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Clear Title May Not Derive From A Fraud

10 Responses

1. 

   SF_Dan, on July 7, 2011 at 1:13 pm said:

   & 6 Angels …

   ~~~~

   (Cite as: 85 Cal.App.4th 1279)85 Cal.App.4th 1279, 102 Cal.Rptr.2d 711, 01 Cal. Daily Op. Serv. 125, 2001 Daily Journal D.A.R. 129

   6 ANGELS, INC., Plaintiff and Respondent,
   v.
   STUART-WRIGHT MORTGAGE, INC., et al., Defendants and Appellants.

   No. B128163.

   Court of Appeal, Second District, Division 4, California.
   Jan 2, 2001.

   SUMMARY

   The trial court granted a purchaser of real estate summary adjudication of its claim to quiet title to property for which plaintiff bid $10,000.01 at a trustee’s sale in which the property had been offered for $10,000. After the bidding, the loan servicing company refused to transfer the deed to plaintiff, stating that the property should have been offered for $100,000. (Superior Court of Los Angeles County, No. BC169368, Marvin Lager, Judge.)

   The Court of Appeal affirmed. It held that the trial court properly granted plaintiff summary adjudication. The company was not entitled to relief from the foreclosure sale. The only potential procedural irregularity was the clerical error that the company alleged it made when instructing the trustee on the opening bid. However, this error, which was wholly under the company’s control and arose solely from the company’s own negligence, fell outside the statutory procedural requirements for foreclosure sales and was unconnected to the sale proceedings. (Opinion by Curry, J., with Vogel (C. S.), P. J., and Epstein, J., concurring.)

   HEADNOTES

   Classified to California Digest of Official Reports

   (1a , 1b, 1c, 1d, 1e, 1f) Deeds of Trust § 36–Sale Under Power–Attack on Sale–Irregularities–Clerical Error in Requested Opening Bid.

   The trial court properly granted a purchaser of real estate summary adjudication of its claim to quiet title to property, where plaintiff bid $10,000.01 for the property at a trustee’s sale in which the property had been offered for $10,000, but the loan servicing company refused to transfer the deed to plaintiff, stating that the property should have been offered for $100,000. The company was not entitled to relief from the foreclosure sale. A mere inadequacy of price, absent some procedural irregularity that contributed to the inadequacy of price or otherwise injured the trustor, is insufficient to set aside a nonjudicial foreclosure sale. The only potential procedural irregularity was the clerical error that the company alleged it made when instructing the trustee on the opening bid. However, this error, which was wholly under the company’s control and arose solely from the company’s own negligence, fell outside the statutory procedural requirements for foreclosure sales and was unconnected to the sale proceedings. That plaintiff may not have been a bona fide purchaser was immaterial, since no deed was transferred to plaintiff. Also, granting the company relief from the sale would frustrate the public policy favoring swift, efficient, and final foreclosure sales. Further, the company was not entitled to relief on theories of unilateral mistake or unjust enrichment, since the mistake was within the discretion of the company. Finally, $10,000.01 was ample consideration; where there is some consideration, a court will not attempt to measure it.

   [See 3 Witkin, Summary of Cal. Law (9th ed. 1987) Security Transactions in Real Property, § 149; 4 Miller & Starr, Cal. Real Estate (3d ed. 2000) §§ 10:210, 10:211.]

   (2) Summary Judgment § 26–Appellate Review–Scope–Summary Adjudication.

   A summary adjudication motion is subject to the same rules and procedures as a summary judgment motion. Both are reviewed de novo. Summary adjudication is properly granted when the evidence in support of the moving party establishes that there is no issue of fact to be tried as to a particular cause of action, affirmative defense, claim for damages, or issue of duty. The aim of the procedure is to discover whether the parties possess evidence requiring the weighing procedures of a trial. For a plaintiff or cross-complainant to prevail, that party must show that there is no material factual dispute with respect to one or more causes of action. The trial court must decide if a triable issue of fact exists. If none does, and the sole remaining issue is one of law, it is the trial court’s duty to determine the issue of law.

   (3) Deeds of Trust § 29–Sale Under Power–Governing Statutes.

   The comprehensive statutory scheme governing foreclosure sales (Civ. Code, § 2924 et seq.) evidences a legislative intent that a sale that is properly conducted constitutes a final adjudication of the rights of the borrower and lender. As a general rule, there is a common law rebuttable presumption that a foreclosure sale has been conducted regularly and fairly. Accordingly, a successful challenge to the sale requires evidence of a failure to comply with the procedural requirements for the foreclosure sale that caused prejudice to the person attacking the sale. Whether there is sufficient evidence to overcome this presumption is generally a question of fact. Nonetheless, the presumption must prevail when the record lacks substantial evidence of a prejudicial procedural irregularity.

   (4) Deeds of Trust § 36–Sale Under Power–Attack on Sale–Buyer Who Is Not Bona Fide Purchaser.

