Martin v. De Ornelas , 139 Cal. 41 ( 1903 )

This is an action to foreclose a mortgage given by defendant Ornelas and wife to their infant daughter, and subsequently assigned to the plaintiff Martin. The appellant, Harper, was a purchaser of the mortgaged real property after the mortgage was signed, acknowledged, and recorded, and before it was assigned to plaintiff. The judgment was in favor of plaintiff against all the defendants. The defendant Harper appeals from the judgment against him, and from an order denying his motion for a new trial. The plaintiff moved to dismiss the appeals, on the grounds, — 1. Of failure to serve notice of appeal on the Ornelases as adverse parties in interest; and 2. Insufficiency of the undertaking on appeal. The motion to dismiss was continued to be heard with the case on its merits, and leave was given to file further proof of service. Since said continuance the appellant has filed a new affidavit of Mr. Downing (who made the previous affidavit of service alleged by respondent to be defective) showing the due service of the notice of appeal, free from any objection. Appellant has also filed a written admission of due service of said notice, signed by said respondent defendants. The notice of appeal, or a copy of it rather, is printed in the transcript, and it will be presumed, that the reference in the written admission, as well as in the affidavit to the "notice of appeal in the above-entitled action," relates to the original of said copy so printed in the transcript. This affidavit and admission obviates all objection to the appeal made on account of want of service or absence of proper proof of service. (SutterCounty v. Tisdale, 128 Cal. 180; Heinlen v. Heilbron, 94 Cal. 636. )

The undertaking in question, after reciting the two appeals, concludes as follows: "Now, therefore, in consideration of the premises, and of such appeals, the Fidelity and Deposit Co. of Maryland (a corporation) doth hereby undertake and promise on the part of the appellant that the said appellant will pay all damages and costs which may be awarded against him on the appeals, or on a dismissal thereof, or of either of them, not exceeding the sum of $300, to which amount it acknowledges itself bound." The objection urged to this undertaking is, that the words "or either of them" were omitted after the word "appeals," so that if judgment should go for respondent on one appeal, and against him on the other, no recovery could be had against the sureties. No case is cited to support this objection, and we think it not well founded. The appeals being from the judgment and from an order denying a new trial, one undertaking in the sum of three hundred dollars was sufficient to cover both appeals.(Bell v. Staacke, 137 Cal. 307, and cases therein cited.) The word "appeals," as used in the undertaking, embraces both, and each of the appeals and damages awarded on either of the appeals is embraced within a promise to pay "all damages" awarded on the "appeals." The undertaking, fairly construed, covers any and all damages and costs that may accrue on either of the appeals. The motion to dismiss the appeals is denied.

The preliminary objections made by respondent to hearing the appeal from the order denying a new trial, because of the absence of specifications of particulars, etc., need not be discussed, for the reason that appellant in his reply brief seems to have practically abandoned his appeal from the order, as his contentions are all directed to the appeal from the judgment.

