Employer or Person to Whom Materials Furnished.— Code of Civil Proo dure, section 1187, so provides, as did also Stats. 1867-68, c. 448, sec. 5, in effect March 30, 1868. The oarlier statutes contained no similar provision. Object of Statement.— ^^Tlae intention was that the claimant should put enough in his notice of lien to enable the owner to understand whether the claim- ant was an original or a subcontractor; in other words, whether the claimant asserted that he had contracted with the owner and had a personal claim against him, or whether he contracted with the con- tractor, and looked only to him and the property. The rights and duties of the two classes of claim- ants are materially different in several respects, and it is important for the owner to know which atti- tude the claimant assumes": Malone v. Big Flat Gravel Min. Co., 76 Cal. 578, 584, 585, 18 Pac. 772. This is Intended to he the Statement of a Fact and not of a Mere Conclusion of Law: (Stats. 1868) Mc- Donald V. Backus, 45 Cal. 262, 265. So where S., who employed a plasterer, was the member of a partnership, a statement in the notice that he was employed by S., without mention of the partnership, is sufficient: McDonald v. Backus, 45 Cal. 262, 265. 916 mechanics' liens. § 568 Where an agent of the owner was named as the employer, the notice is sufficient: (Code) Mclntyre V. Trautner, 63 Cal. 429. On the Other Hand a Statement will not he Rejected Because Stating a Conclusion of Latv.— Where the original contract was void, and the lien-claimant was employed by the wonld-be original contractor, a notice stating that such claimant was employed by the contracting owner is valid and proper in view of section 549 above: McClain v. Hutton, 131 Cal. 132, 136, 63 Pac. 182. A claimant, as a materialman, is not required to state in his claim what relation the person to whom he furnished the material bore to the contracting owner, whether original contractor or agent; nor does the burden of determining whether any con- tract made, or attempted to be made, between the contracting owner and the original contractor, is valid or not, rest on him when he comes to file his lien-claim: Davies-Henderson Lumber Co. v. Gotts- chalk, 81 Cal. 641, 646, 22 Pac. 860. Sufficient Statement.— A statement that claimant's labor was performed under an agreement with said F. for an agreed price of two dollars and fifty cents per day, payable at the end of each week, states substantiallv that claimant was employed by F.: Ascha v. Fitch (Cal.), 46 Pac. 298, 299A. Insufficient Statement,— K claim stating that the materials were to be furnished to P. does not state to whom they were actually furnished and is of no effect: Madera Flume etc. Co. v. Kendall, 120 Cal. 182, 183, 65 Am. St. Eep. 177, 52 Pac. 304. Foreclosure Complaint. — Where the claim states that the claimant was employed by a certain con- tractor as in fact he was, the complaint may pro- ceed upon the theory that the contract was void, and the contractor the statutory agent of the owner, without causing anv variance: Davies-Henderson Lumber Co. v. Gottschalk, 81 Cal. 641, 646, 647, 22 Pac. 860; Coss v. MacDonough, 111 Cal. 662, 667, 44 Pac. 325. § 568 PERFECTING THE LIEN. 917 12 Merely Express Terms Required to be Stated.— Code of Civil Procedure, section 1187, fourth sen- tence, in part: '^A statement of the terms, time ofiven, and conditions of his contract,'' as enacted 1872. Before the enactment of the code no such statement was required. "The code does not require the notice to state implications made by law. For example, if there was nothing but a request for labor or materials, and a silent compliance With it, we do not think that a statement of the implied promise to pay what the labor or materials were reasonably worth would be necessary. It seems to us that the statute re- quires only the a^eement which is expressly made to be stated in the notice*': Jewell v. McKay, 82 Cal. 144, 152, 23 Pac. 139. Thus it cannot be presumed, in the absence of averment and proof, that the terms, time given, and conditions of the contract, are not all stated: Kelley V. Plover, 103 Cal. 35, 36, 36 Pac. 1020. On the contrary, where no time of payment is stated, the presumption of law is that no time was given: McClain v. Hutton, 131 Cal. 132, 137, 63 Pac. 182. Thus where no distinct time of payment was agreed upon, the ''time given" need not be stated: Hills V. Ohlig, 63 Cal. 104. The statute "is not to be construed as requiring a statement of all the details of the contract, but is to receive a reasonable construction, in view of the purpose, for which it is manifestly required": Mc- Ginty v. Morgan, 122 Cal. 103, 104, 54 Pac. 392. The following have been held sufficient statements of the terms, time given, and conditions: "Cash upon demand, in gold coin of the United States": Blackman v. Marsicano, 61 Cal. 638. "The price of all materials furnished by said firm .... should be due on the delivery of the same": Cohn V. Wright, 89 Cal. 86, 89, 26 Pac. 643. "Cash on completion of the contract": Kelley v. Plover, 103 Cal. 35, 36, 36 Pac. 1020. 918 MECHANICS' LIENS. § 568 The statement that the terms, time given, and conditions ^^are and were cash'' was held insuffi- cient in Hooper v. Flood, 54 Cal. 218, 212, 222. This case was distinguished in each of the three above. Reference to Recorded Original Contract for Certain Term^ Sustained.— K notice of claim of lien filed by a materialman who furnishes materials to the original contractor, which refers to the contract between the original contractor and the contracting owner for the terms of making payment to th-e materialman, is not invalidated because it does not repeat the pro- visions referred to, where the original contract, being for more than one thousand dollars, has been duly filed, and the terms can be ascertained therefrom: San Diego Lumber Co. v. Wooldredge, 90 Cal. 574, 557, 578, 27 Pac. 431. 13 Contract Price must be Stated.— Yet the price of the several items of materials furnished is not required to be stated: McClain v. Hutton, 131 Cal. 132, 136, 63 Pac. 182. A statement that the claimant was to receive i certain price, when in fact he was to receive the reasonable value, is fatally defective: Malone v. Big Flat Gravel Min. Co., 76 Cal. 578, 580, 581, 18 Pac. 772; Wagner v. Hansen, 103 Cal. 104, 107, 37 Pac. 195. But a statement (1) that the claimants were to receive ^Hhe usual price and what the materials were reasonably worth at their place of business'' (Eeed V. Norton, 90 Cal. 590, 597, 26 Pac. 767, 27 Pac. 426), or (2) that the claimant was to be paid for mate- rials at the current market price (Santa Monica Lumber etc. Co. v. Hege, 119 Cal. 376, 379-381, 51 Pac. 555), is in effect a statement that he was to receive the reasonable value. So also a statement that the claimant was to receive the reasonable value when he was to receive a fixed price invalidates the claim: Eeed v. Norton, 90 Cal. 590, 599, 26 Pac. 767, 27 Pac. 426; Wilson § 568 PERFECTING THE LIEN. 910 V. Nugent, 325 Cal. 280, 283, 57 Pac. 1008; Buell v. Brown, 131 Cal. 158, 162, 63 Pac. 167. Where a notice of claim of lien filed by a material- man stated that the claimant was to be paid the reasonable price of certain extras furnished, and the proofs showed that except for one item upon which there was an agreed price this statement was true, this item should be excluded and the lien al- lowed for the remainder: Linck v. Johnson (Cal.), 66 Pac. 674, 675A. Sufficient Statement,— The contract price is suffi- ciently stated by a notice filed by an original con- tractor which omitted to state that the contract price was payable in installments but correctly stated its amount, and the amount paid on it. ''The owner contracted for the improvement directly with the person claiming the lien, and therefore had full knowledge of the terms of the contract'': McGinty V. Morgan, 122 Cal. 103, 105, 54 Pac. 392. Whether this statement would be sufficient when there was no contractual relation between the par- ties is left in doubt. A statement that the value of lumber ' ' including cartage thereon'' is a certain sum is not invalidated by the insertion of the phrase quoted, as ''the cost of the transportation of goods necessarily enters into their value": Jones v. Kruse (Cal.), March 13, 1903. 14 Time of Payment.— " The words of the statute, 'time given,' in our judgment mean the time of payment for the work and labor performed and ma- terials furnished, as agreed on and expressed in the contract": Hills v. Ohlig, 63 Cal. 104. The statement that "the terms of payment of said labor were cash, as soon as said labor was per- formed" is sufficient: Tredinnick v. Eed Cloud etc. Min. Co., 72 Cal. 78, 80, 13 Pac. 152. Where a materialman was to deliver lime in such quantities as might be required during the progress of the improvement, the statement that he "was to be paid thereafter therefor, on demand of payment 1)20 mechanics' liens. § 568 as to each delivery of any quantity on said property by him, the reasonable market value thereof, '^ is sufficient: Snell v. Payne, 115" Cal. 218, 221, 46 Pac. 1069. 15 Description of Property.— Code of Civil Proce- dure, section 1187: ^^A description of the property to be charged with the lien, sufficient for identifica- tion.'' Historical.— The same provision is found in Stats. 1867-68, c. 448, sec. 5. Stats. 1862, c. 297, sec. 25, amended 1863-64, c. 262, sec. 3, read: *'A description of the property }'63-4n \- sought ] n63-4^ to be charged.'' Stats. 1855, c. 130, sec. 3, and Stats. 1856, c. 134, sec. 2: '^A correct description of the property to be charged." The description must ^* enable a party familiar with the locality to identify the premises intended to be described with reasonable certainty to the ex- clusion of others": Fernandez v. Burleson, 110 Cal. .164, 167, 52 Am. St. Eep. 75, 42 Pac. 566; Willam- ette Steam Mills Co. v. Kremer, 94 Cal. 205, 209, 29 Pac. 633; (Stats. 1856) Tibbetts v. Moore, 23 Cal. 208, 213. Where there are two descriptions of the property, one by name and the other by courses distances and monuments, and it appears from the evidence that the property was well known by the name given to it, but the description by courses and distances was so erroneous that the lines could not thereby bo traced, the description by name is sufficient to iden- tify the property, and the attempted description by courses may be disregarded: Tredinnick v. Eed Cloud etc. Min. Co., 72 Cal. 78, 81, 82, 13 Pac. 152. ^'As a general rule, the sufficiency of the descrip- tion is a question of fact to be determined by the trial court": Willamette Steam Mills Co. v. Kremer, 94 Cal. 205, 209, 29 Pac. 633. The inclusion of some nonmining land in the de- scription of a mining claim to be charged with a lien does not vitiate the notice of claim of lien so long as any part of the land included in the description § 568 PERFECTING THE LIEN. 921 is a mining claim as in such case the court can ad- just the rights of the parties by the judgment: Be- wick V. Muir, 83 Cal. 368, 372, 23 Pac. 389. A notice of claim filed under section 556 above need not state that the lot of land affected by the lien is '^in an incorporated city or town, '^ where the lot was described as being ^^ situate in the city of San Diego, county of San Diego,'' etc.: Bryan v. Abbott, 131 Cal. 222, 225, 63 Pac. 363. Description of Land Ahoiit Improvement.— The de- scription of the land about a quartz-mill thus: ^'With such convenient space of land around the same as may be required for the convenient use and occupa- tion thereof is sufficient: (Stats. 18'56) Tibbetts v. Moore, 23 Cal. 208, 213. Descriptions Which have teen Held Sufficient,— ^ ^ A wharf situated on Battery street between Jackson and Pacific in San Francisco'': Hotaling v. Cronise, 2 Cal. 60. '^A quartz-mill, being at or near the town of Scottsville in Amador county, known as Moore's New Quartz-mill," there being no evidence that there was any other quartz-miil at that place so desig- nated as to render the description uncertain: Tib- betts V. Moore, 23 Cal. 208, 212, 213. '^Red Cloud Mine," proof showing that the mine was well known by that name, and that the whole claim was designated by it, and notwithstanding the fact that the mine was also described by courses and distances which were so erroneously ' stated that the lines could not thereby be traced: Tredinnick v. Red Cloud etc. Mine, 72 Cal. 78, 81, 82, 13 Pac. 152. ''Lot 6, in block 28, of the Huber Tract," and ' ' situate at the southwest corner of Hope and Eighth streets," Los Angeles, notwithstanding that the proof showed that the building projected onto lot 7, and the description should have read ''northeast corner," but there being no evidence that the con- tracting owner had caused the construction of any other building at that corner than the one on the northeast corner: Willamette Steam Mills Co. v. Kremer, 94 Cal. 205, 209, 29 Pac. 633. 922 . mechanics' liexs. § 568 Descriptions Held Insufficient.— Where the property was described as ^^a dwelling-house lately erected by me for C, situated on Bryant street, between Second and Third, in the city of San Francisco, on lot ," proof showing that C owned no oth-er dwelling-house on Bryant street, but where the prop- erty had been transferred to a bona fide purchaser for value without notice of the fact that C. owned no other dwelling on Bryant street, and without actual notice of the existence of the lien on the property, as against the purchaser the description is insufficient: (Stats. 1855) Montrose v. Conner, 8 Cal. 344. ^'A notice that the property to be charged is the property where claimant worked does not take the first step toward compliance with the statute ''* Fernandez v. Burleson, 110 Cal. 164, 168, 52 Am. St. Kep. 7f^, 42 Pac. 566. Where a notice stated the name of the reputed owner of a mining claim, its size, and the fact that certain mining facilities were upon it, but by mis- take the description by monuments, metes and bounds applied to the adjoining mining claim, and the same person was the reputed owner of both, the descrip- tion is misleading in an essential particular where it should be true, and the reference to the mining facilities taken by itself is not sufficient: Fernan- dez V. Burleson, 110 Cal. 164, 52 Am. St. Eep. 75, 42 Pac. 566. A notice describing the land to be charged as 'Hhat certain lot and parcel of land situated in said county of Nevada state of California, and sought to be charged with this lien, and described as follows, to wit,'' when all other description is entirely omit- ted, is insufficient, there being in fact absolutely no description of the property at all: Penrose v. Calkins, 77 Cal. 396, 19 Pac. 641. 16 Recorder must Record Lien Claim.— See Code of Civil Procedure, section 1189, as enacted 1872. Com- pare Political Code, sections 4235 and 4236: *'He [the recorder] must, upon payment of his fees for the § 569 PERFECTING THE LIEN. 923 569. Time of Filing Notice When Notice of Completion or Cessation Filed. When a notice of completion or cessation from labor has been filed^ a notice of claim of lien may be filed for record (1) by an original contractor/'' at any time af- ter the completion of his contract and within sixty days after the filing of the notice of com- pletion or cessation from labor^ or same, record, separately, in large and well-bonnd sepa- rate books, in a fair liand .... 6. Notices of me- chanics^ liens. '^ [Same provision in County Govern- ment Act 1897, section 120.] ^^ Every recorder must keep: .... 16. An index of notices of mechanics' liens, labeled * Mechanics^ Liens,' each page divided into three columns, headed respectively: 'Parties claiming liens,' 'Against whom claimed,' 'Notices, when and where recorded.' " Historical.— A. substantially similar provision is found in Stats. 1867-68, c. 447, sec. 6, in effect March 30, 1868. Stats. 1862, c. 297, in effect from April 26, 1862, to March 30, 1868, contained no such provision. Stats. 1850, c. 87, sec. 7, in effect AprH 12, 1850; Stats. 1855, c. 130, sec. 6, and Stats. 1856, c. 134, sec. 5, provided that the recorder must record such notice in a book provided for that purpose. 17 Original Contractor must File Claim Within Sixty Days.— Code of Civil Procedure, section 1187, fourth sentence: "Every original contractor, [- 97m ]► [a] at any time after the completion of his contract, and until the expiration of sixty days after the filing of said notice of completion or notice of cessation of labor by the owner ^m97-|." Enacted 1872, in effect January 1, 1873; amended, in effect Mav 27, 1897. (a) Former reading: "Within sixty days after the 924 mechanics' liexs. § 569 (2) by any other lien-claimant/^ (a) within thirty days after the performance of any labor [or the furnishing of any ma- terial] ^^ about a mining claim, or^ completion of his contract.'' Effective July 1, 1855 —May 27, 1897. Historical.—StSits. 1855, c. 130, sec. 3, Stats. 1856, c. 134, sec. 2, Stats. 1862, c. 297, sec. 25, amended Stats. 1863-64, c. 262, aec. 3, and Stats. 1867-68, c. 448, sec. 5, were substantially similar to the code as enacted 1872. Stats. 1850, c. 87, sec. 7, reads: '* With- in sixty days after the completion of the building or repairs. ' ' 18 Other Lien Claimants.— Code of Civil Procedure, section 1187, fourth sentence, second clause: *^And every person, save the original contractor, claiming the benefit of this chapter, \^ 97m \ [a] at any time after the completion of any building, improvement, or structure, or of the alteration, addition to, or re- pair thereof, and until the expiration of thirty days after the filing of said notice of completion or cessa- tion, by said owner ■{ m97 ^ , or \- 97f j- [b] within thirty days after ^ f97^ the performance of any labor in any mining claim.'' Enacted 1872; amended, in effect May 2l, 1897. (a) Former reading: *' Within thirty days after the completion of any building, improvement, or structure, or after the completion of the alteration, J- 87n \- ad- dition to ■{ n87^ , or repair thereof." Enacted 1873; amended in effect May 15, 1887. (b) These words were inserted to preserve the orig- inal meaning when the provision containing them (see previous sentence) was struck out by the amend- ment of May 27, 1897. Historical.— ^tats. 1862, c. 297, sec. 25, amended Stats. 1863-64, c. 262, sec. 3, and Stats. 1867-68, c. 448, sec. 5, were substantially similar to the code as enacted 1872. Between July 1, 1855, and April 26, § 569 PEKFECTIXG THE LIEN. 925 (b) in case of other improvement, where there is an original contract at any time after the completion of the contract,^^ and where 1862, the provision as to time of filing was '^within thirty days after the work was done, or the materials furnished by him'^ (Stats. 1855, c. 130, sec. 3; and Stats. 1856,''c. 134, sec. 2). Under Stats. 1850, c. 87, sec. 7, the time for all lien-claimants was ^^ sixty days after the completion of the building or repairs. .... Upon his failure to do so the lien shall be lost. ' ' Where there is no original contractor, or where the original contract is void, every , lien-claimant is em- braced in this class, and must file his notice of claim of lien within the time and in the manner prescribed Southern California Lumber Co. v. Schmitt, 74 Cal. 625, 627, 16 Pac. 516; Willamette etc. Co. v. Los An- geles College Co., 94 Cal. 229, 237, 29 Pac. 629; Davis V. MacDonough, 109 Cal. 547, 42 Pac. 450. 19 Materials Furnished About Mining Claim.— No time is set in the statute for filing a notice of lien claim in case of a person furnishing materials to be used, and which have been used, about a mining claim. But this case seems to be within the reason- able intendment of the rule which prescribes a period of thirty days after the performance of any labor about a mining claim within which to file a claim of lien therefor, for as the work about a mining claim is usually in its nature continuous, to say in either case that the lien could not be secured until after the completion of the improvement would in many cases forbid it entirely. 20 To be Filed at Any Time After the Completion of the Original Contract.— '* The amount of all the claims of all the subcontractors can be ascertained only after all the work and materials have been fur- nished, and after the building has been completed, so far as the contractor is required to complete the same When the contractor has furnished, through himself or his subcontractors, all the work 026 mechanics' liens. § 569 there is no such contract at any time after the completion of the improvement,^^ but in either instance before the expiration of thirty days after the filing of the notice of completion or cessation from labor. 570. Time of Filing Notice When Notice of Completion of Cessation not Filed. If the notice of completion or cessation from labor is not duly filed, the time within which a notice of claim of lien may be filed is in every case prolonged until ninety days have expired after the completion of the improvement.^^ and material which he has agreed to furnish, then the building is completed so far as he is concerned, and is also completed so far as all the subcontractors under him are concerned; and the contractor and each of the subcontractors may then file their respective statements for liens": Perry v. Brainard (Oal.), 8 Pac. 882; Eovlance v. San Luis Hotel Co., 74 Cal. 273, 278, 20 Pac. 573. 21 To be Filed After Completion of Improvement. Where a person undertook an improvement without the intervention of an original contractor for the en- tire work, a materialman from whom he bought goods from time to time cannot file his claim of lien until after the completion of the entire improvement, but must then include in one claim his entire demand, and must not file a separate claim for materials furnished under each of several contracts: Pacific Mutual Life Ins. Co. V. Fisher, 106 Cal. 224, 236, 39 Pac. 758. 22 Time of Filing Prolonged Until Ninety Days have Expited.— Code of Civil Procedure, section 1187, second sentence, and last clause of fourth: ''In case any such owner neglect to file said notice as Jierein § 570 PERFECTING THE LIEN. 927 required, then the said owner and all persons de- raigning title from him, and all persons claiming an interest in said property, shall be estopped in any proceedings brought to foreclose any mechanics' lien or liens provided for in this chapter, from maintain- ing a defense therein based on the ground that said lien or liens have not been filed within the time pro- vided in this chapter Provided, however, that in any event all claims of lien must be filed within ninety days after the completion of said building, im- provement, or structure, or the alteration, addition to, or repair thereof/' New provisions, in effect May 27, 1897. The Code Construed.— ^^ It is claimed that the effect of the failure of the owner to file and record the no- tice of cessation of labor was to indefinitely postpone the time within which the claim of lien could be filed. We do not so construe the section. After stating that the owner failing to give notice shall be estopped from maintaining a defense on the ground that the lien was not filed within the time provided for in the chapter, it is expressly provided Hhat in any event all claims of lien must be filed within ninety days after the completion of said building.' The statute then provides what is equivalent to and shall be deemed completion. The proviso should be read in connection with, and as a part of, the sentence in re- gard to the owner being estopped to claim that the lien was not filed in time. The construction gives ef- fect 'to, and makes all parts of the section consistent. It enlarges the time of thirty days, formerly given the materialman to file his claim of lien, and gives him thirty days after the filing o*f notice of cessa- tion of labor by the owner, or, in case the owner does not file such notice, then one hundred and twenty days after such cessation from labor. The construc- tion contended for by plaintiff would prolong the time within which a claim of lien could be filed for years, in case the owner failed to file and record the notice. Such could not have been the intention of the legis- lature": Buell V. Brown, 131 Cal. 158, 161, 63 Pac. 167. 928 mechanics' liens. § 571 571. Original Contract as Evidence of Comple- tion. An original contract, although void, may be used as a test of completion to determine the time of filing the notice of claim of lien,^^ 572. Matters Treated as Completion for Pur- poses of Filing Notice.^'* (1) The oecnpation or nse of an improvement by the contracting owner or his representative in a manner inconsistent with the continnanoe work thereon,^^ or 23 Although the original contract is ^^whoUy voicV because not filed, it may be used as evidence to de- termine the character of the building to be erected, and hence as a test of completion: Barker v. Doherty, 97 Cal. 10, 12, 31 Pac. 1117; Joost v. Sullivan, 111 Cal. 286, 292, 43 Pac. 896. 24 Code of Civil Procedure, section 1187, last clause: ^^And |^ 97m }> [a] in every case^ m97 ^ , (1) the occupation or use of a building, improvement, or structure, by the owner, or his representative, or (2) the acceptance by said owner or his agent of said building, improvement, or structure [97o] [bj, and (3) cessation from labor for thirty days upon any [97v] [c] contract, or upon any [97v] [c] building, improvement, or structure, or the alteration, addition to, or repair thereof, shall be deemed equivalent to a completion thereof for all the purposes of this chap- ter. As enacted, in effect May 15,1887; amended, in effect May 27, 1897. (a) Former reading: '^In case of contracts.'' (b) Here was inserted: '* Shall be deemed conclu- sive evidence of completion.'' § 572 PERFECTING THE LIEN. 929 (c) Here was inserted: ^ ^ Unfinished. ' ' Historical.— This section was not applicable before the amendments of 1897 except ^ ^ in cases of contracts. ' ' So * ^ if there was no original contract for its construc- tion, or if the one which had been actually entered into had become ^wholly void/ the condition which " the statute has prescribed for the exception would not exist, and the claim could not be filed until after the actual completion of the building, or until after there had been a cessation from labor for thirty days upon the unfinished building^ ^: Willamette etc. Co. V. Los Angeles College Co., 94 Cal. 229, 240, 29 Pac. 629; Jones v. Kruse, Cal., March 13, 1903. In Giant Powder Co. v. San Diego Flume Co., 78 Cal. 193, 196, 197, 20 Pac. 419, the court, however, had held that although the contract was void because not filed, it nevertheless was a, ^case of contract' within the meaning of the statute; but this decision was criti- cised in Kellogg v. Howes, 81 Cal. 170, 178, 22 Pac. 509. The amendment of 1897 above does not apply to work done under contracts made before its enact- ment, although the contingency to which this statu- tory provision is applicable did not arise until after the amendment took effect: Jones v. Kruse, Cal.^ March 13, 1903. 25 Exclusive Use Treated as Completion.— ^' The occupation or use, however, which, under the statute is to be deemed conclusive evidence of completion^ must be open, entire, and exclusive, and not of such a character as would be consistent with a continuance by the contractor in the completion of his con- tract; and whether in any particular case there has been such occupation or use must be determined by the facts of that case, as in the ordinary case must be determined the fact of actual completion. The owner must be shown to have acted toward the con- tractor and in reference to the building in such a way as by necessary implication to give notice that the building had been accepted by him in satisfaction of the contract. A continuance by the contractor in Liens— 59 S'SO MECIIATs'ICS' LIEXS. § 572 (2) the acceptance of the improvement by the contracting owner or his agent,^^ or (3) cessation from labor for thirty days upon any contract or improvement^^'' the work of completing his contract, while the build- ing or a portion thereof should be occupied by the owner, or even used by him for the purpose for which it was intended, would prevent such occupation or use from being regarded as conclusive evidence of completion ^^ Willamette etc. Co. v. Los Angeles Col- lege Co., 94 Cal. 229, 239, 29 Pac. 629; Orlandi v. Gray, 125 Cal. 372, 374, 58 Pac. 15. Presumption of Completion,— llh.Q occupation and use of a building is prima facie evidence of its comple- tion: Joost V. Sullivan, 111 Cal. 286, 292, 43 Pac. 896. 26 Acceptance Illustrated.— A day or two after an original contractor had become unable to go on with his work, his contracting owner made an arrange- ment by which such contractor was to be absolved from his obligation under the contract, the same being abrogated, and such owner was to pay a certain portion of the contractor's debts, and to have and retain certain of his property. The owner thereupon took possession and control of the uncompleted im- provements and proceeded to complete them. Held, when such owner released the contractor, took his work and some of his property, and agreed to pay some of his debts, this was an acceptance of the im- provement in the sense of the section so that within the proper period thereafter liens for material and labor furnished to the contractor might properly be filed: Giant Powder Co. v. San Diego Flume Co., 88 Cal. 20, 24, 25, 25 Pac. 976. See, also, Giant Powder Co. V. San Diego Flume Co., 78 Cal. 193, 194, 195, 20 Pac. 419. 27 Cessation must be Open.— The words '^cessation from labor for thirty days'' ''certainly do not mean a mere clandestine stopping of actual work for thirty § 572 PERFECTING THE LIEN. 931 days, and then beginning it again without any indicia to the world that it had been stopped for thirty days. They were not contrived as a means for defeating lienholders. The cessation should certainly be of such a character as to carry some charge of notice to a careful person'^: Marble Lime Co. v. Lordsburg Hotel Co., 96 Cal. 332, 337, 31 Pac. 164. Provision Mmidatori/. — This provision is not in- tended merely to make it possible for a materialman to file a claim of lien before the actual completion ot the building, but is designed to make it necessary so to do. ^^ Whenever there has been a cessation from labor for thirty days upon any unfinished build- ing, the time within which a materialman or laborer must file his claim of lien at once begins to run": Kerckhoff-Cuzner etc. Lumber Co. v. Olmstead, 85 Cal. 80, 83, 84, 24 Pac. 648, per the Court; Works and Thornton, JJ., dissenting; Mar chant v. Hayes, 120 Cal. 137, 138, 52 Pac. 154. ^'It is immaterial whether the building is subse- quently completed by the owner or not, or, if com- pleted, .whether such completion is affected by the owner directly or through a contract with another; for the purposes of creating a lien thereon through the terms of the unfinished contract, the cessation from labor under the contract for thirty days is a statutory completion of the building, which sets the time running within which the claim of lien must be filed'': Johnson v. La Grave, 102 Cal. 324, 326, 36 Pac. 651. The abandonment of work by the original con- tractor, the work, however, being pushed to comple- tion by the owner without thirty days' cessation from labor, does not amount to a completion, and the time for filing liens runs from the date of completion, and not from thirty days after cessation in respect to lien claims accruing to persons employed under such aban- doned contract: Pierce v. Birkholm, 115 Cal. 657, 662, 47 Pac. 681; Marchant v. Hayes, 120 Cal. 137, 138, 52 Pac. 154. Whether there is a cessation from labor or a con- tinuance of work is a question of fact: Marble Lime 932 mechanics' liexs. § 572 . must he treated for the purpose of filing the no- tice of claim of lien as an actual completion.-^ 573. Trivial Imperfection to be Disregarded. JSTo trivial imperfection in the performance of any work can be deemed such a lack of comple- tion as to prevent the filing of a valid notice of claim of lien;^^ or the enforcement of the lien which may be secured thereby.^^ Co. V. Lordsburg Hotel Co., 96 Cal. 332, 334, 31 Pac. 164. Before the enactment of this provision, the court held that an owner, by stopping short the construc- tion of a building, could not deprive the claimant of the right to perfect a lien thereon: Schwartz v. Knight, 74 Cal. 432, 434, 16 Pac. 235; Harmon v. Ash- mead, 68 Cal. 321, 323, 9 Pac. 183. 28 Treated as Completion.— ^ ^ The words [in the code] ^ shall be deemed equivalent to a completion' mean shall be equal in legal effect to a completion; that is, shall be treated, for the purpose of filing a lien, as an actual completion'': Kerckhoff-Cuzner etc. Lumber Co. v. Olmstead, 85 Cal. 80, 84, 24 Pac. 64S. See, also, McDonald v. Hayes, 132 Cal. 490, 494, 495, 64 Pac. 850. 29 Code of Civil Procedure, section 1187, first clause of last sentence: ''Any trivial imperfection in the said work, or in the construction of any building, improvement, or structure, or of. the alteration, addi- tion to, or repair thereof, shall not be deemed such a lack of completion as to prevent the filing of any lien.'' JNew provision, in effect May 15, 1887. Substantial Performance is Sufficient.— ^^ In con- tracts for the construction or repair of buildings, a substantial performance of his contract is sufficient to entitle the contractor to compensation for the work done by him under the contract. If there has been § 573 PEKFECTIXG THE LIEN. 933 no willful departure from its provisions, and no omis- sion of any of its essential parts, and the contractor has in good faith performed all of its substantive terms, he will not be held to have forfeited his right to a recovery by reason of trivial imperfections or defects in the work performed. If the omission or im- perfection is so slight that it cannot be regarded as an integral or substantive part of the original con- tract, and the other party can be compensated there- for by a recoupment for damages, the contractor does not lose his right of action^': Harlan v. Stufflebeem, 87 Cal. 508, 511, 512, 25 Pac. 686; Willamette etc. Co. V. Los Angeles College Co., 94 Cal. 229, 237, 238, 29 Pac. 629. See, also, American Type Founders' Co. V. Packer, 130 Cal. 459, 462, 463, 62 Pac. 744. Meaning of Trivial Imperfection.—^' ^Trivial imper- fection, as used in the code, relates to the question whether or not there has been an actual completion of the building.' (Marble Lime Co. v. Lordsburg Hotel Co., 96 Cal. 332 [336, 31 Pac. 164].) .... The trivial imperfections' mentioned in the above section refer to imperfect or defective performance of the work upon a building which is claimed to have been completed, and not to a case in which the build- ing is admittedly incompleted, and workmen are still engaged in constructing substantial portions thereof. Neither is the question whether an omitted portion of the building is a trivial imperfection, or is a sub- stantial failure in its completion, to be determined by its relative cost to that of the entire building. If the omissions are so substantial that the con- tractor would not have a right of recovery upon his contract, he cannot enforce a lien therefor": Bian- chi V. Hughes, 124 Cal. 24, 27, 56 Pac. 610. What constitutes a trivial imperfection is a ques- tion of fact: Harlan v. Stufflebeem, 87 Cal. 508, 512, 25 Pac. 686; Willamette Steam Mills v. Kremer, 94 Cal. 205, 208, 29 Pac. 633; Willamette etc. Co. v. Los Angeles College Co., 94 Cal. 229, 238, 29 Pac. 629; Marble Lime Co. v. Lordsburg Hotel Co., 96 Cal. 332, 334, 31 Pac. 164; Bianchi v. Hughes, 124 Cal. 24, ^34 MECHANICS' LIENS. § 573 27, 56 Pac. 610; Coss v. MacDonough, 111 Cal. 662, 44 Pac. 325. Trivial Imperfection Illustrated.