   In limited circumstances, a foreclosure sale can be successfully challenged only if the buyer is not a bona fide purchaser. Civ. Code, § 2924, contains a statutory presumption arising from the recital in the trustee’s deed that all statutory requirements for notice of default and sale have been satisfied. This presumption is prima facie evidence of compliance and conclusive evidence of compliance in favor of a bona fide purchaser or encumbrancer. Thus, once a deed reciting that all legal requirements have been satisfied has been transferred to a buyer at a foreclosure sale, the sale can be successfully attacked on the ground of procedural irregularity only if the buyer is not a bona fide purchaser.

   (5) Deeds of Trust § 36–Sale Under Power–Attack on Sale–Fraud and Mistake.

   Generally, a court has the power to vacate a foreclosure sale where there has been fraud in the procurement of the foreclosure decree or where the sale has been improperly, unfairly, or unlawfully conducted, or is tainted by fraud, or where there has been such a mistake that to allow it to stand would be inequitable to the purchaser and parties.

   (6) Contracts § 5–Consent–Unilateral Mistake.

   Rescission of a contract on the basis of a unilateral mistake is unavailable to a party who assumed the risk of the mistake in entering into the contract. In some circumstances, a court may allocate the risk of a mistake to a party on the ground that it is reasonable to do so under the circumstances.

   (7) Restitution and Constructive Contracts § 2–Grounds–Unjust Enrichment.

   Determining whether it is unjust for a person to retain a benefit may involve policy considerations. For example, if a person receives a benefit because of another’s mistake, policy may dictate that the person making the mistake assume the risk of the error. The desirability of allowing a party to retain the benefit of his or her bargain may preclude the injured party from receiving restitution.

   COUNSEL

   Burnett & Matthews, Michael W. Burnett and Arturo E. Matthews, Jr., for Defendants and Appellants. *1282
   (Cite as: 85 Cal.App.4th 1279, *1282)

   Law Offices of Jody D. Angel and Jody D. Angel for Plaintiff and Respondent.

   CURRY, J.

   After respondent 6 Angels, Inc., (6 Angels) successfully bid $10,000.01 on a piece of real property offered for $10,000 at a trustee’s sale, appellant Dovenmuehle Mortgage, Inc., (DMI) refused to transfer the deed to 6 Angels, contending that the property should have been offered at $100,000. The trial court granted summary adjudication on 6 Angels’s claim for quiet title and judgment was subsequently entered in favor of 6 Angels and against appellants DMI, Stuart-Wright Mortgage, Inc. (SWM) and MTDS, Inc., doing business under the name of Meridian Trust Deed Service (MTDS). We affirm.

   Statement of Facts
   Prior to March 21, 1997, SWM was the beneficiary under a deed of trust encumbering real property owned by Marvin Salazar and Maria Carmen Ruiz. DMI serviced the loan on behalf of SWM. Mortgage Default Service was the substituted trustee under the deed of trust. FN1

   FN1 Mortgage Default Service is not a party to this appeal.

   On February 25, 1997, a notice of trustee’s sale regarding this property was recorded. The notice listed an indebtedness of $144,656.17, and stated that a trustee’s sale was scheduled for March 21, 1997. The day before the trustee’s sale, DMI sent a letter to Mortgage Default Service setting an opening bid of $10,000.

   6 Angels attended the sale after receiving a copy of the notice of sale. The auctioneer at the sale made an opening bid of $10,000 on behalf of SWM, and 6 Angels tendered a bid for $10,000.01, which was uncontested by any other bidders. Shortly thereafter, DMI learned about 6 Angels’s bid and instructed Mortgage Default Service to return the funds tendered by 6 Angels and not to issue a trustee’s deed. Mortgage Default Service followed these instructions. MTDS bought the property for $100,000.01 at a second trustee’s sale on April 18, 1997.

   Statement of the Case
   6 Angels commenced the underlying action on April 16, 1997. On or about May 26, 1998, 6 Angels filed a motion for summary adjudication on *1283
   (Cite as: 85 Cal.App.4th 1279, *1283)its claim for quiet title in its third amended complaint. On July 10, 1998, the trial court granted the motion, and 6 Angels subsequently dismissed the remaining claims in the third amended complaint. Judgment was entered on October 20, 1998.

   Discussion
   (1a) Appellants contend that the trial court erred in granting summary adjudication on 6 Angels’s claim for quiet title. We disagree.

   A. Standard of Review
   (2) “A summary adjudication motion is subject to the same rules and procedures as a summary judgment motion. Both are reviewed de novo. [Citations.]” ( Lunardi v. Great-West Life Assurance Co. (1995) 37 Cal.App.4th 807, 819 [44 Cal.Rptr.2d 56].)

   “Summary adjudication is properly granted when the evidence in support of the moving party establishes that there is no issue of fact to be tried as to a particular cause of action, affirmative defense, claim for damages or issue of duty. [Citations.] The aim of the procedure is to discover whether the parties possess evidence requiring the weighing procedures of a trial. [Citation.] … For a plaintiff or cross-complainant to prevail, such party must show there is no material factual dispute with respect to one or more causes of action. [Citation.] The trial court must decide if a triable issue of fact exists. If none does, and the sole remaining issue is one of law, it is the duty of the trial court to determine the issue of law. [Citation.]” ( Federal Deposit Ins. Corp. v. Superior Court (1997) 54 Cal.App.4th 337, 344-345 [62 Cal.Rptr.2d 713].)

