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5. Sureties are never bound beyond the strict letter of their contract; they have the right to stand upon the precise terms of their agreement, and there is no authority for extending their liability beyond the stipulation to which they have chosen to bind themselves.-W. P. Fuller & Co. v. Alturas School District, 28 Cal. App. 609, 153 Pac. 743.

6. Interpretation of contract. - In interpreting the language of the undertaking for the purpose of gathering its scope or the measures of the liability of the sureties, we must do so by treating or viewing the contract and the undertaking as a whole or as constituting an indivisible contract. In other words, we must, in order to ascertain the nature and extent of the liability to which the sureties have bound themselves, examine the undertaking by the light of the agreement of whose terms it guarantees the faithful performance.-W. P. Fuller & Co. v. Alturas School District, 28 Cal. App. 609, 153 Pac. 743.

§ 2837.

1. Construction as contract of suretyship -Rules of interpretation.—A contract of suretyship is to be construed the same as other contracts, for the purpose of determining the intention of the parties; to ascertain this intent resort is first had to the contract itself, and if the intention of the parties is doubtful under the terms of the instrument, recourse may be had to the surrounding circumstances to determine its meaning.-Schwab v. Bridge, 27 Cal. App. 204, 149 Pac. 603.

2. The old rule of strictissimi juris applies only to the extent that no implication shall be indulged in to impose a burden not clearly inferable from the language of the contract, but does not apply so as to hold

that the contract shall not be reasonably interpreted as other contracts are. In interpreting the terms of a contract of suretyship, the same rules are to be observed as in the case of other contracts.-Weinreich Estate Co. v. Johnston, 28 Cal. App. 144, 151 Pac. 667.

§ 2840.

1. Release or exoneration of surety.—A surety, by virtue of the provisions of section 2840 of the Civil Code, is not discharged from liability by departures from the contract by the obligee without the surety's consent, when such variations have not had the effect of so prejudicing the surety as to injure or impair his remedies in any degree or of lessening his security, in any measure, or are not in any sense inconsistent with his rights under the bond.-Dunne Investment Co. v. Empire State Surety Co., 27 Cal. App. 208, 150 Pac. 405.

2. A surety is exonerated in like manner with a guarantor, for section 2840 of the Civil Code so expressly provides, and a guarantor is exonerated, except in so far as he may be indemnified by the principal, “if by any act of the creditor, without the consent of the guarantor, the original obligation of the principal is altered in any respect, or the remedies or right of the creditor against the principal, in respect thereto, in any way impaired or suspended."-Dunne Investment Co. v. Empire State Surety Co., (Sup. Ct.) 27 Cal. App. 223, 150 Pac. 411.

3. Where the original obligation of the principal is so altered, or the remedies or rights of the creditor against the principal so impaired or suspended, no inquiry will be allowed as to whether or not the surety was in fact injured thereby.-Dunne Investment Co. v. Empire State Surety Co., (Sup. Ct.) 27 Cal. App. 223, 150 Pac. 411.

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1. Priority of liens.-The lien of a warehouseman for storage is prior to the lien of a mortgagee of the goods who has given his consent to their storage.-Schmidt v. Bekins Van & Storage Co., 27 Cal. App. 667, 155 Pac. 647.

2. A warehouseman has a lien on mortgaged goods for his storage charges thereon superior to that of the mortgagee, where it is made to appear that the mortgagee was not only present at the time the goods were removed from their original location and loaded on a wagon belonging to the warehouseman and made no objection thereto, but two months thereafter signed a paper prepared by the warehouseman stating that the goods were stored with the mortgagee's consent; and the fact that at the time of signing such paper he was unable to read the same and thought he was only

signing a paper which declared that he held a chattel mortgage on the property, the purpose of which was to enable the warehouseman, if the mortgagor demanded the property, to refuse her demand and retain possession of it for the mortgagee, does not affect the superiority of the warehouseman's lien.-Schmidt v. Bekins Van etc. Co., 27 Cal. App. 667, 155 Pac. 647.

§ 2911.

1. Lien of mortgage- Extinguished by bar of statute. - Notwithstanding that the lien of a mortgage is extinguished by the barring of the debt by limitation, the mortgagor can not without paying his debt quiet his title against the mortgagee. This rule is not applicable to one who acquired the mortgaged land by purchase for a consideration after the lapse of the time within which an action to foreclose a mortgage

had become extinguished.-Faxon v. All Persons, 166 Cal. 707, 137 Pac. 919.

could have been brought and at a time when the records showed that the mortgage lien

§ 2920.