— Where a contract was made for raising a two-story frame building and converting it into three fiats, its completion, except for putting on the rim of a bathtub and a door knob, is but a trivial imperfection: Joost v. Sullivan, 111 gal. 286, 292, 43 Pac. 896. "Where a contract for painting was substantially complied with, but some small places in the house were not properly grained and finished, and the cost of properly finishing them would not exceed five dollars, a court properly gave judgment for the con- tract price less five dollars: Harlan v. Stuff! ebeem, 87 Cal. 508, 512, 25 Pac. 686. Evidence held sufficient to sustain a finding of substantial completion: Santa Clara Val. etc. Lum- ber Co. V. Williams, 31 Pac. 1128 j Ward v. Crane, 118 Cal. 676, 50 Pac. 839, 840B: But when it is shown that notwithstanding the trivial character of the uncompleted work at a cer- tain time, the work actually continued thereafter and was finished a few days afterward, a finding that the work was completed at the latter date is sus- tained: Joost V. Sullivan, 111 Cal. 286, 292, 43 Pac. 896. Marble steps by which the basement of a building is to be reached may be considered a substantial portion of the building, instead of a trivial imper- fection: Bianchi v. Hughes, 124 Cal. 24, 27 56 Pac. 610. Conceding that an elevator in a building is a mere convenience, and that the building might have been used without it, when provided for by the plans and specifications, it is an integral part thereof, and the building could not be said to be complete without it: Coss V. MacDonough, 111 Cal. 662, 44 Pac. 325. 30 Trivial Imperfection Cannot Prevent Enforce- ment of Lien.— ^^ If the lien can be * filed' notwith- standing such imperfection, it must follow that the claimant can foreclose his lien, and that the 'trivial § 574 PERFECTIXG TTIE LIEN. 935 574. Notice of Claim of Lien cannot be Re- formed or Amended. A notice of claim of lien must be complete in itself, and cannot be reformed or amended.^^ 575. Substantial Observance of Requirements Essential. The notice of claim of lien must be filed with- in the limits of time prescribed in section 569,^'^ imperfection in the work' is no defense to the ac- tion' ': Harlan v. Stnfflebeem, 87 Cal. 508, 512, 25 Pac. 686. 31 Goss V. Strelitz, 54 Cal. 640, 644; Fernandez v. Burleson, 110 Cal. 164, 167, 52 Am. St. Eep. 75, 42 Pac. 566. ^^The notice of lien which is filed for rec- ord must be complete in itself at that time in order to authorize its enforcement, and is not capable of being amended or reformed'': Madera Flume etc. Co. V. Kendall, 120 Cal. 182, 183, 65 Am. St. Eep. 177, 52 Pac. 304. 32 Notice Must be Filed Within Limits of Time Prescribed. Thus premature filing is unavailing: Perry v. Brainard (Cal.), 8 Pac. 882; Eoylance v. San Luis Hotel Co., 74 Cal. 273, 276, 20 Pac. 573; Schwartz v. Knight, 74 Cal. 432, 433, 16 Pac. 235; WiHamette etc. Co. V. Los Angeles CoUege Co., 94 Cal. 229, 237, 29 Pac. 629; Davis v. MacDonough, 109 Cal. 547, 550, 42 Pac. 450; Santa Monica etc. Co. v. Hege, 119 Cal. 376, 378, 51 Pac. 555; Marchant v. Hayes, 120 Cal. 137, 52 Pac. 154; Jones v. Kruse, Cal., March 13, 1903. Filing after the expiration of the prescribed time is likewise nugatory: Walker v. Hauss-Hijo, 1 Cal. 183; Johnson v. La Grave, 102 Cal. 324, 325, 36 Pac. 651; McLaughlin v. Perkins, 102 Cal. 502, 36 Pac. 839; Beatty v. Mills, 113 Cal. 312, 45 Pac. 468. 936 MECHAXICS' LIEXS. § 575 must siibstantiallY conform in form and contents to each of the requirements of section 56'8^^^ Illustration.— ^Oy in case of a claim of lien accruing under section 556, where the original contract pro- vided that the work should be done 'Ho the satis- faction of the superintendent of streets of said city and county/' and the notice was not filed until after the expiration of sixty days from the completion of the work, but within sixty days after the time a certificate was given by the superintendent stating that the ^'w^ork had been done to my satisfaction,'' the claim was recorded too late and gave no lien, as? the contract and the certificate pursuant to it could not alter the statutory time: Beatty v. Mills, 113 Cal» 312, 45 Pac. 468. ''The giving of credit for a longer period would, not affect the time within which the notice of lien must be filed": Knowles v. Baldwin, 125 Cal. 224, 226, 57 Pac. 988. 33 Notice must Substantially Conform to Statutory Requirements. "The statute is a remedial statute, and, for the purpose of carrying into effect the object for w^hich it was enacted, is to receive a liberal construction, and the notices, which, under its provisions, are re- quired to be given, have regard to substance rather than form": McGinty v. Morgan, 122 Cal. 103. 104, 105, 54 Pac. 392; Macomber v. Bigelow, 126 Cal. 5, 16, 58 Pac. 312. Yet it must be borne in mind that the notice of claim of lien is "a prerequisite to the maintenance of a proceeding which gives a plaintiff an extraor- dinary remedy, to secure which he must comply with the terms on which the statute extends to him the statutory relief": Goss v. Strelitz, 54 Cal. 640, 644. A substantial observance of the provisions of sec- tion 568 is thus necessary: Wood v. Wrede, 46 Cal. 637; Phelps v. Maxwell's Creek Gold Min. Co., 49 Cal. 336, 339; Hooper v. Flood, 54 Cal. 218, 221: Euss Lumber etc. Co. v, Garrettson, 87 Cal. 589, 595, § 575 PERFECTIXG THE LIEX. 937 and must in all essential particulars be true;^'* otherwise it does not avail in the least toward se- curing a lien. Yet the notice need not set forth 25 Pac. 747; Wagner v. Hansen, 103 Cal. 104, 107, 37 Pac. 195; San Francisco Paving Co. v. Fairfield, 134 Cal. 220, 224, 66 Pac. 255. So where the precise words of the statute have not been followed in stating the claim of lien, but other and substantially equivalent expressions have been resorted to, it will be deemed a sufficient compli- ance with the law: Ascha v. Fitch (Cal.), 46 Pac. 298, 299A. But the total failure to make any of the requisite statements, or to observe any other requirement ren- ders the notice wholly ineffective: Wood v. Wrede, 46 Cal. 637; Phelps v. Maxwell's Creek Gold Min. Co., 49 Cal. 336, 339; Hooper v. Flood, 54 Cal. 218, 222; Pacific Mutual Life Ins. Co. v. Fisher, 106 Cal. 224, 234, 235, 39 Pac. 758; Ascha v. Fitch (Cal.), 46 Pac. 298, 298B; Santa Monica Lumber etc. Co. v. Hege, 119 Cal. 376, 379, 51 Pac. 555; Madera Flumo etc. Co. V. Kendall, 120 Cal. 182, 65 Am. St. Eep. 177, 52 Pac. 304. 34 Notice must in All Essential Particulars be True. As the lienor is required to verify his statement, it must in all essential particulars be true: Wagner V. Hansen, 103 Cal. 104, 107, 37 Pac. 195; Santa Monica Lumber etc. Co. v. Hege, 119 Cal. 376, 381, 51 Pac. 555; Wilson v. Nugent, 125 Cal. 280, 284, 57 Pac. 1008. So where a notice of claim of lien stated that the contract was to erect and furnish materials, and left it uncertain whether for one or two buildings, and the proof showed that the work actually per- formed was to raise up, move back, and repair two houses and furnish the materials therefor, the lien cannot be sustained: Eaton v. Malatesta, 92 Cal. 75, 28 Pac. 54. 938 mechanics' liexs. § 575 anything not required by such section,^^ and an error in the statement of unnecessary facts is im- material.^^ Where the amount stated in the notice of claim of lien as the price did not include within it pay- ments made on account, the notice is fatally de- fective: Santa Monica Lumber etc. Co. v. Hege, 119 Cal. 376, 381, 51 Pac. 555. Likewise the averments in the complaint must agree with the statements in the notice of claim of lien; otherwise the complaint is open to demurrer on the ground of ambiguity: Malone v. Big Flat Gravel Min. Co., 76 Cal. 578, 581, 18 Pac. 772. Thus where some of the averments of the com- plaint are inconsistent with the statements in the notice of claim of lien which had been filed, it is subject to demurrer for ambiguity and uncertainty: Frazer v. Barlow, 63 Cal. 71. 35 Notice Need not Set Forth Anything not Re- quired. On the other hand, '^the steps which are requi- site to the enforcement of a mechanic's lien are entirely of statutory creation, and the same rule which makes it essential that all the statutory re- quirements be complied with in order to perfect the lien renders it unnecessary to take any other step than is thus required. In order, therefore, to de- termine whether a notice of lien is sufficient, it is only necessarj^ to compare its terms with the terms of the statute which provides for the notice'': Cor- bett V. Chambers, 109 Cal. 178, 180, 41 Pac. 873; Davies-Henderson Lumber Co. v. Gottschalk, 81 Cal. 641, 646, 22 Pac. 860. Thus it is not necessary to state facts showing a performance of the contract, or other facts necessary to complete the cause of action: Jewell v. McKay, 82 Cal. 144, 152, 23 Pac. 139; Slight v. Patton, 96 Cal. 384, 387, 31 Pac. 248. See, also, Harmon v. Ashmead, 68 Cal. 321, 323, 324, 9 Pac. 183. 36 Error in Statement of Unnecessary Fact Im- material. § 576 PERFECTING THE LIEN. 939 576. Filing Fraudulent Notice Works Forfeiture of Lien. Any lien-claimant who willfully includes in his notice of claim of lien a statement of work or materials not performed upon or furnished for the property described in such claim forfeits his lien.^'' x\s the notice of lien claim is not required to state the date upon which the contract was entered into, a variance of two years in such time between the claim and the proof does not of itself invalidate the lien: Pacific Mutual Life Ins. Co. v. Fisher, 109 Cal. 566, 568, 569, 42 Pac. 154. 37 See Code of Civil Procedure, section 1202, sec- ond sentence. New provision, in effect March 18, i885. A substantially similar provision was con« tained in Stats. 1862, c. 297, sec. 25, in effect, June 25, 1862, repealed March 30, 1868. Section to he Strictly Construed.— ^^ It is penal in* its character, and not only must be strictly con- strued, but the evidence under which it is invoked should be clear and convincing that the violation Avas willful and intentionaP^: Schallert-Ganahl Lum- ber Co. V. Neal, 91 Cal. 362, 365, 27 Pac. 743; Pacific Mutual Life Ins. Co. v. Fisher, 106 Cal. 224, 235, 39 Pac. 758. ^'A recorded lien, good in other respects, cannot be rejected because the amount claimed is somewhat larger than can be sustained by the proofs, unless it is so willfully false as to amount to a fraud^': Snell V. Payne, 115 Cal. 218, 222, 46 Cal. 1069; (Stats. 1862) Barber v. Reynolds, 44 Cal. 519, 533. See, also, Schallert-Ganahl Lumber Co. v. Neal, 91 Cal. 362, 365, 366, 27 Pac. 743; Harmon v. San Francisco etc. E. E. Co., 86 C?l. 617, 618, 619, 25 Pac. 124. 940 mechanics' liexs. § 577 577. Claimant Who Files Joint Claim must Segregate Separate Amounts Claimed.^^ Any lien-claimant mentioned in sections 551;, 552, and 553 above,^® ma}^ claim in a single no- 38 Code of Civil Procedure, section 1188: * 'In every case in which one claim is filed against two or more buildings, mining claims or other improvements owned by the same person, the person filing such claim must, at the same time, designate the amount due to him on each of such buildings, mining claims, or other improvements, otherwise the lien of such claim is postponed to other liens. The lien of such claim- ant does not extend beyond the amount designated, as against other creditors having liens by judgment, mortgage or otherwise upon either of such buildings or other improvements, or upon the land upon which the same are situated.'' As enacted 1872. Stats. 1867-68, c. 448, sec. 7, provided substantially the same, but adding the proviso, '^ provided that no joint claim shall be filed upon two or more build- ings unless they are contiguous to or adjoining each other.'' 39 Section Applies Only to Liens Mentioned in Sections 551, 552 and 553. — Code of Civil Procedure, section 1188, does not apply to liens authorized by section 1191. '' Section 1191 gives to the contractor a lien upon the Hot' for his work done, while sec- tion 1183 gives him a lien upon the building or other improvement.' .... The 'buildings, mining claims, or other improvements' named in section 3188 have the same significance as in section 1183, and the clause in section 1191 giving to the con- tractor a' lien upon the 'lot' which he grades or fillM, or 'otherwise improves,' refers to some improve- ment of the 'lot' upon which the lien is given, rather than to the 'improvements' upon the lot re- ferred to in section 1188 In the present case the plaintiffs made a single contract for the grading § 577 PERFECTIXG THE LIEN. 941 tice of claim of lien a lien under each of several original contracts executed by the same contract- ing owner^ or against each of several separate and distinct^^ parcels of property owned by the same person, even if the lien arises under different contracts ;^^ but in every such case must-desig- of the two blocks at a fixed price, and, as it appears that the character of the two blocks was such that the earth taken from one was to be used in filling up the other, and that the compensation for the en- tire work was fixed at Hen cents per cubic yard for filling,' it is evident that there could be no separate 'amount chargeable against either blockj and that, while the grading had the effect to im- prove the land, it did not constitute such improve- ments' to the different blocks as are contemplated in section 1188, or for which separate liens were authorized'': Warren v. Hopkins, 110 Cal. 506, 510, 511, 42 Pac. 986. 40 Must be Separate and Distinct Parcels of Prop- erty. — Where persons who performed labor upon a dwelling-house situated upon a certain mining claim, and also in a tunnel therein, filed a claim of lien which did not designate separately the amounts due upon the dwelling and upon the tunnel, the court held that their liens were not postponed, on the ground that this section ^^ applies only to cases in Avhich one claim is filed against two or more separate and distinct ^buildings, mining claims, or other im- provements owned by the same person,' and not to a case where, as here, all of the work was performed upon one and the same piece of property, although upon different portions of it": Dickenson v. Bolyer, 55 Cal. 285. 41 * 'While section 1188 requires the claimant who files a lien against two or more buildings, or other improvements, to designate the specific amount for which he claims a lien upon each of such ^improve- 942 mechanics' liens. § 577 nate in his joint claim of lien the specific amount claimed under each original contract^ or against each parcel of property when in fact there is a specific amount owing upon each parcel of prop- erty; otherwise the lien which may be perfected through the joint claim is postponed to all other encumbrances against the same property.'*^ ments/ it does not require him to make such desig- nation unless there is in fact a specific amount due him on each of such improvements; and it might frequently happen that a contractor would construct several buildings under one contract, and there would not be any specific amount due to him on each of such buildings '': Warren v. Hopkins, 110 Cal. 506, 510, 42 Pac. 986. Under this section a joint lien for labor done and materials furnished may be filed against two sep- arate buildings erected on the same lot under differ- ent unrecorded contracts between the owner and the same original contractor, although erected at different times: Booth v. Pendola, 88 Cal. 36, 40 (23 Pac. 200, 24 Pac. 714), 25 Pac. 1101. ''It has been common in this state to consolidate two or more mining locations into one claim, and thereafter to treat and work them as one claim. After such a consolidation the different locations cease to constitute different claims, and become in law, as they are in fact, only parts of one claim.'' In such a case this section is inapplicable: Tredin- nick V. Bed Cloud etc. Mining Co., 72 Cal. 78, 84, 13 Pac. 152. 43 Lien is Postponed.— The only effect of the fail- ure of the claimant to state how much labor was furnished on one building and how much on the other, is to postpone his lien and give precedence to the liens of others. Whether these facts are stated sep- arately is no concern of the owner: Booth v. Pen- dola, 88 Cal. 36, 40, 41, 23 Pac. 200 (24 Pac. 714), 25 Pac. 1101. § 578 THE PERFECTED LIEN. 943 Subdivision 2, Time of AUadiment of Liens. 578. Contractor's Lien Attaches at Commence- ment of Work on Contract .^^ The lien of any contractor attaches as of the time of the commencement of the work npon his contract.^^ 579. Laborer's Lien at Commencement of Labor. The lien of a laborer attaches as of the time of the commencement of his labor.^^ 43 Code of Civil Procedure, section 1186, first clause: '^The liens provided for in this chapter are preferred to any lien, mortgage, or other encum- brance which may have attached subsequent to the time when the building, improvement, or structure was commenced, work done, or materials were com- menced to be furnished." As enacted 1872. nistorical.—'By previous statutes the liens attached as under the present provision, except that Stats. 1862, c. 287, sec. 3, provided that where the origi- nal contract was recorded all liens thereunder should attach from the time of such recordation: See Stats. 1850, c. 89, sec. 9; Stats. 1855, c. 130, sec. 5; Stats. 1856, c. 134, sees. 3 and 4; and Stats. 1867- 68, c. 448, sec. 3. 44 The lien of an- original contractor attaches, by relation, from the date of the commencement of work upon his contract: Soule v. Dawes, 7 Cal. 575. 45 Laborer's Lien Attaches at Commencement of Labor: Tuttle v. Montford, 7 Cal. 358; CroweH v. Gil- more, 13 Cal. 54; 18 Cal. 370. Historical.— lJnd.eT the statute of 1862, where there was no valid original contract, the same was true: Barber v. Eeynolds, 44 Cal. 519, 533. 944 mechanics' liens. § 580 580. Materialman's Lien at Commencement of Furnishing Materials. The lien of a materialman attaches as of the time when he commenced to furnish materials, and includes all that he may thereafter furnish for the same structure^ whether furnished under an express contract in which the terms and quan- tity are fixed^ or under a contract implied from their purchase and use in the structure from time to time as needed.'*^ The materials are furnished within the meaning of this section, not when delivered at the structure in the course of work upon which they are used, hut when the materialman has delivered, or has ready for de- livery, the materials at the place where he has agreed to deliver them under his contract.^'' 46 Pacific Mut. Life Ins. Co. v. Fisher, 106 Cal. 224, 236, 39 Pac. 758; (Stats. 1856) Tibbetts v. Moore, 23 Gal. 208, 214; (Stats. 1856) McCrea v. Craig, 23 Cal. 522. See, also, Germania Bldg. etc. Assn. v. Wagner, 61 Cal. 349, 354; Avery v. Clark, 87 Cal. 619, 627, 22 Am. St. Eep. 272, 25 Pac. 919. Historical.— JJndeY the statute of 1862, where there was no valid original contract, the same was true: Barber v. Eeynolds, 44 Cal. 519, 533. 47 Thus where materials were furnished to be used and were used in the construction of a quartz-mill, but were to be delivered at a foundry some dis- tance from such mill, the lien attaches from the time of their delivery at the found^: Tibbetts v. Moore, 23 Cal. 208, 214. § 581 THE PERFECTED LIEN. 945 Subdivision S. Operation of Perfected Lien. 581. Notice Compels Contracting Owner to Re- tain Certain Moneys.'*^ A notice of claim of lien having been filed, the contracting owner must withhold from the- orig- inal contractor in the execution of whose contract the labor or material has been furnished sufficient money of that already due the contractor but neither paid him nor assigned by him to a bona fide assignee for value,^^ and of that thereafter to become due, to satisfy the lien which may be enforced in virtue of the notice. 48 ;see section 585. See Code of Civil Procedure^ section 1193, in part; ^^In an cases where a lien shall be filed, under this chapter, for work done or materials furnished to any contractor, he shall defend any action brought thereon at his own expense; and during the pend- ency of such action, the owner may withhold from the contractor the amount of money for which such lien is filed. ' ' Historical.—StSits. 1855, c. 130, sec. 4, Stats. 1856, c. 134, sec. 3, and Stats. 1867-68, c. 448, sec. 11, pro- vide substantially the same. As, however, the lien-claimant is also entitled to recover costs and counsel fees, it should seem that the owner should also be directed to withhold them as he is by section 495 when the lien-claimant gives him a notice of his claim. 49 See section 585, note 12. Liens— 60 946 mechanics' liens. § 582 Subdivision J/-. Assignment of Lien. 682. Assignment of Lien. The [written] ^^ assignment of a demand se- cured by an improvement lien assigns the lien.^* 50 Assignment must be Written.—^ ' Under our statute, every conveyance whereby real estate is aliened, mortgaged, charged, or affected must be in writing. A mechanic's lien is in the nature of a mortgage, and is a charge on the land. In the former decisions of this court it has been held that a mortgage is a mere incident to the debt, and will not pass, except by an assignment of the note or debt. Applying this rule to the present case, the lien would not pass, except by a transfer of the ac- count; and as the account carries with it the lien, which is an encumbrance upon the land, or an estate, or interest, it must be in writing'': Ritter v. Steven- son, 7 Cal. 388. The statute apparently referred to in this quota- tion is Stats. 1850, p. 249, c. 101, sees. 1 and 36; Hittell's Gen. Laws, sees. 643, 678, in effect April 16, 1850. '* Conveyances of land, or of any estate or interest therein, may be made by deed, signed by the person from whom the estate or interest is intended to pass, being of lawful age, or by his lawful agent or attorney, and acknowledged or proved and recorded as hereinafter directed. ''The term 'conveyance,' as used in this act, shall be construed to embrace every instrument in writ- ing by which any real estate or interest in real es- tate is created, aliened, mortgaged, or assigned, ex- cept wills, leases for a term not exceeding one year, executory contracts for the sale or purchase of lands, and powers of attorne^'-s. " See, also. Patent Brick Co. v. Moore, 75 Cal. 205» 211, 16 Pac. 890, which assumes without question that the assignment must be written. § 582 THE PERFECTED LIEX. 947 There is, however, no code provision which is comparable to the statute above quoted. Civil Code, section 1091 (see, also, Code of Civil Procedure, sec- tions 1971 and 1972) is comparable to Stats. 1850, p. 249, c. 101, sec. 1; but Civil Code, section 1215, which resembles section 36 most closely, has no ref- erence to the matter in hand. There seems then to be no requirement that the assignment should be in writing under the present law. SI *'A perfected lien may be assigned, or rather it passes with an assignment of the demand for which it stands as security'': Eauer v. Fay, 110 Cal. 361, 367, 42 Pac. 902. See, also. Pacific Mutual Life Ins. Co. v. Fisher, 109 Cal. 566, 570, 42 Pac. 154. 948 mechanics' liens. § 583 AETICLE 6. EQUITABLE SUBEOGATION TO MONEYS OWING ORIGINAL CONTRACTOR.! 583. Certain lien-claimants may give notice of their claims to the contracting owner. 584. Method of giving notice. 585. Notice compels contracting owner to retain cer- tain moneys. 586. Fraudulent notice works forfeiture of lien. 587. Right to give notice unassignable. 588. Right to give notice a cumulative remedy. 589. Action to enforce this liability an equitable proceeding. 583. Certain Lien-Claimants may Give Notice of their Claims to the Contracting Owner.'^ Any lien-claimant (except for certain city street and other improvements as set forth in sec- 1 This article is founded upon an amendment to the latter part of section 1184 of the Code of Civil Procedure which took effect May 17, 1885. Historical.— The mechanic's lien statutes of 1850, 1856, and 1862, provided for a similar notice. '^The proceedings under this notice are in the nature of a garnishment, whereby there is impounded specific money due, or thereafter to become duo, to the contractor": Sweeney v. Meyer, 124 Cal. 512, 514, 57 Pac. 479. 2 Where the original contract is void, there being no contract and no 'payments to stop, this notice is useless: Davies-Henderson Lumber Co. v. Gottschalk, 81 Cal. 641, 644, 22 Pac. 860. § 583 NOTICE TO STOP PAYMEXTS. 949 tion 556)^ not contracting directly with the con- tracting owner'* may, at any time, give to the con- tracting owner a written notice sufficient to in- form him. about or to put him on inquiry con- cerning^ (1) the fact that such lien-claimant has fur- nished or has agreed to furnish, labor or ma- terial or both to any contractor or other person acting by authority of the contracting owner,^ 3 Lien-claimants for Certain City Street and Other Improvements cannot Give this Notice. ^^This right to garnishee the moneys of the con- tractor in the hands of the owner is limited by the terms of the section to 'the persons mentioned in section 1183^ '': Bianchi v. Hughes, 124 Cal. 24, 28, 56 Pac. 610. 4 Lien-claimants not Contracting Directly with Contracting Owner may Give Notice.— Code of Civil Procedure, section 1184, fifth sentence, provides: ''Any of the persons mentioned in section 1183, except the contractor,'' may give it; but as it would be absurd for anyone contracting directly with the owner to give the owner notice not to pay himself, this section evidently refers to persons not contracting directly with the contracting owner. 5 Notice must be Sufficient to Inform or Put on Inquiry.— Code of Civil Procedure, section 1184, seventh sentence: "No such notice shall be invalid by reason of any defect of form, provided it is sufficient to inform the }■ 87n j- reputed ■{ n87 ] owner of the substantial matters herein provided for, |^87n [ or to put him on inquiry as to such mat- ters ^ n87 j .'' New provision, in effect May 17, 1885; amended, in effect March 15, 1887. 6 Code Language.— "That they have performed labor or furnished materials, or both, to the con- 950 mechanics' liens. § 583 (2) the kind of labor and material, in general^ (3) the name of the person to or for whom the labor or material was furnished or agreed to be furnished,^ and (4) the value of that already furnished, and of the whole agreed to be furnished.^ 584. Method of Giving Notice. Such notice is given (1) by delivering it to the contracting owner personally, or (2) by leaving it at his residence or place of business with some person in charge, or (3) by delivering it to his architect, or (4) by leaving it at the architect's residence or place of business with some person in charge, or tractor, or other person acting by authority of the }■ 87n ]■ reputed ] n87 ] owner, or that they have agreed to do so.'' 7 Code Language.— '^Stating in general terms the kind of labor and materials.'' 8 Code Language.— * ^ The name of the person to or for whom the same was done or furnished, or both." Evidently it was also intended that the name of the person to or for whom the labor or materials were agreed to be furnished should like- wise be stated, though this is omitted from the code. 9 Code Language.— ^ ^ The amount in value, as near as may be, of that already done or furnished, and of the whole agreed to be done or furnished, or both." § 584 NOTICE TO STOP PAYMENTS. 951 (5) by posting it in a conspicuous place upon the mining claim or improvement.-*^^ 585. Notice Compels Contracting Owner to Re- tain Certain Moneys. ^^ Such notice being given, the contracting owner must withhold from the original contractor in the execution of whose contract the labor or material 10 See Code of Civil Procedure, section 1184, sixth sentence. New provision, in effect May 17, 1885; amended March 15, 1887. 11 Code of Civil Procedure, section 1184, last sen- tence: ^'Upon such notice being given, it shall be the duty of the |- 87f )■ [a] person who contracted with the contractor -| f87^ to, and he shall with- hold from his contractor, or from the person act- ing under such ]■ 87n j- reputed -j n87 ] owner, and to whom by said notice the said labor or materials, or both, have been furnished, or agreed to be fur- nished, }■ 87f J- [b] sufficient money due, or that may become due to such contractor, or other per- son ] f 87 ] , to answer such claim and any lien that may be filed therefor for record, under this chapter, including J- 87m \ [c] counsel fees not exceeding one hundred dollars in each case, beside reasonable costs provided for in this chapter \ m87^ . New provision, in effect May 17, 1885; amended, in effect March 15, 1887. (a) Former reading: ''Owner.'' (b) Former reading: ''AH money due or that may become due to such contractor, or other person, or sufficient of^ such money." (c) Former reading: "Costs and counsel fees pro- vided for in this chapter, until such notice is by writing withdrawn; and all money paid thereafter by the owner to the contractor, or such other per- son, while such notice is in force, shall, for the pur- 952 mechanics' liens. § 585 has been furnished^ or agreed to be furnished, sufficient money of that already due, but neither paid to such person nor assigned by him to a poses of all liens of all persons, except the con- tractor, be deemed a payment prior to the time the same was due within the meaning of and subject to the provisions of this section/^ This notice must be given in time to intercept the monev in the hands of the contracting owner; other- wise the payment of it to the original contractor in accordance with the terms of the original contract, which may be made ' to suit the parties thereto when the contract price does not exceed one thousand dol- lars, will operate as a complete discharge so far as the contracting owner is concerned: Kerckhoff-Cuz- ner etc. Lumber Co. v. Cummings, 86 Cal. 22, 25, 26, 24 Pac. 814. Historical.— Frior to the addition of this provision to the code, such a notice did not put the contract- ing owner under any obligation to withhold any amount: McCants v. Brush, 70 Cal. 125, 11 Pac. 601. In line with this decision the court in Kennedy- Shaw Lumber Co. v. Priet, 113 Cal. 291, 293, 45 Pac. 336, held that creditors of an original contractor who perfect no lien upon the improvement and do not give this notice, but merely obtain a personal judgment against the original contractor, are not entitled to a judgment directing that the remainder of the fund due from the contracting owner to the contractor, after the payment of liens, shall be dis- tributed between them. Stats. 1850, c. 87, sees. 3 and 4, were similar. Stats. 1862, c. 297, sees. 5, 6, and 7, provide that upon notice being given, the contracting owner must withhold from the amount due the original con- tractor sufficient to satisfy the demands made. If the claims of the lienors are admitted by the origi- nal contractor, the owner must pay them; if con- tested, must pay the amount claimed into court, and § 585 NOTICE TO STOP PAYMENTS. 953 bona fide assignee for value/^ and of that thereafter to. become diie/^ to answer such de- mand, together with counsel fees not exceeding a scheme of procedure is provided for determining the rights of the parties. If the amount in the hands of the owner is not sufficient to satisfy the claims in full, they must be satisfied pro rata. Compare Stats. 1862, sec. 23, and amendment thereto by Stats. 1863-64, c. 262, sec. 1. 13 Money Already Due, but Neither Paid nor As- signed to a Bona Fide Assignee for Value to be Re- tained. — The effect of this notice upon payments that have matured before it is given, but have not been made, is to be determined by the rights of the con- tractor in respect to them: Newport Wharf etc. Co. V. Drew, 125 Cal. 585, 589, 58 Pac. 187. The assignment by the original contractor to a bona fide assignee for value of an amount already due is free from the latent equities of third persons, such as the person who may give this notice: First Nat. Bank v. Perris Irr. Dist., 107 Cal. 55, 62, 64, 40 Pac. 45; Perry v. Parrott, 135 Cal. 238, 245, 67 Pac. 144. And the same is true where the contracting owner is a public corporation, as a board of insane asylum trustees or of school trustees: Newport Wharf etc. Co., 125 Cal. 585, 589, 58 Pac. 187; Long Beach School Dist. V. Lutge, 129 Cal. 409, 413, 414, 62 Pac. 36. The assignment, however, by the original contractor of his contract, either by way of substitution, or to a mere volunteer, or to a trustee, or to a purchaser with actual notice, or without rendering value does not affect such right: First Nat. Bank v. Perris Irr. Dist., 107 Cal. 55, 63, 64, 40 Pac. 45. 13 Money Thereafter to Become Due to be Re- tained. — '^It seems reasonable to say that no assign- ment made by the contractor of the amount to be- come afterward due to him in the course of the per- formance of the contract could, before the arrival of 954 mechanics' liens. § 585 one hundred dollars^ and the cost of filing and recording the notice of claim of lien whenever a lien is obtainable thereby.^^ 586. Fraudulent Notice Works Forfeiture of Lien. Any lien-claimant who willfully gives a false notice of his claim to the contracting owner for- feits his lien.^^ 587. Right to Give Notice Unassignable. The right to give such notice of claim and to secure the resulting benefits is a personal privi- lege of the lien-claimant^ and unassignable.^^ the time of payment, defeat the right of the material- man to give the notice in question and obtain the benefit thereof: First Nat. Bank v. Ferris Irr. Dist., 107 Cal. 55, 61, 63, 40 Fac. 45; Newport Wharf etc. Co. V. Drew, 125 Cal. 585, 589, 58 Fac. 187. 14 When No Lien can be Perfected, Costs, etc., cannot be Recovered.— Where, however, the person giving this notice could not obtain a lien, because the work or material was bestowed on a public build- ing, he could not be allowed any expense incurred in attempting to secure one, as for filing a notice of lien or for counsel fees. The statute does not provide for counsel fees except in cases of lien: Bates v. County of Santa Barbara, 90 Cal. 543, 548, 27 Fac. 438. 15 See Code of Civil Frocedure, section 1202, first sentence. New provision, in effect March 18, 1885. A similar provision was found in Stats. 1862, c. 297, sec. 11. This provision, being penal in its character, not only must be strictly construed, but the evidence un- der which it is invoked should render it clear and § 588 NOTICE TO STOP PAYMENTS. 955 t 588. Rig^ht to Give Notice a Cumulative Rem- edy. The right to give this notice is a cumulative and additional remedy, neither prerequisite to, nor necessarily concurrent with, the remedy by lien/'' and may be availed of by a person convincing that the violation is willful and inten- tional: Schallert-Ganahl Lumber Co. v. Neal, 91 Cal. 362, 365, 27 Pac. 743. 16 McCrea v. Johnson, 104 Cal. 224, 37 Pac. 902. This conclusion is based on the same reasoning as that on which section 563 is based. 17 A Cumulative Remedy.