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claring an absolute deed a mortgage, and it cannot be maintained.31

338. Although Secured Obligation Barred, Mortgagor must Satisfy It.

In such action the mortgagor cannot obtain any affirmative relief without satisfying the principal obligation, although barred by lapse of time.32

339. Judgment must Grant Relief to Mortgagor Conditionally.33

The judgment in the action must provide that in case of the failure of the mortgagor to satisfy the obligation secured by the instrument in form an absolute deed within a time specified by the judgment,

31 Cowing v. Rogers, 34 Cal. 648, 654; Cline v. Rogers, 112 Cal. 581, 585, 44 Pac. 1023.,

32 See sections 216 and 339.

The fact that his debt is barred by the statute of limitations does not absolve a mortgagor who would redeem the mortgaged property from the mortgagee from paying his debt. The moral obligation remains and rests upon the mortgagor who would redeem to pay, as a condition thereof, the sum of money which the mortgagee could have recovered but for the bar of the statute: Boyce v. Fisk, 110 Cal. 107, 113, 42 Pac. 473.

33 The law as stated in the text is not supported unanimously by the decisions, but seems to have the weight of reason and of some well-considered deci sions on its side.

(1) if the secured obligation has not been barred by lapse of time, the property be sold and the proceeds be applied to the satisfaction of the secured obligation,34 or

34 If Secured Debt not Barred, Then Property to be Sold:

Murdock v. Clarke, in bank, 90 Cal. 427, 443, 444, 27 Pac. 275 (this was not a case of mortgagee in possession as might appear from a casual glance, see pp. 431-435).

And in Byrne v. Hudson, 127 Cal. 254, 59 Pac. 597, a judgment that the mortgagor "be barred from all equity of redemption, or other right to said property' was held erroneous.

In certain cases, however, it is held that the proper judgment was that the action be dismissed: Cowing v. Rogers, 34 Cal. 648; Cline v. Rogers, 112 Cal. 581, 585, 586, 44 Pac. 1023, in department, the judgment of the trial court in conformity with Murdock v. Clarke being set aside.

Where an action to quiet title was brought by a mortgagor in possession against his mortgagee under a deed absolute in form, the secured debt not being barred by lapse of time, the court said: "Respondent [the mortgagor] stands simply in the position of a mortgagor seeking to quiet his title against a mortgagee without paying, or tendering or offering to pay, the debt for which the mortgage was given. But such a result cannot be achieved. . . . . The only way for a party in respondent's position to quiet a mortgage is to pay it. The decree in the case at bar first undertakes to quiet respondent's title, and then disturbs it again by declaring appellant's right to foreclose. If appellant's debt should become barred by the statute of limitations, then, by this decree, respondent would have his title quieted without paying the mortgage debt-the very thing which equity says cannot be done. Respondent can have no remedy in the premises without paying or tendering the amount due appellant on his mortgages': Brandt v. Thompson, in department, 91 Cal. 458, 462, 27 Pac. 763.

(2) if the secured obligation has become barred. by lapse of time, the action be dismissed.35

Subdivision 4. As to Insurance.

340. Acts of Mortgagor Avoid Insurance Although Assigned to Mortgagee.36

The assignment from a mortgagor to a mortgagee of the sum which may become due on the

35 If Secured Debt Barred, then Action to be Dismissed: Booth v. Hoskins, 75 Cal. 271, 276, 17 Pac. 225 (an action to quiet title), the judgment of the trial court in conformity with Murdock v. Clarke being set aside; De Cazara v. Orena, 80 Cal. 132, 22 Pac. 74 (also to quiet title); Boyce v. Fiske, 110 Cal. 107, 116, 42 Pac. 473, which held that as a mortgagee could not obtain any affirmative relief upon his outlawed debt, an order adjudging that in case the mortgagor fails to satisfy the judgment his title shall terminate and the mortgagee's title become valid was erroneous. In one case at least, however, it was held that the proper judgment was that the property be sold: Healy v. O'Brien, in department, 66 Cal. 517, 520, 6 Pac. 386.