   B. Setting Aside the Foreclosure Sale
   (1b) The primary issue presented is whether the trial court properly denied appellants relief from the foreclosure sale.

   1. Challenges to Foreclosure Sales
   (3) As the court explained in Moeller v. Lien (1994) 25 Cal.App.4th 822, 830 [30 Cal.Rptr.2d 777], foreclosure sales are governed by a “comprehensive” statutory scheme. This scheme, which is found in *1284
   (Cite as: 85 Cal.App.4th 1279, *1284)Civil Code sections 2924 through 2924k, FN2 evidences a legislative intent that a sale which is properly conducted “constitutes a final adjudication of the rights of the borrower and lender.” ( Moeller v. Lien, supra, 25 Cal.App.4th at p. 831.)

   FN2 The scheme can be summarized as follows: “Upon default by the trustor, the beneficiary may declare a default and proceed with a nonjudicial foreclosure sale. (Civ. Code, § 2924 ….) The foreclosure process is commenced by the recording of a notice of default and election to sell by the trustee. (Civ. Code, § 2924 ….) After the notice of default is recorded, the trustee must wait three calendar months before proceeding with the sale. (Civ. Code, § 2924, subd. (b) ….) After the 3-month period has elapsed, a notice of sale must be published, posted and mailed 20 days before the sale and recorded 14 days before the sale. (Civ. Code, § 2924f ….) The trustee may postpone the sale at any time before the sale is completed. (Civ. Code, § 2924g, subd. (c)(1) ….) If the sale is postponed, the requisite notices must be given. (Civ. Code, § 2924g, subd. (d).) The conduct of the sale, including any postponements, is governed by Civil Code section 2924g. [Citation.] The property must be sold at public auction to the highest bidder. (Civ. Code, § 2924g, subd. (a) ….)” ( Moeller v. Lien, supra, 25 Cal.App.4th at p. 830.)

   “As a general rule, there is a common law rebuttable presumption that a foreclosure sale has been conducted regularly and fairly.” (4 Miller & Starr, Cal. Real Estate (3d ed. 2000) § 10:211, p. 647, fn. omitted; Brown v. Busch (1957) 152 Cal.App.2d 200, 204 [313 P.2d 19].) Accordingly, “[a] successful challenge to the sale requires evidence of a failure to comply with the procedural requirements for the foreclosure sale that caused prejudice to the person attacking the sale.” (4 Miller & Starr, supra, § 10:210, at p. 640.) Whether there is sufficient evidence to overcome this presumption is generally a question of fact. ( Wolfe v. Lipsy (1985) 163 Cal.App.3d 633, 639 [209 Cal.Rptr. 801], disapproved on another ground in Droeger v. Friedman, Sloan & Ross (1991) 54 Cal.3d 26, 36 [283 Cal.Rptr. 584, 812 P.2d 931].) Nonetheless, the presumption must prevail when the record lacks substantial evidence of a prejudicial procedural irregularity. ( Stevens v. Plumas Eureka Annex Min. Co. (1935) 2 Cal.2d 493, 497 [41 P.2d 927].)

   2. Absence of Procedural Error
   (1c) On appeal, the parties do not dispute that DMI intended to set the opening bid at $100,000, but through a clerical error it mistakenly instructed Mortgage Default Service to open with a bid of $10,000. However, California courts have long held that mere inadequacy of price, absent some procedural irregularity that contributed to the inadequacy of price or otherwise injured the trustor, is insufficient to set aside a nonjudicial foreclosure sale. ( Crofoot v. Tarman (1957) 147 Cal.App.2d 443, 446 [305 P.2d 56]; Sargent v. Shumaker (1924) 193 Cal. 122, 129-130 [223 P. 464].)

   An instructive application of this principle is found in Crofoot v. Tarman, supra, 147 Cal.App.2d 443. In Crofoot, the owners of some real property *1285
   (Cite as: 85 Cal.App.4th 1279, *1285)encumbered it with a trust deed to secure a note for a corporation, and a default occurred. ( Id. at p. 444.) The owners entered into a contract to sell the property for approximately $78,000 to Tarman, who also bought the note secured by the property and asked for a postponement of the impending foreclosure sale. ( Id. at pp. 444-445.) When the corporation tried to determine the date of the postponed sale from Tarman’s attorney, the attorney’s secretary innocently and inadvertently provided an incorrect date, and neither the owners nor the corporation appeared at the foreclosure sale. ( Id. at pp. 445-447.) Tarman bought the property for $10,000 at this sale and did not make any payment under his prior contract to purchase the property. ( Id. at pp. 445-446.)

   The owners then sought relief from the foreclosure sale. ( Crofoot v. Tarman, supra, 147 Cal.App.2d at p. 446.) At trial, Tarman testified that he believed the property was worth between $40,000 and $50,000 on the date of the foreclosure sale, and the trial court concluded that its value was “ ‘not in excess of $50,000.’ ” ( Ibid.) On appeal, the court in Crofoot noted that Tarman obtained the property for about $20,000 (including sums paid to discharge liens). ( Ibid.) Nonetheless, it concluded that the owners were not entitled to relief from the sale, despite the inadequacy of the sale price, because there were no procedural irregularities in the sale, and the secretary’s mistake was “dehors FN3 the sale proceedings.” ( Id. at p. 447; see also Lancaster Security Inv. Corp. v. Kessler (1958) 159 Cal.App.2d 649, 652-656 [324 P.2d 634] [even though property valued at between $50,000 and $60,000 was sold at a nonjudicial foreclosure sale for $3,000, party who bought property from original trustor prior to sale is not entitled to set aside sale because all statutory notice requirements for sale were satisfied].)