— ^ ^ This right to gar- nishee the moneys of the contractor in the hands of the owner .... is but a cumulative or additional remedy given for the purpose of enforcing in another mode the right for which by. section 1183 a lien is au- thorized upon the property upon which the labor has been performed, or for which th materials were fur- nished' ': Bianchi v. Hughes, 124 Cal. 24, 28, 56 Pac. 610; Bates v. County of Santa Barbara, 90 Cal. 543, 547, 27 Pac. 438; Weldon v. Superior Court Los An- geles Co., 138 Cal. 427, 71 Pac. 502. See, also, Davies Henderson Lumber Co. v. Gottschalk, 81 Cal. 641, 644, 645, 22 Pac. 860; French v. Powell, 135 Cal. 636, 640, 642, 68 Pac. 92. ^'The remedy provided .... for intercepting the contract price in the hands of the owner is not de- pendent upon proceedings to enforce a lien against the property affected by the contract^': First Nat. Bank V. Perris Irr. List., 107 Cal. 55, 65, 40 Pac. 45. Historical— Vnder the statutes of 1850, 1855, 1850, and 1862 a similar notice was an essential prerequi- site to a lien. Thus, under Stats. 1850, c. 87, sees. 2, 3, and 4, sub- contractors, materialmen and laborers not contract- ing directly with the contracting owner are required, 956 mechanics' liexs. § 588 « otherwise a lien-claimant wlio^ on grounds of j^ub- lic policy and public necessity, is not permitted to obtain a lien against a public building. ^^ as a prerequisite, to the right to a lien, to serve a notice upon the contracting owner setting forth *^[1] the amount of his claim, and [2] the service rendered, for which his employer is indebted to him, and [3] that he holds the said owner or owners responsible for the same/' In Cahoon v. Levy, 6 Cal. 295, 65 Am. Dec. 515, it was said that the statute of 1850 ''was designed for two classes of laborers and con- tractors: First, master builders, mechanics, lumber merchants, and all other persons furnishing labor or materials by contract with the owner of the building himself; and, second, subcontractors, journeymen, etc., performing labor or furnishing materials by contract with the master builders or contractors, and between whom and the owner there is no privity of contract whatever [The first class] have, by the first section of the act, a lien on the building The second class are provided for by the second, third, and fourth sections of the act The act intended to provide an actual lien, existing from the commence- ment of the work until sixty days after its comple- tion, for those enumerated in the. first .section, leaving all others their remedy by notice to the owner; and no time being fixed when such notice shall be given, that their lien attaches only upon the service thereof; that this mode of procedure was intended to prevent litigation, by substituting a procedure in the nature of an attachment or garnishment; and this class of cases is put on the same footing as ordinary attach- ments in which the rule, first in time first in right, prevails. ' ' In Knowles v. Joost, 13 Cal. 620, and McAlpin v. Duncan, 16 Cal. 126, decided under the act of 1856 with the amendment of 1858, it was held that as to the claims of subcontractors and materialmen the legislature did not intend to make the contracting owner responsible, except upon notice being served § 589 NOTICE TO STOP PAYMENTS. 957 589. Action to Enforce this Liability an Equi- table Proceeding. . An action to enforce the liability created by duly filing this notice is a proceeding in equity; hence the superior court has original jurisdiction thereof, although the amount of the demand is less than three hundred dollars. ^^ upon such owner, or to a greater extent than the sum due to the contractor, at the date of the notice. Under Stats. 1862, c. 297, sees. 5, 8, and 12, mate- rialmen and laborers not contracting directly with the contracting owner, or their assigns, were required as a prerequisite to the right to a lien to serve a written notice personally upon such owner, or where personal service is impossible by posting, stating ^ ^ the nature and extent of his claim against the original contractor, or his assigns, over and above all pay- ments and offsets for work and labor done, or agreed to be done, or materials furnished, or agreed to be furnished, for such construction or repair.^' But the particular nature of work and materials furnished need not be stated in the notice: See Davis v. Living- ston, 29 Cal. 283, 287. IS Notice Effective in Case of Public Building: Bates V. County of Santa Barbara, 90 Cal. 543, 547, 27 Pac. 438; French v. Powell, 135 Cal. 636, 642, 68 Pac. 92. 19 Action to Enforce Liability Equitable Proceed- ing.— ^^ Section 1184 of the Code of Civil Procedure is a part of the legislative scheme devised, pursuant to the constitutional provision, to provide security to mechanics, laborers, materialmen, and others men- tioned, for their labor bestowed or materials in the erection or improvement of buildings. The giving of the statutory notice does not establish a lien on the fund in the owner's hands in the sense that the re- corded lien is established on the buildings and land, under section 1183, but it does not follow that no sort of equitable lien may not be enforced against the 958 mechanics' liens. § 589 fund referred to in section 1184 The effect that may be given to this section does not depend upon the lien provided for in section 1183. Whether the notice may result in establishing an equitable garnishment or assignment, or confers an equitable lien, or is a form of equitable subrogation regulated by statute, as it has been variously termed, this court has said ^the right to control and direct the funds remaining in the hands of the owner is as distinct and independent as the right to file and enforce a lien. It is a remedy entirely disconnected from and additional to the remedy by lien upon the building.* .... Doubtless Swinford, ' the materialman, might have brought his action on the law side of the court, against Weldon, the contractor, and served the ordi- nary garnishment on the owner, Maher, but he was not restricted to this remedy. An action at law would not lie against the owner alone, for his liabil- ity would depend on the liability of the contractor being first determined. Where the action is by the materialman against both the owner and contractor, the owner might defend by showing that there were other claimants to the fund, who had served like notice on him, in excess of the amount in his hands, and this would necessitate an accounting and an ap- portionment among the several claimants of the fund, after the liability of the contractor had been fixed. In most cases this very situation would arise. But such an action (and this is in fact such a one, except there is but one claimant) would clearly be equitable. That the court should permit such proceeding to be brought and thus determine in one action the rights of the parties and secure to the materialman the fruits of his notice, and compel the owner to perform the duty imposed upon him by statute, we feel quit© clear.'' Thus, where a notice is served on the owner for eighty-four dollars under Code of Civil Procedure, section 1184, although no lien is perfected, and not- withstanding the demand is for less than three hun- dred dollars, the action thereon may be maintained in the superior court, being an equitable action: Weldon v. Superior Court of Los Angeles Co., 13S Cal. 427, 71 Pac. 502. 590 AMOUNTS OF LIENS. 969 AETICLE 7. AMOUNTS OF LIENS. 590. Maximum amount of individual lien. 591. Maximum amount of liens in aggregate when contract price fixed. 592. Amount of lien not reduced by contracting owner's equities. 593. Liens enforceable to full amount when contract price not fixed. 594. Amounts of liens when original contract non- conformable to statutory requirements, 595. Amount applicable to liens in case of stop- page of work on original contract. 596. Amount of original contractor's lien. 597. Original contractor liable to owner for amount beyond contract price which he is compelled to pay. 598. Lien likewise enforceable when contract price payable in property. 590. Maximum Amount of Individual Lien. The maximum amount recoverable upon any lien cannot exceed the amount designated in the notice of claim of lien/ nor that owing and re- maining unpaid the lienor at the time of the en- forcement of his lien.^ 1 See section 568, subdivisions 3 and 6, section 574, and section 5^, especially note 34. 2 The phrase ''for the value/' referring to the amount for which a lien is authorized, (twice) found 960 mechanics' liens. § 591 591. Maximum Amount of Liens An Aggregate When Contract Price Fixed.^ Whenever a contracting owner makes any valid contract with a fixed contract price^ the aggre- gate amount recoverable from the owner by all in section 1183 of the code, '*is not used in contra- distinction from ^ price ^ or ^agreed value.' It can- not possibly have been the intention that a contractor, materialman, or laborer, who agrees for a certain sum, can have a lien for a greater sum upon the ground that the value of what he furnished is greater. It is probably true that where a subcon- tractor, materialman, or laborer agrees with the origi- nal contractor for more than he is entitled to, upon the understanding that it shall be m.ade out of the property, there would be such a fraud as would viti- ate the claim. But aside from such a case, we think that the word ^ value' in the above provision is to be construed so as to mean 'agreed value' in cases where there is an agreed value": Jewell v. McKay, 82 Cal. 144, 150, 23 Pac. 139. (This quotation presumably refers to the phrase the earlier time it is used ia the code section.) 3 When the contract price is fixed, the amount for which the contracting owner can be rendered liable is limited by the terms of the contract, unless statu- tory or equitable requirements are violated; and the legislature has no power to increase the owner's lia- bility: Knowles v. Joost, 13 Cal. 620; McAlpin v. Duncan, 16 Cal. 126; Bowen v. Aubrey, 22 Cal. 566, 571; Dore v. Sellers, 27 Cal. 588, 593; Whittier v. Wilbur, 48 Cal. 175; Eenton v. Conley, 49 Cal. 185; Wells V. Cahn, 51 Cal. 423; Dingley v. Green, 54 Cal. 333; Eosecranz v. Wagner, 62 Cal. 151, 154; Latson V. Nelson (Cal.), 11 Pac. C. L. J. 589 (construed in Kellogg V. Howes, 81 Cal. 170, 177); Whittier v. Hol- lister, 64 Cal. 283, 30 Pac. 846; Turner v. Strenzel, 70 Cal. 28, 30, 11 Pac. 389; Wiggins v. Bridge, 70 Cal. r ■^\ b ^. A H OF THE f UNIVERSITY j § 591 AMOUNTS OF LIE^S. OF 96^ lienors other than the original contractor upon all liens enforceable thereunder cannot exceed a fund consisting of that portion of the contract price already due the contractor^ but neither paid 437, 11 Pac. 754; Walsh v. McMenomy, 74 Cal. 356, 359, 16 Pac. 17; Kellogg v. Howes, 81 Cal. 170, 177, 6 L. E. A. 588, 22 Pac. 509; Grieg v. Eiordan, 99 Cal. 316, 319, 33 Pac. 913; McDonald v. Hayes, 132 Cal. 490, 495, 64 Pac. 850: Stimson Mill Co. v. Braun, 136 Cal. 122, 124, 125, 89 Am. St. Eep. 116, 68 Pac. 481. See, also, Harmon v. San Francisco etc. E. E. Co., 86 Cal. 617, 620, 25 Pae. 124; O^Donnel v. Kra- mer, ^^ Cal. 353, 4 Pac. 204. Averment. — Thus an averment is necessary that some money is due, or to tecome due, the contractor from the owner: Whittier v. Hollister, 64 Cal. 283, 30 Pac. 846. So the provision added to the Code of Civil Pro- cedure, section 1183, by amendment of April 15, 1880, reading: ^^This lien shall not be affected by the fact that no money is due, or to become due, on any ac- count made by the owner with any other party, '^ was declared unconstitutional in Latson v. Nelson (Cal.), 11 Pac. C. L. J. 589. Code of Civil Procedure, section 1183, as enacted, in effect May 17, 1885; and amended, in effect March 15, 1887, provides: *^In case of a contract for the work between the }-87n|- reputed ^n87^ owner and his contractor, the lien shall extend to the entire contract price, and such contract shall operate as a lien in favor of all persons, except the contractor, to the extent of the whole contract price; and after all such contracts are satisfied, then as a lien for any balance of the contract price in favor of the con- tractor. '' Previous enactments are found in the Code of 1183 as enacted 1872 and repealed May 29, 1874, in Stats. 1862, c. 297, sec. 1, and in Stats. 1855, c. 130, sec. 3. Liens— 61 1)62 mechanics' liens. § 591 him nor assigned by him to a bona fide assignee for value^'* together with that portion thereafter to become due [but deducting in case the con- tract price does not exceed one thousand dollars any premature payments which may actually have been made],^ the amount of the fund to be de- 4 Neither Paid, nor Assigned to a Bona Fide As- signee for Value: See section 585, note 12. 5 Deducting, When the Contract Price does not Exceed One Thousand Dollars, any Premature Pay- ments. — Where the contract price ot an original con- tract which was in writing was less than one thou- sand dollars, the court held ^'the payment of install- ments is subject to change by the agreement of the owner and contractor, both as to time and amount, as in the case of private contracts relating to other mat- ters. If it were otherwise— if the provisions as to the time and amount of payments, and the penalty imposed upon the owner for having anticipated pay- ments, were intended to apply to contracts where the price is less than one thousand dollars — we may safely assume that the statute would have required them to be in writing and recorded, or, in other words, would have made no distinction based upon the amount of the contract price' ^: Southern Califor- nia Lumber Co. V; Jones, 133 Cal. 242, 65 Pac. 378, in department. So, where a contract in which the contract price was less than one thousand dollars pro- vided that the price was payable in four installments, and after three had become due and had been paid and before the final payment had become due, notice of a lien-claim was given the contracting owner, but such final payment had been prematurely made be- fore such notice w^as given, the notice created no lia- bility on the part of the contracting owner. This conclusion seems, however, to disagree with at least three earlier cases, one of them being decided in bank, and two of them by the former supreme § 591 AMOUNTS OF LIENS. 963 termined as soon as the aggregate amount re^ quired to be withheld in consequence of liens Avhich have been perfected and of equitable sub- rogations of lien-claimants to moneys in the con- tracting owner^s possession equal the moneys? court. These cases were decided before the enact- ment of the presejit section 1184 of the Code of Civil Procedure, when all original contracts were on the same basis as contracts in which the contract price does not exceed one thousand dollars are at present. In Walsh v. McMenomy, 74 Cal. 354, 359, 16 Pac. 17, in bank, the court says: ^'When a contract is made by the owner for the construction of a building, by the terms of which a pert of the contract price is not due until after the building is completed, and when materials have been furnished for and used in the construction, presumably in view of such con- tract, and when thereafter, and with notice thereof, the owner pays his orioinal contractor before the 'building is completed and before the money is due, he must be held liable to the materialman to the ex- tent of the money prematurely paid. To hold other- w^ise would be to enable the owner to practice a fraud, and the contract, instead of a chart for the direction of materialmen, subcontractors, and labor- ers under the original contract, would become a de- lusion and a fraud. We think that this conclusion is fairly deducible from Eenton v. Conley, 49 Cal. 185, Quale V. Moon, 48 Cal. 478, and other adjudicated cases. ^' Where a materialman perfected a lien for mate- rials furnished an original contractor, the court sus- tained a demurrer of the answer of the contracting owner on the ground, among others, that ^Hhe an- swer does not aver .... that the sum paid by the defendant [the owner] to the builder, before the abandonment by him of his work and contract, was due when the same was paid'^: Stats. 1868) Quale V. Moon, 48 CaL 478, 482. 964 mechanics' liens. § 591 which should thereby be intercepted. Where, however, the owner of the liened property eon- tests the foreclosure action without reasonable cause, the necessary incidents of the judgment es- tablishing the liens may be allowed over and above the amount of this fund.^ 592. Amount of Lien not Reduced by Con- tracting Owner's Equities. 'No lien of any subcontractor, materialman, or laborer can be defeated or diminished (1) by any premature payment upon the con- tract price of, or alteration of, any original contract [in which the contract price exceeds one thousand dollars],® nor '^ Where the owner had made payments to the con- tractor in good faith, under and in pursuance of the contract, before receiving notice, either actual or constructive, of the liens, the materialmen and labor- ers could not charge the buildings with liens, ex- ceeding the balance of the contract price remaining unpaid when notice of the lien was given' ^: (Stat. 1868) Eenton v. Conley, 49 Cal. 185, 188. 6 Where the contracting owner retains the money remaining unpaid on the contract price in his own possession (instead of depositing it in court), and without cause or right raises a contest on every point and fights the case through to the end, thereby de- laying the lienors in recovering money to which they were justly entitled, and putting them to unnecessary expense, the lienors' costs and counsel fees are prop- erly allowed and made payable out of the property ordered to be sold beyond and in addition to the amount of the fund remaining unpaid in the contract- ing owner's hands: De Camr) Lumber Co. v. Tolhurst, 98 Cal. 631, 635, 34 Pac. 438. § 592 AMOUNTS OF LIENS. 965 7 Not Defeated by Premature Pajrment or Altera- tion. — Code of Civil Procedure, section 1184, second and third sentences: ^^No payment made prior to tlie time when the same is due, under the terms and conditions of the contract, shall be valid for the pur- pose of defeating, diminishing, or discharging any lien in favor of any person, except the contractor, but as to such liens, such payment shall be deemed as if not made, and shall be applicable to such liens, notwithstanding that the contractor to whom it was paid may thereafter abandon his contract, or be or become indebted to the }- 87n |^ reputed -| n87 -j owner in any amount for damages or otherwise, for nonper- formance of his contract or otherwise No al- teration of any such contract shall affect any lien ac- quired under the provisions of this chapter.'^ New provision, in effect May 17, 1885; amended in effect March 15, 1887. A provision, substantialy similar to the former part of this was found in Stats. 1862, c. 297, sec. 10, in effect June 25, 1862, repealed March 30, 1868, and was applied in Davis v. Livingston, 29 Cal. 283, 290, and Shaver v. Murdock, 36 Cal. 293, 298. This provision is universal in its application, and is not dependent upon notice having been given under article 6, sections 583 through 589, above: Sweeney v. Meyer, 124 Cal. 512, 513, 514, 57 Pac. 579; Ganahl v. Weir, 130 Cal. 237, 238, 239, 62 Pac. 512. It is also applied in Eeed v. Norton, .90 Cal. 590, 602, 26 Pac. 767, 27 Pac. 426. Arermenf. — Where the lienor claims that a prema- ture payment has been made, an averment in his foreclosure complaint that there is now due from the owner under the contract a certain sum, and that the same has not been paid, being a statement of the ulti- mate fact, is sufficient to raise an issue as to the pro- mature character' of certain payments. The reason why it is now due and has not been paid need not be stated in the complaint: Ganahl v. Weir, 130 Cal. 237, 238, 62 Pac. 512. s This Provision is Open to Some Doubt: See sec- tion 591, note 5. 966 mechanics' liens. 592 (2) by any prior or subsequent indebtedness, off- set, or counterclaim in favor of the contract- ing owner and against the original contractor.'^ 593. Liens Enforceable to Full Amount When Contract Price not Fixed. Whenever a contracting owner makes any con- tract without a fixed contract price, the full amount of each demand secured by a lien en- forceable thereunder may be recovered from tho 9 Not Defeated by Offset in Favor of Contracting Owner.— Code of Civil Procedure, section 1184, third sentence, first clause: ^^As to all liens, except that of the contractor, the whole contract price .... shall not be diminished by any prior or subsequent indebtedness, offset, or counterclaim in favor of the }- 87n \- reputed ^ n87 ■{ owner, and against the con- tractor. ^' New provision, in effect May 17, 1885; amended, in effect March 15, 1887. 10 Code of Civil Procedure, section 1183, first sen- tence: ^^ Mechanics, [etc.], .... shall have a lien upon the property upon which they have bestowed labor, or furnished materials, for the value of such labor done and materials furnished . . . . ; and any person who performs any labor in any mining claim or claims has a lien .... for the work or labor done^ or materials furnished.'' New provision, in effect May 17, 1885. Code of Civil Procedure, section 1191: '^Any per- son who [does certain city street or other improve- ments] .... has a lien .... for his work done and materials furnished,'' As enacted 1872, Historical.— The phraseology of previous statutes has in all cases been broad enough to cover this case. § 594 AMOUNTS OF LIENS. 967 594. Amounts of Liens When Original Contract Nonconformable to Statutory Require- ments.^^ (1) If an}^ original contract is void on any of the grounds specified in section 547 above, or (2) if the terms of such contract and every alter- ation thereof do not substantially conform to the requirements of section 544 as to time and manner of paying the contract price, 11 Code Provisions.— Code of Civil Procedure, sec- tion 1183, last clause: ^^In such case, the labor done and materials furnished by all persons aforesaid, ex- cept the contractor, shall be .deemed to have been done and furnished at the personal instance of the owner, and then shall have a lien for the value thereof.^' New provision in effect May 17, 1885. Code of Civil Procedure, section 1202, last clause, provides substantially the same. New provision in effect March 18, 1885. Code of Civil Procedure, section 1184, fourth sen- tence: ^^ }-87f 1^ [a] In case such contracts and altera- tions thereof ■{ f 87 ■{ do not conform substantially to the provisions of this section, [87o] [b] the labor done and materials furnished by all persons except the contractor shall be deemed to have been done and furnished at the personal instance |-87f )■ [c] and re- quest of the person who contracted with the con- tractor ^ f 87 \ , and they shall have a lien for the value thereof.^' New provision, in effect May 17, 1885; amended in effect March 15, 1887. (a) Former reading: ^^All such contracts and alter- ations thereof as. '^ (b) Here followed: ^^ Shall be wholly void, and no recovery shall be had thereon by either party thereto; and in such case. ^^ 968 mechanics' liens. § 594 the amount of the lien of each subcontractor/" materialman and laborer is the value^^ of the personal services or materials, or both, furnished by him respectively less payments and credits re- ceived. (c) Former reading: '^Of the owner.'' The amend- ment seems to have improved the original con- tractor's position, for as the original contract is no longer declared void he is now entitled to a lien; the penalty declared in favor of the other lien-claimants is not affected. C on stitiitionaUty.— In a case where the contract had not been filed for record, the court said: *^It has been held, .... and very properly, that where there is a valid contract the owner cannot be compelled to pay more than he has contracted to pay, unless he is noti- fied of the claims of subcontractors before payment to the contractor. But that is not this case. Here there was no contract. If the legislature has power to say to the owner, ^If you pay the contactor after notice irom the subcontractor of his claim, you shall still be liable to the latter,' it has the undoubted right to say to him, ^If you do not execute your con- tract in a certain form, and file it in the recorder's office, you shall be liable to materialmen and laborers for the value of their material and labor.' There is no hardship in this provision. The owner is only compelled to pay once for what he receives and re- tains the benefit of. He is not bound and has no right, as between himself and subcontractors, to pay the contractor": Kellogg v. Howes, 81 Cal. 170, 177, 6 L. E. A. 588, 22 Pac. 509. In the Kellogg case, page 177, the court states that the clause of section 1183 above quoted means that ''the subcontractors, laborers, and materialmen shall have their lien precisely as if no contract had ever been made between the owner and contractor, and the material had been furnished and work done for the owner at his special instance and request." § 594 AMOUNTS OF LIENS. 969 12 Concerning Amount of Subcontractor's Lien.— Where a subcontractor files a claim of lien in whicli lie includes the value of work done by his employees, and his employees also file claims of liens, the court Avill render its foreclosure judgment in favor of each employee who has perfected a lien for the amount eacn is entitled to receive, and deduct the amounts of the liens so allowed from that of the subcontractor's lien: Maeomber v. Bigelow, 126 Cal. 9, 15, 58 Pac. 312. 13 Amount of Lien is Value of Work or Materials. *^The extent of the materialman's recovery is not measured by the terms of the contract. On the con- trary, the statute provides, in express terms, that, where the contract is not recorded, the materialman shall have a lien for the value thereof. In case the contract is not recorded, the statute, and not the contract, measures the extent of his recovery'': Kel- logg V. Howes, 81 Cal. 170, 178, 6 L. E. A. 588, 22 Pac. 509; Davies-Henderson Lumber Co. v. Gottschalk, 81 Cal. 641, 645, 646, 22 Pac. 860. Tn the Kellogg case, page 178, what was said in Giant Powder Co. v. San Diego Flume Co., 78 Cal. 193, 196, 20 Pac. 419, as to the original contract remaining to mark the recovery of the lienholders, when the contract is void because not recorded, is overruled. Where the original contract is void, the price at which a lienor agrees to furnish materials to the con- tractor is prima facie evidence of their value: Booth V. Pendola, 88 Cal. 36, 41 (23 Pac. 200), 25 Pac. 1101 ; Joost V. Sullivan, 111 Cal. 286, 296, 43 Pac. 896; Bringham v. Knox, 127 Cal. 40, 44, 59 Pac. 198. Com- pare Carpenter v. Furrey, 128 Cal. 665, 669, 61 Pac. 369. Nevertheless, ^'the property is subject to a lien for only the ^ value' of the Avork done" by employees of a subcontractor; and if the subcontractor has em- ployed them at a higher rate than he could enforce against the property, he must stand the loss: Ma- comber V. Bigelow, 126 Cal. 9, 15, 58 Pac. 312. 970 mechanics' liens. § 595 595. Amount Applicable to Liens in Case of Stoppage of Work on Original Contract. ^^ If an original contractor fails to perforin his 14 See Code of Civil Procedure, section 1200. New section, in effect March 18, 1885. The court seems to hold that this section is not applicable where the contract price is less than one thousand dollars. In Denison v. Burrell, 119 Cal. 180, 51 Pac. 1 (compare Southern Cal. Lumber Co. v. Jones, 133 Cal. 242, 244, 65 Pac. 378), where the con- tract price was less than one thousand dollars, and the original contractor abandoned the work when half completed, and a lienor sought to cause one-half of the contract price to be applied to the discharge of liens, the court said: ''The contract price being less than one thousand dollars, the provisions of section 1184 of the Code of Civil Procedure relative to the time and mode of payment, and the withholding of a percentage of the contract price, are not applicable. It was permissible for the parties to contract for the payment of the whole amount to the contractor before the commencement of the work, or, as was done in this case, to contract that payment should not be made until the whole building was completed. .... The cases upon which respondent [the lien- claimant] relies, and which he contends oppose this construction, are those of Dunlop v. Kennedy, 102 Cal. 443 [36 Pac. 765], and Golden Gate Lumber Co. V. Sahrbacher, 105 Cal. 114 [38 Pac. 635], but these cases both had to do with contracts where the price exceeded one thousand dollars, and they are there- fore inapplicable.'' The reasoning of the court rests on the assumption that this section can only be ap- plied when the time and mode of payment of the con- tract price are regulated by Code section 1184, which admittedly is not the case when the contract price does not exceed one thousand dollars; but the true view seems to be that this section can be rendered applicable whenever the owner has not paid the § 595 AMOUNTS OF LIENS. 971 contractor the full amount proportionate to the work and materials furnished, estimated by the standard of the whole contract price. In Gibson v. Wheeler, 110 Cal. 243, 42 Pac. 810, where the contract was abandoned and the owner paid out in the completion of the building more than the balance o$ the contract price (the contract price being less than one thousand dollars), a materialman was not permitted to re- cover, no reference, however, being made to this sec- tion. ' In Golden Gate Lumber Co. v. Sahrbacher, 105 Cal. 114, 118, 38 Pac. 635, the question was raised, but left undetermined, whether this section was appli- cable when the original contractor had a right to stop work as well as when he wrongfully abandoned work. Rule Before Adoption of Section.— Where an original contractor abandons his contract without cause, and the contracting owner afterward completes the con- tract for himself for less than the balance of the contract price remaining in his hands, materialmen of the original contractor can have no lien upon that part of the contract price still remaining in the own- er ^s possession. When the original contractor aban- doned his contract he forfeited all his rights there- under, and upon the extension of his claim, the claims of all persons claiming under him were likewise ex- tinguished: (Stats. 1862) Blythe v. Poultnev. 31 Cal. 233; (Code 1874) Dmgley v. Green, .54 Cal.*^ 333, 335. Where an original contractor for the erection of a building abandons the work before its completion, af- ter being paid in full by the contracting owner for the work already done, a materialman is not entitled to a lien on the im.provement for the materials fur- nished the original contractor for its construction, un- less the contracting owner afterward completes it for a less amount than the balance of the contract price in his lands: Wiggins v. Bridge, 70 Cal. 437, 11 Pac. 754. 072 mechanics' liens. § 595 contract in fiill^ or abandons^^ the same before eonipletion, there nevertheless is applicable to the liens of persons other than the contractor that portion of the contract price remaining after the amount of the contract price then lawfully due and actually paid is deducted from the value, • estimated as near as may be by the standard of the whole contract price^ of the work already done and materials already furnished at the time of such failure or abandonment^, including ma- terials then actually delivered or on the ground which shall thereupon belong to the owner. 596. Amount of Original Contractor's Lien.^^ The amount recoverable upon a lien by an original contractor is the amount which remains 15 What Amounts to Abandonment.— Where the original contractor leaves the work without cause it is an abandonment: Golden Gate Lumber Co. v. Sahrbacher, 105 Cal. 114, 116, 38 Pac. 1635. A finding that the contractor ^ ' entirely ceased labor thereon without completing said building ^^ shows an abandonment within the meaning of this section: McDonald v. Hayes, 132 Cal. 490, 495, 64 Pac. 850. 16 Code of Civil Procedure, section. 1193, in part: " ' The contractor shall be entitled to recover upon a lien filed by him only such amount as may be due to him according to the terms of his contract, after de- ducting all claims of other parties for work done and materials furnished, as aforesaid; and in all cases Avhere a lien shall be filed, under this chapter, for work done or materials furnished to any contractor, he shall defend any action brought thereon at his own expense; .... and in case of judgment against the § 590 AMOLNTS OF LIENS. 973 after deducting the gross amount^'' (mclnding costs and counsel fees) recovered b}^ all lienors furnishing work or materials to such contractor, together with the expenses incurred by the owner in defending the actions in which their liens were foreclosed (except where the ov/ner had agreed owner or his property, upon the lien, the said owner shall be entitled to deduct from any amount due or to become due by him to the contractor the amount of such judgment and costs/' New section, in ef- tect May 29, 1874. Stats. 1867-68, c. 448, sec. 11, in effect March 30, 1868, repealed by code, read the same. Code of Civil Procedure, section 1183, second sen- tence: ^^In case of a contract for the work between the )■ 87n j- reputed ■{ n87 -| owner and his contractor, the lien shall extend to the entire contract price, and such contract shall operate as a lien in favor of all persons, except the contractor, to the extent of the whole contract price; and after all such liens are satisfied, then as a lien for any balance of the con- tract price in favor of the contractor. ^^ New provi- sion, in effect May 17, 1885; amended, in effect March 15, 1887. Also, see Stats. 1850, c. 87, sec. 5. See section 548, above, especially note 23. Under Stats. 1855, c. 130, sec. 4, and Stats. 1856, c. 134, sec. 3, the amount of the liens of other persons than the contractor, were, when established, to be a * ^ valid offset against the amount due ' ' him. 17 Amount Recovered by Lienors to be Deducted.— In case of a judgment in behalf of a materialman employed by an original contractor against the con- tracting owner and his property, the latter is entitled to deduct from any sum due such contractor the amount of such judgment: (Stats. 1868) Whittier v. Wilbur, 48 Cal. 175. 974 MECHANICS' LIEXS. § 596 with the original contractor to pay such lien- ors)/^ from the amount remaining due and un- paid him according to his contract. 597. Orig^inal Contractor Liable to Owner for Amount Beyond Contract Price Which He is Compelled to Pay. If the amount recovered on foreclosure judg- ments rendered against the contracting owner for personal services or materials furnished an original contractor, with costs thereon added, ex- ceeds the amount coming to the contractor from the owner, or if the owner has settled with the contractor in full, the ovrner is entitled to recover back from the contractor the amount so paid in excess of the contract price. ^^ 38 Where an original contractor gave his subcon- tractor an order upon the contracting owner tor the amount due the su]' contractor, which order the own- er refused to pay, the original contractor must bear the expenses incurred by the owner in defending a foreclosure action brought by the subcontractor. The contractor cannot split his demand and impose upon the owner without his consent the duty of paying an assignee of a part of it: Clancv v. Plover, i07 Cal. 272/275, 276, 40 Pac. 394. But where the agreed method of payment was by orders issued by the contractor on the owner, which the owner refused to pay, the owner must himself bear the expenses of foreclosure actions brought by such lienors: Adams v. Burbank, 103 Cal. 646, 650, 651, 37 Pac. 640. 