36 Acts of Mortgagor Avoid Insurance Although Assigned to Mortgagee.-Civil Code, section 2541: "Where a mortgagor of property effects insurance in his own name, providing that the loss shall be payable to the mortgagee, or assigns a policy of insurance to the mortgagee, the insurance is deemed to be upon the interest of the mortgagor, who does not cease to be a party to the original contract, and any act of his which would otherwise avoid the insurance will have the same effect, although the property is in the hands of the mortgagee."

Such an assignment by way of security is permissible. Where a policy of insurance was assigned as collateral security for the payment of a general balance, and the insured property was destroyed, and the insurance became payable, and the insured party

insurance on the mortgaged property,37 or a stipulation in an insurance policy that the insurance is payable in case of loss to the mortgagee,38 amounts merely to a provisional assignment of the contingent proceeds of the contract of insurance; and the contract will thereafter, unless became insolvent, it was claimed that the assignee could not maintain an action to recover the insurance, as the insurance could be assigned only in connection with an insurable interest in the insured property, and then only with the consent of the insurer. The court held that the fact that the title of the policies and to the insurance money when it, as a fund of indemnity for the loss, came in esse, remained in the parties insured; and the further fact that the plaintiff's [assignee's] right in respect to it was that of a lien upon it merely, subject to be discharged at the will of the debtor, obviates the objection that was void": Bibend V.

the. . . . transaction

Liverpool etc. Ins. Co., 30 Cal. 78, 89, 90.

37 The so-called "assignment of a policy of insurance" is, rather, an assignment, when made bofore the loss occurs, of the sum that may become due, and when the assignment is made after the loss, of the sum that has already become due: Bergson v. Builders' Ins. Co., 38 Cal. 541, 544.

An indorsement in a policy of insurance, making the loss payable to a mortgagee of the insured property as his interest might appear, operates as an assignment of the policy to the mortgagee by way of collateral security: Ballard v. Nye (Cal.), 69 Pac. 481, 482A.

38 A stipulation for payment to the mortgagee in case of loss is a provisional assignment of the contingent proceeds of the contract, and has not the effect to substitute the mortgagee for the mortgagor as the party insured: Holbrook v. Baloise Fire Ins. Co., 117 Cal. 561, 566, 49 Pac. 555; Reynolds v. London etc. Ins. Co., 128 Cal. 16, 19, 79 Am. St. Rep. 16, 60 Pac.

otherwise expressly provided,39 be avoided 40 by any act of the mortgagor which would otherwise have avoided it, although the mortgagee is in possession.

39 Where a mortgagor insured the mortgaged premises in the name of the mortgagee, the policy providing that "as to the interests of the mortgagee or trustee only therein," the policy "shall not be invalidated by any act or negligence of the mortgagor or owner of the property insured. nor by the occupation of the premises for purposes more hazardous than are permitted by the terms of this policy, nor by any change in title or possession of the property insured; provided, however, that whenever the said mortgagee or trustee shall become aware of any act or negligence on the part of the mortgagor or owner which would, except as to such mortgagee or trustee, invalidate this policy, or of any occupation of the premises for purposes more hazardous than are permitted by the terms of this policy, or of any change in title or possession of the property insured, he will at once notify this company thereof; and provided, also, that he will, on demand, pay to this company the additional premium charged by this company on account of any increased risk for the entire term of the policy; and failure to so notify this company, or to so pay said additional premium, shall avoid this contract," and where the mortgagee complied with the terms of the contract, the policy will be enforced notwithstanding the acts of the mortgagor which otherwise would have avoided the insurance: Nat. Bank v. Union Ins. Co., 88 Cal. 497, 22 Am. St. Rep. 324, 26 Pac. 509.

40 Contract will be Avoided-Limitation of Principle.-But a condition in a policy of insurance on mortgaged property issued to the mortgagor, and made payable in case of loss to the mortgagee, that the policy should be void if, with the knowledge of the insured, foreclosure proceedings should be commenced on any of the property covered thereby, is inoperative as against the mortgagee: Sharp v. Scottish etc. Ins. Co., in department, 136 Cal. 542, 543 et seq., 69 Pac. 253, 255A.

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