STOCKTON SAVINGS LOAN BANK v. MASSANET

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District Court of Appeal, Third District, California.

STOCKTON SAVINGS & LOAN BANK v. MASSANET et al.

Civ. 6310

Decided: July 18, 1940

Glensor & Schofield and H.W. Glensor, all of San Francisco, and J. Leroy Johnson, of Stockton, for appellants. Nutter & Rutherford, D.R. Jacobs, Stephen Dietrich, and Philip Cavalero, all of Stockton, for respondent.

This is an appeal from a judgment in favor of plaintiff for a deficiency after sale under a deed of trust. The property here involved was a tract of land improved with a vineyard and buildings, including a bonded winery, in which was stored several thousand gallons of wine which belonged originally to Edna Gleason. The real property was subject to a deed of trust in favor of Stockton Savings and Loan Bank. Mrs. Gleason was in default, and the bank started to foreclose. Chris Massanet desired to acquire the property, and originally the plan was for Massanet to take a deed directly from Mrs. Gleason and assume the obligation to the bank and to give to Mrs. Gleason security for the repayment to her of certain moneys advanced by her to one Soler, a tenant on the premises, and for taxes and interest, and then Massanet was to lease the property to Mrs. Gleason. However, this plan was changed, and as finally consummated, the property was deeded by Mrs. Gleason to the bank, and the bank then deeded to Massanet, he executing a deed of trust to the bank, and a second deed of trust for $2,651.08 to reimburse Mrs. Gleason for the money advanced by her, and then Massanet leased the property to her.

The papers were placed in escrow, and the entire transaction as outlined consummated at one time. To complete this deal Massanet borrowed $12,200 from the bank, executing, on August 20, 1935, a note and deed of trust on the property to a subsidiary of the bank. The note not being paid at maturity, the bank sold the property under the terms of the deed of trust, and then on May 20, 1938, brought this action for the deficiency.

The answer, by way of a special defense, set up that the deed of trust was given to secure the purchase price of the property, and the action was therefore barred by section 580b of the Code of Civil Procedure.

A motion to strike this special defense was granted, and judgment was entered in favor of the bank for some $4,500, being the deficit under the sale under the deed of trust. From that judgment this appeal is taken.

Two questions are presented by this appeal: First, does section 580b of the Code of Civil Procedure prohibit a deficiency judgment after sale under a deed of trust where the deed of trust was executed on August 20, 1935, and the sale thereunder was not had until May 4, 1938, and

Secondly, was the deed of trust in question given to secure payment of the balance of the purchase price of real property?

Section 580b of the Code of Civil Procedure, as enacted in 1933, Stats.1933, chap. 642, p. 1673, provided “No deficiency judgment shall lie in any event after any sale under a deed of trust or mortgage given to secure payment of the balance of the purchase price of real property.”

This chapter included other sections concerning deeds of trust and mortgages, and provided (section eight), “This act and the provisions of this section shall be effective to and until September 1, 1936.”

In 1935, Stats.1935, chap. 650, p. 1802, section 580b of the Code of Civil Procedure was re-enacted, and section 9 of chapter 650 declared it was the intent of the act to re-enact various sections of the Civil Code and Code of Civil Procedure, including section 580b of the Code of Civil Procedure, in order to continue the same in effect subsequent to September 1, 1936, and to remove any ambiguity created by chapter 642 of the Statutes of 1933, and expressly declared the legislative intent to make such sections effective without any time limitations thereon. This enactment of chapter 650 of the Statutes of 1935 became effective September 15, 1935. It will be recalled that the deed of trust with which we are here concerned was executed August 20, 1935, almost a month prior to the effective date of the amendment of 1935, and the present suit for deficiency was commenced May 20, 1938.

It would seem clear, therefore, that we are not here concerned with the enactment of any statute subsequent to 1933, as the law, as it stood in August, 1935, became a part of the contract between the parties, and by the express provisions of that statute the only prohibition of a sale for any deficiency was effective up to and until September 1, 1936.