19 See Code of Civil Procedure, section 1193, latter clause: New provision, in effect May 29, 1874. Stats. 1867-68, c. 448, sec. 11, latter part, prov'des the same. § 593 AMCLNTS CF LIEXS. 975 59?. lien likewise Enforceable When Contract Price Payable in Property .^^ Xotwithstanding the contract price of a valid contract with the contracting owner is payable in something other than money, the contractor may, upon breach of payment thereof [when the dam- Where, however, liens are filed by persons working under an original contractor in a sum in excess of the contract price of a valid contract, and the owner pays them without the request of the contractor, he cannot recover the excess from the contractor or his sureties: Brill v. De Turk, 130 Cal. 241, 243-245, ^2 Pac. 462. 20 Code of Civil Procedure, section 1184, in part; '^As to all liens, except that of the contractor, the whole contract price shall be payable in money.'' ^^The exception in favor of the contractor, in the provision of the code above quoted, indicates, if it does not imply, that he may contract and have a lien for the value of his work payable otherwise than in money; and this is in perfect accord with section 1183, which provides that he shall have a lien for the value of the labor done and materials furnished'': Baird v. Peall, 92 Cal. 235, 237, 28 Pac. 285. ^'Eespondent claims that section .... 1184, above cited, relate [s] only to cases where the contract price exceeds one thousand dollars After carefully reading the opinions in the cases referred to, we fail to see how they can be said to sustain respondent's contention": Schmid v. Busch, 97 Cal. 184, 188, 31 Pac. 893. The code provision above quoted cannot be inter- preted to render void a contract a part of the contract price of which is payable in property, as such a pro- vision would be unconstitutional as unreasonably re- straining the right of contract: Stimson Mill Co. v. Braun, 136 Cal. 122, 89 Am. St. Eep. 116, 68 Pac. 481. 976 mechanics' liens. § 598 ages are liquidated and certain, if not in every case],^^- and every lienor claiming under him may in every case,^^ enforce each, respectively, his lien to the same extent as though the contract price was payable in money. 21 Where an original contractor contracted to do some painting at a fixed money price, a specified por- tion of which (one hundred and fifty dollars) was to be paid in land, upon a breach of the agreement to pay one hundred and fiftj^ dollars in land, the dam- ages being liquidated and certain, precisely the same as in case of the breach of an agreement to pay ntoney, the contractor may enforce his lien for the balance due him. ''Had the plaintiff [original contractor] contracted to do the work in consideration that defendant should convey to him certain land or personal property, without fixing the money price or value of the work, perhaps he would not have been entitled to a lien^^: Baird v. Peall, 92 Cal. 235, 237, 28 Pac. 285. 22 Other I-ienor in Every Case.— ''The laborer [em- ployed by an original contractor], in our opinion, may enforce a lien, notwithstanding the contract price v/as to be paid in something other than money, it not having in fact been paid when the claim of lien was filed and the action commenced'': Schmid v. Busch, 97 Ca\ 184, 188, 189, 31 Pac. 893. 599 PRIORITY. 977 AETICLE 8. PEIOEITY OF IMPEOVEMENT LIENS AMONG THEMSELVES. 599. Eank of liens. 599. Rank of Liens. Improvement liens have priority in the follow- ing order: (1) liens of persons performing manual labor, (2) of materialmen, (3) of subcontractors, (4) of original contractors. The court must, in its judgment, declare the rank of each lien, and the proceeds of the sale of the property subject to the liens must be applied to the satisfaction of each class of liens in the order of its rank.^ 1 Code of Civil Procedure, section 1194, first por- tion: ^^In every case in which different liens are as- serted against any property, the court in the judgment must declare the rank of each lien, or class of liens, j-73-4n l^ which shall be in the following order, viz.: [ 85m [ [a] 1. All persons performing manual labor in, on or about the same; 2. Persona furnishing ma- terials; 3. Subcontractors; 4. -{ m85 -j Original con- tractors -\ n73-4 ] . And the proceeds of the sale of the Liens— 62 978 mechanics' liens. § 599 property must be applied to each lien or class of liens in the order of its rank. ^' As enacted 1872; amended, in effect May 29, 1874, and May 17, 1885. (a) Former reading: ''First. All persons other than the original contractors and subcontractors; Second. The subcontractors; Third. The. '^ Historical.— JJnder the earlier statutes, Stats. 1850, c. 87, sec. 9, Stats. 1855, 1856, and 1862, c. 297, sec. 3, all lien-claimants were divided into two classes, original contractors and subcontractors constituting one, and laborers and materialmen the other, the lat- ter class having priority, and in case of a deficiency of proceeds being entitled to a pro rata distribution: See (jStats. 1850) Moxley v. Shepard, 3 Cal. 64, and (Stats. 1856) Crowell v. Gilmore, 18 Cal. 370. By Stats. 1867-68, c. 448; sec. 10, second subdivision, the order of priority was: 1. Laborers and materialmen; 2. Subcontractors; 3. Original contractors. The code as enacted 1872 made a division into: 1. Persons con- tracting directly with the contracting owner; and 2. All other persons, the latter (called 'subcontractors' by the statute), being given priority. On May 29, 1874, a return was made to the provisions of the stat- ute of 1868. 600 A CUMULATIVE REMEDY. 979 AKTICLE 9. 3MPE0VEMENT LIEN A CUMULATIVE SECUE- ITY. 600. Improvement lien a cumulative security. 600. Improvement Lien a Cumulative Security. An improvement lien is an additional and cumulative security, which may be availed of by those authorized to obtain it without impairing or affecting any right of action otherwise avail- able; nor is an improvement lien waived by re- course to other remedies.^ 1 Code of Civil Procedure, section 1197: ''Nothing contained in this chapter j- 73-4f j. shall ] f 73-4 ] be construed to impair or affect the right of any person of whom any debt may be due for work done or ma- terials furnished to maintain a personal action to re- cover such debt against the person liable therefor [o73-4o]. As enacted 1872; amended, in effect July 1.. The code as enacted 1872, and Stats. 1867-68, c. 448, sec. 13, contained a further provision that where the holder of a mechanic's lien resorted to remedies in personam, he might take out an attachment, notwith- standing his claim was secured by a valid lien. Stats. 1867-68, also added a proviso that there could be but one satisfaction of the secured obligation. See, also, Stats. 1850, c. 87, sec. 13; Stats. 1855, c. 130, sec. 9; Stats. 1856, c. 134, sec. 8; Stats. 1862, c. 297, sec. 14, amended 1863-64, c. 262, sec. 2. 980 MECHANICS' LIENS. § 600 There is, however, no personal liability on the part of the contracting owner to persons contracting with the original contractor v»^here the original contract is void and the original contractor is deemed the con- tracting owner ^s agent. See section 549, ahove. '^The right to a money judgment against the per- son who employs the mechanic or purchases the ma- terials is not lost or waived by a proceeding to en^ force the lien, or recover from the owner the balance of the contract price remaining in his hands, ^^ under Code of Civil Procedure, section 1184: Bates v. County of Santa Barbara, 90 Cal. 543, 547, 548, 27 Pac. 438. Nor is the lien waived by commencing and prose- cuting a personal action upon the secured claim to judgment, so long as the judgment remains unsatis- fied: (Stats. 1856) Brennan v. Swasey, 16 Cal. 140, 76 Am. Dec. 507; Germania Bldg. etc. Assn. v. Wag- ner, 61 Cal. 349, 355. No judgment against the parties personally liable is necessary to support the lien: Euss Lumber etc. Co. V. Garrettson, 87 Cal. 589, 596, 25 Pac. 747; Yancy V. Morton, 94 Cal. 558, 560, 29 Pac. 1111. § 601 ENFORCEMENT THEREOF. 9^1 AETICLE 10. ENFOECEMENT OF IMPEOVEMENT LIEN. 601. Method of enforcement. 602. Time of commencing action. 603. Foreclosure actions against the same property- may be united. 604. Costs and counsel fees are necessary incidents of foreclosure judgment. 601. Method of Enforcement.^ All improvement lien may, when performance of the obligation secured thereby becomes due,"* be enforced by a foreclosure action. 602. Time of Commencing Action.^ Every action to foreclose an improvement lien 1 See Code of Civil Procedure, section 1190, as quoted section 602, below. 2 Secured Obligation Must be Due.— A foreclosure complaint averring that the plaintiffs, who were ma- terialmen, were to be paid ^^upon the completion of the building,'^ and that at the time of the commence- ment of the action the building was not completed, does not state a cause of action, as ^Hhere can be no foreclosure of a lien until the debt for which the lien is made and held as security has become pay- able.^' If the agreement had been varied or ter- minated by any of the modes made known to the law, it should have been stated by suitable averments: Harmon v. Ashmead, 60 Cal. 438. 3 Code of Civil Procedure, section 1190: '*No lien provided for in this chapter binds any building, min- 982 mechanics' liens. § 602 must be commenced* within ninety days after the filing of the claim of lien; or, if credit be given, then within ninety days after the expiration of such credit ; but no agreement to give credit can continue any lien in force for a longer period than two years after the completion of the work. ing claim, improvement, or structure, for a longer period than ninety days after the same has been filed, unless proceedings be commenced in a proper court within that time to enforce the same, or, if a credit be given, then ninety days after the expira- tion of such credit; but no lien continues in force for a longer time than two years from the time the work is completed, by any agreement to give credit/' As enacted 1872. Historical.— The provision in Stats. 1867-68, c. 448, sec. 8, is substantially the same. Under Stats. 1855, c. 130, sec. 7, Stats. 1856, c. 134, sec. 6, and Stats. 1862, c. 297, sec. 19, the time was six months in- stead of ninety days, and under Stats. 1850, c. 87, sec. 8, one year. Under Stats. 1855, c. 130, sec. 7, credit could not be given to exceed one year, and a marginal note must be made on the. record of the lien-claim stating the length of time for which credit was given. Where the action to foreclose the lien is not brought until after the expiration of the time prescribed by statute, the lien is lost: (Stats. 1856) Green v. Jack- son Water Co., 10 Cal. 374; (Code) Bradford v. Dor- sey, 63 Cal. 122. 4 When Action is Commenced.— Code of Civil Pro- cedure, section 405: ^^ Civil actions in the courts of this state are commenced hy filing a complaint.'' Under the statutes of 1855 and 1856, the action was not commenced until the summ.ons was issued on the ground that 'Hhe filing of the complaint and the is- suing of the summons are required by the General § 603 ENFORCI^IENT THEREOF. 983 603. Foreclosure Actions Against the Same Property may be United.^ Any number of lienors against the same prop- erty^ may join in one action to foreclose their Practice Act; and the provision in the General Limita- tion Act, that the filing of the complaint shall be deemed a commencement of the suit, applies to that act only, and not to the Mechanics' Lien Law": Flandreau v. White, 18 Cal. 639; Green v. Jackson Water Co., 10 Cal. 374. Under the amendment of 1861, the action was com- menced by filing a petition: Yan Winkle v. Stow, 23 Cal. 457, 459. 5 Code of Civil Procedure, section 1195, first sen- tence: '^Any number of persons claiming liens may join in the same action, and when separate actions are commenced, the court may consolidate them." Enacted as code section 1196 in 1872; became part of section 1195 on May 29, 1874. Where a materialman, who furnished materials both to an original contractor and to the owner, was made a party defendant in an action to foreclose certain liens, and filed an answer which united a cause of action to foreclose a lien for the materials furnished the contractor with one to foreclose a lien for the materials furnished the owner, there is no misjoinder of parties: Quale v. Moon, 48 Cal. 478. Under Stats. 1862, c. 297, sees. 6, 7, and 9, parties holding several separate and distinct claims, as do tiiO various persons employed on a single improvement, without any community of interest in the claims themselves, may join in an action to establish and enforce their liens: Barber v. Eeynolds, 33 Cal. 497, 602; 44 Cal. 519, 532. c Lienors Against the Same Improvement may Join.— ^^ Section 1195 of the Code of Civil Procedure provides that ^any number of persons claiming liens may join in the same action.' This provision does 984 mechanics' ^liens. § 603 liens thereagainst ; and when separate ac- tions are commenced the court may con- solidate them into a single action.'' The various parties in the consolidated action become actors against one another as well as against the contracting owner.^ not say whether the liens must all be upon the same I)roperty or simply against the same person. We in- cline to the former construction'': Malone v. Big Flat Gravel Min. Co., 76 Cal. 578, 582, 18 Pac. 772. For the purposes of this section, several mining claims, all adjoining each other, in the form of a strip of land with a creek as a backbone, and all owned by the same person, and used and operated as one mine, may be considered a single piece of property. Where certain of the liens were on smaller portions of such claim while others covered it all, they may be joined: Malone v. Big Flat Gravel Mm. Co., 76 Cal. 578, 582, 583, 18 Pac. 772. 7 May be Consolidated into a Single Action.— Af- ter the consolidation the court should treat the var- ious actions as a single action by the respective plaintiffs against the defendants, and embody its de- cision in a single set of findings, upon which a single judgment shouid be rendered: Willamette etc. Co. V. Los Angeles College Co., 94 Cal. 229, 232, 29 Pac. 629. 8 All Parties Actors Against One Another.— '^ Upon the consolidation of the various actions, the plain- tiffs therein became actors in the suit against each other, as well as against the owners, and each was entitled to reduce or avoid the lien of either of the others by any evidence that would have that effect": Kennedy & Shaw Lumber Co. v. Dusenbery, 116 Cal. 124, 126, 47 Pac. 1008. § 604 ENFORCEMENT THEREOF. 985 604:. Costs and Counsel Fees are Necessary In- cidents of Foreclosure Judgment.^ The money paid for filing and recording the claim of lien and liabilities actually incurred^^ for 9 Code of Civil Procedure, section 1195, second sen- tence: ^'The court |^ 85m }- [a] must^m85^ also allow, as a part of the costs, the money paid for filing and recording the lien, and reasonable attor- neys' fees in the J- 85f j- superior 'jf85-j and su- preme courts, j-85n}- such costs and attorneys' fees to be allowed to each lien-claimant whose lien is established, whether he be plaintiff or defendant, or whether they all join in one action or separate actions are consolidated ■{ n85 ^ . Enacted 1872, as section 1193; became part of 1195, May 29, 1874; amended, in effect May 17, 1885. (a) Former reading: ^^May/' Stats. 1867-68, c. 448, sec. 10, third subdivision reads substantially the same as the section enacted 1872. It takes but a cursory examination of this provi- sion to determine that the attorney's fee referred to is not part of the costs, but a separate and distinct matter therefrom. Still, it bears some resemblance to costs, inasmuch as it is an incident of the judgment: Schallert-Ganahl Lumber Co. v. Neal, 94 Cal. 192, 193, 29 Pac. 62Z. 10 Liability for Counsel Fees must be Actually In- curred.— Where the attorney expressly agrees to give his services for nothing, or is an employee of the plaintiff at a yearly salary, (probably) the plaintifT would not be entitled to an allowance for counsel fees: Eapp v. Spring Valley Gold Co., 74 Cal. 532, 535, 16 Pac. 325. See Bank of Woodland v. Tread- well, 55 Cal. 379, cited under section 398, above. Where, however, there is an implied agreement for the payment of the attorney, or where there is an agreement for such fee as the court will allow, the plaintiff is entitled to counsel fees: Eapp v. Spring VaHey Gold Co., 74 Cal. 532, 535, 16 Pac. 325. 986 mechanics' liens. § 604 counsei fees in the superior and supreme courts are necessary incidents^^ of a judgment foreclos- ing an improvement lien, which must in every case be allowed by the superior court^^ to each lienor whose lien is established/^ in an amount to be determined by such court in the exercise of a sound discretion/^ 11 Necessary Incidents.— Like the ordinary right to recover costs, the right to recover the costs of filing the claim and attorneys' fees are necessary incidents of a foreclosure judgment: Eapp v. Spring Valley Gold Co., 74 Cal. 532, 533, 16 Pac. 325; Mulcahy v. Buckley, 100 Cal. 484, 490, 35 Pac. 144. The right to these incidents does not depend on any averment in the complaint, except such as is suffi- cient to establish the lien: Mulcahy v. Buckley. 100 Cal. 484, 490, 35 Pac. 144. The fee is to be fixed irrespective of any averment in the complaint, and an averment, if made, does not even bind the person making it: Pacific Mutual Life Ins. Co. v. Fisher, 106 Cal. 224, 234, 39 Pac. 758; Clancy v. Plover, 107 Cal. 272, 274, 40 Pac. 394. Therefore, an issue as to counsel fees is immaterial, find the failure of the court to find upon it is not error: Clancy v. Plover, 107 Cal. 272, 274, 40 Pac. 394. Thus a stipulation between certain lienors, plain- tiffs in a foreclosure action, and the owner of the property, that judgment shall be entered for a cer- tain sum, does not exclude the allowance of counsel's fees or costs of filing the lien: Eapp v. Spring Valley Gold Co., 74 Cal. 532, 533, 16 Pac. 325. The plaintiff is not, however, entitled in any event to recover the amount expended for preparing his notice of claim of lien: Mulcahy v. Buckley, 100 Cal. 484, 490, 35 Pac. 144. Where, however, the claimant, although he has perfected a lien, brings a personal action against tne § 004 ENFORCEMENT THEREOF. 987 owner and obtains a merely personal judgment, he cannot be allowed the cost of filing his claim of lien nor counsel fees: Central Lumber etc. Co. v. Center, 107 Cal.'193, 197, 40 Pac. 334. 12 Must be Allowed by the Superior Court.— The matter of counsel fees in both superior and supreme courts is addressed to the superior court exclusively: Schallert-Ganahl Lumber Co. v. Neal, 94 Cal. 192, 193, 194, 29 Pac. 622; San Joaquin Lumber Co. v. Welton, 115 Cal. 1, 5 (46 Pac. 737), 46 Pac. 1057; Sweenev V. Meyer, 124 Cal. 512, 517, 57 Pac. 479; Williams V. Gaston, 127 Cal. 641, 60 Pac. 427. Thus it seems to be without the power of the su- preme court to direct the superior court to allow a reasonable fee; and such an order would not be bind- ing: Schallert-Ganahl Lumber Co. v. Neal, 94 Cal. 192, 194, 29 Pac. 622 (in which case such a direc- tion as given by the supreme court in West Coast Lumber Co. v. Newldrk, 80 Cal. 275, 281, 22 Pac. 231, or Smith v. Solomon, 84 Cal. 537, 539, 24 Pac. 286, is criticised). If, after an appeal to the su- preme court, a further allowance of fees becomes proper, application therefor must be made to the superior court: San Joaquin Lumber Co. v. Welton, 115 Cal. 1, 5 (46 Pac. 737), 46 Pac. 1057. Williams v. Gaston, 127 Cal. 641, 60 Pac. 427. 13 Can Only be Recovered by Lienor Whose Lien is Established.— Counsel fees being an incident of a judgment of foreclosure of the lien, there can be no recovery of such fees when the plaintiff fails in the foreclosure proceedings. The fact that the plaintiff was successful in an appeal to the supreme court does not entitle him to a fee for such appeal unless he was ultimately successful: Mclntyre v. Trautner, 78 Cal. 449, 21 Pac. 15. 14 Amount of Counsel Fee Rests in Discretion of Court. — The superior court is authorized to exercise its discretion in the -allowance of these fees, and, in the absence of any evidence regarding the amount of services, its judgment cannot be reviewed: Pacific Mu- 1)88 mechanics' liexs. § 604 tual Life Ins. Co. v. Fisher, 106 Cal. 224, 234, 39 Pac. 758. The limitation imposed upon the action of the su- perior court in fixing counsel fees is that it shall not abuse the discretion committed to it by the stat- ute; thus the failure to produce evidence on the matter does not affect the validity of the judgment awarding such fees. No doubt such evidence is ad- missible and may properly be considered by the court, but its absence in the record on appeal is not a cir- cumstance requiring a reversal unless it should ap- pear from an inspection of the record, and without evidence to sustain it, that the fee fixed by the court is unreasonable: Clancy v. Plover, 107 Cal. 272, 275, 40 Pac. 394. '^What is a reasonable fee is a matter to be de- termined by the trial court, and its action will not be disturbed on appeal unless it appears that the sum allowed is clearly unreasonable. '^ Where a trial occupied more or less of four days a fee of seventy- five dollars, while rather small, cannot be considered an abuse of discretion: Stimson Mill Co. v. Riley, 42 Pac. 1072, 1075A. The court is not bound by a stipulation between the attorney and his client as to the amount of the fee, but must allow such amount as is reasonable: Eapp V. Spring Valley Gold Min. Co., -74 Cal. 532, 16 Pac. 325. § 605 INDEMNITY AGAINST LIENS. 989 ARTICLE 11. INDEMNITY AGAINST LIENS. 605. Owner must protect sureties on indemnity bona as against contractor. 606. Likewise as against lienors. 607. Bond valid although contract void. 608. When surety also lienor, owner entitled to setoff. 605. Owner must Protect Sureties on Indemnity Bond as Against Contractor. A contracting owner who receives from an orig- inal contractor a bond executed with sureties to indemnify himself against any liens which may he filed against the property by persons claiming un- der such contractor/ and without the consent of 1 But where a bond was given to secure the faith- ful performance of the building contract, but did not provide that the building should be delivered up free from liens, and the contractor did the work as contracted for, but the contract was void because not properly recorded, and the contracting owner was compelled to pay a sum in excess of the contract price in discharge of valid liens, he cannot recover the excess paid from the sureties on the contractor's bond. ^^The fact that the debts due by Maloney [the original contractor] became, by virtue of the statute, liens upon plaintiff ^s [the contracting own- er ^s] property, did not make the sureties liable. They haa not agreed to pay such liens, nor to be re- 990 mechanics' liens. § 605 such sureties makes a pa3^ment to the contractor not authorized by law or the original contract, and is compelled to pay a sum in excess of the contract price of his contract with the contractor in satisfaction of liens which have been perfected, cannot recover such sum from the sureties;^ but if a premature payment unauthorized by law is made to the contractor with the consent of the sureties, and the owner is compelled to pay a sum in excess of the contract price, he may recover the same from the sureties.^ sponsible therefor. The liability of plaintiff for the amount of the liens was a statutory liability, and not by virtue of his contract with Maloney. The bond given Dy appellants [the sureties on the bond] was that Maloney would comply with the covenants of his contract. There is no covenant in the contract that the building shall be delivered free of liens, nor that liens shall not be placed upon it^': Boas v. Maloney, 138 Cal. 105, 70 Pac. 1004, 1005A. 2 Where, notwithstanding the existence of valid liens, the owner made full payment to the original contractor, and was afterward compelled to pay the liens, he cannot recover the sum so paid from the sureties on the contractor's bond, for the sureties had a right to look to this fund in the owner's hand for their indemnity: Kiessig v. Allspaugh, 91 Cal. 231, 27 Pac. 655. 3 Where the indemnity bond provided that the contracting owner and the original contractor might alter, enlarge, or in any manner change the original contract without in any way affecting the bond, but the bond was to remain in full force and effect the same as though no changes had been made, and the contracting owner made a payment which was pre- mature, so that he was compelled to pay to certain § 006 INDEMNITY AGAINST LIENS. 991 606. Likewise as Against Xienors. A contracting owner who^ without any request from the original contractor or duty so to do^, dis- charges liens which have been filed against his property in an account in excess of the contract price of a valid original contract^ cannot recover such sum from the sureties on the bond.'* 607. Bond Valid Although Contract Void. Such bond continues to be a binding under- taking on the part of the sureties although the original contract is void because nonconf ormab] o to statute.^ lienors a sum in excess of the balance of the con- tract price remaining in his possession, the owner may recover such sum from the sureties, as such payments were valid as regards the original contractor whose engagement the bond secured: Ganahl v. Weir, 130 Cal. 237, 239, 240, 62 Pac. 512. 4 Brill V. De Turk, 130 Cal. 241, 243-245, 62 Pac. 462. The payment on the part of the owner was merely voluntary. 5 Kiessig v. Allspaugh, 91 Cal. 234, 237, 238, 27 Pac. 662; Kiessig v. Allspaugh, 99 Cal. 452, 454, 455, 34 Pacj. 106; Blyth v. Eobinson, 104 Cal. 239, 241, 37 Pac. 904; McMenomy v. White, 115 Cal. 339, 344, 47 Pac. 109; Summerton v. Hayes, 117 Cal. 252, 49 Pac. 135. See, also. Union Sheet Metal Works v. Dodge, 129 Cal. 390, 395, 62 Pac. 41. Schallert-Ganahl Lumber Co. v. Neal, 90 Cal. 213, 215, 27 Pac. 192, holding that when the original contract was void, such bond was void, was overruled in these cases. 992 mechanics' liens. § 608 608. When Surety also Lienor, Owner Entitled to Setoff. In an action brought by a surety on a con- tractor's bond to foreclose an improvement lien to indemnify against which the bond was given^ the owner of the liened property may set off the amount of any valid demand against the surety by reason of the liability on such bond against the amount claimed by him upon his lien.^ 6 Owner may Set Off Liability of Lienor as Surety by Way of Defense: Blyth v. Kobinson, 104 Cal. 239, 242, 243, 37 Pac. 904; Ganahl v. Weir, 130 Cal. 237, 239, 240, 62 Pac. 512. The lienor is not, however, estopped from maintain- ing an action to foreclose his lien by reason of his liability as surety. For the bond is simply to in^ demnify the owner against damage, and until his dam- age has been averred and ]3roved in some appropriate way can avail him nothing. If he had not been dam- aged, he has no right of action upon the bond; and if no right of action upon it, it is valueless to him, even for the purposes of an estoppel. If the owner's damage is nothing, or trifling in amount, the ma- terialman should not be deprived of all remedy; or if the indemnity bond is trifling in amount, as com- pared to the materialman's claim of lien, the doors of the court should not be shut against him. In other words, the principle of estoppel is not involved, but it is rather a question of cross-complaint or set- off. The owner in answer to the materialman's ac- tion to foreclose his lien, may set out the bond, prove the damage, and establish the materialman's liability thereon, and the rights of both parties be thus fully and equitably adjudged: Blyth v. Torre (Cal.), 639, 640A (a rehearing was afterward granted, but the case never came to judgment; thus this decision is not authoritative, but its reasoning is persuasive). CHAPTER 4. LIE^sF FOR ABATI^TQ- INSECT PEST NUI- ' SA^CES.i 609. County has lien claim for expense incurred for abating nuisance. 610. Notice of claim of lien to fce filed. 611. Time of commxcncing action. 612. Disposition of proceeds of sale. 609. County has Lien-Claim for Ezpenr^e In- curred for Abating Nuisance.- The amount disbursed out of the gen- eral fund of any county in payment of 1 See Stats. 1897, p. 244, c. 183, in eflPect March 31, 1897. Constitutionality.— The enforcement of this lien **is not obnoxious to any constitutional inhibition": County of Los Angeles v. Spencer, 126 Cal. 670, 77 Am_. St. Eep. 217, 59 Pac. 202; County of Eiversido V. Butcher, 133 Cal. 324, 325, 65 Pac. 745. Historical.— A similar lien was given by Stats. 1881, p. 86, c. 75, sec. 2, in effect March 14, 1881; with amendments thereto of Stats. 1889, p. 413, c. 265, sec. 2, and Stats. 1891, p. 268, c. 188, sec. 1; these statutes being repealed by the present enactment. 2 Where the county board of horticultural com- missioners orders an insect pest nuisance to be abated, and the owner of the infected premises or property cannot be found, or refuses or neglects to abate it. Liens— 63 (993) 994 INSECT PEST NUISANCES. § 609 any expense which may be incurred, ac- cording to law, by the county board of horticultural commissioners in the abatement of any insect pest nuisances, by eradicating or de- stroying any scale insects or codlin moth, or other pests injurious to fruit, plants, vegetables, trees, or vines, or their eggs or larvae, constitutes a lien-claim in favor of such county against the premises and property from which the nuisance has been abated, which accrues to the county at the time of the payment of such amount.^ 610. Notice of Claim of Lien to be Piled. Within thirty days after the accrual of such lien-daim, a notice of claim of lien must be filed and recorded in the office of the recorder of the county in which the property to be affected there- by is situated, and thereupon the lien is per- fected.^ the board must proceed to abate it, and the ex- penses incurred in abating it must be paid out of the general fund of the county. 3 Lien accrues to the county at time of payment of amount from treasury: County of Biverside v. Butcher, 133 Cal. 324, 327, 65 Pac. 745. 4 See Stats. 1897, p. 244, c. 183, sec. 2. ^^The notice of lien was sufficient when signed and verified by the members of the board of commission- ers, stating that the county claimed a lien for the amount of expense. It contains a description of the premises, the nam^e of the owner, the amount claimed; that it is for labo? bestowed and materials fur- nished in eradicating insects from the orchard of de- § 611 liS^SECT PEST NUISANCES. 995 611. Time of Comniencing Action. An}^ action to foreclose such lien must, within ninety days after the filing of such notice, be brought by the district attorney of the county for the benefit of which the lien accrued.^ 612. Disposition of Proceeds of Sale. Upon the sale of the property affected by the lien, sufficient of the proceeds thereof must be paid into the county treasury of the county to satisfy the lien and costs; the overplus, if any, must be paid to the owner of the property, if known; otherwise into court for his use when ascertained.^ fendant. This was all that was required by the stat- ute. In fact, the statute is entirely silent as to the form, contents, or requisites of the notice. It simply says, a 'notice of such lien shall be filed and re- corded^ ^': County of Eiverside v. Butcher, 133 Cal. 324, 327, 65 Pac. 745. 5 See Stats. 1897, p. 244, c. 183, sec. 2. 6 See Stats. 1897, p. 244, c. 183, sec. 2. CHAPTER 5. LIENS FOE PAETITIOi^ FENCES.^ 613. Land owner inclosing land liable for one-half value of existing boundary fences. 014. Land owner must pay his share of cost of par- tition fence. 615. Lien perfected by filing notice of claim of lien. 616. Lien a cumnlative remedy. 613. Land Owner Inclosing Land Liable for One- Half Value of Existing Boundary Fences.^ Except in Colusa, Glenn, Placer, Eiverside, San Bernardino, San Diego, San Mateo, Shasta, Sis- Myou, and Trinity counties, and Liberty and Klamath townships and Hoopa Valley Eeserva- tion in Humboldt county,^ when a land owner has 1 By Political Code, section 19, twenty-third sub- division, all acts in relation to lawful fences are re- tained in force. In order, therefore, to give all parts of the law an effect, if possible. Civil Code, section 841, must be held merely to be applicable in counties not pro- vided for by acts concerning fences: Gonzales v. Wasson, 51 Cal. 295, 297. 3 This section is founded on Stats. 1855, p. 154, c. 129, sec. 5, as amended Stats. 1860, p. 141, c. 173, se^ 1. 3 Counties Where the Lien may be Claimed.— B;^. Stats. 1863-64, p. 465, c. 410, it was enacted that the (996) § 613 LIENS FOR PARTITION FENCES. 997 erected a fence on the line of his land^ and the owner of contiguous land himself alone or con- jointly with other persons thereafterward makes statute of 1855, as amended in 1860, was not appli- cable in Amador, Butte, Colusa, Glenn, Nevada (the statute, just previously, by Stats. 1863-64, p. 318, c. 310, had been made applicable to Nevada county), Placer, Eiverside, San Bernardino, San Diego, >Santa Barbara, Shasta, Siskiyou, Trinity, Tuolumne, Ven- tura, and Yuba counties, and Klamath and Liberty townships and Hoopa Valley Eeservation, Humboldt county. By Stats. 1871-72, p. 700, c. 472, sees. 3 and 4, a lien, precisely similar to that declared by Stats. 1855, as amended 1860, was created in Butte and Yuba counties. A slightly different enactment, Stats. 1875-76, p. 175, c. 172, sees. 5 and 1, superseded this enactment in Contra Costa, El Dorado, Kings, Sacramento, San Luis Obispo, San Mateo, Solano, Sutter, Tulare, and Yolo counties, and that part of San Joaquin county north and east of the San Joaquin river, and also created a similar lien in Amador, Nevada, Santa Bar- bara, Tuolumne, and Ventura counties. (The act of 1855, as amended 1860, had previously been super- seded as to Contra Costa county by Stats. 1857, p. 54, c. 55, which was in turn repealed by Stats. 1858, p. 40, c. 66, sec. 2, and Stats. 1861, p. 277 c. 281, sec. 2.) lij Stats. 1877-78, April 1, p. 1019, c. 658, the act of 1875-76, was repealed as to San Mateo county. The act of 1855 was re-enacted as to MaTin county by Stats. 1858 p. 123, c. 166. By Stats. 1861, p. 510, c. 453, sec. 2, the act of 1855 was made applicable to Butte county. (A previous enactment as to Tuolumne county did not create a lien: Stats. 1863-64, p. 475, c. 424.) (Another aet, establishing a similar lien in San Mateo county. Stats. 1875-76, p. 173, c. 171, sec. 1, seems to have been superseded by Stats. 1875-76, p. 175, c. 172, above.) 998 LIENS FOR PARTITION FENCES. § 613 an inclosure'* on the opposite side of the fence, so that the fence answers for the purpose of in- closing his ground also^ such owner of adjoining land must pay the owner of the fence already erected one-half the value of so much thereof as serves as a partition fence between them. Such value is deemed the amount with interest thereon to which the builder of the fence was entitled, except in Amador^ Butte, Contra Costa, El Do- rado, Kings, Nevada, Sacramento, San Luis Obispo, Santa Barbara, Solano, Sutter, Tulare, Ventura, and Yolo counties, and that part of San The effect of the statute of 1855, as amended in 1860, may have been somewhat modified in Sonoma county by Stats. 