   FN3 The term ”dehors“ means ”[o]ut of; without; beyond; foreign to; unconnected with.“ (Black’s Law Dict. (6th ed. 1990) p. 424, col. 2.)

   Here, the only potential procedural irregularity identified by appellants is the clerical error that DMI allegedly made when instructing Mortgage Default Service on the opening bid. However, this error, which was wholly under DMI’s control and arose solely from DMI’s own negligence, falls outside the procedural requirements for foreclosure sales described in the statutory scheme, and, like the secretary’s error in Crofoot, is “dehors the sale proceedings.” ( Crofoot v. Tarman, supra, 147 Cal.App.2d at p. 447.) Because there is no procedural error here independent of the inadequacy of price, we conclude that summary adjudication was properly granted.

   Appellants contend otherwise on several grounds. For the reasons explained below, we reject these contentions. *1286
   (Cite as: 85 Cal.App.4th 1279, *1286)

   3. Bona Fide Purchaser
   Appellants contend that there is a triable issue as to whether 6 Angels was a bona fide purchaser, and thus summary adjudication was improper. We disagree.

   It is undisputed that 6 Angels is in the business of buying properties at foreclosure sales, and thus there is evidence that it is not a bona fide purchaser. ( Estate of Yates (1994) 25 Cal.App.4th 511, 523 [32 Cal.Rptr.2d 53].) Nonetheless, as we explain below, 6 Angeles’s status as a bona fide purchaser is immaterial here.

   (4) In limited circumstances, a foreclosure sale can be successfully challenged only if the buyer is not a bona fide purchaser. (4 Miller & Starr, Cal. Real Estate, supra, § 10:210, at p. 639.) Aside from the common law presumption of validity discussed above (see pt. B.1, ante), Civil Code section 2924 contains a statutory presumption “aris[ing] from the recital in the trustee’s deed that all statutory requirements for notice of default and sale have been satisfied. This presumption is prima facie evidence of compliance and conclusive evidence of compliance in favor of a bona fide purchaser or encumbrancer.” (4 Miller & Starr, supra, § 10:211, at p. 648, italics & fn. omitted; see also Wolfe v. Lipsy, supra, 163 Cal.App.3d at pp. 639-640.) Thus, once a deed reciting that all legal requirements have been satisfied has been transferred to a buyer at a foreclosure sale, the sale can be successfully attacked on the grounds of procedural irregularity only if the buyer is not a bona fide purchaser. ( Moeller v. Lien, supra, 25 Cal.App.4th at p. 831; 4 Miller & Starr, supra, § 10:211, at p. 648.)

   (1d) However, it is undisputed here that no deed was transferred to 6 Angels. When the deed has not been transferred, the sale may be successfully challenged, regardless of whether the buyer is a bona fide purchaser, provided that there is a procedural irregularity. ( Moeller v. Lien, supra, 25 Cal.App.4th at pp. 831-832; Little v. CFS Service Corp. (1987) 188 Cal.App.3d 1354, 1358-1362 [233 Cal.Rptr. 923]; 4 Miller & Starr, Cal. Real Estate, supra, § 10:211, at p. 648.) As we have explained, nothing suggests that there was any procedural defect in the sale. Accordingly, under the facts of the present situation, the existence of factual disputes about 6 Angels’s status as a bona fide purchaser is irrelevant to whether summary adjudication was properly granted.

   Appellants disagree, citing Estate of Yates, supra, 25 Cal.App.4th 511. However, Yates is factually distinguishable. The court in Yates held the gross inadequacy in price was sufficient to put a skilled and experienced purchaser *1287
   (Cite as: 85 Cal.App.4th 1279, *1287)on notice of the actual procedural defect, namely, the trustee’s failure to send a mandatory notice. ( Id. at pp. 520-523.) Unlike Yates, there was no procedural irregularity in the sale at issue here.

   4. Alternative Remedial Theories
   Appellants also contend the sale should be set aside on grounds of public policy, and on the basis of theories of unilateral mistake, unjust enrichment, and lack of consideration. We are not persuaded.

   The public policy underlying the comprehensive framework governing foreclosure sales is a concern for swift, efficient, and final sales. ( Moeller v. Lien, supra, 25 Cal.App.4th at pp. 830, 832.) In our view, which we elaborate below, granting relief under the circumstances present here would frustrate, rather than promote, this policy, by adding uncertainty to the finality of foreclosure sales. (5) Regarding appellants’ theories of relief, we recognize that “[i]t is the general rule that courts have power to vacate a foreclosure sale where there has been fraud in the procurement of the foreclosure decree or where the sale has been improperly, unfairly or unlawfully conducted, or is tainted by fraud, or where there has been such a mistake that to allow it to stand would be inequitable to purchaser and parties.” ( Bank of America etc. Assn. v. Reidy (1940) 15 Cal.2d 243, 248 [101 P.2d 77].) Nonetheless, the alternative theories fail in this context.