In Hales v. Snowden, 19 Cal.App.2d 366, 65 P.2d 847, an action was commenced to foreclose three purchase-money mortgages executed in April, 1927. The court, in refusing to set aside the order directing a deficiency judgment, pointed out that laws which were in effect at the time and place of the making of a contract enter into and form a part of it, as effectively as if incorporated in its terms, and the obligations of a contract were impaired by any law which released or extinguished them. Under the law then existing, the mortgagee, upon default, had the right to sue and obtain a judgment for any deficiency remaining after crediting the proceeds of the sale upon the indebtedness. This was a substantial right, the court held, and constituted an impairment of the contract, and in so far as the section purported to apply to mortgages executed before its enactment, was ineffectual.

Appellants do not seriously question this rule but predicate their argument upon the ground that the legislature did not intend the time limit to September 1, 1936, should apply to section 580b of the Code of Civil Procedure. It is pointed out by them that chapter 642 of the Statutes of 1933 was a group enactment of certain moratorium legislation and designed to meet the extraordinary social and economic conditions then prevailing, and which seem still to continue. Among the many bills thus pooled was one adding section 29241/212 to the Civil Code, which was section 8 of chapter 642. This paragraph contained this final clause: “This act and the provisions of this section shall be effective to and until September 1, 1936.”

An examination of the history of this particular bill shows that it was not included in chapter 642 until the final hearing in the Assembly. From these facts appellants claim that doubt is cast on the legislative intent in enacting chapter 642, and that there is nothing to show that it was the intention of the legislature to impose any time limit on any of the sections of chapter 642 other than section 29241/212 of the Civil Code, and that sufficient doubt and ambiguity is created thereby, by the use of the words “This act and” as found in section 8 to justify and warrant a court in ascertaining and declaring the legislative intent.

In addition to the legislative history appellants point to section 9 of chapter 650, p. 1807, Statutes of 1935, where it was declared: “It is the intent of this act to reenact * sections * 580b * of the Code of Civil Procedure in order to continue the same in effect subsequent to September 1, 1936, and remove any ambiguity created by the language of section 29241/212 of the Civil Code as added by an act approved June 2, 1933, as to the time said sections shall be effective. It is intended that sections * 580b * of the Code of Civil Procedure shall be effective without any time limitation thereon.”

However, the language of the statute: “This act and the provisions of this section shall be effective to and until September 1, 1936,” is so clear and unambiguous as to leave no opportunity to inquire into the legislative intent. 22 Calif.Law Rev., p. 181; Seaboard Acceptance Corp. v. Shay, 214 Cal. 361, 5 P.2d 882; Braun, Bryant & Austin v. McGuire, 201 Cal. 134, 255 P. 808.

Furthermore, a subsequent legislature is without power to construe or interpret an act of a former legislature, and cannot, by later amendment, remove that limited prohibition and thereby abrogate contracts entered into prior to the amendment. We are unable to find anything upon which a court could justify a right to declare the legislative intent in the instant case.

It is next urged by appellants that regardless of the time limitations in the statute, section 580b of the Code of Civil Procedure in effect when the deed of trust was executed, should in effect be embodied in the instrument and construed to read “no deficiency judgment shall lie after a sale under this deed of trust”. In other words, appellants claim the statute took away entirely the right of a deficiency judgment in any deed of trust executed between the effective date of the act and September 1, 1936, and not merely that the right to obtain a deficiency judgment had been postponed or suspended until after September 1, 1936. The section does not justify this construction. The language is clear and unambiguous. A study of the principles dealing with statutory construction, as found in the many cases dealing with that subject, make it clear the position of appellants cannot be sustained.

If the foregoing is correct, it is not necessary to pass upon the question as to whether the deed of trust was given to secure payment of the balance of the purchase price. The judgment is affirmed.

Mr. Presiding Justice PULLEN delivered the opinion of the court.

I concur: THOMPSON, J.