1877-78, p. 692, c. 447, sec. 2, which provides that the owner of any land in Sonoma county which borders on land in an adjoining county wherein lawful fences are required must erect one-half the division fence the distance the land borders on the county line, and creates a lien against the land of a person who fails to construct his proportion of such fence in favor of the coterminous owner who has duly constructed his portion of the fence and by which '^all acts and part of acts in conflict with the pro- visions of this act are hereby repealed." 4 **The fact that the defendant's land was, by an understanding between him and the owners of other tracts of lands lying adjacent to his tract, inclosed in one field by a common inclosure, does not make the inclosure any less an inclosure of the defendant's land within the meaning of that section. Nor was it necessary, in order to make such inclosure, for the defendant to construct a fence at a place where there was a natural barrier which was sufficient for the protection of his land'': Gonzales v. Wasson, 51 Cal, 295. § 613 LIENS FOR PARTITION FENCES. 999 Joaquin county north and east of the San Joa- quin river, where the value is determined by the agreement of the parties or the judgment of viewers.^ This demand, together with interest thereon at the rate of fifteen per cent per annum, constitutes a lien-claim against the adjoining land so inclosed. 614. Land Owner must Pay His Share of Cost of Partition Fence.^ Except in Colusa, Glenn, Placer, Eiverside, San Bernardino, San Diego, San Mateo, Shasta, Siskiyou, and Trinity counties, and Klamath and Liberty townships and Hoopa Vallej^ Eeservation in Humboldt county,''' when two or more persons own adjoining land inclosed by one fence, and it becomes necessary for the protection of the rights and interests of one party that a partition fence should be made between them, the other party, when notified of such fact, must erect as near as practicable on the division line one-half such par- tition fence. If, after being given six months^ notice, or in Amador, Butte, Contra Costa, El Dorado, Kings, ISTevada, Sacramento, San Luis Obispo, Santa Barbara, Solano, Sutter, Tulare, 5 stats. 1875-76, p. 175, c. 172, sec. 5. O This section is founded on Stats. 1855, p. 154, c. 129, sec. 6, as amended Stats. 1860, p. 141, c. 173, sec. 2. 7 See section 613, note 3, above. 1000 LIENS FOR PARTITION FENCES. § 614 Tuolumne, Ventura, and Yolo counties, and that part of San Joaquin county north and east of the San Joaquin river, where viewers are appointed to determine the particular part of the fence to be made by each coterminous owner, within six months after their determination,^ the person to whom the notice was given fails to proceed to erect one-half of the partition fence, the person giving notice may then erect the entire partition fence and collect by law one-half the cost thereof from the other party. This demand, together with interest thereon at the rate of fifteen per cent per annum, constitutes a lien-claim against the land thus partitioned by the partition fence. 615. Lien Perfected by Filing Notice of Claim of Lien. The lien-claimant must file a notice of claim of lien in the office of the county recorder as re- quired by law in order to perfect a mechanic's lien, and thereupon when the notice is duly filed the lien is perfected and becomes enforceable.^ 8 Stats. 1875-76, p. 175, c. 172, sec. 1, provides: '' If, after notice given in writing, or after determina- tion of the viewers, as provided in section 6 hereof, either party shall fail to proceed to erect, or cause to be erected and completed, within six months' time thereafter, one-half of such fence, the party giving the notice may proceed to erect, or cause to be erected, the entire partition fence, and collect by law one-half of the costs of the fence from the other party. ' ' § 616 LIENS FOR PARTITION FENCES. 1001 616. Lien a Cumulative Eemedy. The lien herein authorized is a cumulative and additional remedy in no manner impairing the right of action otherwise available upon the se- cured obligation.^ ^ 9 stats. 1855, p. 154, c. 129, sec. 5, as amended Stats. 1860, p. 141, c. 173, sec. 1, provides: *^ Notice of such lien shall be filed in the office of the county recorder of the county as provided by law for mechanics^ liens. ^ ^ Stats. 1855 p. 154, c. 129, sec. 6, as amended 1860, p: 141, c. 173, sec. 2, adopts this provision. Stats. 1875-76, p. 175, c. 172, sec. 1, in part, pro- vides: ^'}le shall be entitled to a lien upon the land thus partitioned, as provided in section 1 of an act entitled ' An act amendatory of and supplemental to an act entitled an act concerning lawful fences, approved April tliird, eighteen hundred and sixty.' '' As to the notice of claim of mechanic's Jien, see section 568 above. 10 It was so held in respect to the lien established by the act of 1855 as amended 1860 in Gonzales v. Wasson, 51 Cal. 295, 298. CHAPTER 6. MIXIXG PASTXER^S LIEN". 617. Nature of lien. 618. Who bona fide purchaser. 619. Lien does not entitle lienor to possession. 620. Effect of sale of liened interest. 621. Lien nonwaivable. 617. Nature of Lien.^ Eaeh^ member of a mining partnership has a lien^ independent of possession,^ against the part- nership property, valid as against every person except a bona fide purchaser for valne,'* as se- curity 1 **It is apparent this lien is given for the purpose of enabling him [the partner] to collect from his co- partners their proportion of the indebtedness which he has been compelled to pay in full'': Stuart v. Ad- ams, 89 Cal. 367, 371-372, 26 Pac. 970. 2 Civil Code, section 2514, first sentence, provides: ^^Each member of a mining partnership has a lien on the partnership property for the debts due the credi- tors thereof, and for money advanced for its use." 3 See Morganstern v. Thrift, 66 Cal. 577, 6 Pac. 689, as quoted section 619, note 6, below. 4 Civil Code, section 2517, provides: *^A purchaser of an interest in the mining ground of a mining part- nership takes it subject to the liens existing in favor of the partners for debts due all creditors thereof, or (1002). ] § 617 MINING PABTNER'S LIEN. 1003 (1) for the payment by the partnership of the debts due the creditors thereof, and (2) for the repayment of moneys advanced by him for its use. 618. Who Bona Fide Purchaser. A purchaser of the interest of a partner in a mine when the partnership is engaged in working it, takes with notice of all liens resulting from the relation of the partners to each other and to the creditors of the partnership.^ 619. Lien does not Entitle Lienor to Possession. The existence of a mining partner's lien doei^ not entitle the holder thereof to the possession of the liened property.^ advances made for the benefit of the partnership, un- less he purchased in good faith, for a valuable con- sideration, without notice of such lien.'^ 5 Civil Code, section 2518. 6 Lien does not Entitle Lienor to Exclusive Posses- sion. — '*The lien of a partner, mentioned in section 2514 of the Civil Code, does not give to either partner a right of possession to the partnership property, to the exclusion of the other from such possession. The lien has no connection with the possession. It exists independent of possession. If one partner is in act- ual possession of the property of the partnership, (Claiming to hold it against the other, the lien still exists in favor of the other partner out of possession, as in the case specified in the section above cited'': Morganstern v. Thrift, 66 Cal. 577, 578, 579, 6 Pac. 689. 1004 MiNixG partner's lien. '§ 62.0 620. Effect of Sale of Liened Interest. Upon a sale by one partner of his interest in partnership property affected by a lien in favor of another partner, made to a person bound by the lien, the liened property becomes primarily liable for the payment of the secured obligation and the retiring partner secondarily liable there- fore 621. Lien Non waivable. A mining partner^s lien cannot be waived by any agreement made by the person entitled there- to.s 7 Sale of Liened Interest.— ^^ Ordinarily, when a partner retires from a firm he continues personally liable for the indebtedness, unless the new firm has assumed the debt and the creditor has taken them for it. If, in the case of a mining partnership, the retir- ing partner still continues bound, he nevertheless has parted with the equity to have the partnership debts paid out of the partnership property. The purchaser, however, having taken his interest subject to the debts, has no claim to recover against his vendor for any debts which may be paid out of the partnership assets. The former partners, therefore, have no in- terest, except consequentially, in this proceeding, and if proper, are certain! v not necessary parties to it^': Jones V. Clark, 42 Call 180, 194, 195. S Civil Code, section 2514, last sentence. CHAPTER 7. LIEX OF ALIMO^^Y. 622. Nature of lien. 622. Nature of Lien. Where a divorce is granted a wife for an of- fense of her hnshand, any alimony which may be awarded the wife by the court in which the di- vorce action is pending may^ at the discretion and by the order of the courts, be constituted a lien against the community property of the par- ties, or in default thereof against the separate property of the husband.^ 1 Compare the following sections of the Civil Code: Section 139: ^^ Where a divorce is granted fcrr an offense of the husband, the court .may compel him to provide for the maintenance of the children of the marriage, and to m.ake suitable allowance to the wife for her support.'^ Section 140: ^^The court may require the husband to give reasonable security for providing maintenance or making any payments required under the provi- sions of this chapter, and may enforce the same by the appointment of a receiver, or by any other rem- edy applicable to the case.'' Section 141: ^'In executing the five preceding sec- tions the court must resort. (1) to the community property; then, (1005) 1006 LIEN OF ALIMONY. § 622 (2) to the separate property of the husband. ^^The statute [that is, Civil Code, section 140] ought not to be construed as abridging the power exercised by courts having cognizance of matrimonial causes — commonly, though not always, as a branch of their chancery jurisdiction — to declare a lien for securing the award of support to the wife in such cases.'' ^^ Moreover, the oivorce being upon the grounds of extreme cruelty, the court was authorized to assign the community property to the parties in such pro- portion as, under the circumstances, seemed just (Civil Code, section 146); under this section it had the power to assign to the wife the absolute property in the land in question, and this included the power to charge a lien on the same'': Gaston v. Gaston, 114 Cal. 542, 546, 55 Am. St. Eep. 86, 46 Pac. 609. Where a divorce is granted a wife on the ground of extreme cruelty, the court may probably declare the alimony, maintenance, etc., granted her a lien upon the separate property of the husband which the hus- band has fraudulentlv conveyed: Huellmantel v. Huellmantel, 117 Cal. 407, 410, 49 Pac. 574. CHAPTER 8. JUDGMENT LIE:N'S. SuhiUvision 1. Lien of Superior Court Judgment in County Where Judgment Rendered, 623. Accrual of, lien. 624. Extinction of lien. SuMivision 2. Lien of Superior Court Judgment in Other Counties, 625. Accrual of lien. 626. Extinction of lien. SuMivision 3. Lien of Justice^ s Court Judgment. 627. Accrual of lien. 628. Extinction of lien. Subdivision Jf. Provisions AppUcaUe to All Judgment Liens. 629. Judgment lien not provable by parol. 630. Computation of time of limitation of lien. 631. Lien not affected by division of county. 632. Property not twice lienable under same judg- ment. 633. Cannot accrue against property of decedent or bankrupt. 634. Liened property not subject to independent levy. 635. Attachment merged into judgment lien. 636. Enforcement. (1007) 1008 JUDGMENT LIENS. § 623 S^h(Mvision 1, Lien of S'Uperior Court Judg- ment in County Where Judgment Rendered, 623. Accrual of Lien.^ From the time a judgment of a superior court is duly docketed in the docket^ kept by the cleric, the judgment, if docketed during the lifetime of the judgment debtor, constitutes a lien against 1 Code of Civil Procedure, section 671, provides in part: ^^Immediately after filing the judgment-roll, the clerk must make the proper entries of the judgment, under appropriate heads, in the docket kept by him; and from the time the judgment is docketed it be- comes a lien upon all the real property of the judg- ment debtor not exempt from execution in the county owned by him at the time, or which he may after- ward acquire, until the lien ceases/^ Practice Act, section 204, in part provided likewise. 2 Judgment Constitutes Lien from Time of Docket- ing. — ^'No judg-ment lien is created upon real prop- erty belonging to a judgment debtor until the judg- ment be docketed '': Eby v. Foster, 61 Cal. 282, 286. The purpose of docketing a judgment is only to fix a lien against the lienable property: Los Angeles County Bank v. Raynor, 61 Cal. 145, 147; High v. Bank "of Commerce, 95 Cal. 386, 389, 29 Am. St. ReD. 121, 30 Pac. 556. In entering names in the docket ''it was evidently intended that the surnames should precede the Chris- tian names, and the omission of the Christian name of the defendant Chipman did not deprive the docket of its useful function of directing the attention of those interested to the existence of a judgm.ent and to all its incidents.'' Thus the judgment when so docketed constituted a lien: Hibberd v. Smith, 50 Cal. 511, 517, 518. (Toar> § 623 SUPERIOR COURT. lOOD all his immovable property,^ subject to forced sale,'* in the county wherein it was docketed, whether owned by the judgment debtor at the 3 Immovable Property.— The statutory words are ^^real i)ropcrtv/' but ^^the words 'real property' are coextensive with lands, tenements, and hereditaments .... and include amy interest in land held by the judgment debtor' ': Martinovich v. Marsicano, 137 Cal.^ 354, 356, 70 Pac. 459. 4 Constitutes Lien -Against Property Subject to Forced Sale.— The statutory language is ''not exempt from forced sale. '^ "The lien of a judgment is purely the creature of statute, and in this state the statute only provides that a judgment shall become a lien from the time it is docketed upon the property of the judgment debtor 'not exempt from execution/ which means, upon property which is subject to forced sale'': i^ckley v. Chamberlain, 16 Cal. 181, 183, 76 Am. Dec. 516. A homestead, not being subject to forced sale, can- not be affected by a judgment lien: Ackley v. Cham- berlain, 16 Cal. 181, 183, 76 Am. Dec. 516; Ebv v. Foster, 61 Cal. 282, 287. "A judgment cannot become a lien upon the home- stead premises. It can become a lien only upon the real property of the judgment debtor which is 'not exempt from execution'— that is, which can be sub- jected to forced sale": Bowman v. Norton, 16 Cal. 213, 220. And although the homestead premises greatly ex- ceed in value the homestead value, a judgment cannot become a lien against them. The judgment creditor must take the proper means to have the homestead partitioned and the homestead set apart: Sanders v. Eussell, 86 Cal. 119, 120-121, 21 Am. St. Eep. 26, 24 Pac. 852; Barrett v. Sims, 59 Cal. 615, 619. Liens— 64 1010 JUDGMENT LIENS. § 623 time of the docketing or afterward acquired by him during the continuance of the lien.^ 624. Extinction of Lien. Such lien is extinguished (1) by the satisfaction of the judgment, (2) by the staying of the judgment secured thereby by the execution of a sufficient under- taking on appeal, and (3) by the lapse of five years after the accrual of the lien.^ 5 But where before a judgment is recovered, prop- erty which was held by the judgment debtor when the action was commenced has been conveyed to a third party hy the judgment debtor, a judgment lien will not attach thereto upon the docketing of the judgment. ^^The statutory lien of a judgment upon the real estate of the judgment debtor can attach only upon property in which such debtor has a vested legal interest: People v. Irwin, 14 Cal. 428, 434; Watt v. Wright, 66 Cal. 202, 208, 209, 5 Pac. 91. The same is true where the plaintiff- had attached the land, although in this case recourse could not be defeated by the transfer: Eilev v. Mance, 97 Cal. 203, 205, 31 Pac. 1126, 32 Pac. 315^ 6 Code of Civil Procedure, section 671, second sen- tence, provides: *^The lien continues for five years, unless the enforcement of the judgment be stayed on appeal by the execution of a sufficient undertaking as provided in this code, in which case the lien of the judgment and any lien by virtue of an attachment that has been issued and levied in the action ceases.'' As amended, in effect March 9, 1895. E\storical.—Th.Q section before the amendment, and Practice Act, section 204, provided: ^^The lien shall continue for two years, unless the judgment be pre- viously satisfied.'' § 625 SUPERIOR COURT. 1011 Subdivision 2» Lien of Superior Court Judg- ment in Other Counties, 625. Accrual of Lien. A transcript of an original docket of a judg- ment;, certified by the clerk^ may be filed with the recorder of any other county. From the time of the filing, if done during the lifetime of the judgment debtor, the judgment constitutes a lien against all the immovable property of the judgment debtor p.ot exempt from execution, in such county, whether owned by the judgment debtor at the time of filing or afterward acquired by him during the continuance of the lien.''' 7 Code of Civil Procedure, section 674, first sen- tence, provides: ^'A transcript of the original docket, certified by the clerk, may be filed with the recorder of any other county, and from the time of the filing the judgment becomes a lien upon all the real prop- erty of the judgment debtor, not exempt from execu- tion, in such county, owned by him at the time, or which he may afterward, and before the lien expires, acquire. ' ' Practice Act, section 207, was substantially the same. In Donner v. Palmer, 23 Cal. 40, 45, 46, decided in 1863, the court said : ^ ^ The statute is plain that the lien commences at the time of the filing of the tran- script in the recorder's office, and continues for two years from that time, unless the judgment be satis- fied before that time expires. No language could more clearly express that to be the intention of the legislature, and we can perceive no injustice or hard- ship in it. The fact that a lien under the judgment has existed and expired in one county, can make no 1012 JUDGMENT LIENS. § 626 626. Extinction of Lien. Such lien is extinguished (1) by the satisfaction of the judgment, (2) by the lapse of two years after the accrual of the lien.*"^ Subdivision 3. Lien of Justice's Court Judg- ment, . 627. Accrual of Lien.^ xin abstract ^^ of a judgment of a justice^s court, given by the justice to the party in whose favor the judgment was rendered on his demand, may be filed in the office of the recorder of any difference. The intention is to give a judgment credi- tor the right to acquire a lien in any county when and where he pleases, and then it gives him two years thereafter in which to enforce that lien. If he fails or neglects, or can find no property in one county on which to enforce it, that is no just cause why he should not exercise his right of enforcing it in an- other county where he may be able to find property of the judgment debtor.'' 8 Code of Civil Procedure, section 674, second sen- tence: ^^The lien continues for two years, unless the judgment be previously satisfied.'' 9 Code of Civil Procedure, section 897: ''The jus- tice, on the demand of a party in whose favor judg- ment is rendered, must give him an abstract of the judgment. ' ' Section 900: ''A judgment rendered in a justice's court creates no lien upon any lands of the defendant, unless such an abstract is filed in the office of the recorder of the county in which the lands are situated. When so filed, and from the time of filing, the judg- § 627 justice's court. 1018 county in which any iinniovable property of the judgment debtor is sitmated. From the time of filings if done during the lifetime of the judg- ment debtor, the judgment constitutes a lien against all his immovable property, not exempt from execution, in such county, whether owned by the judgment debtor at the time of filing or afterward acquired by him during the continu- ance of the lien. 628. Extinction of Lien. Such lien is extinguished "(1) by the satisfaction of the judgment, ,(2) by the lapse of two years after the accrual of the lien.^^ ment becomes a lien upon all the real property of the judgment debtor, not exempt from execution, in such county, owned by him at the time, or which he may afterward, and before the lien expires, acquire.'' As amended, in effect April 16, 1880. Practice Act, section 599, as amended in effect July 1, 1854, contained provisions similar to Code of Civil Procedure, sections 597 and 600, quoted above. The filing and recording in the recorder's office is prerequisite to the accrual of the judgment lien: Bag- ley V. Ward, 27 Cal. 369, 371. A justice's court judgment becomes a lien against the property of the judgment debtor only by a com- pliance with Code of Civil Procedure, section 900: Beaton v. Eeid, 111 Cal. 484, 486, 44 Pac.'167. 10 A ** certified copy" of a justice's court judgment is not an ^^ abstract" thereof, and the filing thereof is not equivalent to filing an abstract in its effect: Fra- zier V. Crowell, 52 Cal. 399, 401, 402. 11 Code of Civil Procedure, section 900, second sen- 1014 JUDGMENT LIENS. § 629 SnibcUvision 4* Provisions AppUcadle to All Judgment Liens* 629. Judgment Lien not Provable by Parol. ^N'either the existence nor the time of the ac- -crual or continuance of a judgment lien can be proved by parol evidence.^ 630. Computation of Time of Limitation of Lien. A judgment lien is extinguished immediately upon the expiration of the time limited for its continuance although proceedings are com- menced during its continuance for its enforce- ment;, and unless enforced before expiration of the time is lost.^^ The time^ however, during tence: ''The lien continues for two years, unless the judgment be previously satisfied.'' As amended, in effect April 16, 1880. 12 **The time [during which a judgment lien con- tinues] must appear by the record; for as the lien is purely statutory, neither its existence nor commence- ment can be proved by paroP': Eby v. Foster, 61 Cal. 282, 287. Parol proof cannot be admitted, if objected to, to show that a written encumbrance exists against real estate: Eacouillat v. Requena, 36 Cal. 651, 658. 13 Judgment Lien Extinguished Immediately upon Expiration of Time Limited. (1858) ^^ Section 204 [of the Practice Act] creates the lien of the judgment, au.d also fixes the period of its continuance. Taking the different portions of the section together, the intent is clear that the lien should not continue beyond the time specified. The § 630 JUDGMENT LIENS. 1015 which the enforcement of a judgment lien is stayed by an order of court made during the pen- dency of a motion for a new trials or by an ap- peal to the supreme court together with the fil- power* that creates confines the existence of the thing created within a specified period. The lien it- self would not exist without this provision of the statute, and, of course, cannot exist beyond the time expressly stated ^^The rule that confines the lien of the judgment strictly within the two years is the most simple and certain in theory, and the most beneficial in practice. If we hold that the lien of the judgment may be pro- longed beyond the period stated, by- the issue and levy of an execution within the time, then we can fix no definite and certain limits to the continuance of the lien'^ Isaac v. Swift, 10 Cal. 71, 81, 70 Am. J3ec. 698; Sanders v. Eussell, 86 Cal. 119, 121, 21 Am. St. Rep. 26, 24 Pac. 852. In order to preserve a judgment lien the property must be sold before the time set for the expiration of the lien: Bagley v. Ward, 37 Cal. 121, 133, 99 Am. Dec. 256; Eogers v. Druffel, 46 Cal. 654, 656; Ebv v. Fos- ter, 61 Cal. 282, 287; Petaluma Sav. Bank v. Superior Court San Francisco, 111 Cal. 488, 499, 44 Pac. 177. But in Estate of Wiley, 138 Cal. 301, 71 Pac. 441, the court held that where a claim secured by judg- ment lien accruing under the Code of Civil Pro- cedure, section 674, section 613, above, is presented for allowance or rejection about one year after its accrual, and upon its rejection the claimant brings suit with due -diligence, and afterward obtains a judgment establishing his lien and within a reasonable time thereafter petitions the probate court to sell the liened property, the lien is not discharged by reason of the fact that the order of sale was not made until the expiration of more than two years after the ac- crual of the lien, no laches being imputable to the lienor. 1016 JUDGMENT LIENS. § 630 mg of a sufficient stay bond (where the lien is not extinguished by- such filing), is not included within the time limited for commencing the ac- tion, but is omitted in the computation there- of.^4 Whether the provision of the Code of Civil Proce- dure, section 1569, that ^^no claim against any estate, which has been presented and allowed, is affected by the statute of limitations, pending the proceedings for the settlement of the estate ^^ operates to protect a .judgment lien— querv: Estate of Wiley, 138 Cal. 301, 71 Pae. 441. 14 Time When Judgment Stayed by Motion for New Trial or Appeal not Included in Time of Continu- ance of Lien. **The two years mentioned in the two hundred and fourth section of the Practice Act, which relates to judgment liens, commences to run from the docketing of the judgment, unless execution is stayed by an order of court pending a motion for a new trial or by an appeal with a stay bond. The time during which execution is thus stayed constitutes no part of the two years, but is to be omitted from the computation. Any period of time, however, which- may transpire between the docketing of the judgment and the stay of proceedings, is to be included in the computation. A stay of proceedings, whether by an order of the court pending a motion for a new trial or by an ap- peal with a stay bond, merely suspends the running of the statutory time. But it does not postpone the commencement of the statutory limitation until after the stay has ceased ^\* Barroilhet v. Hathawav, 31 Cal. 395, 89 Am. Dec. 193. In Solomon v. Maguire, 29 Cal. 224, 237, the court expressed a doubt whether the making of an order staying execution suspended the running of the statutory period, but the doctrine of the Barroilhet case has never been overruled. ^^The obvious intention [of the statute] was to charge the estate of the judgment debtor, and to give § 631 JUDGMENT LIENS. 1017 631. Lien not Affected by Division of County. Where a judgment lien has attached to all the immovable property situated in a given county^ the lien is not affected by a subsequent division of the countv, but continues to aifect all the lien- the creditor two years to make his money. The stat- ute intended that this time should run from the date of the judgment, or period at which the plaintiff was in a situation to take out execution, and pursue his remedy to final satisfaction. By the defendant's [Judgment debtor's] own act [in prosecuting an ap- peal], the force of that judgment has been suspended, und the lien, which is merely an incident, must share a like fate. It would be absurd to say that a lien attached upon a judgment, and expired upon its own limitation, while the judgment was still in fieri, and could not be prosecuted to full fruition'': Dewey v. Latson, 6 Cal. 130; Englund v. Lewis, 25 Cal. 337, 351-353; Chapin v. Broder, 16 Cal. 403, 420-421. But the statement in Dewey v. Latson, 6 Cal. 130, that where the judgment was stayed on appeal the judgment lien ran from the date of the remittitur from the supreme court was not necessary for the decision, and cannot be supported, and in Barroilhet V. Hathaway, 31 Cal. 395, 397, 89 Am. Dec. 193, the court held that all that was in fact decided by the case was that the running of the time was suspended during the appeal. Where, however, a sufiicient stay bond is not filed on appeal, the running of the statute is not stayed by the appeal: Chapin v. Broder, 16 Cal. 403, 420, 421. * The running of the statutory time for the continu- ance of the lien is not stopped by an injunction re- straining the sheriff from selling the land under exe- cution, but the lien ceases after two years: Eogers V. Druffel, 46 Cal. 654. 1018 JUDGMENT LIENS. § 631 able property in both counties until it is extin- guished.^^ 632. Property not Twice Lienabie under Same Judgment. The same property cannot twice be affected by a lien under the same judgment.^ ^ 633. Cannot Accrue Ag^ainst Property of Dece- dent or Bankrupt. A judgment lien cannot be created against the estate of a decedent/'' nor against the estate of a person adjudged a bankrupt.^^ 15 Bowman v. Hovions, 17 Cal. 471, 474-476. 16 Same Property not Twice Lienabie.— * ^ This is the only conclusion at which we can reasonably ar- rive. If such a lien, once exhausted, can afterward be revived, there is no limit to the number of times that this may be done'': Bowman v. Hovious, 17 Cal. 471, 476. Thus where a judgment lien has attached to the land in a county and the county is subsequently di- vided, a transcript of the judgment cannot be filed in the new county to prolong the lien beyond the time at which it would otherwise have expired: Bow- man V. Hovious, 17 Cal. 471, 476. 17 Judgment does not Constitute Lien Against Es- tate of Decedent. Code of Civil Procedure, section 669 (Practice Act, section 202), provides: ^^If a party die after a verdict or decision upon any issue of fact, and before judg- ment, the court may nevertheless render judgment thereon. Such judgment is not a lien on the real property of the deceased party^ but is payable in the course of administration on his estate.'' §634 JUDGMENT LIENS. 1019' 634. Liened Property not Subject to Independ- ent Levy. During the continuance of a judgment liert' against any property, the levying of an execution thereon pursuant to the secured judgment by the judgment lienor is wholly useless, neither extend- ing the existing lien nor creating a new lien.^**^' Section 1504: ^'A judgment rendered against an executor or administrator, upon any claim for moneys against the estate of his testator or intestate, only establishes the claim in the same manner as if it had been allowed by the executor or administrator and the judge No execution must issue upon such judgment, nor shall it create any lien upon the prop- erty of the estate, or give to the judgment debtor any priority of payment.^' Section 1506: ''A judgment rendered against a de- cedent, dying after verdict or decision on an issue of fact, but before judgment is rendered thereon, is not a lien on the real property of the decedent, but is payable in due course of administration.'' 18 Nor Against Estate of Bankrupt: See Bankrupt Act, section 67f, as quoted section 40, note 6, above. 19 Levying of Execution Wholly Useless. ^^The judgment lien being a lien upon the lands, a levy is unnecessary.'' ^'The judgment binds the lands, and the execution comes as a power to sell" (p. 132): Bagley v. Ward, 37 Cal. 121, 99 Am. Dec. 256. Where property is affected by a judgment lien, a levy under the same judgment cannot sequester such property (p. 133). ^ ^Pending the judgment lien, the levy of the execution neither extends the existing lien nor creates a new lien" (pp. 138, 139): Bagley V. Ward, 37 Cal. 121, 99 Am. Dec. 256, per Ehodes, Sanderson, and Crockett, JJ.; Sawyer, C. J., and 1020. JUDGMENT LIENS. § 635 635. Attachment Merged into Judgment Lien. Where immovable property has been attached and afterward a judgment lien accrues there- against as security for the same demand in the course of the same action, notwithstanding the property is still in contemplation of law in the possession of the attaching officer subject to the judgment, the attachment lien is merged into the judgment lien and ceases, except as maintaining priority for the judgment lien against the prop- erty attached, and does not revive upon the ex- piration of the judgment lien.^^ 636. Enforcement.^! A judgment lien may be enforced. (1) by execution,^'^ the writ for which may issue as of course at any time within five years after the docketing of the judgment, or on motion Sprague, J., dissenting (pp. 142-149). To the same effect, Rogers v. Druffel, 46 Cal. 654, 656. Thuc by the issue and levy of an execution during the continuance of the lien, the lien cannot be ex- tended beyond the time at which it would otherwise expire: Isaac v. Swift, 10 Cal. 71, 81, 70 Am. Dec. 698; Sanders v. Eussell, 86 Cal. 119, 121, 21 Am. St. Rep. 26, 24 Pac. 852. 20 Eagley v. Ward, 37 Cal. 121, 131, 99 Am. Dec. 256, per Rhodes, Sanderson, and Crockett, J J.; Saw- yer, C. J., and Sprague, J., dissenting (p. 153) ; Porter V. Pico, 55 Cal. 165, 174; Anderson v. Goff, 72 Cal. 65, 71, 1 Am. Sfc. Bep. 34, 13 Pac, 73. § 636 JUDGMENT LIENS. 1021 21 In Bartholomew v. Hook, 23 Cal. 277, where cer- tain land subject to a judgment lien was affected by a subsequent homestead declared thereon by the judg- ment debtor's wife, and there was no property other than the liomestead subject to the judgment lien, the court required the judgment creditor to proceed first against the movable property of the judgment debtor. The court, however, merely quoted the first portion of the' first subdivision of the Code of Civil Procedure, section 682 (Practice Act, 210), which provides that the writ of execution ^^must require the sheriff to sat- isfy the judgment, with interest, out of the personal property of such judgment debtor, and if sufficient personal property cannot be found, then out of his real property, '^ and wholly ignored the next portion of that subdivision which provides that the writ of execution ^^must require the sheriff to satisfy the judgment, with interest, .... if the judgment be a lien upon real property, then out of the real property belonging to him on the day when the judgment was docketed, or at any time thereafter. ' ' It seems clear that if certain of the property affected by a judgment lien was subject to a subsequent homestead, while the remainder was not, then on the principle of mar- shaling of securities (see section 21 above), the lienor would be required to proceed first against the property not subject to the homestead; but where all the liened property alike is affected by a subsequent homestead, to compel the lienor to forego his lien and enforce his judgment against the movable property of the judgment debtor is to ignore the force of the provision of Civil Code, section 1241, first subdivi- sion, that the homestead is subject to forced sale un- der such liens. 22 Judgment Lien may "be Enforced by Execution. Code of Civil Procedure, section 681: ^^The party in whose favor judgment is given may, at any time within five years after the entry thereof, have a writ of execution issued for its enforcement. '' Section 685: ''In all cases, the judgment may be enforced or carried into execution after the lapse of five years from the date of its entry, by leave of the 1022 JUDGMENT LIENS. § 636 court, upon motion, or by a judgment for that pur- pose, founded upon supplemental pleadings/^ As amended, in effect March 9, 1895. Historical.