PHELPS v. AMERICAN MORTGAGE CO

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District Court of Appeal, Third District, California.

PHELPS et al. v. AMERICAN MORTGAGE CO. et al.*

Civ. 5344.

Decided: September 23, 1935

Reed & Vernon, of Los Angeles, for appellants. Alvan M. Palmer, of Los Angeles, for respondent.

Plaintiffs above named are appealing from a judgment of dismissal of their fourth amended complaint, following the sustaining of a demurrer thereto by the trial court, and without leave to amend. The said fourth amended complaint, after alleging that American Mortgage Company, Mortgage Guarantee Company, and Title Guarantee & Trust Company, at the times therein mentioned, were corporations, sets forth, so far as are deemed necessary for a decision in this matter, and as nearly as may be chronologically, as follows:

That on or about November 22, 1926, Arthur Gilman and Nellie Gilman executed to defendant mortgage company 125 promissory notes, each in the principal sum of $1,000, each due on November 22, 1931, with interest at 8 per cent., payable quarterly, and at the same time, as security for the payment of said notes, the said Gilmans executed their deed of trust to defendant Title Guarantee & Trust Company, as trustee, and to American Mortgage Company, as beneficiary, and which deed of trust was, on November 23, 1926, in book 6545, at page 8 of the records of Los Angeles county, recorded in the office of the recorder thereof, and on or about November 23, 1926, defendant Title Guarantee & Trust Company accepted the trust as provided for in said deed of trust.

That thereafter, and prior to January 1, 1931, said defendant American Mortgage Company with the knowledge of the defendant Title Guarantee & Trust Company and the defendant Mortgage Guarantee Company, for value, indorsed, transferred, and delivered to the plaintiffs in this action 73 of the said promissory notes, and that plaintiffs ever since have been, and still are, the owners and entitled to the possession of said notes, and which facts were at all times in the complaint mentioned known by the defendants Title Guarantee & Trust Company, Mortgage Guarantee & Trust Company, and American Mortgage Company of California.

That on November 22, 1926, the said defendants Gilman executed to American Mortgage Company their promissory note for $60,000, due on or about three years from date thereafter, and bearing interest at 8 per cent. per annum, and contemporaneously with the execution of said note, and as and for security for its payment, the said Gilmans executed a deed of trust to defendant Title Guarantee & Trust Company, as trustee, and to defendant American Mortgage Company, as beneficiary, upon the same property, and which said trust deed was recorded in the office of the said recorder on November 22, 1926, in book 6461, at page 205 of said records.

That thereafter said Title Guarantee & Trust Company, as trustee under said last-mentioned deed of trust, after notice and sale by said defendant, pursuant to the terms thereof, executed in writing its trustee's deed of said real property to defendant American Mortgage Company, all of which acts were unknown to plaintiffs, or any of them, and were known to defendants, and each of them.

That thereafter defendant American Mortgage Company executed its deed of said real property to defendant American Mortgage Company of California, the successors in interest of defendant American Mortgage Company, which defendant American Mortgage Company of California succeeded to the properties and interest of defendant American Mortgage Company with full and complete knowledge of all transactions had and conveyances executed as thereinabove in said complaint stated.

That said transfer was known to defendants, and each of them, and unknown to plaintiffs, or any of them.

There are also allegations that subsequent transactions set forth in the complaint were made without consideration, fraudulent, and invalid; that there was no agreement or contract between plaintiffs and defendants Title Guarantee & Trust Company or American Mortgage Company, with respect to the execution or making of any of said instruments; that there was not any consideration at any time for the making or execution of the said subsequent instruments set forth in the complaint; and that the said instruments were wholly without consideration, fraudulent, and void.

It is also alleged that particularly the described reconveyance is an obstruction and hindrance to, and a cloud upon, the title and first lien of plaintiffs herein.

In view of the position which we take in the matter, a specific statement of further allegations in the complaint, except as herein particularly stated, are deemed unnecessary.

It is to be noted that the two trust deeds mentioned were executed the same day, but that the one executed by the Gilmans for $60,000, as security for the payment of the said amount, was recorded on November 22, 1926, in book 6461, at page 205 of the said records, while the trust deed given to secure the payment of the notes held by plaintiffs was recorded on November 23, 1926, in book 6545, page 8 of said records, but that no time of the day of the filing of said two trust deeds is set forth or alleged in the complaint. The $60,000 trust deed being recorded in book 6461, at page 205, and the trust deed under which plaintiffs claim, being recorded in book 6545 at page 8 of said records, under such circumstances we are compelled to assume that the $60,000 trust deed was filed for record prior to that of the one under which plaintiffs claim. These circumstances, together with the allegation that said Title Guarantee & Trust Company, as trustee under the $60,000 deed of trust, and after notice and sale by defendant pursuant to the terms thereof, executed in writing its trustee's deed of said real property to defendant American Mortgage Company, all of which acts were unknown to plaintiffs and each of them, render ineffective the allegations that said acts were unknown to plaintiffs, or any of them. Otherwise, recordation and the giving of notice would be idle acts.

There is a further allegation that on April 7, 1931, action was commenced in the United States District Court in and for the Southern District of California, and in said proceeding, at different times, A. D. McLeod and Frank C. Mortimer were appointed receiver and coreceiver, respectively, of said defendant American Mortgage Company of California, both of which receivers duly qualified, and that the said District Court authorized the commencement of this action on the part of the plaintiffs herein.

The complaint contains many allegations of fraud, knowledge of and want of consideration for the transactions mentioned therein, and of which complaint is made, but, in view of the specific allegations set forth, we are of the opinion that such allegations are only conclusions of the pleader. The recordation of the $60,000 trust deed prior to that under which plaintiffs claim, of course, imparts to them notice. The further allegation that after notice of sale and sale under said $60,000 trust deed, the allegations that the transactions were unknown to plaintiffs are nothing more than statements of conclusions. It is thoroughly settled as the law of this state that where relief is sought under a claim of fraud, deceit, or concealment, these matters and the facts constituting them must be specifically alleged, therefore, we deem citation of authorities unnecessary. Herein the complaint does not attempt to set forth specifically facts of fraud or concealment, or other such matters, as a result of which plaintiffs were precluded from receiving the constructive notice available to them in the records of said county, and of the notice of sale under said $60,000 trust deed.

We therefore conclude that the complaint, on its face, fails to establish a cause of action for any relief sought, and that, after at least four attempts to state a cause of action, the trial court was correct in sustaining the demurrer without leave to amend.

It is therefore ordered that the judgment be and the same is hereby affirmed.

Mr. Justice pro tem MONCUR delivered the opinion of the court.

We concur: THOMPSON, J.; PULLEN, P. J.