Reset A A Font size: Print

District Court of Appeal, First District, Division 2, California.


Civ. 10095.

Decided: January 30, 1937

Randolph V. Whiting, of San Francisco, for appellants W. Coy Filmer and Alice Requa Filmer. Breed, Burpee & Robinson, of Oakland, for appellants H. P. Bancroft, and Sarah E. Bancroft. Snook & Snook & Chase, of Oakland, for appellants Russell C. Wilson and Ellita Wilson. C. H. White, Louis Ferrari, G. D. Schilling, and Caxton P. Rhodes, all of San Francisco, for respondent.

Three groups of attorneys, representing a like group of appellants, have petitioned for a rehearing, and all profess dissatisfaction with the statement of facts in the opinion. All the facts stated are proved either by direct evidence or by presumptions and legal inferences which must be drawn from the facts proved. Counsel have all overlooked the elementary principle that in an action upon a promissory note the burden of proving payment is on the defendant. The complaint pleaded execution of a promissory note for $30,000, and payment thereon in principal and interest of $18,000. Prayer was for $11,630 and interest alleged to be then due. Defendants set up the deed of trust, and the action was tried as one for a deficiency judgment. The answers denied for want of information the amounts paid and the amount due. Plaintiff gave evidence of the proceeds of the trustees' sale credited on the note and of the additional sums admittedly received and credited from the sale of lots reconveyed and removed from the trust lien under the terms of the contract.

The appellants take an inconsistent position. They argue that, since the portion of the proceeds of lot sales had not been agreed upon, the respondent was not entitled to credit any of said proceeds to payment on the note; that the evidence fails to prove that respondent credited all these proceeds to such indebtedness; and that the court should therefore have found that the security was not exhausted because the respondent had not sold out these lot purchasers after having credited appellants with the proceeds of these sales. They claim that the respondent should have been compelled to prove that the proceeds of sales credited to them on their note were tagged to specific lots with detailed proof of these lots by description of each and the amount credited from each lot. The evidence that all lots were included in the notice of trustees' sale, except those reconveyed under this agreement of the parties, was sufficient to sustain the finding that all lots subject to the trust lien were sold on the foreclosure and that the security of the lien was thus exhausted. If any further proof was necessary, this finding was supported by the presumptions and legal inferences which must be drawn from the facts proved. These reconveyances giving complete descriptions of the lots reconveyed had been delivered to appellants at their request, and were presumably in their possession at the time of the trial. By the terms of the trust it was agreed that such reconveyances were to be made from time to time “as said Beneficiary * * * may direct, upon the payment of such portion of the debt secured hereby as may be agreed upon.” The appellants admitted that proceeds of such sales had been applied to a reduction of the debt. The trial court could presume that the regular course of business had been followed––that the reconveyances were made upon request of appellants, that the amount of proceeds applied to the debt had been agreed upon, and that, from appellants' failure to produce the evidence in their possession, the reconveyances covered the precise lot numbers omitted from the notice of sale.

Confusion is then made to appear in the statement of facts relating to the payments made after forfeiture. The real estate corporation had, prior to the forfeiture, issued a number of sales contracts to lots subject to the lien and all of which lots were sold at the trustees' sale. These sales contracts called for periodic installment payments, and by agreement of the parties made after notice of default, these payments were made to the bank to be held in trust pending the foreclosure sale. Here again the appellants complain that the respondent did not assume the burden of proof. Enough was shown, taken with the legal inferences, to prove that these partial payments all concerned lots covered by the lien of the trust deed at the time the payments were made and that all these lots were sold at the trustees' sale. The agreement first made relating to these sales was, as we said in the opinion, modified before it became effective. By no possible theory could the appellants claim payments made after the trustees' sale upon portions of the property sold under the deed. These moneys were not to be returned to the lot purchasers, but they were to be credited to them as part payment upon the lots sold subject to the lien of the deed of trust. The bank was under no obligation to charge off these moneys against the note any more than it should be required to charge off sales made of other lots after it had acquired full title to them through the trustees' deed. The deed of trust expressly provided that reconveyances should be made, and credits allowed on the note “while this Deed of Trust remains in force.” It did not purport to control the right of the purchaser at the trustees' sale to convey any portion of the property purchased by him or to dispose of the proceeds of sales of such property. The correspondence upon which the appellants rely as creating an agreement to apply these proceeds to the note originated before the sale and at a time when the parties were negotiating a settlement and a new loan. The final agreement that the bank should hold these moneys in trust to be turned over to the purchaser at the trustees' sale and to be credited to the lot purchasers was made upon the earnest solicitation of the real estate corporation to protect the appellants from claims of these lot purchasers in the event that the bank foreclosed upon the lots covered by their sales contracts.

The petitions for a rehearing are denied.