Opinion ID: 1161511
Heading Depth: 1
Heading Rank: 15

Heading: The Hollister Bank Mortgage

Text: The trial court found that The interest in Section 31 acquired by Ashurst and COP and now claimed by plaintiffs was subject to the lien of the purchase money mortgage for $17,500 given by Brandt and Abrams to secure the unpaid balance of the purchase price for the ranch. The rights of the mortgagee under that mortgage were transferred to the Hollister Savings Bank and the lien of the mortgage was from time to time renewed. The balance of the purchase price for the ranch was not paid and in May 1921, the bank foreclosed its mortgage. The money to satisfy the bank mortgage and the decree of foreclosure was provided by Antonio Frusetta and Warren Cornwell, the predecessors of defendants, as part of the price which Frusetta and Cornwell paid for the ranch. Accordingly, the rights of the bank under the mortgage and the decree of foreclosure would pass to Frusetta and Cornwell to the extent necessary for their protection. Since, however, the title to the fractional interests in the oil rights in Section 31 purchased by Frusetta and Cornwell was clear of any claims of plaintiffs' predecessors, no interest in the mortgage or decree of foreclosure passed to Frusetta and Cornwell. Defendants contend that the trial court erred in holding that they acquired no interest in the mortgage. They take the position that because they furnished the funds with which the Hollister Bank mortgage was liquidated they were subrogated to the rights of the bank. Since they took possession of section 31 they were mortgagees in possession, and Code of Civil Procedure section 346 precludes redemption following five years of adverse possession by a mortgagee in possession. [32] We need not, however, consider defendants' claims of error in this respect, since we have concluded that the judgment of foreclosure entered in connection with the Hollister Bank mortgage did not cover the mineral interests underlying section 31 held by the shareholders. Abrams and Brandt executed a purchase money mortgage for $17,500 to the Ashursts in 1905 covering the entire Syncline Ranch, which included section 31; the Ashursts assigned this mortgage to the Hollister Savings Bank, and in 1908 Abrams and Brandt executed and recorded a deed of trust to bank officials covering the mortgaged property. Subsequently in 1910 Abrams and Brandt conveyed the interests herein disputed to the corporations [53] and recorded the deeds on April 2 and November 25 of that year. On November 30, 1910, Abrams and Brandt executed a promissory note for $11,500 and a mortgage to the Hollister Bank covering the Syncline Ranch; on the same date the bank officials reconveyed the ranch to Abrams and Brandt pursuant to the deed of trust. These documents were recorded in 1911. In 1915 Abrams and Brandt executed a note for $17,000 and a mortgage securing the note on the Syncline Ranch to the bank; the bank shortly thereafter acknowledged satisfaction of the November 30, 1910, mortgage. If we regard the 1910 or 1915 mortgage instrument as definitive of the property subject to the lien, the corporations' property interests were not subject to the mortgage, since documents recorded prior to the execution of these mortgages evidenced that Abrams and Brandt no longer owned certain mineral rights underlying section 31. If, on the other hand, the bank and the partners, by executing the 1910 and 1915 instruments, intended to renew or extend rather than to pay or discharge the prior mortgage and debt, the corporate property would have continued to be subject to the 1908 deed of trust. [54] Although [t]he necessary agreement to accept the renewal instruments in payment and discharge of the prior debt and lien is not necessarily established by evidence, standing alone, that the old mortgage has been released of record.... ( Bowden v. Bank of America (1950) 36 Cal.2d 406, 410-411 [224 P.2d 713]), we find no evidence indicating that the bank and the partners had agreed in the 1910 and 1915 transactions to renew rather than discharge the earlier obligations. [55] The 1915 notation of satisfaction of the 1910 mortgage constitutes persuasive evidence of an agreement to discharge the earlier mortgages, when considered with the following factors: (1) The Hollister Bank, in its action to foreclose the 1915 mortgage did not name as defendants all of the shareholders in Ashurst and COP, although it did name some who had other interests in the Syncline Ranch; (2) Brandt, one of the original mortgagors, in his complaint in action 1870 refers to the 1915 mortgage held by the Hollister Bank (as pointed out, supra, the 1908 mortgage would control the rights and liabilities of the shareholders); (3) the court in rendering judgment in action 1870 did not state that the corporate assets were subject to the lien of the Hollister Bank mortgage, although the court was aware of that mortgage and although, in the case of COP, the court found that the corporate assets were subject to the lien of the COP mortgage.