   (6) Rescission of a contract on the basis of a unilateral mistake is unavailable to a party who assumed the risk of the mistake in entering into the contract. ( Conservatorship of O’Connor (1996) 48 Cal.App.4th 1076, 1096-1099 [56 Cal.Rptr.2d 386]; Rest.2d Contracts, § 153.) In some circumstances, the risk of a mistake may be allocated to a party by a court “on the ground that it is reasonable in the circumstances to do so.” (Rest.2d Contracts, § 154, subd. (c); see Schultz v. County of Contra Costa (1984) 157 Cal.App.3d 242, 249 & fn. 1 [203 Cal.Rptr. 760].) In Sargent v. Shumaker, supra, 193 Cal. at page 132, our Supreme Court indicated that a beneficiary assumes the risk of the sort of error at issue here, stating that “ ‘[i]f the inadequacy [of price] can be connected with or shown to result from any mistake, accident, surprise, misconduct, fraud or irregularity, the sale will generally be vacated, unless the complainant was himself in fault, or the rights of innocent third parties have become dependant upon the sale.’ ” (Quoting Freeman on Executions (1900) § 309.)

   The Sargent court’s discussion in connection with these remarks cites with approval Rauer v. Hertwick (1917) 175 Cal. 278 [165 P. 946]. In Rauer, a judgment creditor’s land was sold at a meager price at an execution sale to *1288
   (Cite as: 85 Cal.App.4th 1279, *1288)pay the judgment, and the judgment creditor sought to set aside the sale, contending that he had not received notice of the sale. ( Id. at p. 279.) Observing that all statutorily mandated notices of the sale were given and that the judgment creditor knew of the judgment, the court in Rauer declined to set aside the sale, despite the inadequacy of the price, reasoning that his loss could “more properly be attributed to his neglect of his own interests than to any unfairness” by anyone else. ( Id. at pp. 281-283.)

   (1e) We believe that Sargent and Rauer are dispositive here. The alleged error in price was within appellants’ discretion and control, and they were solely responsible for it. Unless beneficiaries assume the risk of such errors, a low opening bid at a foreclosure sale will invariably trigger suspicion about the sale’s finality, deterring buyers and impairing the efficacy of foreclosure sales.

   For similar reasons, principles of unjust enrichment do not provide a basis for relief. (7) As the court explained in First Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, 1663 [15 Cal.Rptr.2d 173], “[d]etermining whether it is unjust for a person to retain a benefit may involve policy considerations. For example, if a person receives a benefit because of another’s mistake, policy may dictate that the person making the mistake assume the risk of the error. The desirability of allowing a party to retain the benefit of his or her bargain may preclude the injured party from receiving restitution.” (1f)That is the case here.

   Finally, $10,000.01 is ample consideration for the sale. (See Poggetto v. Bowen (1936) 18 Cal.App.2d 173, 175 [63 P.2d 857] [“There being some consideration, the law will not attempt to measure the amount thereof.”]; 1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, § 210, pp. 218-219.)

   Disposition
   The judgment is affirmed.

   Vogel (C. S.), P. J., and Epstein, J., concurred. *1289
   (Cite as: 85 Cal.App.4th 1279, *1289)

   Cal.App.2.Dist.
   6 ANGELS, INC., Plaintiff and Respondent, v. STUART-WRIGHT MORTGAGE, INC., et al., Defendants and Appellants.
   85 Cal.App.4th 1279, 102 Cal.Rptr.2d 711, 01 Cal. Daily Op. Serv. 125, 2001 Daily Journal D.A.R. 129

   Briefs and Other Related Documents (Back to top)

   • 2000 WL 34025639 (Appellate Brief) Appellants’ Reply Brief (Jun. 22, 2000) Original Image of this Document (PDF)
   • 2000 WL 34228725 (Appellate Brief) Brief of Respondent 6 Angels, Inc. (Apr. 05, 2000)
   • 1997 WL 33572410 (Appellate Brief) Appellants’ Opening Brief (Mar. 21, 1997) Original Image of this Document (PDF)

   ——————————————————————————–

   Judges and Attorneys (Back to top)
   Judges | Attorneys
   Judges
   Curry, Hon. Daniel A.
   State of California Court of Appeal, 2nd Appellate District
   Los Angeles, California 90013
   Litigation History Report | Judicial Reversal Report | Profiler

   Epstein, Hon. Norman Lee
   State of California Court of Appeal, 2nd Appellate District
   Los Angeles, California 90013
   Litigation History Report | Judicial Reversal Report | Judicial Expert Challenge Report | Profiler

   Lager, Hon. Marvin Mitchell
   State of California Superior Court, Los Angeles County
   Los Angeles, California 90012
   Litigation History Report | Judicial Reversal Report | Judicial Expert Challenge Report | Profiler

   Vogel, Hon. Charles S.
   State of California Court of Appeal, 2nd Appellate District
   Los Angeles, California 90013
   Litigation History Report | Judicial Reversal Report | Profiler

   ——————————————————————————–

   Attorneys
   Attorneys for Defendant
   Burnett, Michael W.
   Newport Beach, California 92660
   Litigation History Report | Profiler

   Matthews, Art
   Newport Beach, California 92660
   Litigation History Report | Profiler

   Attorneys for Plaintiff
   Angel, Jody D.
   Los Angeles, California 90071
   Litigation History Report | Profiler

   END OF DOCUMENT

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2. 

   SF_Dan, on July 7, 2011 at 1:06 pm said:

   To clarify any confusion, the case title is Trout v. Taylor (below) — not Trout v. Trout.

   ~~~~

