Bull v. Coe

Suit to foreclose a mortgage. The material facts are as follows:

Charles L. Strong, John 0. Earl, and Alpheus Bull agreed together to purchase and operate a certain mine. Each was to furnish one third of the capital, and be interested in that proportion. Strong had no money, and Bull agreed to advance his share, taking as security a mortgage upon a piece of real property of which Mrs. Strong was the owner, and upon which a homestead had been declared, and taking, also, the title to the mine in his own name as additional security. The mortgage was by a deed absolute in form, duly signed and acknowledged by the Strongs. The terms of the contract ■were in a separate paper signed by Bull only. The money was advanced by Bull as required from time to time, in accordance with the terms of his contract. After a time the mine proved a failure, and Strong died. The defendant Coe was appointed administrator of his estate, and gave notice to the creditors to present their claims. Bull did not present any claim against the estate, but commenced his action of foreclosure upon the property mortgaged by Mrs. Strong, under section 1500 of the Code of Civil Procedure. The court below gave judgment for the defendants, and the plaintiff appeals. The following are the only questions which, we think, require notice: —

1. It is contended that there was no proper acknowledgment of the deed by Mrs. Strong. The argument is, that this deed expressly declares that the property is conveyed “in trust, the conditions of which are stated in a separate instrument”; that it appears from the evidence that this separate instrument was not signed until the next day, and that therefore its contents could not have been explained to her; that where one contract refers to another, the two are considered as one; and that therefore she was not made acquainted by the notary with the contents of the instrument, as the law requires.

2. It is argued that Mrs. Strong never authorized the mortgage for so large a sum. She does not deny that she executed and acknowledged the deed. Nor does she deny that her husband had authority to deliver it. Her answer admits that the deed was given to secure advances . to the amount of three thousand dollars, but denies that it was given for any other purpose. The husband, therefore, had authority to deliver the deed. Furthermore, he had authority to deliver it “ in accordance with its terms and manifest pxirpose.” (De Arnaz v. Escandon, 59 Cal. 489 ). And by its terms it was a conveyance “in trust, the conditions of which are stated in a separate instrument in hands of the parties of the

3. It is contended that the action cannot be maintained because there was no settlement of the partnership accounts. The court finds that “the entire claim of plaintiff, whatever may be its amount or the balance due, grows out of the purchase and working of the said mine by the said Earl, Bull, and Strong, as mining partners, and not otherwise, and no accounting was ever had between the partners during the lifetime of the said Strong, nor any balance struck between them.” In other words, the court found that the loan by Bull to Strong was a partnership transaction. So far as this involves a conclusion of law, the conclusion is erroneous; and so far as it is a finding of fact, it is not sustained by the evidence.

The uncontradicted evidence shows that the transaction as to the loan was entirely between Strong and Bull.

It is well settled in this state, as elsewhere, that one partner cannot sue another upon a demand arising out of the partnership transactions, in the absence of a settlement of the accounts. But by the terms of this rule it does not apply where the transaction is not a partnership matter. And it seems plain that a loan from one partner to another is not a partnership transaction, notwithstanding the fact that the borrower intends to put the money into the firm, and does so. Accordingly, it is well settled that the lender in such a case can maintain an action for the recovery of the money, although there has been no settlement of the partnership accounts. (Currier v. Webster, 45 N. H. 226 ; Crater v. Bininger, 45 N. Y. 545 ; Morgan v. Nunes, 54 Miss. 312 , 313; Scott v. Campbell, 30 Ala. 730 ; Grigsby v. Nance, 3 Ala., N. S., 350, 351; Terrill v. Richards, 1 Nott & McO. 20.)

4. The title to the mine was taken in the name of Bull, as additional security for the loan. And it is argued that under the provision that “there can be but one action for the recovery of any debt or the enforcement of any right secured by mortgage” (Code Civ. Proc., sec. 726), the plaintiff cannot foreclose the mortgage upon Mrs. Strong’s property without at the same time foreclosing on the mine. But the plaintiff has commenced only one action. The fact that he has omitted some of the security would, under the decisions, be a waiver of the mortgage upon the omitted portion.