The appellant contends that the findings do not support the judgment rendered. We think this contention is well founded. The findings show that Manuela, the ward of her father, Ornelas, held a note for twenty-five hundred dollars, executed by one Garcia, and secured by a mortgage upon a town lot, executed by the same party; that said town lot was thereafter conveyed to Ornelas, the guardian, by Garcia; that Ornelas conveyed the said lot to Martin for a consideration; and, without an order of the court authorizing it, attempted, as guardian of the ward, to satisfy of record the Garcia mortgage on the same lot, and thereafter, as agreed with Martin, Ornelas and his wife signed, executed and delivered a note and mortgage for two thousand five hundred dollars and interest on a lot in the Alvarado tract, belonging to Ornelas and his wife, to the ward. This mortgage was recorded, and the last-named note and mortgage were intended and given as substitutes for the aforesaid Garcia note and mortgage. The two thousand six hundred dollars paid by Martin for the town lot was applied directly to the payment of Ornelas's debts, and no part of it went to the ward. Subsequent to the giving of the Ornelas mortgage to the ward, the guardian, Ornelas, being again in need of money, attempted, as guardian, without any authority from the court, to satisfy of record the said mortgage given to the minor by himself and wife on the Alvarado lot; and at the time time he and his wife gave a mortgage to a local bank on the same property. This mortgage was subsequently foreclosed, the property bought in by the bank, which thereafter assigned its sheriff's certificate to defendant Harper, who at about the same time bought the lot from Ornelas and wife and obtained a deed from them for the same. Harper paid one thousand seven hundred dollars for the land. Soon after this the friends of the ward obtained the appointment of a guardian ad litem for her. Said guardian adlitem, in pursuance of an order of court, duly authorizing him thereto, commenced a suit against Martin et al., to set aside the release of the Garcia mortgage and to foreclose the same, and in this suit judgment was rendered against Martin et al., and in favor of said ward, awarding a foreclosure of the Garcia mortgage, a sale of the lot upon which it rested to satisfy the note secured by the mortgage, and a deficiency judgment against Garcia and Ornelas. Appeal was taken by Martin to the supreme court. While this appeal was pending, Martin made a compromise with the guardian ad litem, by which it was agreed that Martin should pay the ward three thousand two hundred dollars, and in return the judgment should be reversed and remanded to the trial court, the trial court to enter judgment in Martin's favor, and the minor to assign all her right and title in the Ornelas mortgage to Martin. This compromise was duly approved by the probate court for the minor; and the case was disposed of and the assignment of the mortgage made in accordance therewith. Soon thereafter Martin commenced this suit to foreclose the assigned mortgage. Between the commencement of the suit in foreclosure on behalf of the minor and the date of the compromise, Harper made permanent improvements on the land previously purchased by him, to the extent of one hundred and fifty dollars in value. Martin had full notice of the dispositon to be made of the moneys which he paid to Ornelas. Harper had no notice of the arrangement between Martin and Ornelas, or of the disposition of the money paid for the Garcia lot. It is clear from the foregoing statement of facts that the attempted satisfaction of the Garcia mortgage without an order of the probate court authorizing the same was of no validity. (Jenningsv. Jennings, 104 Cal. 150; Aldrich v. Willis, 55 Cal. 81.) It is equally clear that the minor was in no way bound by the unauthorized attempts of Martin and Ornelas to exchange or substitute another note and another mortgage on another piece of property for the note and mortgage which she held against Garcia. She may have been at liberty to avail herself of either of the two mortgages, but as the second one was intended by the makers as a substitute and satisfaction of the first, if she accepted it at all, she must do so on the terms under which it was given. She did not accept it, however, but, on the contrary, through her guardian ad litem, expressly repudiated the arrangement that had been made for her between Martin and Ornelas, and elected to stand by and claim her full rights under the Garcia note and mortgage, when she began her suit to foreclose the same. Having done this, and having followed the case to the supreme court when Martin appealed it, she was bound by such election, and could not thereafter avail herself of the second mortgage. (Rowley v.Towsley, 53 Mich. 329.) Having once repudiated the second mortgage, it had no further validity, and did not thereafter constitute a lien upon the land, and Harper's title, though obtained subsequent to the date of said mortgage, was no longer affected by it. Indeed, it is doubtful whether the Ornelas mortgage ever constituted a lien upon the premises. It is difficult to understand how there could be a mortgage without a mortgagee; and it is still more difficult to see how the ward could be made a mortgagee without any assent on her behalf to the transaction. But be this as it may, it is clear that when she had once elected to repudiate the transaction, so far as she was concerned, the second mortgage was as if it had never been. She then had no further right or interest in the second mortgage that she could assign or that any one could be subrogated to. In this view of the case it becomes immaterial to determine whether the satisfaction placed of record as to the Ornelas mortgage was valid or not.

As to the claim that the Ornelas mortgage should be treated as valid for the protection of Martin, even though the ward elected to hold on to the Garcia mortgage, we have this to say: Harper purchased the land without any notice of Martin's equities, as is shown by the findings, and, conceding that the attempted satisfaction of the second mortgage was invalid, Martin was responsible for the doubtful and uncertain condition of his own title in the Garcia property. It was the result of his negligence in not seeing to it that the several acts of the guardian were duly authorized; and he will not be permitted to save himself from his own negligence by resort to the equitable doctrine of subrogation at the expense of one who innocently invested his money without notice of any of these equities now claimed by him.

Again, it would be inequitable, as against the rights of Harper, to allow Martin to give the arrangement between Ornelas and himself any other effect than the parties to it intended it should have at the time it was entered into. They intended that the Ornelas mortgage should satisfy the Garcia mortgage. It is so found. They never intended that the ward should have the benefit of both those mortgages. What principle of equity can be invoked now to give the transaction a greater scope, a broader effect in Martin's behalf than it was to have on behalf of the minor? The respondent now wants both these mortgages held to be in full force and effect for the protection of his "latent equities" against a purchaser for value who had no notice of those equities. Equity will not so punish an innocent party that it may reward a negligent party for his negligence. (Heyder v. Excelsioretc. Assn., 42 N.J. Eq. 403;¹ Horner's Appeal, 94 Pa. St. 489;City Council v. Ryan, 22 S.C. 339.²) In Sheldon on Subrogation (2d ed., sec. 43) it is said: "The fact that the loss of one who seeks to be protected by the application of the doctrine of subrogation arose from his own negligence, and that the granting of his request would now be prejudicial to other innocent creditors or assignors of his debtor, will be fatal to his claim." In this connection it may be well to remember that the payment of the three thousand two hundred dollars was made by Martin long subsequent to the purchase by Harper, and after Harper had improved the place to the extent of one hundred and fifty dollars, and therefore any equities of Martin on account of the payment of this three thousand two hundred dollars arose subsequent to and are subject to Harper's prior equities. These improvements, too, were made after the suit to foreclose the Garcia mortgage was commenced, and while the ward was in the very act of repudiating the whole transaction between Martin and Ornelas, including the second mortgage, which was the outgrowth of that transaction.

The judgment and order are reversed.

McFarland, J., Henshaw, J., Lorigan, J.,

Angellotti, J., Van Dyke, J.

¹ 59 Am. Rep. 49.

² 53 Am. Rep. 713.