— By the Code of Civil Procedure, section 685 and Practice Act, sec. 214, before April 8, 1861, and after March 9, 1895 (except in respect to judg- ments which had been barred before March 9, 1895), execution could be issued by the court on motion after five years from the entry of the judgment in all cases; between April 2, 1866, and March 9, 1895, by the same section it could be so issued except in cases for the recovery of money (which included cases of the recovery of money demands by the enforcement of liens) ; between April 8, 1861, and April 2, 1866, it could not in any case be issued after the lapse of five years after entry. In Donner v. Palmer, 23 Cal. 40, 46, decided in 1863, the court said: ^^ Section 209 [of the Practice Act] provides that an execution to enforce this [judg- ment] lien can only issue within five years after the date of the judgment, and if the judgment debtor suf- fers that time to elapse without having enforced his lien, he cannot procure an execution, since the repeal of section 214, with which to enforce it. So, too, ail right of action upon the judgment is barred by the seventeenth section of the statute of limitations un- less commenced within five years of the date of its rendition. AVhether a lien can exist in any county after the expiration of five years from the date of the judp;ment by filing a transcript in the recorder's office just within the two years, is a question not prop- erly before us in this case; but it is clear that if a lien could exist in such case, it would be merely nominal, unless an execution is issued within the five years with which to enforce it.'' A Judgment Lien is Enforced hy Execution.— ' ^ ThRt is the only purpose of the execution in respect to real estate while the judgment lien subsists": Bagley v. "Ward, 37 Cal. 121, 131, 99 Am. Dec. 256. Although the liened property is in the possession of a receiver, the lienor may sell it under execution § 636 JUDGMENT LIENS. 1023 without leave of court, without committing a eon- tempt of court: Petaluma Savings Bank v. Superior Court San Francisco, 111 Cal. 488, 500, 44 Pac. 177. Whether a judgment lien is enforceable by execu- tion or otherwise after the death of the judgment debtor, or whether the secured demand must be ]3re- sented against the estate of the decedent and paid as a preferred demand, has never been directly decided. It has been held that where judgment is rendered during the lifetime of the judgment debtor, execution thereon issued after his death is void, no judgment lien having, however, accrued in this case: Smith v. Eeed, 52 Cal. 345. It has also been held that where a money judgment is rendered during the lifetime of the judgment debtor and execution is issued, but not levied, against cer- tain property which had previously been attached, the death of the judgment debtor before the levy discharges both attachment and execution under the Code of Civil Procedure, section 686, Practice Act, section 215, there being no judgment lien: Ham v. Cunningham, 50 Cal. 365; Ham v. Henderson, 50 Cal. 367. In Estate of Wiley, 138 Cal. 301, 71 Pac. 441, 443B, where a judgment lien was involved, and the judg- ment secured by the lien had been presented and re- jected, and action had been prosecuted thereon to successful termination, the court remarked inciden- tally: ^^ After the death of the judgment debtor, no execution could issue,'' citing Code of Civil Proce- dure, section 1505, which provides: ^^When any judg- ment has been rendered for or against the testator, intestate in his lifetime, no execution shall issue thereon after his death, except as provided in section 686. A judgment against the decedent for the recov- ery of money must be presented to the executor or administrator like any other claim. If execution is actually levied upon any property of the decedent before his death, the same may be sold for the satis- faction thereof; and the oflScer making the sale must account to the executor or administrator for any sur- plus in his hands.'' 1024 JUDGMENT LIENS. § 636 by the court after the lapse of five years, the execution being enforceable without the ne- cessity of a levy^^^"^ (2) by a foreclosure action (where necessary for the protection of the lien, if not in every case).^"* Code of Civil Procedure, section 686, referred to above, provides: '* Notwithstanding the death of a party after the judgment, execution thereon may be issued, or it may be enforced as follows: .... .(2) in case of the death of the judgment debtor, if the judgment be for the recovery of real or per- sonal property, or the enforcement of a lien there- on. '^ It would seem that as in Estate of Wiley, 138 Cal. 301, 71 Pac. 441, it was held that a judgment lien is a lien within the meaning of the Code of Civil Pro- cedure, section 1570, which allows the lienor, when the liened property is sold in the course of the ad- ministration of the estate of the deceased owner of the property, to become the purchaser and pay the purchase price by giving a receipt for the secured demand, it must also be held a lien within the Code of Civil Procedure, section 686, and thus to be en- forceable by execution, notwithstanding the death of the judgment debtor. 23 Levy Unnecessary.— Where property is affected by a judgment lien, a levy thereof as attachments are required to be levied, is not requisite on execution to the due appropriation of the liened property to the satisfaction of the judgment: Lehnhardt v. Jennings, 119 Cal. 192, 193-197, 48 Pac. 56, 51 Pac. 195. 24 Judgment Lien may "be Sometimes Foreclosed.— A judgment lienor has a specific lien against the property affected by his lien, which, so long as the secured obligation is not satisfied, he is entitled to enforce. Were there a doubt of the right of a judg- § 636 JUDGMENT LIENS. 1025 ment lienor, in the absence of other remedy, to main- tain an independent action to foreclose his lien, there can be none of his right to do so in an action brought to foreclose a superior encumbrance in which action he was made a part}^ defendant: Hibernia Savings etc. Soc. V. London etc. Fire Ins. Co., 138 Cal. 257, 71 Pac. 334, 335A. Liens— 65 CHAPTER 9. TAX LIENS. 63.7. Lien of tax upon immovable property. 638. Of tax upon improvements. 639. Of movable property tax. 640. Of poll tax. 641. Extinction of lien. 642. Time of commencing foreclosure action. 637. Lien of Tax upon Immovable Property.^ Every tax^ upon immovable property consti- tutes a lien against the taxed property which at- 1 Political Code^ section 3718 provides: ^* Every tax upon real property is a lien against the property as- sessed; .... which several liens attach as of the first Monday of March in each year.''. The liens provided by Political Code, sections 3716, 3717, and 3718,* ^* attach to the property of railroad companies owning and operating roads situate in two or more counties, the same as to all other property in the state. It will thus be seen that, for the *taxes upon this class of property, the state and every county in it has the same security that is provided for taxes upon all other property in the state — a lien upon all property of the owner — not even excepting that which is by law exempt from execution; and by other pro- visions of the statute it is made a first lien; so that, in no event can the state be defeated in the collec- tion of its taxes, if its own proceedings in the assess- (1026) § 637 TAX LiE^-s. 1027 taches as of the first Monday in March of the calendar year in which the tax was assessed.^ 638. Of Tax upon Improvements.^ Every tax due upon improvements upon im- movable property assessed to other persons than the owners of the immovable property constitutes ment, levy, and collection have been lawful'': People V. Central Pac. E. E. Co., 83 Cal. 393, 407-408, 23 Pac. 303. 2 Query: Whether a tax levied for municipal pur- poses, constitutes a lien under this and sections 63S and 639 following? City of San Diego v. Higgins, 115 Cal. 170, 176, 46 Pac. 923. 3 This proposition seems to Ire recognized in the cases. Thus in San Gabriel Valley Land etc. Co. v. Witmer, Bros. Co., 96 Cal. 625, 626, 29 Pac. 500, 31 Pac. 588, the court said: /^ The taxes for each fiscal year accrue on the first Monday of March preceding, .... and when assessed, take effect and become a lien from that date.'' In McPike v. Heaton, 131 Cal. 109, 82 Am. St. Eep. 335, 63 Pac. 179, the court recognized that a tax lien for taxes for the fiscal year commencing July 1, 1897, the taxes being levied on November 29, 1897, attached on March 1, 1897. In this case where a person sold land on March 24th after the accrual of the lien, cove- nanting that the land was free from liens, and subse- quently the purchaser sold the land to a third person who paid the taxes, the court held that the third per- son could not recover the ta.xes from the original ven- dor as a covenant that land is free from encumbrances does not run with the land or pass to the assignee, but was personal to the first purchaser. 4 See Political Code, section 3718, except first clause. 1028 TAX LIENS. § 638 a lien against the property, unless nontaxable/' and improvements, which attaches as of the first Monday in March of the calendar year in which the tax was assessed.^ 639. Of Movable Property Tax. Every tax due upon movable property consti- tutes a lien against the immovable property of the owner of the movable property, which at- taches at 12 o'clock noon of the first Monday in March in each year.'' . 640. Of Poll Tax. A delinquent poll tax, together with one-third the amount thereof in addition thereto, consti- tutes a lien against the property assessed to the person liable for the payment of the poll tax which attaches from the first Monday in March in each year.^ 641. Extinction of Lien.^ A tax lien is extinguished only (1) by the payment of the tax, or 5 A tax upon improvements upon nonassessable public lands cannot become a charge against the land: See Political Code, section 3650, subdivision 12, last sentence; People v. Smith, 123 Cal. 70, 76, 55 Pac. 765. 6 See section 637, note 3, above. 7 Political Code, section 3717, as amended in effect March 22, 1880. 8 Political Code, section 3860, in part. § 641 TAX LIENS. 1029 (2) by the sale of the liened property in satis- faction of the demand secured by the lien^ [or (3) by the lapse of the time within which a fore- closure action can be commenced]. ^^ 642. Time of Commencing Foreclosure Action. An action to foreclose a tax lien must be com- menced before the expiration of three years after the right of action accrued. ^^ 9 Political Code, section 3716, provides: *' Every tax has the effect of a judgment against the person, and every lien created by this title has the force an*l effect of an execution duly levied against all the prop- erty of the delinquent; the judgment is not satisfied nor the lien removed until the taxes are paid or the property sold for the payment thereof.^' 10 In City of San Diego v. Higgins, 115 Cal. 170, 46 Pac. 923J the court in effect holds that the lapse of the time for commencing an action does not extin- guish the lien, but merely bars the remedy; but Mr. -Justice Temple, in his dissenting opinion, clearly shows that, a legal right Avithout a remedy is a con- tradiction in terms. 11 Action must be Commenced Within Three Years. An action to foreclose a tax lien is an action upon a liability created by statute other than a penalty or forfeiture, and is barred under the Code of Civil Pr<:)- cedure, section 338, subdivision 1, r.pon the lapse of three years from the time the right of action accrued: ntj of San Diego v. Higgins, 115 Cal. 170, 46 Pac. 923, per Henshaw, McFarland, Garoutte, Van Fleet, and Harrison, JJ.; Temple, J., dissenting. In Lewis v. Eothchild, 92 Cal. 626, 629, 28 Pac. 805, it was held that the action to foreclose a tax lien was not barred by any of the limitations con- tained in the Code of Civil Procedure; but this state ment was overruled and the case distinguished. CHAPTEE 10. ASSESSMENT LIENS.* SuMivision 1. The Assessment. 643. Assessment defined. 644. Distinction between tax and assessment. 645. Authority to levy granted by legislature but vested in local public corporations exclu- sively. 646. Opportunity to be heard must usually bo granted property owner before assessment becomes final. 647. Assessment must be levied on uniform stan- dard. 648. Assessment when properly apportioned not in- validated by erroneous distribution thereof. 649. Assessment grossly disproportionate to benelits invalid. 650. Description must be sufficient for identification. SuhdivUion 2. The Lien. 651. Assessment when duly levied constitutes spe- cific lien. 652. Lien cannot accrue when contract to pay which assessment was levied void. 653. Maximum amount of assessment the value of the property assessed. 1 In this chapter an attempt is made to state some of the general principles of constitutional law which apply to all local assessments, and to set forth some of the rules which in California have been held to govern all assessment liens. (1030) § 643 ASSESSMENT LIENS. 1031 654. Expiration of lien. 655. Demand prerequisite to maintenance of fore- closure action. 656. Joinder of causes of action. 657. Certain documents may be constituted prima facie evidence of lien. 658. Of defenses available in the foreclosure action. 659. Of counsel fees in foreclosure actions. Subdivision 1, The Assessments 643. Assessment Defined. Every special local charge duly levied under authority of law in the exercise of the taxing power upon the immovable property in the im- mediate vicinity of a public work of local con- venience, upon the theory of apportioning bur- dens to benefits, and for the purpose of defraying a special public expenditure made upon such work and of peculiar and especial advantage to the property charged, is, as distinguished from a tax, called an assessment.^ 2 Assessment Defined.— ^ ' An assessment, as distin- guished from a tax, is a special and local charge or imposition upon property in the immediate vicin- ity of municipal improvements, predicated upon the theory or principle of equivalents for benefits from such improvements, and levied as a charge upon land or property specially benefited thereby. It is a charge upon property, in theory at least, upon the principle of apportionment according to the relation between burden and benefit '^ Holley v. County of Orange, 106 Cal. 420, 426, 39 Pac. 790. See, also, Emery v. San Francisco Gas Co., 28 Cal. 345, 356, 357; City of San Diego v. Linda Vista Irr. Dist., 108 Cal. 189, 193, 194, 41 Pac. 291. 1032 ASSESSMENT LIENS. § 643 Assessment Considered and Distinguished from Tax, ''The word 'assessment/ as employed in the con- stitution [of 1849^ article 4, section 37], while it represented in part the general power of taxation vested in the government, was used to designate a particular branch of that power specifically different in its purpose and mode of working from that in- tended by the more general and comprehensiv.e term of 'taxation/ .... By the latter the power of im- posing taxes upon the property of the citizen gen- erally for the support of government was intended, and by the former the power of imposing a tax for the purpose of improving the streets of cities and incorporated villages upon the property bordering upon or in the vicinity of the improvement. .... [p. 250.] "In exercising the power of taxation the govern- ment is authorized to call upon the taxpayer for an unlimited percentage upon the value of all his prop- erty not exempt from taxation. It must be so ex- ercised as to operate, so far as possible, equally and uniformly. The burden imposed must be apportioned upon the ad valorem principle, and not otherwise. From this mode no departure can be made In its exercise, counties, cities and incorporated villages are governed by the same rules by which the legis- lature is governed [pp. 251, 252.] "The power of assessment, on the other hand, is of municipal rather than of state consequence It is true that the power of assessment is vested in the state legislature, but it is so in a modified sense. It is not so vested as an independent or principal power, like that of taxation, but as a part of, or as an incident to the power of organizing municipal corporations and providing for them a system of government to the proper working of which the power of assessment is indispensable [p. 252.] "[The term assessment] was employed .... [in the constitution of 1849] to represent those local burdens imposed by municipal corporations upon prop- erty bordering upon an improved street or situated § 644 THE ASSESSMENT. 1033 644. Distinction Between Tax and Assessment. Every charge levied upon all the property^ both movable and immovable^ within a taxing district is a tax, without regard to the purposes for which it was levied,^ and must be levied in proportion so near it as to be benefited by the improvement, for the purpose of paying the cost of the improve- ment, and laid with reference to the benefit which such property is supposed to receive from the ex- penditure of the money. This definition ex vi ter- mini describes the power and defines with precision its limits. It is not a power to tax all the property within the corporation for general purposes, but a power to tax specific property for a specific purpose. It is not a power to tax property generally founded upon the benefits supposed to be derived from the organization of a government for the protection of life, liberty and property, but a power to tax specific property founded on the benefit supposed to be de- rived by the property itself from the expenditure of the tax in its immediate vicinity '^ (p. 254): Tay- lor V. Palmer, 31 Cal. 240. 3 An imposition laid upon all the property mov- able and immovable within a certain district does not become an assessment from the mere fact that it is used for a local public work. In People v. Whyler, 41 Cal. 351, the court says: ^^jSTo cases are called to our attention which hold that by reason of the purposes for which they [the so-called taxes] were levied, they became assessments. Taxes for the con- struction of roadS; bridges, and school houses are familiar instances. The funds to pay for the grad- ing of a street may be raised by taxes levied upon all the property of a town, should the law so direct; but the tax does not become an assessment, because the latter is the mode usually adopted to raise funds for that purpose If the legislature intended that a tax should be levied, and if it may be levied 1034 ASSESSMENT LIENS. § 644 to the value of the property.^ But an assess- ment is levied upon immovable property only and in proportion to benefits deemed to have been conferred thereon by the local public work.^ 645. Authority to Levy Granted by Legislature, but Vested in Local Public Corporations Exclusively. The legislature itself cannot levy an assess- ment;^ but without violating any constitutional to pay for a local improvement, it is not only no objection to the act [permitting the district to levy the tax], or the proceedings that were had under it, that it was not levied upon property in propor- tion to the benefits leceived by means of the im- provement; but if a tax should be levied on that principle, it would be fatally defectfve, because lack- ing the constitutional qualities [required under the constitution of 1849] of equality and uniformity/' 4 Const. 1879, art. 13, sec. 1. 5 As the levy of an assessment depends wholly upon the location of the property assessed in relation to the public work to defray the cost of which the assessment is levied, and as the assessment is ap- portioned on the theory of apportioning the burdens to the benefits derived from the public work, it is manifest that an assessment can only be levied upon immovable property and property which by affixment has become a part thereof, for that property alone has such a locus that it can be said to have de- rived any benefit, except of the most ephemeral sort, from the public work. 6 Legislature cannot Levy Assessment.— See Con- stitution 1879, article 11, section 12, which provides: ^^The legislature shall have no power to impose taxes upon counties, cities, towns, or other public or mu- § G45 THE ASSESSMENT. 1035 nicipal corporations, or upon the inhabitants or property thereof, for county, city, town, or other municipal purposes, but may, by general laws, vest in the corporate authorities thereof the power to assess and collect taxes for such purposes/' This section does not in terms prohibit the legis- lature from levying an assessment, but merely a tax. But the intent of the provision seems to be to pro- hibit the legislature from levying any charge for local purposes, and an assessment is always levied for a local purpose. Moreover, in article 13 of the constitution, where the power of the legislature in respect to taxation is defined, there is no reference to assessments being made by the legislature, but it is declared in sec- tion 1 thereof that '^all property in the state, not exempt under the laws of the United States, shall be taxed in proportion to its value, to be ascer- tained as provided by law.'' Furthermore, under the constitution of 1849, it was held that the legislature has no power to levy an assessment for a local public work in an incorporated city, or in a reclamation district: Brady v. King, 53 Cal. 44; People v. Houston, 54 Cal. 536, 539; Schu- macker v. Toberman, 56 Cal. 508, 511; People v. McCune, 57 Cal. 153. See, also. Fanning v. Scham- mel, 68 Cal. 428, 430, 9 Pac. 427; Kellv v. Luning, 76 Cal. 309, 18 Pac. 335. As to Taxation, it has been held that the legisla- ture cannot levy a tax in a high school district for the support of the high school: McCabe v. Carpen-. ter, 102 Cal. 469, 471, 36 Pac. 836. Nor can the legislature levy such a tax inrlirectly. In McCabe v. Carpenter, 102 Cal. 469/471, 36 Pac. 836, the court says: '^Whether a school district is itself a public corporation, or .... is to be deeme-l a part of the county organization, is immaterial In either view the constitutional provision [Const. 1879, art. 11, see. 12] limits the power of the legis- lature in the matter of imposing taxes upon the in- habitants or the property within it. If the legisla- IQcQ ASSESSMENT LIEXS. § 645 inhibition"'' may authorize the legislative body of any duly constituted public corporation^ but no other body nor person,^ to levy an assessment^ for ture cannot impose a tax upon the property or in- habitants of a schcol district, it would seem to fol- low that it cannot prescribe a procedure through which such tax would inevitably be levied without leaving some discretion in regard to it to the local authorities. The legislature imposes the tax when it requires an officer to make certain computations, the result of which must fix the amount to be levied. ' ' 7 Constitutional Law.— Article 13, section 1, of the California constitution of 1879. which provides that all taxes must be levied upon all property both movable and immovable according to value does not apply to local assessments, nor limit the power of the legislature to authorize their levy in proper cases: Turlock Irr. Dist. v. Williams, 76 Cal. 360, 370, 18 Pac. 379; Citv of San Diego v. Linda Vista Irr. Dist., 108 Cal. 189, 192-194, 41 Pac. 291. Likewise the court previously held under the con- stitution of 1849 that the provision of article 11, section 13, thereof, in regard to taxation, did not ^Pply to special assessments, nor prohibit their levy: Burnett v. City of San Francisco, 12 Cal. 76, 83, 84, 73 Am. Dec. 518; Emerv v. San Francisco Gas Co., 28 Cal. 345, 356, 372: Emery v. Bradford, 29 Cal. 75, 82; Walsh v. Mathews, 29 Cal. 123; Taylor v. Palmer, 31 Cal. 240, 250; Chambers v. Satterlee, 40 Cal. 497, 514; Hagar v. Board of Supervisors, 47 Cal. 222, 234. In Chadwick. v. Kelly, 187 IT. S. 540, 23 Sup. Ct. 175, 177, the United States supreme court quotes as ^^ consonant with the great weight of authority, both state and federal,^' the following views enunciated in Kelly v. Chadwick, 104 La. 719, 29 So. 295: /*It is too late to question the right of the gen- eral assembly [legislature] to establish particular districts for the attainment of special local public § Gi5 THE ASSESSMENT. 1037 good, through works of a particular character, and to order itself, or authorize some political body to order, special assessments to be made, within the district, for the purpose of meeting the cost and ex- pense of such works ^^It is true that in some instances almost the whole benefit accrues to a few, but there can be no uni- versal rule of justice upon which such assessments can be made. An apportionment of the cost that would be just in one case would be oppressive in another. For this reason the power to determine when a special assessment shall be made, and ori what basis it shall be apportioned, rests in the legis. lature or some other political body to which it has delegated that authority '^It cannot be exacted for the purpose of sus- taining the constitutionality of a statute or ordi- nance authorizing a work of local public improve- ment, at the cost of abutting owners, that it be shown that there is a benefit in every possible re- spect to the particular owners, nor that the benefit be direct and immediate '^The general assembly has .... conferred upon the common council the right and power, by a tw(»- thirds vote, to constitute any particular street which it proposes to pave a special taxing district for the purpose of meeting the cost of making such paving. It has exercised this right in the matter of the pav- ing of Hagar avenue. Having done so, the legis- lature has designated how, in what proportion, and by what standard this cost is to be met. The coun- cil was not at liberty to depart from this appor- tionment. The judiciary is not authorized to alter it and to substitute for a fixed legislative standard a fluctuating judicial standard based upon actual benefits received and measured by values or enhanced values to be established by evidence and proof. '^ s Cannot be Levied by Other Person or Body Than Legislative Body or Public Corporation. ^^ Since the power to levy a tax is purely legisla- tive, it would seem to follow that the power cannot 1038 ASSESSMENT LIEN'S. § 645 be vested in any other autliority of the local cor- poration than the body in which is vested the legis- lative power of such municipal corporation'^: McCafce V. Carpenter, 102 Cal. 469, 472, 36 Pac. 836. '^The legislative body must determine, not only the character and extent of the improvcm^ent which it will authorize, but also the amount of the burden which is to be imposed therefor by the assessment upon the adjacent property to defray the expense of the improvement. This power of assessment is ref- erable to the power of taxation, and Is itself a leg- islative power which must not only find express au- thority for its exercise, but which can neither be exercised by an executive officer, nor delegated to such officer by the legislative body of the munici- pality. The clerical or ministerial act of appor- tioning the assessment upon the lands to be charged therewith may be performed by another official, but whether the assessment shall be imposed upon the lands, and the amount of such assessment, must be determined by the legislative body'': Bolton v. Gilleran, 105 "Cal. 244, 248, 38 Pac. 881, 45 Am. St. Rep. 83. Moreover, a valid assessment cannot be levied by a de facto public corporation unless it is a de jure corporation also: Reclamation Dist. No. 537 v. Burger.. 122 Cal. 442, 444, 55 Pac. 156. In Swamp Land Dist iSTo. 150 V. Silver, 98 Cal. 51, 53, 32 Pac. 866, the court, however, thought that the validity of thf organization of a district could not be attacked iv an action to foreclose an assessment lien. The Power to juevi/ an Assessment cannot 6? DeJe gated to Any Private Body. Article 11, section 13 of the California constitution of 1879, provides; *^The legislature shall not delegate to any special commission, private corporation, company, associa tion, or individual, any power to make, control, ap propriate, supervise, or in any way interfere with any county, city, town, or municipal improvement money, property, or effects, whether held in trust o otherwise, or to levy taxes or assessments, or per form any municipal functions whatever." § G45 THE ASSESSMENT. 1039 In Banaz v. Smith, 133 Cal. 102, 103, 104, 65 Pao 309, where the contention was made that the pro . vision of the Street Improvement Act of 1885 (thr Vrooman Act) by which the contractor for stree*' work was made the collector of the assessment levied to defray the cost of the work, violated this pro vision, the court said: '^It is perfectly otvious tha^ there is here n^ delegation of a municipal function The contractor acts only as the agent or servant of the city. He has no discretion, and can create n«' liability, nor can he impose any duty or exercise any control or authority over anyone. He makes i\i^ assessment, levies no tax, or performs no municipal function. The municipal officers who enforce thf ordinances of the city do not perform municipal functions, and in the collection of the street assess ment the contractor does no more. ^' Of Corporations Which are Puhlic and Thus Author ized to Levy Assessments. All municipal corporations are public corpora tions: In re Werner, 129 Cal. 567, 572, 62 Pac. 97. '^An irrigation district organized under the Wright Act becomes a public corporation, and its officers be- come public officers of the state ^': Boehmer v. Big Eock Irr. Dist., 117 Cal. 19, 28, 48 Pac. 908. See In re Madera Irr. Dist., 92 Cal. 296, 321, 322, 27 Am. St. Eep. 106, 28 Pac. 272, 675. An irrigation district ^^is a public corporation^': People V. Selma Irr. Dist., 98 Cal. 208, 32 Pac. 1047; Perry v. Otay Irr. Dist., 127 Cal. 565, 568, 60 Pac. 40. ^'The formation of one of these irrigation districts amounts to the creation of a public corporation, and their officers are public officers' ': Fallbrook Irr. Dist. V. Bradley, 164 U. S. 112, 174, 17 Sup. Ct. Rep. 56, 41 Law ed. 369. While a reclamation district is not a municipal corporation (People v. Reclamation Dist. No. 551, 117 Cal. 114, 123-124, 48 Pac. 1016), nor is a sanitary district a municipal corporation (In re Werner, 129 Cal. 567, 572-573, 62 Pac. 97), yet they seem to be 1040 ASSESSMENT LIENS. § 645 any public purpose of special and peculiar local benefit,^ upon such property within its territorial limits as may be properly charged with the as- sessment,^^ and may by general law, or where special legislation is permissible by special law/^ public corporations (People v. Levee Dist. No. 6, 131 Cal. 30, 33-34, 63 Pac. 676). They do not pos- sess the police powers usually belonging to cities and municipal corporations exercising local govern- mental functions, and the legislature cannot delegate to them the power of enacting penal legislation; but their powers are usually limited to those required for the execution of some special local improvement (In re Werner, 129 Cal. 567, 572, 575, 62 Pac, 97). 9 Assessment can Only be Levied for Public Pur- pose. — ^^The taxing power, whether it be executed in the form of general taxation or of local assess- ment, cannot be upheld, when the purpose in view can be judicially seen to be other than public '': In the Matter of Opening and Grading Market Street, 49 Cal. 546, 549. 10 What Land is Properly Chargeable with an As- sessment. — Property belonging to the state or a mu- nicipal corporation therein, as well as .private prop- erty, may be subject to a special assessment; but the legislature has no such power over United States lands: City of San Dieffo v. Linda Vista Irr. Dist., 108 Ca). 189, 194-196, 41 Pac. 291. On the other hand, property belonging to the state or a municipal corporation therein may be exempted from liabilitv for an assessment: Dovle v. Austin, 47 Cal. 353, 360-361. Under the laws, land owned by a school district and used for school purposes is not liable for special assessment for street work, and where it is sought to enforce an assessment lien against such land, the fact must be averred in the complaint that the land is not used for school purposes: Witter v. Mission School Dist., 121 Cal. 350, 66 Am. St. Eep. 33, 53 Pac. 905. I 645 THE ASSESSMENT. 1041 declare the rule by which the district to be bene- fited by a public work is to be ascertained^^ and by which the relative benefit to the property in the district to be derived from the work is to be measured. ^^ 64:6. Opportunity to be Heard must Usually be Granted Property Owner Before Assess- ment Becomes Final. Whenever a local public corporation expresses the intention to perform a public work to defray the cost of which an assessment is leviable, and the legislature has conferred upon the legislative 11 A reclamation district, or a levee district, may be organized by special law: People v. Levee Dist. No. 6, 131 Cal. 30, 33, 34, 63 Pac. 676. 12 Legislature may Determine District Benefited.— ^^The legislature has power to fix such a district for itself without any hearing as to benefits, for the purpose of assessing ui)on the lands within the district the cost of a local, public improvement. The legislature when it fixes the district itself is sup- posed to have made proper inquiry, and to have finally and conclusively determined the fact of bene- fits to land included in the district, and the citizen has no right to any other or further hearing upon the question^': Fallbrook Trr. Dist. v. Bradley, 164 U. S. 112, 174, 17 Sup. Ct. Eep. 56, 41 Law ed. 369. Thus under the Vrooman Act the district to be benefited by a city street improvement is declared for most purposes to consist of the lots fronting thereon, and on a portion of the cross streets. 13 Legislature may Determine Method by Which Relative Benefit is Ascertained.— ^ ' The legislature Liens— 66 1042 ASSESSMENT LIENS. § 646 body of the corporation the discretion to deter- mine the district to be benefited by the work^ or the relative benefit to the property in the district to be derived from the work/^ any assessment which may thereupon be levied by the corpora- tion to defray the expenses of the work can only become a final charge upon the property against which it is levied, and an assessment lien can only accrue against the property thereunder, after each property owner has had an opportunity to be heard/^ respectively, as to whether his may establish an arbitrary standard of estimating the amount of benefit derived by each tract of land within an assessment district declared to be benefited as a whole; as by reference to the number of front feet in the case of street assessments, or to the num- ber of acres in cases of reclamation^': Eeclamation Dist. No. 108 v. Evans, 61 Cal. 104, 107. 14 This discretion is conferred upon the local cor- poration whenever the assessment is to be appor- tioned according to the value of the . land in the district, or according to the benefits estimated to be received by the land. But where the legislature directs the assessment to be leviKid according to frontage or superficial area or a combination of the two, there is no discretion conferred upon the local corporation, and a hearing is of no possible advantage. 15 Opportunity to "be Heard must "be Given Prop- erty Owners.