Podrat v. Oberndorff

An appeal in this cause was taken by certain defendants from the whole of the judgment in favor of plaintiffs, foreclosing a chattel mortgage and ordering a sale of the property covered thereby. Since the said appeal the judgment has been satisfied in all respects except as to the item of $517.67 allowed plaintiffs as attorneys' fees and the item of $140.04 allowed as taxes paid. The relationship of the various parties to the issues involved in the action is such that considerable space would be required to explain the situation, but this, if done, would throw no light upon the questions now remaining and a further statement in this respect is deemed unnecessary. [1] Furthermore, as the appeal is on the judgment-roll alone, and the pleadings and findings support the allowance of the item of taxes paid, there is no ground for review of the court's action on this item.

[2] This leaves as the sole question for discussion, the power of the court to allow said or any attorneys' fee. This question recurs solely upon the following provision of the chattel mortgage: "It is also agreed that if the mortgagor shall fail to make any payment, as in the promissory note provided, then the mortgagee may taken possession of the said property, using all necessary force so to do, and may immediately proceed to sell the same in the manner provided by law, and from the proceeds pay the whole amount of said note specified, and all costs of the sale, including counsel fees and not exceeding per cent upon the amount due, paying the overplus to the said mortgagor, all of said costs, including said counsel fees, being hereby secured."

Appellants insist that under this clause attorney's fees are allowable only when a sale of the mortgaged premises under foreclosure is made by the summary method provided in the chapter on pledges, Civil Code, sections 2967 and 3005, and that inasmuch as this method was not followed but the regular method provided by the Code of Civil Procedure was employed, no attorneys' fees can be allowed in the action. Admittedly attorneys' fees may not be allowed if no warrant is found for such action in the contract of the parties; hence the correct interpretation of the above language of the instrument is required of us.

[3] At the outset reference must again be made to section2967 of the Civil Code from which we ascertain that upon default, the mortgagee has either one of two remedies — one by a summary sale as under the chapter on pledges and the other under the chapter of the Code of Civil Procedure relating to foreclosure proceedings by court action. We should also note the fact that sales had under either method must be conducted in the manner of sales had under execution (Civ. Code, sec. 3005; Code Civ. Proc., sec. 726), at which the personal property, if capable of manual delivery, must be present. (Sec. 694, Code Civ. Proc.; Ely v.Williams, 6 Cal.App. 455 [92 P. 393]; Wixom v. Davis,57 Cal.App. 620, 623 [207 P. 694].) We should also note the fact that the taking of possession by the mortgagee under his contract with the mortgagor does not give him title but merely increases the value of his security. (Harper v. Gordon, 128 Cal. 489 [61 P. 84]; Blodgett v. Rheinschild, 56 Cal.App. 728, 737 [206 P. 674].)

If the right to reduce the property to possession in case of default is conferred upon the mortgagee by the contract, an action for claim and delivery may be employed to secure possession of it and this too whether the mortgagee intends to employ the one method or the other of foreclosure. Indeed, the claim and delivery action may be prosecuted while the action for foreclosure is pending in the court. (Ely v. Williams, supra;Ashcroft Estate Co. v. Nelson, 26 Cal.App. 400, 401 [147 P. 101]; Blodgett v. Rheinschild, supra; Wixom v. Davis, supra;Harper v. Gordon, supra.)

[4] We may now give closer consideration to the language of the mortgage ". . . may immediately proceed to sell the same in the manner provided by law." Is not a sale conducted by either method a compliance with this provision of the contract? The chattel mortgage contains no other language respecting foreclosure than that above set forth. The two methods are not separately identified. Consequently there is no reason to say that a sale under the pledge law is meant and a sale under the foreclosure proceeding provided by the Code of Civil Procedure excluded for each is surely a sale in the manner provided by law. It seems clearly to be the true meaning of the clause that a foreclosure by either method is contemplated and that any such sale conducted under either warrants the allowance of attorneys' fees. Moreover, it would seem that the general language was employed in order to cover both methods.

In the case of Brickell v. Batchelder, 62 Cal. 623, 630, we find the following language: "It would be difficult to detect any difference between a stipulation empowering a mortgagee to proceed to foreclosure on such default, and one giving authority on like default ``to proceed to sell' ``in the manner prescribed by law.' The law prescribes but one mode of sale in the case of mortgaged property, and that is at public outcry, by virtue of an execution issued on a judgment of foreclosure. (Code Civ. Proc., secs. 684, 726, 744.) The power given in the mortgage by the clause just above quoted is to proceed to sell in the manner prescribed by law — which, in our judgment, is in substance the same as a power to proceed to sell by means of an action to foreclose. The power to sell in the manner prescribed by law being given, all means given by law to render such power effectual are also conferred; that is, all means necessary to effectuate a sale in the mode established by law are given. The power to use the lawful means necessary and proper to carry out the express power is conferred and given by an implication as strong and clear as if it was expressed in so many words. (Civ. Code, sec. 1656) This is a familiar and well-established rule in the construction of powers. (See Story on Agency, secs. 55, 56, 58, 59, 60, 73; Wharton on Agency, sec. 187.)"

While the above language was used with reference to a real estate mortgage, we see no reason for putting a different construction on the same words when applied to the same subject where personal property is involved. The quotation above set forth was approved in Mercantile Trust Co. v. San Joaquin etc.Corp., 89 Cal.App. 558 [265 P. 583]. See, also, Maddox v.Wyman, 92 Cal. 674 [28 P. 838], where the provisions of section 726 et seq. were made applicable to a chattel mortgage with practically the identical language found in the chattel mortgage here.

It is said that certain early cases in Michigan and South Carolina support a conclusion contrary to the one here announced. The basic facts necessary to determine the applicability of these cases are not before us and what investigation we have been able to make does not confirm a conclusion that the situations there were parallel with the one before us. For example, in the Michigan cases real estate mortgages were referred to which did not contain the language here under consideration. The South Carolina cases cite no authority to sustain them and the facts contained in the opinions are so meager and the discussions so brief that the reasoning upon which the conclusions are based cannot be fully discerned. And at any rate, we are better satisfied with the interpretation here announced.

Lastly, no reason can be suggested for a mortgagee to have attorneys' fees allowed him where the mortgage is foreclosed by the summary method, where the services of an attorney are not needed, and denied him when foreclosure is by the regular method — a case in which the services of an attorney are usually indispensable. Common reason would also suggest that a debtor in default would prefer to have the foreclosure proceeding conducted according to the method provided by the Code of Civil Procedure for in such case the element of time would enter as well as a chance to be heard as to the ascertainment and adjudication of the true amount of the indebtedness and fixation of the proper fee.

These facts argue for the broader construction of the language. We, therefore, conclude that the language of the mortgage in question should be so construed as to allow attorneys' fees in a reasonable amount whether the mortgage be foreclosed by the one method or the other provided by law. It follows that the judgment appealed from should be in all respects affirmed and it is so ordered.

Langdon, J., Richards, J., Seawell, J., Waste, C.J., and Shenk, J., concurred.