   (Cite as: 220 Cal. 652)220 Cal. 652, 32 P.2d 968

   KATE C. TROUT, Appellant,
   v.
   R. H. TAYLOR et al., Respondents.

   KATE C. TROUT, Respondent,
   v.
   R. H. TAYLOR et al., Defendants; R. P. ARCHER, Appellant.

   Supreme Court of California.
   L. A. Nos. 12510, 12574.

   April 30, 1934.

   [1] DEEDS—GRANTOR AND GRANTEE—CANCELLATION OF INSTRUMENTS—VOID DEED.
   In this action to set aside a conveyance of real property which was induced by fraud, the deed, which did not contain the name of the grantee at the time it was executed, was not merely voidable, but was void in toto and a nullity, where the records showed no agency nor authority, express or implied, was given by plaintiff to the agent who secured the deed.

   [2] ID.—VOID DEEDS—INNOCENT PURCHASERS—GOOD FAITH.

   An instrument wholly void, such as an undelivered deed, a forged instrument or a deed in blank, cannot be made the foundation of a good title even under the equitable doctrine of bona fide purchase; and in such action the mere fact that an encumbrancer acted in good faith in dealing with persons who apparently held the legal title was not in itself a sufficient basis for relief.

   [3] ID.—NEGLIGENCE—ESTOPPEL—EVIDENCE.

   An innocent purchaser taking such a void instrument may find protection in the doctrine of estoppel when circumstances are presented which show negligence or some other misconduct by the other party which contributed to the loss; but in such action said encumbrancer was not entitled to a lien on the property for the amount of the encumbrance with interest where the trial court failed to find any negligence on the part of plaintiff and expressly found that plaintiff was not estopped to urge her claims against such encumbrancer and that she was not guilty of laches and there was no evidence in the record to warrant a different finding.

   APPEALS from a judgment of the Superior Court of Los Angeles County. Warren V. Tryon, Judge Presiding. Reversed with directions.

   The facts are stated in the opinion of the court.

   *653
   (Cite as: 220 Cal. 652, *653)Meserve, Mumper, Hughes & Robertson for Appellant Trout.

   Tobias R. Archer for Appellant R. P. Archer.

   Sherman & Sherman and Austin C. Sherman for Respondents R. H. Taylor et al.

   THE COURT.

   A hearing was granted in this case, on petitions of both plaintiff and defendant Archer, after decision by the District Court of Appeal, Fourth Appellate District. We now adopt, as part of our decision, the following portions of the opinion rendered therein by Mr. Justice pro tem. Morton.

   Plaintiff, an elderly woman, without business experience, and of very limited schooling and education, was induced by an agent of R. H. Taylor Corporation on April 18, 1927, to exchange her two acres located in Sawtelle, Los Angeles county, of a reasonable market value of $12,500, for 110 shares of Running Springs Park, Inc., having property in San Bernardino county. This stock was represented to her as having a value of $30,000 and she was assured that it would pay her $5,000 every six months commencing September 1, 1927, and until she had received $30,000. The *654
   (Cite as: 220 Cal. 652, *654)stock was in fact of no value whatever and paid no returns. The deed signed and acknowledged by plaintiff to her lots was in blank as to a grantee which was not discovered by her at the time. Subsequently the names of A. H. Taylor and Mae Taylor were inserted as grantees pursuant to certain alleged transactions with the R. H. Taylor Corporation, Inc. After recording the deed a trust deed was placed on lot 1 securing a promissory note for $4,000 in favor of the notary who took the acknowledgment of plaintiff’s deed, and a trust deed was placed on lot 2 securing a promissory note for $3,000 in favor of the agent who induced plaintiff to enter into the deal. Both notes were sold to defendant R. P. Archer for $6,660. A. H. Taylor and wife defaulted on the $4,000 note secured by a trust deed on lot 1 and at the foreclosure sale defendant R. P. Archer bid in the property. They paid off the $3,000 note secured by the trust deed on lot 2 and thereafter executed a new note for $2,500 payable to L. E. Arnold secured by a trust deed on this lot. Since bidding in lot 1 defendant Archer has expended for assessments and taxes $521.51. On November 5, 1928, plaintiff served notice of rescission; she did not discover, however, that the deed executed by her was in blank until the taking of the deposition of R. H. Taylor on March 23, 1929. The trial court decreed the deed executed by plaintiff to be null and void and cancelled and held that no interest or title passed thereby. Defendant R. P. Archer was adjudged to be entitled in equity to the return of his $521.51, together with interest and also $4,611.16 with interest at 7 per cent from June 23, 1928, that being the amount due at the foreclosure sale of that date. To secure the payment of these amounts defendant R. P. Archer was awarded a lien against lot 1. Defendant L. E. Arnold was declared by the judgment to have a lien on lot 2 in the sum of $2,500, together with interest, less any amounts paid to him on principal or interest. Plaintiff is willing to repay to defendant Archer the $521.51 together with interest but appeals on the judgment roll from the Archer judgment for $4,611.16 with 7 per cent interest from June 23, 1928, and also the Arnold judgment of $2,500 plus interest. The court found that R. P. Archer and L. E. Arnold acted in good faith and relied on the record title. Because the grant deed to A. H. Taylor and wife was a nullity, plaintiff contends that neither R. P. *655
   (Cite as: 220 Cal. 652, *655)Archer nor L. E. Arnold acquired any title or lien on the property even though they acted in good faith, without knowledge of the fraud perpetrated, and relied on the record title. Instead of giving plaintiff judgment against all the defendants except Archer and Arnold for the amounts evidenced by the trust deeds, plaintiff maintains that this judgment should be in favor of Archer and Arnold and plaintiff’s property decreed free of the two liens.