— This opportunity may be granted be- fore a special board or equalizer appoinfed for that purpose before the levy of the assessment, or after the levy of the assessment in a special proceeding for the confirmation of the assessment and the de- termination of its validity (as to reclamation dis- tricts, see Political Code, section 34931/^; as to irri- § 046 THE ASSESSMENT 1043 gation districts, see Stats. 1897, p. 254, c. 189, sees. 68-73; also, see Lower Kings Eiver Eeclamation Dist. No. 531 V. McCullah, 124 Cal. 175, 177, 56 Pac. 887), or in the action for the foreclosure of the assess- ment lien: Gwynn v. Dierrsen, 101 Cal. 563, 566, 36 Pac. 103; Lower Kings River Reclamation Dist. No. 531 V. Phillips, i08 Cal. 306, 313-315, 39 Pac. 630, 41 Pac. 335. Thus where an assessment can only he enforced by legal proceedings in which the property owner has a right to avail himself of all his grievances by way of defense, there is due process of law: Hagar v. Rec- lamation Dist. No. 108, 111 U. S. 701, 711, 712, 4 Sup. Ct. Rep. 663, 28 Law ed. 569. Whenever an assessment is to be levied propor- tionate to the whole expense and to the benefits to be derived therefrom, a taxpayer not given an op- portunity to be heard before the assessment is levied is entitled to prove as a defense in the action to foreclose the assessment lien any material overrat- ing of benefits and consequent assessment injurious to himself, whether the overrating is the result of the fraud, negligence, or incompetence of the asses- sors: Lower Kings River Reclamation Dist. No. 531 v, Phillips, 108 Cal. 306, 324, 39 Pac. 630, 41 Pac. 335. People V. Hagar, 66 Cal. 59, 4 Pac. 951, to the con^ trary was overruled. *'It cannot be material .... that the land owner had -no notice before the proportional benefit to his land [to be assessed against it] was estimated by the commissioners [appointed for that purpose], if in the subsequent action he has had his day in court, with full opportunity to contest the charge, before it was declared a lien upon his land'': Reclamation Dist. No. 108 V. Evans, 61 Cal. 104, 107. See, also. Reclamation Dist. No. 3 v. Goldman, 65 Cal. 635, 637, 638, 4 Pac. 676; Lent v. Tillson, 72 Cal. 404, 420, 14 Pac. 71; Lower Kings River Rec- lamation Dist. No. 531 V. Phillips, 108 Cal. 306, 311, 312, 39 Pac. 630, 41 Pac. 335; Lov/er Kings River Reclamation Dist. No. 531 v. McCullah, 124 Cal. 175 177, 36 Pac. 103. 1044 ASSESSMENT LIENS. § 646 property should be included within the district upon which the assessment is levied/^ or as to the relative benefit to be derived from the work to his property.^'' But where no hearing is granted "before the levy of the assessment, and the assessment is to be col- lected hj summary process in which the property owner is not heard, the constitutional guaranties are infringed and the law is invalid: Hutson v. Wood- bridge Protection Dist. No. 1, 79 Cal. 90, 95, 16 Pac. 549, 21 Pac. 435; Lower Kings Eiver Eeclamation Dist. No. 531 V. Phillips, 108 Cal. 306, 312, 39 Pac. 630, 41 Pac. 335. In the early case of Eeclamation Dist. No. 108 v. Hagar, 66 Cal. 54, 55, 4 Pac. 945, the contrary was held. As the Irrigation Act of 1897 provides for notice to the taxpayer of the meeting of the board of equalization, the duration of which is fixed by law, and of all the preliminary steps which h^ can ex- amine and make objection to, the act is not invali- dated by not providing for notice being given of the levy of the assessment, this act being the final out- come of the rest, in reference to which he can have nothing to say; Lahman v. Hatch, 124 "Cal. 1, 7, 56 Pac. 621. 16 Property Owner has Eight to Hearing as to Boundaries of District, When Determined by Local Corporation.— By Stats. 1867-68, p. 316, c. 293, the supervisors of Sutter county were commanded to es- tablish levee districts upon the request of the prop- erty owners in the proposed district, no discretion being lodged in the supervisors. The costs of the public works to be constructed by the districts were to be defrayed by a special tax upon all the prop- erty in the district. This act was unconstitutional, because it permitted a mere majority of the property owners to determine the boundaries of the districi. and the benefits to be derived, thus making them § 646 THE ASSESSMENT. " 1045 judges in their own cases: Monlton v. Parks, 64 Cal. 166, 183-184, 30 Pac. 613; Brandenstein v. Hoke, 101 Cal. 131, 133, 134, 35 Pac. 562; People v. Levee Dist. No. 6, 131 Cal. 30, 31, 63 Pac. 676. Where an assessment for street work is to be pro- portioned according to benefits and to the expense of the work, there is no constitutional objection to n statute which confers upon the superintendent of streets the power to estimate the benefits, the prop- erty owners thereafter having a hearing before the city council before the levy of the assessment: Green- wood V. Morrison, 128 Cal. 350, 352, 60 Pac. 971. Where each parcel of land is to be assessed ac- cording to benefits and the property owner has a hearing upon such question, it is immaterial whether he has a hearing upon whether his property should be included in the district or not, because although his property is included in the district yet if the benefits are nil there would be no assessment; but where the assessment is by frontage or superficial area or value, it is clear that this inquiry is vital. 17 Property Owner has Right to Hearing as to Relative Benefit, When Determined by Local Cor- poration. — Where the assessment is to be levied upon the basis of benefit received, to be estimated by com- missioners, the property owner is entitled to a hear- ing before the assessment becomes a finally deter- mined lien against the property affected thereby, for, as the court pointed out in Lower Kings Eiver Eeclamation Dist. No. 531 v. Phillips, 108 Cal. 306, 39 Pac. 630, 41 Pac. 335, ^'otherwise it would be a proceeding in which one might be deprived of his property without due process of law^^ (p. 313). '*For it would be no recompense, and but poor consolation to the land owner who has been overtaxed without a hearing, to assure him that the unlawful burden put upon him was the honest judgment of incompe- tent or negligent commissioners. And the issue of this should be determined by the tribunal of original jurisdiction (whether a court or a board of super- visors) according to a satisfactory preponderance of evidence, allowing just weight to what may appear 1046 ASSESSMENT LIENS. § 646 Whenever a local public corporation is about to be organized for the purpose of performing a pub- lic work for the cost of which an assessment is leviable^ and the legislature had not determined the territorial limits of the corporation but has declared that all the property therein must be assessed^ the corporation can be incorporated only after each property owner within the limits of the proposed corporation has had an opportunity to be heard as to whether his property should be included within the jurisdiction of the corpora- tion and the district against which the assessment is to be levied.^* to have been the honest judgment of the commis- sioners'' (p. 324). See, also, Eeclamation Dist. No. 551 V. Eunyon, 117 Cal. 164, 49 Pac. 131. 18 Hearing Prerequisite to Formation of Corpora- tion in Which All Property is to be Assessed.— ^^ There is nothing in the essential nature of .... a [public] corporation, so far as its creation only is <3oncerned, which requires notice to OT hearing of the parties included therein before it can be formed. It is created for a public purpose, and it rests in the discretion of the legislature when to create it and with what powers to endow it. ^^[But under the Wright Act] .... the estab- lishment of its boundaries, and the purposes for which the district is created if it be finally organ^ ized by reason of the approving vote of the people^ will almost necessarily be followed by and result in an assessment upon all the lands included within the boundaries of the district. The legislature thu« in substance provides for the creation not alone of a public corporation, but of a taxing district whose boundaries are fixed, not by the legislature, but, after § 646 THE assessmejN^t. 1047 a hearing by the board of supervisors, subject to the final approval by the people in an election called for that purpose. '^It has been held in this court that the legisla- ture has power to fix such a district for itself with- out any hearing as to benefits, for the purpose of assessing upon the lands within the district the cost of a local, public improvement. The legislature, when it fixes the district itself, is supposed to have made proper inquiry, and to have finally and con- clusively determined the fact of benefits to the land included in the district, and the citizen has no constitutional right to any other or further hearing upon the question. The right which he thereafter has is to a hearing upon the question of what is termed the apportionment of the tax, i. e., the amount of the tax which he is to pay. .... ^^But when as in this case the determination of what lands shall be included in the district is only to be decided after a decision as to what lands de- scribed in the petition will be benefited, and the de- cision of that question is submitted to some tribunal (the board of supervisors in this case), the parties whose lands are thus included in the petition are entitled to a hearing upon the question of benefits, and to have them excluded if the judgment of the board be against their being benefited. ^ • Unless the legislature decide the question of benefits itself, the land owner has the right to be heard upon the question before his property can be taken^^: Fallbrook Irr. Dist. v. Bradley, 164 U. S. 112, 174, 175, 17 Sup. Ct. Eep. 56, 41 Law ed. 369. But where, after the hearing and decision by the board of supervisors, the question of the organization of the proposed irrigation district is to be submitted to the electors for final action, no notice nor hearing is requisite on the question of whether such ques- tion shall be so submitted: In re Madera Irr. Dist., 92 Cal. 296, 323, 27 Am. St. Eep. 106, 28 Pac. 272, 675. 1048 ASSESSMENT LIENS. § G47 64:7. Assessment must be Levied on Uniform Standard. While the legislature^ or any public corpora- tion upon which is conferred the discretion to determine the relative benefit supposed to be de- rived from a public work^ may levy the assess- ment according to any standard or system of estimating the benefits to be derived therefrom which it may deem, proper^ yet such body cannot levy an assessment arbitrarily without reference to any such standard or system; and a purported assessment when so arbitrarily levied is void, aiid no lien can accrue as security for the pay- ment thereof.-*^^ (In McMnien v. Anderson, 9o U. S. 37, 42, 24 Law ed. 335, where a license tax levied upon business was eittacked upon the ground that the taxpayer was not granted a hearing before the tax was collected by summary process, the claim being made that the 14th amendment of the federal constitution " v/as thereby violated, the court said: ^^It seems to be supposed that it is essential to the validity of this tax that the party charged should have been present in some tri- bunal when he was assessed. But this is not, and never has been, considered necessary to the validity of a tax/^) 19 Assessment Must be Levied on Uniform Stand- ard.— In People V. Lynch, 51 Cal. 15, 21 Am. Eep. 677, where the legislature sought to confirm an as- sessment which had been levied by a local legisla- tive body, and one parcel of property within the district determined to be benefited by the public work was not assessed at all, the court (pp. 22 and 23) said: ^^The act .... must be the same as if it had declared certain tracts of land to have been § 647 THE ASSESSMENT. 1041> benefited by the local improvement, and had further enacted that parts of the tract should pay the whole cost. It has been repeatedly held that an attempt by the legislature to compel each lot upon a street to pay the whole expense of grading and paving along its front cannot be maintained, because, while there is an apparent uniformity, the measure of equality required by the constitution is entirely wanting. It is far more clearly a violation of the constitutional principle of equality and uniformity to require of one lot, or any number less than all, to pay for all within a given assessment district. .... This act, at best, is an attempt directly to levy a contribution within a certain dis- trict; to declare that, each lot shall pay a sum, arbi- trarily fixed, as its proportion thereof, and that particular lots shall pay nothing. Such a statute .... [is] undoubtedly .... invalid, as clearly a violation of principles recognized and established by the constitution of the state. ^' Where the legislature by general act declared me district to be benefited, but erroneously levied the assessment so that it covered certain land outside the district declared to be benefited, the assessment is void: Schumacker v. Toberman, 56 Cal. 508, 510. Where the commissioners appointed to determine the relative benefit to be derived to each parcel of land in a reclamation district from the reclamation works apportioned an equal amount to each acre in the district, although, parts of it were lower and more subject to overflow than others, and allowed certain credits to certain lands for portions of old levees upon them, the assessment is not according, to benefits and cannot be sustained: Eeclamation Dist. No. 537 V. Burger, 122 Cal. 442, 55 Pac. 156. But where an assessment is levied upon the basis of benefit actually received, and it is duly determined that certain lands within the district will not be bene- fited by the work to be done, although such land ia within the assessment district, no assessment need be levied against it, and the assessment against the re- mainder is not invalidated thereby: Eeclam.ation Dist.. No. 3 V. Goldman, 65 Cal. 635, 641, 4 Pac. 676. 1050 ASSESSMENT LIENS. § 648 648. Assessment When Properly Apportioned Not Invalidated by Erroneous Distribu- tion Thereof. Whenever the officer to whom is intrusted the ministerial act of apportioning an assessment ac- cording to a standard or system of apportionment determined by the proper legislative body er- roneously apportions the same, the assessment, although subject to correction, is not invalidated by the error, and unless the assessment is cor- rected at the instance of an aggrieved property owner by appeal to the tribunal provided by law, a lien accrues against the assessed property as security for the payment thereof.^^ But the 20 Assessment, When Properly Apportioned by Legislative Body, not Invalidated by Erroneous Dis- tribution Thereof.— Where the superintendent of streets erroneously apportions against certain lots a larger amount than was properly chargeable against them (other lots being entirely omitted .from the as- sessment properly chargeable against them), although the objection appears upon the face of the assessment, as to the lots against which an excessive sum is charged, no appeal having been taken to the/ body . provided by law for the correction of such errors in the levy, the assessment is valid, and the lien ac- cruing thereunder foreclosable. For, the lot '^was lawfully assessable for the work on that crossing; and, inasmuch as an assessment of it for such work was fully authorized, the mistake of the superin- tendent of streets in assessing it for a sum exceeding its proper proportion was merely an error in the ex- ercise of an unquestionable power, which error m.ight have teen corrected by an appeal to the board of § 648 THE ASSESSMENT. 1051 supervisors; and the failure to take such appeal operated as a waiver of the error ^^: Dowling v. Coniff, 103 Cal. 75, 77, 78, 36 Pac. 1034. In four other cases it is necessarily implied that the assessment is not invalidated by the erroneous distribution of the assessment. For while in these cases the error did not appear on the face of the as- sessments, yet that which is void may always be shown to be so, whether the invalidity appears upon the face of the papers or not; and a fact which, when not apparent, does not render a proceeding void, can- not reasonably be said to render it void merely be- cause it is apparent. Where a valid contract was made for grading a street, the ministerial act of apportioning the expense of the work being given by law to the superintendent of streets, the property owner, if dissatisfied with his apportionment, should appeal to the board of super- visors upon whom was conferred the power of rectify- ing the levy, and having failed to do so, cannot com- plain in an action for the foreclosure of the accruing assessment lien of any matters from which he could have obtained relief by applying at the proper time to the proper authorities: McVerry v. Boyd, 89 Cal. 304, 310, 26 Pac. 885. In McDonald v. Coniff, 99 Cal. 386, 389, 34 Pac. 71, the court held that the question whether the superin- tendent of streets in levying a street assessment ha-l erroneously included lots which ought not to be as- sessed, or has failed to include all those which should have been assessed, must, when it does not appear upon the face of the assignment, be raised by ap- peal to the board of supervisors, and cannot be raised in the foreclosure action. In Buckman v. Landers, 111 Cal. 347, 350, 43 Pac. 1125, a foreclosure action, it was contended by the property owners that the assessment was invalid for the reason that certain lots which should have borne a portion of the expense of the work "were not in fact assessed; but the court held that this error could not be assigned in the foreclosure action, but should have- 1052 ASSESSMENT LIENS. § 648 been corrected upon appeal to the board of super- visors. Where a whole street assessment is not equally dis- tributed according to frontage, and one lot was as- sessed for more than its proper proportion of the ex- pense, the error is waived by the failure of the owner to appeal to the board of supervisors: Wells v. Wood, 114 Cal. 255, 257, 46 Pac. 96. (In this case it does not appear whether or not the objection appeared upon the face of the assessment.) Moreover, in People v. Lynch, 51 Cal. 15, 23, 21 Am. Rep. 677, where an assessment was declared void be- cause levied under an unconstitutional law, the court added: ^^This cannot be fairly treated as a law pro- viding for the levy of an assessment within a certain district, and appointing officers to make it, whose er- rors, perhaps, might not vitiate the entire levy. '^ ConfiictuKj Cases.— There is a sharp conflict on this point, and in the following instances it was held that where the assessment was erroneously appor- tioned by the ministerial officer the assessment was rendered void. Thus, where the superintendent of streets errone- ously apportioned the assessment for street work, omitting three lots therefrom, the assessment was void •'because certain lots in the assessment district for sidewalks were omitted'' from assessment: Dyer v. Harrison, 63 Cal. 447, 448; Diggins v. Brown, 76 Cal. 318, 322, 18 Pac. 373. Where *'the property in the assessment district was not all assessed,'' the assessment was void: Davies V. City of Los Angeles, 86 Cal. 37, 49, 50, 24 Pac. 771. Where the superintendent of streets erroneously apportioned to certain lots twice the amount properly chargeable against them, the assessment is void: Kenny v. Kelly, 113 Cal. 364, 45 Pac. 699. Where the superintendent of streets erroneously ap- portioned to certain lots twice the amount properly chargeable against them, and failed to apportion to others the sums chargeable against them, the assess- § G48 THE ASSESSMENT. 1053 assessment, so far as apportioned upon property outside the assessment district, is void.-^ 649. Assessment Grossly Disproportionate to Benefits Invalid. Where an assessment -is apportioned against the property in an assessment district according to a system or standard which renders the rela- tive amounts assessed against the various parcels of land therein grossly disproportionate to the benefit actually derived from the public work, the assessment is invalid.^^ ment is void: Ryan v. Altschul, 103 Cal. 174, 178, 37 Pac. 339; San Diego Investment Co. v. Shaw, 129 Cal. 273, 61 Pac. 1082. In City Street Imp. Co. v. Taylor, 138 Cal. 364, 71 Pac. 446, where a resolution of intention provided for paving a street and laying granite curbs where not already laid, and the superintendent of streets charged against a certain lot in front of which gran- ite curbs were already laid, a gross sum which in- cluded its pro rata of the cost of laying granite curbs along the street, although no such sum was properly chargeable, and no appeal was taken to the super- visors, in an action to foreclose the assessment lien accruing under such assessment, the court reduced the assessment by the pro rata of the cost of the curbing. The court cited De Haven v. Berendes, 135 Cal. 179, 67 Pac. 786, as authoritative^ but clearly it was not, for in the Berendes case the resolution of intention and contract were in excess of the jurisdiction of the local legislative body, while in this case they were not. 21 Ryan v. Altschul, 103 Cal. 174, 177, 37 Pac. 339. 23 Assessment Grossly Disproportionate to Benefits Invalid. — '^Before the judiciary would be justified in 1054 ASSESSMENT LIENS. § 649 holding an assessment to be invalid, it should be made to appear that it is, as was said in Norwood v. Baker, 172 U. S. 269 [19 Sup. Ct. Eep. 187, 43 Law ed. 443], ^in substantial excess of benefits,' or, as was said in Cleveland v. Tripp, 13 E. I. 50, that it ^ palpably trans- gresses' the principle upon which it is authorized. In Fallbrook Irr. Dist. v. Bradley, 164 U. S. [112] 176 [17 Sup. Ct. Eep. 56, 41 Law ed. 369], the court said: 'The way of arriving at the amount may be, in some in- stances, inequitable and unequal, but that is far from arising to the level of a constitutional problem, and far from the case of taking property without due process of law.' In Lent v. Tillson, 72 Cal. 428 [14 Pac. 71], the court said: 'The benefits need not be immediate. I see no just limitation in this respect, except that a tax will not be upheld when the courts can plainly see that the legislature has not really ex- ercised its judgment at all, or that manifestly and certainly no such benefit can or could reasonably have been expected to result' ": Hadley v. Dague, 130 Cal. 207, 221, 222, 62 Pac. 500. The legislative determination that an assessment be apportioned between several lots according to their frontage 'Ms a declaration by the legislature that, in the judgment of that body, the property within the district will receive a benefit from the improvement in proportion to its frontage upon the work. Unless, therefore, it is made to appear upon the face of the proceedings, or by some competent showing, that there is a gross or substantial variation from this principle [of benefits (?)], it is the duty of the courts .... to uphold the assessment": Hadley v. Dague, above, p. 221. Illustrations.— Where the standard of assessment in a reclamation district was that the assessment should be proportionate to the whole expense and to the benefit to result from the work, and the assess- ment was levied at the same rate per acre upon land actually benefited, and that prospectively to be bene- fited at some future time after other work was done, the assessment on the latter land was disproportionate § 650 THE ASSESSMENT. 1055 650. Description must be Sufficient for Identi- fication. The description in the instruments upon which an assessment is founded of the property sought to be charged with the assessment must be suf- ficient to enable the property owner to identify the property assessed without reference to ex- trinsic evidence.^^ and invalid: Eeclamation Dist. No. 108 v. West, 129 Cal. 622, 62 Pac. 272. A statute assessing the whole cost of opening a new street upon the property fronting upon such newly opened street according to frontage is unconstitutional because, in the guise of determining a standard oc measuring the benefit, it in effect provides that pri- vate property shall be taken for public use without compensation. (This result at any rate follows when the same person owns the property taken for the new street, and that fronting thereon also.) Norwood v. Baker, 172 IT. S. 269, 19 Sup. Ct. Eep. ]87, 43 Law ed. 443. See the discussion of this case in Hadley v. Dague, 130 Cal. 207, 217-222, 62 Pac. 500. 23 Description Must be Sufficient Without Ex- trinsic Evidence.— ^ ^ The description must be suffi- cient to enable the owner to determine from an inspec- tion of it whether his land is sought to be subjected to the lien. '^ ^^The rule, 'id certum est, quod certum reddi potest,^ has no application to descriptions under proceedings in invitum^^ Labs v. Cooper, 307 Cal. 656, 657, 40 Pac. 1042. Thus, in case of a street assessment, the description of the assessed land must be sufficient to identify the land assessed, and to show the relative location of each lot to the work done: Blanchard v. Ladd, 135 Cal. 214, 217, 67 Pac. 131. Descriptions in street assessments were held suffi- cient in Whiting v. Quackenbush, 54 Cal. 306, 310; 1056 ASSESSMENT LIENS. § 651 SuMivisiGn 2, The Lien. 651. Assessment When Duly Levied Consti- tutes Specific Lien. Whenever an assessment duly levied upon any propert}' has become final and payment has be- come due^ the assessment upon each known lot or parcel of land becomes a specific lien against the whole of such lot or parcel.^"* But an assess- Gillis V. Cleveland, 87 Cal. 214, 219, 220, 25 Pac. 351; Blanchard v. Ladd, 135 Cal. 214, 67 Pac. 131. Insufficient in Himmelman v. Danos, 35 Cal. 441^ 449, 450; Himmelman v. Bateman, 50 Cal. 11; Norton V. Courtney, 53 Cal. 691; People of the City and County of San Francisco v. Quackenbush, 53 Cal. 52. 24 Assessment Constitutes Specific Lien. Where a parcel of land wa-s assessed to unknown owners, and the lien for the amount of the assess- ment attached to the whole of the property, and the owner of one-half of the parcel came forward and paid his proportion of the assessment, the lien never- theless continued to attach to the entire parcel for the remainder due upon the assessment. ^^The pay- ment of a portion of the assessment did not release any portion of the lot assessed from the lien for the amount remaining unpaid. The lien was against the lot as an entirety for the whole and every part of the amount of the assessment. The assessment was to 'unknown' owners, and the payment by one of sev- eral co-owners of his proportion of the assessment had no more eifect to release any portion of the lot from the lien than would the payment of such portion had he been the sole owner of the lof : Williams v. Bergin, 127 Cal. 578, 580, 581, 60 Pac. 164. ''Where two or more lots are assessed for the ex- penses of the work on a street, each lot is chargeable only with the amount assessed upon it, and not for § 651 ASSESSMENT LIENS. 1057 ment levied upon a whole parcel of property, but properly chargeable only upon a part thereof, does not constitute a lieri.^^ 652. Lien cannot Accrue When Contract to Pay Which Assessment was Levied Void. Where an assessment is levied to pay the con- tract price of a contract for a public work, but the contract is or becomes void, no assessment lien can accrue^^ upon such void contract as se- the amount assessed upon another lot, and in enforc- ing the lien of the assessment the judgment should state the amount for which each lot is liable, and should order a sale of each lot, or so much thereof as may be necessary to satisfy such amount and costs^'; Brady v. Kelly, 52 Cal. 371; Gillis v. Cleveland, 87 Cal. 214, 218, 25 Pac. 351. In case of street work under the Vrooman Act, where the certificate of the engineer provided for in section 34 of the act has not been duly recorded as re- quired by section 9, assuming that the assessment is not thereby vitiated, yet no assessment lien can accrue until the due recordation thereof, and no cause of action for the foreclosure thereof can arise: Eauer V. Lowe, 107 Cal. 229, 231-233, 40 Pac. 337; Frenna V. Sunnyside Land Co., 124 Cal. 437, 57 Pac. 302. S5 Parker v. Keay, 76 Cal. 103, 105, 18 Pac. 124. 26 When Contract Void, Lien cannot Accrue. Burke v. Turney, 54 Cal. 486, 487; Manning v. Den, 90 Cal. 610, 614, 27 Pac. 435; Perine v. Forbush, 97 Cal. 303, 310, 32 Pac. 226; Capron v. Hitchcock, 98 Cal. 427, 430, 33 Pac. 431; Schiesau v. Mahon, 110 Cal. 543, 42 Pac. 1065; California etc. Co. v. Quinchard, •119 Cal. 87, 51 Pac, 24; Chase v. Scheerer, 136 Cal. 248, 251j 68 Pac. 768. ^'A contract authorized and executed in the mode Liens— 67 1058 ASSESSMENT HENS. § 652 curity for the payment of the whole or any part of the contract price thereof.^" 653. Maximum Amount of Assessment the Value of the Property Assessed. An assessment being levied upon the assump- tion that the assessed property has been benefited to the amount of the assessment^ the assessment constitutes a lien merely against the property up- on which the assessment was levied, and cannot be extended to cover other property ,^^ nor can any person be held personally liable for the satis- faction of the secured demand.^^ prescribed by the act is^ indispensable to the validity of the assessment'^: Dougherty v. Hitchcock, 35 Cal. 512, 524. ^^The contract for the construction of the sewer was void, and the work done thereunder, and the sub- sequent assessment and proceedings created no lien upon the propertv of defendants'': McBean v. Kedick, 96 Cal. 191, 192, 81 Pac. 7. 37 Cannot Accrue for Payment of Any Part of Con- tract Price.— Under the Street Improvement Act of 188d, as amended b}^ Stats. 1889, p. 169, c. 151, sec. 9, by the addition of section 12i/^, a proportional assess- ment may, when the work is of a certain magnitude, be levied for its part payment. But where a contract has not been completed within the prescribed time or a valid extension thereof, the contract is rendered void, and no valid assessment lien can be created for the payment of any part of the contract price: Kelso V. Cole, 121 Cal. 121, 53 Pac. 353; John Kelso Co. v. Gillette, 1B6 Cal. 603, 69 Pac. 296. 28 Constitutes Lien Merely Against Assessed Prop- erty. — '^Property not benefited by the improvement § 654 ASSESSMENT LIENS. 1059 654. Expiration of Lien. The various assessment liens expire by lapse of time in the manner prescribed in each case by law. cannot be subjected to the burden imposed for that purpose. To say that the owner of land bordering upon an improved street can be made personally liable for the payment of the improvement is equivalent to saying that his entire- estate, real, personal, and mixed, whether bordering upon the street or remoto from it, whether within the corporate limits or with- out, whether benefited or not, shall be held responsi- ble for the tax, which, in turn, is equivalent to say- ing that his entire estate may te taxed for the im- provement in direct contradiction to the very ternijf of the power ^^ Taylor v. Palmer, 31 Cal. 240, 254, 255, per Sanderson, J., Currey, C. J., and Ehodes, J.;, Sawyer (see 31 Cal. 666)^ and Shafter, XJ., dissenting. In Williams v. Corcoran, 46 Cal. 553, 556, the court says that the principal proposition in the above case is that an assessment is a charge upon the immovable property within the given district only, and for that reason it was held that a personal judgment could not be rendered for the amount of the assessment against the person owning the immovable property chargecl with the assessment. 29 Personal Liability cannot be Constitutionally Imposed: Taylor v. Palmer, note 28, above; Beaudry V. Valdez, 32 Cal. 269, 279; Guerin v. Keese, 33 CaL 292, 29'6; GalPney v. Donolioe, 36 Cal. 104, 105; Coniff V. Hastings, 36 Cal. 292, per Sprague, Crockett, Ehodes, and Sanderson, JJ,; Sawyer, C. J., dissenting; . Gillis V. Cleveland, 87 Cal. 214, 217, 25 Pac. 351; Manning v. Den, 90 Cal. 610, 617, 27 Pac. 435; Santa Cruz etc. Co. v. Bowie, 104 Cal. 286, 288, 37 Pac. 934. 1060 ASSESSMENT LIENS. § 055 655. Demand Prerequisite to Maintenance of Foreclosure Action. When payment of an assessment is due, a sep- arate and distinct demand must, as a prerequisite to the maintenance of an action for the fore- closure of the assessment lien, be made againsl: each known lot or parcel of land, or the owner thereof, for the amount of the assessment due thereon.^^ 30 Demand Must be Made for Exact Amount of Assessment. — Where work was performed under a street improvement contract, which was not author- ized by the resolution of intention,' and the cost thereof was included in the assessment, and a demand was made upon the property owner for an aggregate amount including the cost of the unauthorized work, the demand is ineffectual: Dyer v. Chase, 52 Cal. 440; Donnelly v. Howard, 60 Cal. 291; Partridge v. Lucas, 99 Cal. 519, 522, 523, 33 Pac. 1082. Compare Himmel- mann v. Satterlee, 50 Cal. 68, wherein it was intimated that if the void items could be segregated the lien could be sustained. Must he Made Against Each Known Parcel for Itself. AVhere two or more lots are assessed for the expense?? of street work, a demand for the amount due on each lot must be made separately, and an aggregate de^ mand for the amount due on two or more lots, al- though owned bv the same person, is insufficient. Schirmer v. Hovt"; 54 Cal. 280; Gillis v. Clevelanri, 87 Cal. 214, 217, 218, 25 Pac. 351. Under the Vrooman Act it is also necessary for the superintendent of streets to sign the record of the return showing the demand before the lien becomes enforceable: Witter v. Bachman, 117 Cal. 318, 322, 323, 49 Pacr. 202. Parcels Unkmnrn,—The reputed owner of certain land who caused it to be rssessed for a street im^ § 656 ASSESSMENT LIENS. 1061 656. Joinder of Causes of Action. Assessment liens (1) accruing under the same assessment against different parcels of land belonging to the same person,^^ or I)rovemeTit as a single lot owned by unknown owners, cannot attack the assessment lien on the ground that the two lots were assessed together as one parcel: McSherry v. Wood, 102 Cal. 647, 650, 36 Pac. 1010. Where a street assessment was levied by the front foot method, and a parcel of land assessed to unknown owners was afterward shown to belong to two per- sons each owning a given number of front feet in severalty, the assessment might be segregated with- out injustice to either and enforced: McSherrv v. Wood, 'l02 Cal. 647, 650, 651, 36 Pac. 1010. Pleading. — In an action to foreclose a street assess- ment lien against property assessed to ^^unknow/i owners,'^ a complaint which does not show any do- mand on the premises for the amount of the assess- ment does not state a cause of action: Engelbert v. McElwee, 122 Cal. 284, 54 Pac. 900. In case of street assessments, where an appeal is taken from a street assessment to the tribunal pro- vided by law for the correction of errors, until the final determination of the appeal and the ^confirmation of the assessment or the making of a new assessment, no action to foreclose the lien accruing thereunder can be maintained: People v. O^Neil, 51 Cal. 91; Mahoney V. Braverman, 54 Cal. 565, 569; Williams v. Bergin, 108 Cal. 166, 172, 173, 41 Pac. 287; Girvin v. Simon^ 127 Cal. 491, 494, 495, 59 Pac. 945. ai Liens Under Same Assessment Against Different Parcels Belonging to Same Person may be Joined.— Thus several such assessment liens accruing to a swamp land district under Stats. 