5. It is contended for the respondent that Mrs. Strong was a mere surety, and was discharged for two reasons:—

(a) Because no claim was presented against the estate of the principal debtor. If we assume that the fact of suretyship sufficiently appears, the point is, nevertheless, not well taken. The precise point was decided in favor of the appellant in Sichel v. Carrillo, 42 Cal. 500 . The only argument made by respondent in this regard is, that the decision is incorrect in principle and unsupported by authority. But to this we cannot agree. It was well settled in this state, as elsewhere, that mere delay of the creditor to proceed against the principal would not discharge the surety. (Humphreys v. Crane, 5 Cal. 173 ; Kritzer v. Mills, 9 Cal. 22 , 23; Hartman v. Burlingame, 9 Cal. 557 ; Williams v. Covillaud, 10 Cal. 419 ;. People v. Jenkins, 17 Cal. 500 .) And this is still the law. (Preston v. Hood, 64 Cal. 408 ; Civ. Code, sec. 2823.) In extension of this principle it was held that the surety was not discharged, even if the delay of the creditor was such that his remedy against the principal became barred by limitation. (Whitney v. Clark, 17 Cal. 407 .) And it was but a short step from this to the position that the loss of the creditor’s remedy against the estate of the principal, by non-action as to presentation of the claim, did not discharge the surety. This was the decis

(b) It is claimed that the surety was discharged because the plaintiff in his complaint in this action expressly released his claim against the estate of the principal. The statement in the complaint in this regard is, that the plaintiff “hereby expressly waives all recourse against any of the property or estate of said Charles L. Strong, deceased, not included in the aforesaid deed, and he relies solely on his lien on the premises described in said deed for the repayment of his said advances.” In making this waiver, the learned counsel for the plaintiff must have proceeded upon the theory that both of the Strongs were principal debtors. If, however, Strong was alone the principal, and his wife was the sole owner of the property, and was a mere surety for him, it is a very grave question whether she was not discharged by this act of the plaintiff. Was she a mere surety ? There can be no doubt but that the debt was the debt of the husband alone. The complaint expressly alleges that the mortgage was given to secure money advanced and to be advanced “ to and for account of said Charles L. Strong.” And the evidence accords with this allegation. The appellant says in his reply brief that “the money advanced by the plaintiff was as much for her benefit as that of her husband.” But there is nothing in either the pleadings or the evidence to justify this remark. The only possible sense in which, upon this record, she can be said to have been interested is that in which every wife, may be said to be interested in her husband’s transactions; and it is hardly necessary to say that this general interest does not make her separate property liable for his debts.

The debt being the debt of the husband alone, if the

6. It is argued that there was a valid homestead upon the property, and that for this reason a claim ought to have been presented against the estate. When the case was here before, we were of opinion that the case of Camp v. Grider, 62 Cal. 21 , required claims upon the homestead to be presented; and that it made no difference that the homestead was upon the separate property of the survivor. With reference to the latter proposition, further examination and reflection, after rehearing, have convinced us that we erred, and that the fact that the homestead was upon the separate property of the survivor takes it out of the rule laid down in Camp v. Grider. Except for the homestead, it is clear that the separate property of the survivor is not a part of the estate of the decedent, and that (all demands against

It cannot be contended that the failure to present a claim as to the debt extinguished it, and that the lien, being a mere incident to the debt, expired with it. Because although a claim which is not presented becomes “barred,” it is not “extinguished.” (Whitmore v. San Francisco Savings Union, 50 Cal. 149 .)

No question as to the rights of general creditors of the estate is involved here, because the plaintiff, having waived all claim against the estate, is not such a creditor. And we desire what is said above to be understood with reference to the precise facts of the case before us, viz., where the homestead is upon the separate property of the survivor. We neither express nor intimate any opinion as to what would be the rule where the homestead is upon the separate property of the decedent, or upon the community property.

•The positions as to the power of the court to grant a rehearing, and the sufficiency of the order granting it, do not require special notice.

We therefore advise that the judgment and order appealed from be reversed, and the cause remanded for a new trial.

Foote, C., concurred.

For the reasons given in the foregoing opinion, the judgment and order are reversed, and cause remanded for a new trial.

Rehearing denied.