   Defendant Archer claiming to be an innocent purchaser files a separate appeal from the judgment denying his title to lot 1 and allowing him only a lien thereon. In this appeal the clerk’s and reporter’s transcripts bring before us the entire evidence. The two appeals have been consolidated and therefore they will be considered jointly here.

   The fraud of the defendants excluding Archer and Arnold has not been challenged so we turn our attention at once to the law of this state dealing with deeds executed in blank. In Jones v. Coulter, 75 Cal. App. 540, at page 547 [243 Pac. 487], the court held:

   “There can be no doubt as to the utter invalidity of the instruments under which appellant’s grantor, Meng, deraigned his purported title. The blank deeds signed by respondent and subsequently filled out under Neilson’s direction, with Meng’s name inserted as the purported grantee, were mere nullities. According to the great weight of authority, a deed executed in blank is void and passes no title. ( Wunderlin v. Cadogan, 50 Cal. 613, and cases cited infra.) As was said in Whitaker v. Miller, 83 Ill. 381, ‘there must be, in every grant, a grantor, a grantee and a thing granted, and a deed wanting in either essential is absolutely void’. In the instant case each of the instruments signed by respondent was wanting in all three of these essentials to a valid deed. Though the decisions of other jurisdictions are not in entire harmony upon the question, it has been definitely decided in this state that under our statute of frauds the name of the grantor or grantee or a description of the property cannot be inserted by an agent for the grantor, in the absence of the latter, unless the agent’s authority be in writing. If the authority of the agent be not in writing, his insertion of the name of grantor or grantee or description of the property does not pass the title. ( Upton v. Archer, 41 Cal. 85 [10 Am. Rep. 266]; *656
   (Cite as: 220 Cal. 652, *656)Vaca Valley etc. R. R. v. Mansfield, supra [84 Cal. 560 (24 Pac. 145)]; Harris v. Barlow, 180 Cal. 142 [179 Pac. 682]. See, also, Lund v. Thackery, 18 S. D. 113 [99 N. W. 856].) In Upton v. Archer, supra, the court says: ‘… as it could not become the plaintiff’s deed until the name of a grantee was inserted, that act could not be performed by an agent, in the absence of the plaintiff, unless his authority was in writing’ ”. ( Videau v. Griffin et al., 21 Cal. 390, 392; Tannahill v. Greening, 85 Cal. App. 714 [259 Pac. 1017]; Bardin v. Grace, 167 Ala. 453 [52 So. 425, Ann. Cas. 1912A, 537].)

   (1) “In view of these authorities the conclusion is inescapable that the deed in question was not voidable but was void in toto, a nullity. The record shows no agency, and no authority, express or implied given by plaintiff to defendant R. H. Taylor. The findings state that she believed the name of R. H. Taylor Corporation as grantee was written in the deed when she signed and acknowledged it and that she was not aware it was blank as to the grantee. The question of agency is therefore not involved.”

   The trial court, as stated above, adjudged title to the properties to be in the plaintiff, subject to liens of the two parties who lent money thereon in good faith, to the extent of their expenditures. Defendant Archer objects to this determination of his rights, and claims full title as a bona fide purchaser, to the land which he bought at the foreclosure sale. Plaintiff attacks this position and objects to any payments save for the sums expended for taxes, etc.

   (2) Numerous authorities have established the rule that an instrument wholly void, such as an undelivered deed, a forged instrument, or a deed in blank, cannot be made the foundation of a good title, even under the equitable doctrine of bona fide purchase. ( Promis v. Duke, 208 Cal. 420 [281 Pac. 613]; Gould v. Wise, 97 Cal. 532 [32 Pac. 576, 33 Pac. 323]; Bardin v. Grace, supra.) Consequently, the fact that defendant Archer acted in good faith in dealing with persons who apparently held legal title, is not in itself sufficient basis for relief.

   (3) An innocent purchaser taking a void instrument can, however, find protection in the doctrine of estoppel, where circumstances are presented which establish negligence or some other misconduct by the other party, which contributed to the loss. Section 3543 of the Civil Code provides broadly that “where one of two innocent persons*657
   (Cite as: 220 Cal. 652, *657)must suffer by the act of a third, he, by whose negligence it happened, must be the sufferer”.

   In this connection the court failed to find any negligence on the part of plaintiff, and in fact, expressly found that “it is not true that plaintiff ought now to be estopped to urge said claims against defendant R. P. Archer, or against defendant L. E. Arnold, and it is not true that plaintiff was guilty of gross laches, or any laches”. There is no evidence in the record to warrant a different finding. The loss resulting from the fraud must fall, therefore, where the course of business has placed it. ( Security Mortgage Co. v. Delfs, 47 Cal. App. 599 [191 Pac. 53]; Gould v. Wise, supra.) Defendants Archer and Arnold must seek their recourse against the fraudulent defendants who occasioned the loss.