1867-68, p. 507, c. 415, sec. 35, may be foreclosed in one action. ^'Though several tracts of the same owner were sep- arately assessed, there was but one assessment, an,1 1062 ASSESSMENT LIENS. § 656 (2) accruing under different assessments made at different times against the parcel of land in the course of the same public work.^^ ma}^ be foreclosed in the same action. But in the absence of statutory permission sev- eral distinct assessment liens accruing under as- sessments made at different times against several parcels of land for distinct public works cannot be foreclosed in one action.^^ 657. Certain Documents may be Constituted Prima Facie Evidence of Lien. The legislature may ordain that certain docu- ments shall/in an action to foreclose an assess- the cause of action is the failure to p>ay it. The assessment is a unit, constituting but one transaction, and is strictly analogous to the levy of state and county taxes upon different parcels of land of the same owner; and it has never been doubted, so far as we are aware, that under our revenue system a tax assessed at the same time upon several parcels of land of the same owner may be enforced in the same ac- tion. This has been the uniform practice, and it would lead to great and useless multiplicity of actions if it were otherwise. The same rule is applicable to assessments of this character'^: People v. Hagar, 5'1 Cal. 171, 181, 182. »2 Liens IJKder Different Assessments Against the Same Parcel in Course of Same Work may be Joined.— Thus two causes of action upon two reclamation dis- trict assessment liens accruing under two assessments made upon the same land at different times in the course of carrying out the same work may be united in one action, and should be so united in order to avoid a multiplicitv of action: Swamp etc. Dist. No. 110 V. Feck, 60 Cal. 403, 405. § 657 ASSESSMENT LIENS. 1063 ment lien, be prima facie evidence of the regu- larity and validity of the assessment lien to be foreclosed therein,"'* saving to the owner of the liened property the right to overcome this pre- sumption by any competent and relevant evi- dence.^^ 658. Of Defenses Available in the Foreclosure Action. Where the legislature provides a forum for the correction of any errors or irregularities which may be made in the establishment of an assess- ment, and the property owner fails to apply there- in for the relief which may be obtained there- from, as to all defects which might lawfully have been corrected by such body, and for which an 33 Dyer v. Barstow, 50 Cal. 652. In the cases cited in the two preceding notes this case was distinguished. 34 Prima Facie Evidence.— ''It is competent for the legislature to prescribe rules of evidence for tho trial of actions, and statutes which make a document prima facie evidence of the regularity of official pro- ceedings in reference thereto, or which cast the burden of proof in an issue upon either party to the action, are within the constitutional power of the legislature. .... Neither does this provision of the statute con- travene the provision of the constitution prohibiting the legislature from passing special or local laws 'regulating 'the practice of courts of justice' '': McDonald v. Coniff, 99 Cal. 386, 390, 391, 34 Pac. 71. 35 Such a presumption has been established in street improvement cases; but the courts hold that evidence is admissible in evidence to rebut it: Burke V. Turney, 54 CaL 4Se, 488; Manning v. Den, 90 Cal. 610, 614, 27 Pac. 435. 1064 ASSESSMENT LIENS. § 058 appeal is provided, and which do not appear upon the face of the instruments upon which the as- sessment lien is founded, the property owner by such failure to apply therein waives the right to object, and cannot defend the foreclosure action on the ground of such defects.^® 36 Where Forum Provided for Correction of Errors, Appeal Must be Taken Thereto, or Objection Waived. ^^As to all matters which may lawfully be corrected on appeal to the city council or other governing powers of the municipality, and for which an appeal is pro- vided by the statute, the property owner deeming himself aggrieved must prosecute his appeal, failing in which he is estopped^': Girvin v. Simon, 116 Cal. 606, 610; 611, 48' Pac. 720. See, also, McSherry v. Wood, 102 Cal. 647, 651, 86 Pac. 1010; Shepard v. McNeil, 38 Cal. 72, 74, 75; Emery v. Bradford, 29 CaL 75, 85, 86, per Sawyer and Shafter, JJ., and Sanderson, C. J.; Currey and Ehodes, JJ., dissenting. Irregularities on Account of WJiich Appeal Must he Taken, or Tliey are Deemed to he Waived.— I^Yiq failure of the contractor to complete the work, and the mis- conduct of the superintendent of streets in approving or accepting the work before it was "completed: Jennings v. Le Breton, 80 Cal. 8, 11, 21 Pac. 1127. See, also, Warren v. Eiddell, 106 Cal. 35^, 353, 354; Diggins V. Hartshorne, 108 Cal. 154, 162, 41 Pac. 283; Smith V. Hazard 110 Cal. 145, 149, 42 Pac. 465. The failure to properly grade a street: Fanning v. Leviston, 93 Cal. 186, 188, 28 Pac. 943. Where the resolution of intention provided for grad- ing a street to the official line, but the contract pro- vided for grading it to a line one foot below the official grade, and the work so done was accepted (for the contract might have been set aside on appeal and a proper one substituted, see p. 531): Chambers v. Satterlee, 40 Cal. 497, 519, 524-526, 531, per Wallac?, Temple, and Crockett, JJ.; Ehodes, C. J., dissenting; Himmelman v. Burns, 40 Cal. 531 (the court being^ likewise divided). § 658 ' ASSESSMENT I.IENS. 1065 But the owner may interpose any defense which appears upon the face of the instruments upon which the lienor^s action is founded.^'' The inclusion in an assessment as incidental ex- penses of an amount for printing and engineering, not properly belonging therein: Boyle v. Hitchcock, 6Q Cal. 129, 4 Pac. 1143, Compare Ryan v. Altschul, 103 Cal. 174, 177, 37 Pac. 339. The inclusion in an assessment for street work of the cost of doing a greater number of lineal feet of work than was authorized by the resolution of inten- tion and contract: Himmelmann v. Hoadley, 44 Cal. 276; Frick v. Morford, 87 Cal. 576, 579, 25 Pac. 764. The inclusion in an assessment for street work of the cost of work not within the terms of the contract, although reasonably related thereto, and of sucJi a character as might have been included in the contract without rendering it void: Perine v. Forbush, 97 Cal. 305, 313, 32 Pac. 226; Petaluma Paving Co. v. Singley, 136 Cal. 616, 619, 69 Pac. 426. Certain errors in the diagrams under which street work was done at which the property owner felt ag- grieved, where the diagrams set forth the facts re- quired by law: Borland v. McGlynn, 47 Cal. 47, 51. A purely technical objection to an assessment, which could not possibly affect the substantial rights of tho property owner: Dyer v. Parrott, 60 Cal. 551, 555. 37 Defense Appearing Upon Face of Assessment May Always be Interposed. — Where one street ter- minated in another, and the whole expense of improv- ing the street opposite tho termination was assessed to the two quarter-blocks cornering on the intersec- tion, and the objection appeared upon the face of the papers, ^'as the objection did not require extrinsic evidence for the purpose of establishing the fact, but the assessment appeared on its face to have been made in violation of the statute, the defendants are not precluded from making the objection without hav- ing previouslv appealed to the toard of supervisors ^'r Perine v. Lewis, 128 Cal. 236, 241, 60 Pac. 422, 772. See, also, Kenny v. Kelly, 113 Cal. 364, 45 Pac. 699. 10G6 ASSESSMENT LIENS. § 658 And the property owner may always contest a lien upon the ground that the jurisdictional prerequisites to the levy of the assessment and the accrual of the lien are lacking^ or on the ground that the local corporation has exceeded its powers.^® 38 Lack of Jurisdictional Prerequisites.— The ques- tion of the existence of facts or acts of a jnrisdictional character, and essential to the validity of the assess- ment, may be raised in the foreclosure action without the necessity of a previous appeal: Emery v. Brad- ford, 29 Cal. 75, 86 ; San Jose Imp. Co. v. Auzerais, 106 Cal. 498, 500, 39 Pac. 859; Manning v. Den, 90 Cal. 610, 616, 27 Pac. 435 (interpreted in Girvin v. Simon, 116 Cal. 610, 6T6, 48 Pac. 720); Warren v. Chandos, 115 Cal. 382, 387, 47 Pac. 132; Chase v. City Treasurer of the City of Los Angeles, 122 CaJ. 540, 545, 55 Pac. 414; De Haven v. Berendes, 135 Cal. 17S, 181, 67 Pac. 786. *'A void [street improvement] contract does not become valid by failure to appeal to the board of supervisors'^: Girvin v. Simon, 116 Cal. 606, 610, 48 Pac. 720. See, also, Bvan v. Altschul, 103 Cal. 174:, 177, 37 Pac. 339. Circumstances Avoiding JnrisUiction not Cnred hy Failure to Appeal and Provable as Defense to Fore- closure Action. — A valid contract being essential under the Vrooman Act, that there was no valid contract: Williams v. Bergin,- 129 Cal. 461, 465, 62 Pac. 59; McBean v. Eedick, 96 Cal. 191, 193, 31 Pac. 7. That the street work actually done was different from that set forth in the notice of intention: Dough- erty V. Hitchcock, 35 Cal. 512, 524. That the contract for street work was prematurely made by the superintendent of streets, the contract being for that reason void: Burke v. Turney, 54 Cal. 486, 487. That a contract for street work allowed a longer time for doing the work than that prescribed by the § G58 ASSESSMET^T LIENS. IOG'7 ' Any objections for which an appeal is not pro- vided to the forum provided by law may also be availed of in the foreclosure action.^^ That the property owner has appealed to such forum in a case where an appeal thereto must needs be unavailing does not estop the property board of suDervisors for doing the work: Brock v. Xuning, 89 Cal. 316, 321, 26 Pac. 972. That street work was not completed within the time prescribed by the contract, no extension of the time having been granted, this fact being fatal to any as- sessment: Mahoney v. Braverman, 54 Cal. 565, 571. The fact that the local legislative body delegated powers which it was required to exercise itself: Chase V. City Treasurer of the City of Los -.Angeles, 12L' Cal. 540, 545, 55 Pac. 414. ' That an irrigation district has no outstanding bonds upon which interest is payable, or that the amount of the assessment is not within any reasonable esti- mate of that interest, the power of an irrigation dis- trict being limited to purpose of raising money to pay the interest on outstanding bonds: Hughson v. Crane, 115 Cal. 404, 416, 417, 47 Pac. 120. That a contract for street work was rendered void by fraudulent collusion between the contractor and certain property owners: Bradv v. Bartlett, 56 Cal. 350, 362-369. The provision of section 3 of the Street Improve- ment Act of 1885, relating to a Detition of remon- strance, being intended to be applicable only to acts within the power of the city council, the right to in- terpose the defense that the act complained of was in excess of the powers of the common council is not waived either by the filing of the remonstrance or the failure to file it: De Haven v. Berendes, 135 Cal. 178, 182, 67 Pac. 786; Capron v. Hitchcock, 98 Cal. 427, 431, 33 Pac. 431. 30 Manning v. Den, 90 Cal. 610, 616, 27 Pac. 435. INDEX. Agistor's lien 70S Accessory — encumbrance accessory to secured obligation 9 Accrual of encumbrance, time thereof. Liens generally 682 Mechanics ^ liens 943-944 Mortgage on crop to be planted 501 Administrator, lien of .693-695 Alimony, lien of . 1005 Assessment liens. Assessment defined 1031 Assessment constitutes lien when duly levied 1056-1058 Distinction between tax and assessment . . . 1033-1034 Enforcement of lien .1060-1068 Maximum amount 1058 Validity and operation of assessments. . . . 1034-1055 Attachment of encumbered property 390-391, 519-521, 685 Banker's lien 686 Bankruptcy— effect thereof on encumbrances. Bankrupt defined 70-71 Control of bankruptcy court over encum- brances 116-128 Enforcement of encumbrances against prop- erty of bankrupt 129-136 Persons embraced within operation of federal bankrupt law 71-77 Possession of encumbered property 110-112 Priorities not affected by bankruptcy 98 Proof of secured demand against bankrupt estate :. 113-115 (1071) 1072 , INDEX. Bankruptcy — Continued . Validitv of encumbrances in case of bank- ruptcy 81-109 See ^^ insolvency/' Bankruptcy— relation of federal and state legis- lation to each other. Congress may enact uniform laws 64 Effect of enactment and repeal of federal laws on state laws 69-70 Persons embraced within scop« of federal bank- rupt law 71-77 Persons embraced within scopie of state insol- vent law. 78-70 Scope of federal bankrupt laws 64-65 Scope of state insolvent laws 66-68 Boarding-house keeper, lien of 713-716 Carrier of goods 706-707 Carrier of passengers 717 Characteristics of encumbrances 3-5 Contract encumbrances, generally 361-363 Corporation — lien thereof on its own stock. . . .805-806 Other liens of corporation discussed 803-805 Death — effect thereof on encumbrances. Control of probate court over encumbered prop- erty . . . . •• 50-55 Enforcement of encumbrances against estate of decedent 56-63 Proof of secured demand against decedent's estate 45-49 Validity of encumbrances in case of death. .. .38-44 Depositary for hire, lien of 710-711 Enforcement of encumbrances. By foreclosure proceeding. See ^^foreclosure. " Modes thereof in general 170-171 Of various encumbrances. Assessment lien 1060-1068 Carrier's lien — goods 707 Carrier's lien— passengers 717 Depositary for hire, lien of 711 Equitable lien in nature of mortgage 656 INDEX. 16v3 Of various encumbrances— Continued. Factor 's lien 688 Finder of lost articles, lien of 712 Insect i^est nuisances, lien for abating. ... 995 Innkeeper ^s lien 714-716 Judgment liens ^ 1020-1024 Logger 's lien 768-770 Mechanics' liens — immovable property. . .981-986 Mechanics' lien — movable property 704-705 Maritime liens 797 Mortgage 620-651 Nonmaritime liens against vessels 800-802 Pledge 411-416 Propagating animals, lien,' in favor of owner of 775 Purchaser's lien — immovable property.. .. 823 Thresher's lien .' 772 Tax lien 1029 Trust deed in nature of mortgage ..,646-651,664-665 Vendor's lien — immovable property 820-821 Vendor's lien — movable property 701-702 Vessels, liens against 797, 800-802 Vendor's security 672-677 Equitable mortgage 652-656 Estates of deceased persons. See ^^ Death." Estrays, distraint of 762-7G4 See, also, ''trespassing animals." Executor, lien of 493-495 Extinction of encumbrances— modes thereof. Conversion of property 166-167 Destruction of encumbered property 163 Generally 162 Lapse of time 165 Offer to perform 163-164 Partial performance * 169 Performance 163-164 Sale of property in satisfaction thereof 165-166 Surrender of property by encumbrancer. .. .168-169 Tender 163-164 Wrongful dealing with property 166-167 Liens— 68 1074 INDEX. Factor's lien 68T-68S Finder of lost articles, lien of 712 Foreclosure. Action to enforce judgment of foreclosure.... 236 Appeal bonds in foreclosure actions 354-359 Application of proceeds of sale of encumbered property 292-294 Assistance, writ of 286-289 Commissioner to sell property 232-23 i Deficiency judgment .226-227, 295-302 Effect of foreclosure judgment 235-236 Elisor to sell property .234-235 Equitable proceeding, foreclosure an 173-171 Intervention in foreclosure actions 211 Judgment of foreclosure. Action to enforce judgment 236 Deficiency, provision as to 226-227 Effect of judgment 235-236 Encumbered property situate in two coun- ties, provision as to 229 Levy on judgment 237 Money required in payment, kind thereof. .228-229 Paramount and adverse titles, provisions as to 230-232 Requisites in general ...221-225 Subsequent encumbrances, provision as to. . 228 Levy on foreclosure judgment ' 237 Money required in payment, kind of 228-229 Nature of foreclosure action 172-174 Paramount title— adjudication thereon in fore- closure action 181-184, 230-232 Parties in foreclosure action. Indispensable parties 192-198 Intervention in foreclosure actions 211 Necessary parties 199-207 Persons not reqiuired to be parties 210-211 Proper parties 207-210 Purchaser at foreclosure sales. Joint owner of encumbrance— effect of piir- chase by 282-283 Judgment creditor may purchase 259 Person conducting sale cannot purchase .... 259 Purchaser who refuses to pay purchase price ......261-262 1075 Purchaser at foreclosure sales— Continued. Belief from defective sale 267-268 Eelief when necessary parties not joined. .216-219 Sale vests property sold in purchaser 273 Writ of assistance 286-280 See ^'Foreclosure— redemption^'; '^ Foreclos- ure—sales. '^ Eecovery of excessive amount paid encum- brancer from proceeds of sale 294 Eedemption from foreclosure sales. Constitutionality of redemption statutes as applied prospectively and retrospectivelv 304-318 Effect of redemption 349-352 Certificate of redemption 348-349 Conditions of redemption 338-346 Evidence of right to redeem 336-337 Expiration of time of redemption 352-353 Mistake in attempt to redeem 347 Persons entitled to redeem .... . . . 329-336 Possession during time of redemption 320 Property subject to redemption 319 Eedemption, how effected 329-349 Eents and profits and value of use during time of redemption 321-327 Subsequent redemptions 340-341 Time within which redemption may be made : 338-340 Use during time of redemp'tion 327-329 Sales of property in foreclosure actions. Certificate of sale 269-272 Death of owner of encumbered property does not prevent sale 246 Delivery of property sold 269 Finality of sale *..,.,.,...,. 263-268 Foreclosure sales and execution sales distin- guished. 239-241 Joint owner of encumbrance foreclosed, effect of sale to 282-283 . Mode and conduct of sale 251 Notice of sale 250-254 Operation of sale . .. , 273-283 Order of sale 178-179 1076 INDEX. Foreclosure. Sales of property in foreclosure actions — Con- tinued. Paramount and adverse claims usually not affected by sale 279-282 Proceeds of sale 292-294 Eedemption from sales— see ^^Foreclosure — redemption from sales. ^ ^ Belief from sales 266-268 Eeport of sale 262-263 Specified kind of money must sometimes be required in pa^'ment ^ . 260 Subordinate encumbrances extinguished by sale 279 Title of purchaser at sale 283-291 Writ of assistance 286-289 Writ of sale 241-249 Writ prerequisite to valid sale 224 Scope of judicial authority in foreclosure actions 176-186 Description of encumbered property — ambig- uities therein 180-181 Homestead 185 Movable property may be taken into custody 229-230 Paramount and adverse claims 181-184 Perishable property 176-177 Secured obligations not all due .*. . . .177-178 Subordinate claims 186 Validity. As against necessary parties not joined. . .212-216 Generally 174-175 Venue of actions against immovable prop- erty ^ 187-191 Forfeitures 363, 534-536 Fraud — encumbrance made to hinder, delay, or defraud 105, 362, 478 Future interest may be encumbered 361, 437-438 Goats, lien against 750 See, also, ^trespassing animals. ^^ Guardian, lien of 493 Hogs, lien against 753-758 See, also, ^trespassing animals.'' INDEX. 1077 Homestead — operation of encumbrances in re- spect thereto. Bankruptcy— effect on encumbrances against homestead— see ^ ^ bankruptcy. ' ^ Death— effect on encumbrances against home- stead—see ' ^ death. '^ Equitable lien in nature of mortgage 20-^1 Insolvency — eff'ect on encumbrances against homestead— see ^ ' insolvency. ^ ' Mechanics^ liens— immovable property 20 Mortgages 513-518 Vendor ^s lien 20 Hotelman's lien 713-716 Improvement liens — see ^^ mechanics^ liens. '^ Innkeeper's lien 713-716 Insect pest nuisances, lien for abating 993-995 Insolvency under state law— effect thereof on en- cumbrances. Control of court over encumbrances 151-152 Enforcement of encumbrance against property of insolvent 153-154 Insolvent defined 71 Persons embraced within operation of state insolvent law 78-7^ Proof of secured demand against insolvent es- tate 146-150 Validity of encumbrances in case of insolvency 138-146 Validity of encumbrance made by insolvent . . 362 See '^bankruptcy.'' Judgment liens. Attachment merged into judgment lien 1020 Division of county, lien not affected by. .1017-lOlS Enforcement ". . . 1020-1024 Justice's court judgment lien 1012-1013 Limitation of lien, computation of time there- of 1014-lOlG Liened property not subject to independent levy 1019 Parol, lien not provable by 1014 Property not twice lienable under same judg- ment 1018 1078 INDEX. Judgment liens— Continued. Superior court judgment lien in county where judgment rendered 1008-1010 Superior court judgment lien in other counties 1011-1012 Iiaundryman's lien ' 689 Levy on encumbered movable property 519-'520 Lien-claim defined ; 858 Liens. Accrual of lien, time of ' 682 See, also, '* accrual of encumbrances, time thereof.'' Classified . 682 Defined 681 Exempt property lienable 683 General lien defined 682 Possession of liened property 684-685 Special lien defined 682 Waived by taking mortgage 683 Logger's lien 21, 765-770 Manner of creation of encumbrances 7 Maritime liens. See '' Vessels, liens against.'' ' Marshaling of securities 32-34 Mechanics* liens— immovable property. Agent— original contractor contracting owner's agent when contract void 854 Amount of liens. Contract price payable in property 975-976 Maximum amount of individual lien 959 Maximum amount of liens in aggregate. Contract price fixed 960-964 Contract price not fixed 966 Not reduced by contracting owner's equi- ties 964-966 Original contract nonconformable to statu- tory requirements 967-968 Original contractor's lien 972-974 Recourse of owner against original con- tractor 974 Stoppage of work before completion ....970-972 INDEX. 1079 Assignment. Lien — assignment thereof 946-947 Lien-claim unassignable 897 Attachment of liens, time thereof 943-944 Bonds for the benefit of lien-claimants. In case of public works 888-889 Cann<)t constitutionally be required in case of private improvements 889-896 Contracting owner defined 825 Contracts for improvements. Certain contracts exempt from usual require- ments 832 Memorandum of contract 844-846 Persons presumed to have right to bind prop- erty for liens 883-884 Eecord of contract 842 Eecovery when contract void 851 Requisites of contract 833-842 Void contracts 847-854, 897 Cumulative security, the mechanics ' lien a . . 979 Enforcement of lien. Costs and counsel fees 985-986 Foreclosure. See '^foreclosure.^' Joinder of actions 983-984 Method of enforcement 981 Time of commencing action 981-982 Equitable subrogation of certain persons to moneys owing by contracting owner 948-957 Estate, property thereof, how far lienable.... 886 Exemptions from liens. Estate, property of 886 Incompetents, property of 885 Public property 886 Improvement defined 825 Incompetents, property thereof not lienable. . 885 Indemnity against liens 989-992 Lien-claim defined . . . ." ' 85S Materialman defined 829 Materials about to be used in improvement ex- empt from execution . . . . .829-830 Memorandum of improvement contract .... 844-846 1080 INDEX. Mechanics' liens— Continued. Mining claim defined 880-881 JSTotice to owner to stop payments to original contractor . 948-957 Notice of claim of lien. Cannot be reformed nor amended 935 Joint claim ^ operation and requisites ....940-942 Eequisites 907-908 Substantial observance of requirements es- sential 935-938 Time of filing 923-932 Notice of completion or cessation from labor must be filed 900-905 Notice of nonresponsibility for improvement 868-872, 877-879, 882 Objects against which a lien may be claimed. Aqueduct.. " 860 Bridge 860 Buildings ^ • 859 Ditch * 860 Fence 860 riume 860 Land necessary for convenient use and occu- pation 866 Land of noncontracting owner ..868-872, 877-879 Leased mining machinery 880 Lot in incorporated city or town . ; 881-882 Machinery 860 Mining property 873-876 Railroad ' 860 Structure 860 Tuniiel . 860 Wagon road 860 Well 860 Wharf 859 See ^^ mechanics' liens — exemptions from liens. ' ' Operation of perfected lien 945 Original contract defined 831-832 Original contractor defined 827-828 INDEX. 1081 Perfecting the lien. Every lien- claimant may perfect 907 ^ Lien forfeited by filing fraudulent notice of claim 939 Notice of claim of lien. must be filed 907 See ^^ mechanics^ liens — notice of claim of lien. Persons who may claim liens. Building, • structure, aqueduct, well, road, wharf 858-872 Classification of 826-827 City street or lot 881-882- Mining property 873-87J^ Original contractor cannot claim lien when contract void 897 Property subject to liens. See *' mechanics' liens — objects against which, liens may be claimed. ' ^ Presumption of authority to render property subject to liens 883-884 Priorities of liens among themselves 977 Public property not lienable 886 Promptitude in exercise of rights conferred es- sential 824 Eationale of liens 82-1 Subcontractor ^lefined 828 Void improvement contracts 847-854 Waiver of lien 898- Waste, commission of on liened property .... 900 Mechanics* liens— movable property 703-705 Mining partner's lien 1002-1004 Mortgage. Absolute deed as mortgage 426-429, 485-488, 537-541 Accommodation, mortgage made for 474-47d Acknowledgment to continue or renewal of mortgage 632-640 Assignment of mortgage 585-589^ Assessment of mortgage and mortgaged prop- erty — see ' ^ taxation. ' ' Attachment of mortgaged movable property 519-521 1082- INDEX. Mortgage— Continued. Attorii^6T?s fee when secured' by mortgage .. \ .451-454, 642-645 Continuance of mortgage ......;,. w ... . .632-638 Conversion of mortgaged property 506-509 Crop mortgage. Continues after severance without removal 500-501 Effect of provision in immovable property mortgage mortgaging crops * 492-494 Time of attachment on crop to be planted. . 501 Deed absolute in form as mortgage. See ^^ mortgage— absolute deed.'* Definition 418-419 Description of mortgaged property 421-424 Distinguished 432-437 Enforcement. Deficiency in case of sale of mortgaged prop- erty 295-302, 651 Foreclosure by judicial proceeding. Attorney's fee 642-645 Multiplicity of actions 623-628 Keceiver 641 Time of commencing foreclosure action 629-640 See ^^foreclosure.'' Power of sale, exercise of 646-651 Strict foreclosure unknown in California . . 622 Equitable mortgage .' 652-656 Evidence — Extrinsic evidence admissible to show mortgage 429-431 Execution of mortgage 419-420, 455-463 Extinction. Generally 598-599 Movable property mortgages (special modes of extinction) " 600-601 Eecorded mortgages 602-605 Eemoval of movable property 499, 601 See ^ ' extinction of encumbrances. ' ' Foreclosure. See ''foreclosure." Forfeitures 534-536 Formal hypothecations mostly mortgages ..426-437 Form of mortgage 420 Fraud, mortgage made to defraud 478-479 INDEX. IQS'i Future advances, mortgages to secure. Advances, how made ........ ...... . . . .510-511 Failure to make advances contracted for . . 513 Maturity 511 Priority in respect to subsequent encum- brances 511-513 Stating object 509-510 Validity 509-5ia Homestead, mortgage of 513-518 Immovable property mortgages — see the vari- ous heads. Instrument of mortgage 419-425 Becordation of instrument — see ^ ^mort- gage— recordation. ^^ ^ Insurance of mortgaged property . .447, 448, 541-545 Interpretation of mortgage 448-454 Levy upon mortgaged movable property . . . .519-521 Limitation of action 629-640^ Mortgagee in possession of immovable prrop- erty 575-584 In wrongful possession 533 In possession of movable property 445 Movable property mortgage — see the various heads. Movable property mortgageable 439-444 Operation of mortgage. Absolute deed as mortgage. See ^'mort- gages — absolute deed. ^' Affixment of mortgaged movable property to immovable 503 After-acquired title 470-473 Appurtenances to mortgaged land 480 Crop mortgages. See '^ mortgages — crop mortgages. ' ' Fixtures on mortgaged land 489-490 Future advances. See ' ' mortgages, future advances. ^ ' Generally ! 468-484 Holders of several notes secured by one mortgage 483-484 Homestead, mortgages of 513-ol8 1084 INDEX. Mortgage. Operation of mortgage— Continued. Immovable property mortgages executed as such 484-49i Income of mortgaged property . 502 Levy of mortgaged movable property . . . .519-521 Mortgage taken subject to existing burdens on mortgaged property 490-491 Movable property mortgages 495-509 Offspring of mortgaged animals 502 Provision accelerating time of payment in case of default 480-483 Title to mortgaged property 468 Unrecorded — validity when Immovable property mortgages . .17-19, 484-488 Movable property mortgages 496-499 Personal action on mortgage obligation. . . .616-617 Possession of mortgaged property. .. .444-445, 521 Liability of mortgagee in wrongful posses- sion 533 Mortgagee in rightful possession 575-584 Possession during time of redemption. See ' ^ foreclosure— redemption. ' ' Eemedies of mortgagee entitled to possession 530-5:;3 Power of sale 445-447, 646-6oi Primary security, the mortgage a. Failure to foreclose does not impair remedies against secondary parties 613-615 Loss of security without fault of mortgagee does not bar personal action 616-617 Mortgaged property must first be resorted to r 607-610 Waiver of mortgage waives personal liability of mortgagor 611-613 Property mortgageable 437-444, 473-474 Purchase money mortgage 15-16 Purchaser of mortgaged property, liabilities of 591-596 Eeceivers of mortgaged property 532-533, 641 Eecordation of instrument. Additional recordation of movable property mortgages 46-1 A-ssignment of mortgage, recordation of... 587-588 INDEX. lOSo Recordation of instrument— Continued. Crop mortgages 45^ Extinction of recorded mortgages 602-606 Immovable property mortgages 455-45G Mistake — extinction of record by' mistake 605-606 Movable property mortgages 458-46 i Necessity of recordation in case of movable property mortgages 495-499 Property in transit 463 Property of common carrier 463 Vessels, mortgages against 459 Reformation of instrument of mortgage .... 424-425 Removal of mortgaged movable property ...529-530, 601 Renewal of mortgage 638-640 Sales of mortgaged property. See ^^mort- gages—transfer. ' ' Substitution of other property for mortgaged property '••••. 504-505 Taxation of mortgaged property. See '^Taxa- tion.'' Test of mortgage 432-437 Transactions amounting to mortgages ....432-437 Transfer of mortgaged property. Immovable property 590-596 Movable property 527-529, 600 Unrecorded mortgages, effect of. See '^ mort- gages — operation of.'' Use of mortgaged property 525-527, 531 See, also, '^mortgages — operation of." Validity of mortgages. Immovable property mortgages . . .17-19, 484-488, 595-596 Movable property mortgages 496-499 Mortgages on nonmortgageable property. .505-506 Vessels, mortgages against 459 Waiver of mortgage 611-613 Waste of mortgaged property . .327-329, 526-527, 534 Writing— mortgage in writing 419-420 Nature of encumbrances in general 7-9 Parties. See ' 'foreclosure," and ''partition." 1086 INDEX. Partition of encumbered immovable property — effect thereof on encumbrances 158-lCl Encumbrancer as partv in action in partition r 155-157 Partition fences— lien for constructing 996-1001 Personal obligation not implied in creation of encumbrance 7-8- Pledge. After-acquired title 380-381 Collateral securities — sale by pledgee. . .402, 412-413 Conversion of pledged property 391-393, 403^ Corporate stock, pledge of 385-386, 396-399 Cumulative security, pledge a 409-410 Definition ••.... 364-365 Enforcement. Foreclosure. See ^^foreclosure. '^ Methods 411 Sale by act of party 412-416 Executory agreements to pledge 382-384 Increase of pledged' property 380 Operation of pledge 379 Persons who may or may not pledge 377-378, 386-389 Pledgeholder 406-408 Pledgelender 404-405 Eequisites of pledge 364-374 Eights and duties of parties 394-403 Sale of property in satisfaction of pledge . . . 399-400 Transactions deemed pledge 375-376 Pledgeholder 406-408 Pledgelender 404-405 Possession of encumbered property. Encumbrancer in piossession may retain same until secured demand satisfied 400, 576, 663, 684-685 Priorities. Dependent on possession, encumbrances 22 Encumbrance generally superior to subse- quently acquired interest in the same prop- erty J3 Homestead. See ' ' homestead. ^ ^ Logger ^s lien 21 1087 Eights of inferior encumhrancer 14-15 Superiority of purchase money mortgage. .. .15-16 Time as controlling priorities. Maritime liens 22-23 Nonmaritime liens 11-12 Tax liens paramount 23 Unrecorded mortgages 17-19 Vessels^ liens against 21, 796, 800 Propagating animal — lien in favor of owner thereof , 773-775 Purchaser's lien — immovable property 822-823 Receiver, lien of | 493 Redemption from foreclosure sales. See '^fore- closure — redemption from sales.'' Rights and duties of parties affected by encum- brance. Apiplication of proceeds when securing two ob- ligations 35-»:J7 Inferior encumbrancer may, in case of neces- sity, satisfy superior encumbrance before ma- turity 26-27 Interested person may discharge encumbrance when due 26 ^Q^shaling of securities 32-34 il-^^tive rights of encumbrancer in possession au(i owner of property 24-25 Subrogation 27-32 Sales of encumbered property in foreclosure ac- tions. See ' 'foreclosure— sales. '' Sheriff's lien 718 Stable-keeper's lien 708 Stoppage in transit 697-701 Subrogation . . 27-32 Taxation of encumbrances and encumbered prop- erty. Agreement compelling mortgagor to pay taxes ,. . 570-574 Constitutionality of system of taxation 549-551, 558-560 1088 INDEX. Taxation— Continued. Liability for taxes generally 566-567, 569-570 Obligations secured by propierty outside state. 561 Obligations secured by property within state 561-566 Quasi-public corporations, property of 566 Special assessment upon encumbered property. 560 System of taxation in California discussed. . .546-560 Who may pay taxes 567-568 Tax liens 1026-1029 Priority thereof 23 Thresher's liens , . . . . 771-772 Title not transferred by encumbrance. .. .9, 379, 468 Trespassing animals— liens against 719-764 Trust deed in the nature of a mortgage. Barring of secured obligation by lapse of time 663 Defined and distinguished 657-660 Enforcement 664-665 Operation of trust deed 661 Presumption against trust deed 661 Primary security, trust property a 664 Taxation . 662 Use of trust property 662 Validity 660 Trustees, liens of , 690-605 Vendor's lien. Immovable property. Additional security, vendor's lien a 818 Creation 808-810 Distinguished 807-808 Enforcement 820-821 Inures to personal representatives 812 Unassignable 811 Waiver of lien 813-817 Movable property. Enforcement 701-702 Generally 696-702 Stoppage in transit 697-701 INDEX. 1089 Vendor's security 666-679 Assignment 667, 668 Continuance of security 671-672 Cumulative remedy, vendor ^s security a. .669-670 Enforcement of security 672-677 Extinction 668 Transfer from vendor to third party as se- curity for obligation of vendee equiva- lent to vendor's security 679 Vendee's lien, immovable property 822, 823 Vessels, liens against. Creation of 780-781 Maritime liens. Enforceable solely in federal courts. .782-783, 797 Enumeration of liens established by state law 788-79') Nonmaritime liens. Enforceable in state courts 786, 800-802 Enumeratioix of liens established 798-800 Priority. Generally 790 Of maritime liens 22-23, 796-797 Of nonmaritime liens 21, 800 Liens — 69 THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW AN INITIAL FINE OF 25 CENTS WILL BE ASSESSED FOR FAILURE TO RETURN THIS BOOK ON THE DATE DUE. THE PENALTY WILL INCREASE TO 50 CENTS ON THE FOURTH DAY AND TO $t.OO ON THE SEVENTH DAY OVERDUE. FFR Q 193P YB 1268c O r^^:H^^^^