CHAPTER II.

MORTGAGE.

§ 2924. Transfer, when mortgage, when pledge.

1. Mortgage-What is a.-At common law a mortgage was a conveyance of title upon condition subsequent. That title became absolute and indefeasible upon breach of the condition.

No right of redemption existed. The sole recourse was a resort to equity for relief against the forfeiture. Moreover, the mortgagee had his right to go to law to recover the amount of the mortgage debt and to enforce his recovery by imprisonment of the debtor. Nor did the doing of any

of these acts impair his mortgage security.Martin v. Becker, 169 Cal. 301, Ann. Cas. 1916D 171, 146 Pac. 665.

2. A mortgage is a pledge or security for a debt, whatever may be the form which the transaction takes, whether a simple mortgage deed in form or a mortgage with a power of sale, or a deed in trust or a deed absolute on its face, accompanied by an agreement in writing to reconvey or to sell or to do any other thing upon the payment of a certain sum of money.-Alexander v. Bosworth, 26 Cal. App. 589, 147 Pac. 607.

§ 2924. TRANSFER, WHEN MORTGAGE, WHEN PLEDGE. Every transfer of an interest in property, other than in trust, made only as a security for the performance of another act, is to be deemed a mortgage, except when in the case of personal property it is accompanied by actual change of possession, in which case it is to be deemed a pledge.

[Power of sale to be exercised when.] Where, by a mortgage hereafter created, of any estate in real property, other than an estate at will or for years, less than two, or in any transfer in trust hereafter made of a like estate to secure the performance of an obligation, a power of sale is conferred upon the mortgagee, trustee, or any other person, to be exercised after a breach of the obligation for which such mortgage or transfer is a security, such power shall not be exercised (except where such mortgage or transfer is made pursuant to an order, judgment, or decree of a court of record, or to secure the payment of bonds or other evidences of indebtedness authorized or permitted to be issued by the commissioner of corporations, or is made by a public utility subject to the provisions of the public utilities act), until, (a) the mortgagee or beneficiary shall first record, in the office of the recorder of the county wherein the mortgaged or trust property or some part thereof is situated, a notice of such breach and of his election to sell or cause to be sold such property to satisfy the obligation; (b) not less than three months shall thereafter elapse; and (c) the mortgagee, trustee or other person authorized to make the sale shall give notice of the time and place thereof, in the manner and for a time not less than that required by law for sales of real property upon execution.

§ 2925.

History: Enacted March 21, 1872; amended March 30, 1874, Code Amdts. 1873-4, p. 260; May 10, 1917, Stats. and Amdts. 1917, p. 300. In effect July 27, 1917.

1. Deed intended as a mortgage.- A deed absolute in form may be shown by parol evidence to be a mortgage in fact, although no actual fraud is imputed to the mortgagee. -Golden v. Fischer, 27 Cal. App. 271, 149 Pac. 797.

2. A deed intended as a mortgage for a debt from the grantor to the grantee does not pass the legal title as between the parties nor confer a right of possession upon the grantee, but merely operates as a mortgage between them.-Power & Irr. Co. of Clear Lake v. Capay Ditch Co., 226 Fed. 634.

3. No matter how strong the language

of the instrument employed by the parties may be, if it was intended merely as security for the payment of a debt, the law fixes its character as a mortgage only; it is not at all a matter of contract, but of law.Power & Irr. Co. of Clear Lake v. Capay Ditch Co., 226 Fed. 634.

$2957.

1. Chattel mortgage—Affidavit of good faith (subd. 1).-The signature of the parties to an affidavit that a chattel mortgage is made in good faith and without intent to defraud creditors is unnecessary, if the oath is taken by a competent official certify

ing to the same.-In re Johnstone, 220 Fed. 218.

2. A chattel mortgage is not rendered valid by the fact that the parties go before a notary public with the purpose and intent of making the affidavit required by section 2957 of the Civil Code, if neither of them sign nor swear to the affidavit.-In re Johnstone, 220 Fed. 218.

3. The certificate of a notary public that the parties to a chattel mortgage were duly sworn and deposed that it was not given to defraud creditors is not conclusive, when they have not signed the affidavit.-In re Johnstone, 220 Fed. 218.

§ 2972.

1.