   The judgment is therefore reversed with directions to the trial court to enter judgment in accordance with the views expressed in this opinion.

   Cal. 1934.
   KATE C. TROUT, Appellant, v. R. H. TAYLOR et al., Respondents. KATE C. TROUT, Respondent, v. R. H. TAYLOR et al., Defendants; R. P. ARCHER, Appellant.
   220 Cal. 652, 32 P.2d 968

   END OF DOCUMENT

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3. 

   Kev in NV, on November 7, 2010 at 11:17 am said:

   Gary,
   Please call me at your earliest convienence.
   I’m in Nevada, which as you know it is also a non-judicial State. I believe you have far more knowledge on this subject, and the fact that I can’t find anyone here “WHO GETS IT”. I feel like a pre-schooler playing against the NFL (w/o refs).
   Right now it looks like, I’m forced to go pro-se all the way, and now I need to ready a case as the Plaintiff in District Court. Before I go back to Justice Court as a Defendant in a UD hearing later this month.
   When you here what’s going on, I’m sure you’ll wish you could be the quarterback on my team.. or at least cheering for the underdog.. lol
   I need someone with knowledge, so maybe I’ll have a chance, or even catch them off guard with a winning game plan.
   I pray you’ll have a moment, to be the light at the end of the…
   I can be reached @ 7O2_ 782.9159.

   Thank You.
   Kev in NV.

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4. 

   Gary H, on November 5, 2010 at 1:19 am said:

   Javier, thanks for the case precedence, I need to look it up, much appreciated.

   DT and Tim, lets take this a step further and remove MERS from the picture and assume what Javier provided as precedence holds true.

   Since CA is a non-judicial State the only recourse we have as a defense is to file suit. In Trout v Trout (1934) a foundation is building it’s way to similar CA court precedent as can be seem in the 6 Angels Inc. case.

   Let me see if I can clarify a bit more, since in non-judicial foreclosure we don’t have the luxury of standing before a court to defend ourselves.

   1. The Robo-Signing in CA occurred with Predatory Securitized loans not long after closing by an “origination” Broker (by now bankrupt) and NOT a Lender by any means, think of Ameriquest and Argent Mortgage! There is an outlet available for everyone in all non-judicial states to obtain this information, it’s called The Secretary of State…..!

   2. Most of these assignments were “recorded” in their name at the county hall of records. (note, it is a State / Federal crime to “record” fraudulent / forged documents with any county recording office).

   3. In most cases the Broker / Pretender Lender retained the “Note” and never found it’s way to the “trust”, I have proof of this by going back to my loan docs. (I also have an acknowledgement of this in my CA court filings by the opposing party).

   4. There is also a lot more in these non-judicial “recorded” docs that should take additional precedence to include false claims of A.I.F. (attorney in fact) to further transfer or make assignment to.

   On a short note, MERS has a long way to go even after registering in CA. Did I miss something regarding “recorded assignments”? AMB is a sham!

   Gary

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5. 

   DyingTruth, on November 4, 2010 at 11:19 pm said:

   Um, just so everyone know MERS is re-registered with the California Secretary of State reg info below

   Entity Name: MORTGAGE ELECTRONIC
   REGISTRATION SYSTEMS, INC.
   Entity Number: C3306164
   Date Filed: 07/21/2010
   Status: ACTIVE
   Jurisdiction: DELAWARE
   Entity Address: 1818 LIBRARY ST STE 300
   Entity City, State,
   Zip: RESTON VA 20190
   Agent for Service
   of Process: GENPACT REGISTERED AGENT, INC.
   Agent Address: 15420 LAGUNA CYN RD STE 100
   Agent City, State,
   Zip: IRVINE CA 92618

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6. 

   Diana, on November 4, 2010 at 7:47 pm said:

   Does this mean that MER’s must pay back all filing fees to the CA Counties before having authority to foreclose?

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7. 

   Fighting MERS in Ca, on November 4, 2010 at 12:29 pm said:

   Tim,

   YUP

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8. 

   Neva, on November 4, 2010 at 10:13 am said:

   To me, it means that MERS engaged in fraud, so their “contract” is void. If an entity is going to engage in fraud and false documents in order to foreclose, that case can and should be dismissed by the Court. http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

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9. 

   Fighting MERS in CA, on November 4, 2010 at 9:53 am said:

   First to Tim: Yes, that’s what it’s saying.

   Second: Michael Rooney deserves credit for sharing Clear Title May Not Derive From A Fraud.

   Michael Rooney
   Michael Rooney Law Office
   580 California Street, 16th Floor
   San Francisco, CA 94104
   T (415) 533-0282 | F (415) 704-3321
   web: http://mikerooneylaw.com

   For more flaws visit: https://sites.google.com/site/mersfatalflawsincalifornia/

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10. 

    Tim, on November 4, 2010 at 8:17 am said:

    Does this mean Mer’s must pay all back filing fee’e to the Ca counties before answering a Quiet Title complaint?

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