Katz v. Haskell

196 Cal. App. 2d 144, 16 Cal. Rptr. 453, 1961 Cal. App. LEXIS 1556
California Court of Appeal·Decided October 6, 1961·No. Docket Nos. 25294, 25295·Published·Cited by 11 cases

Opinion

*148 LILLIE, J.

The present matters, in which separate judgments were rendered below, have been consolidated on appeal pursuant to stipulation of all parties; they arose, generally speaking, out of a series of transactions involving the same property, a 20-unit apartment building in the city of Burbank. Appellants Rockwell and respondents Katz and Haskell will be referred to hereinafter in the singular as Rockwell and Katz and Haskell respectively.

In each matter the background facts, all apparently without dispute, are briefly as follows: Prior to December 27, 1956, Rockwell was the owner of the real property in question. On that date he sold the building to Frances and Sanford Kohl, from whom he received a note for $32,500 secured by a third deed of trust as part of the purchase price. Thereunder payments of $350 or more were due on the 5th of each month, commencing February 5, 1957, and continuing until January 5,1959, at which time the balance of principal and interest fell due. At the request of Rockwell, the following acceleration clause was included in the note: “In the event of a subsequent sale, the then remaining unpaid balance of principal and interest hereof shall immediately become due and payable in full.” On May 28, 1957, Rockwell assigned the Kohl note to Katz for value as follows: “We hereby assign all our right, title and interest in and to this note with recourse and hereby guarantee the payments of this note as they become due to Sam Katz and Rose Katz”; concurrently therewith the deed of trust was also assigned to Katz. On October 10, 1957, the Kohls conveyed the property to Rockwell; shortly thereafter Rockwell conveyed the property to one Cerf who, on March 28, 1958, reconveyed it to Rockwell. Finally, on October 22, 1958, Rockwell conveyed the building to Haskell.

The action by Katz, in its essence, was against Rockwell as guarantors and assignors with recourse of the note secured by the deed of trust, said deed of trust being on property title to which was then vested in the name of Haskell (No. 25294). The companion matter (No. 25295) involved a cross-complaint by Haskell against Rockwell on the latter’s alleged guaranty that a five-year extension on the trust deed would be obtained, or that Rockwell would purchase it and extend it for five years—Rockwell did neither. We shall consider the present matters in numerical order.

In No. 25294, on May 21, 1959, (five months after the note became fully due) the plaintiffs Katz sued to foreclose .the third deed of trust on the property concerned; copies of the *149 various instruments just mentioned were attached to the complaint as exhibits. It was alleged that Haskell had purchased the building on October 22, 1958, and assumed payment of the note held by plaintiffs in the face amount of $32,500; it was further alleged that Haskell purchased the property subject to a first and second deed of trust both of which were prior to the third deed of trust owned by Katz. As of January 5, 1959, according to the complaint, Haskell was in default, at which time there was an unpaid balance of $24,016.61 in principal and interest; he had also defaulted, it was further alleged, in payments on the first and second deeds of trust. In addition to the defense of laches, Rockwell affirmatively alleged that their guarantee, if any, lapsed subsequent to October 22, 1958. Concurrently with the filing of the complaint, plaintiffs requested the appointment of a receiver to collect the rentals during the pendency of the foreclosure action; after a hearing on the order to show cause, a referee was appointed and entered into the performance of his duties ; his final report was subsequently approved, including an award of receiver’s and attorneys’ fees pursuant to provisions therefor in the note. Upon judgment of foreclosure, which also declared that Rockwell was personally liable on the guarantee and assignment with recourse in the sum of $46,291.75, the property was ordered sold, and Katz was the successful bidder with a bid of $30,000. According to the receiver’s report, after giving Rockwell credit for $30,000 (the amount of the Katz bid) and some cash on hand, there was a deficiency payable by Rockwell. The appeal is from those portions of the judgment holding Rockwell personally liable on the guarantee and assignment and awarding a deficiency judgment in favor of Katz.

The propriety of any deficiency judgment against him, says Rockwell, was one of the principal issues litigated below. Thus, Katz urged that Rockwell, not having paid the balance due on the guarantee of what was a purchase money obligation, was liable as an original maker of a nonpurchase-money obligation. Rockwell, however, argued that even if he were liable on the guarantee and notwithstanding other defenses urged, liability was fixed on the date of Haskell’s default; therefore, he could not be liable to Katz for receiver’s expenses, foreclosure costs and attorneys’ fees, and, in addition be compelled to reimburse Katz for the monies advanced by him as payments on the first and second trust deeds. The correctness of this statement of the “issues” is challenged by *150 Katz. The issue, he says, is “not as to the obligation of the original maker but as to the obligation of the original guarantor and an independent indorser separate and distinct from the original transaction and a guarantor and indorser who creates his own transaction, receives a separate consideration, and guarantees and indorses his own transaction as distinguished from receiving a guarantee or indorsement from a third party in the original transaction.” As for the claim that Rockwell’s liability was fixed on the date of Haskell’s default, respondents reply that the extent of Rockwell’s liability on that date is controlling, and therefore it becomes immaterial that expenditures were made prior or subsequent to that date “so long as the expenditures made flowed from the liability so fixed.”

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Katz v. Haskell, 196 Cal. App. 2d 144, 16 Cal. Rptr. 453, 1961 Cal. App. LEXIS 1556 (Cal. Ct. App. 1961).

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