Mortgage on crop-Lien lost, when.The lien of a mortgage on a crop of grapes is not lost by the delivery of the crop to a packing house for marketing by the mortgagor in his own name in violation of an agreement, because the mortgagor becomes the agent of the mortgagee. Nor is the lien lost by the wrongful removal of the crop from the land, independent of any agreement; such a lien still exists against the consignee of the mortgagor unless he can clothe himself with the character of an innocent purchaser for value.-Crosby Fresno Fruit Growers' Co., 30 Cal. App. 308, 158 Pac. 1070.

§ 2986.

V.

1. Pledge or sale.-When personal property is delivered as security, the transaction is a pledge, but if goods are delivered by a debtor to his creditor in payment of the debt, the transaction has the effect of a sale, and the same is true if goods are delivered by the debtor to the creditor to be sold and the proceeds applied on the debt with a return of the surplus.-Rauer v. Rued, 27 Cal. App. 556, 150 Pac. 780.

$3000.

1. Pledgec-When may exercise power of sale. While it is true that the relation existing between parties to a transaction where collateral is placed in the hands of the pledgee as security for the payment of a debt, with power of sale in case of default, is in the nature of a trust relation, and that the power must be exercised in good faith, yet, where the pledgee makes the sale in the manner provided by law and in accordance with the conditions of the contract, and it is not shown that he did or caused to be done anything for the purpose of preventing a fair sale, the pledgor has no right to complain. Under such circumstances the pledgee may take the market as he finds it and exercise his power of sale accordingly.-Williams v. Parker, 30 Cal. App. 71, 157 Pac. 550.

§ 3003.

1. Waiver of notice of sale. -Where a promissory note recites the fact of deposit with the payee of certain shares of corporate stock as security for the payment of

the obligation, and provides that in case of failure of the payee to furnish such additional security as called for, or in case of nonpayment of the obligation, that the payee may sell the stock without notice, it can not be contended in an action to recover on the note that the pledge sale which was made was illegal for want of actual notice to the pledgor, on the theory that the waiver was limited to the condition which might arise upon the failure of the pledgor to furnish additional security, if called for. -Williams v. Parker, 30 Cal. App. 71, 157 Fac. 550.

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1.

Vendor's lien.-The vendor's lien is in the English and American law exceptional in character. It was an importation from the Roman civil law, and found its recognition in the English system through its courts of chancery. The equitable principle was that the person who had secured the estate of another ought not in conscience to be allowed to keep it and not pay full consideration money, and that to enforce that payment it was just that it should be made But charge upon the estate so taken. being from its nature a secret lien, being thus an intrusion upon and an exception to every principle of our jurisprudence, which frowns upon secret transactions of all kinds, some courts have criticised its existence, some states by statute have destroyed it, and every court has been swift to declare that the taking by the vendor of any security is a waiver of the lien. — Martin V. Becker, 169 Cal. 301, Ann. Cas. 1916D 171, 146 Pac. 665.

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2. A vendor who retains the legal title under an executory contract for the sale of land does not waive his lien by bringing an action at law for the recovery of the purchase price.-Ehrhart v. Mahony, 170 Cal. 148, 148 Pac. 934.

§ 3051.

1. Lien for services on property-Construction.-One making repairs to an automobile at the request of one legally in possession of the automobile under the terms of a contract for the conditional sale thereof is entitled to a lien for the work done and materials furnished.-Davenport v. Grundy Motor Sales Co., 28 Cal. App. 409, 152 Pac. 932.

2. -Constitutionality. Such section of the code is not unconstitutional because creating a lien under such circumstances.Davenport v. Grundy Motor Sales Co., 28 Cal. App. 409, 152 Pac. 932.

["Title XV of part IV of division third of the Civil Code is hereby repealed and a new title XV of part IV of division third of said code is hereby added to read as follows": Stats, and Amdts. 1917, p. 1531. In effect July 31, 1917.]

TITLE XV.

NEGOTIABLE INSTRUMENTS.

Chapter I. Negotiable instruments in general.

II. Bills of exchange.

III. Promissory notes and checks.

IV. General provisions.

CHAPTER I.

NEGOTIABLE INSTRUMENTS IN GENERAL.

Article I. Form and interpretation.

II. Consideration.

III. Negotiation.

IV. Rights of the holder.

V. Liabilities of parties.

VI. Presentment for payment.

VII. Notice of dishonor.

VIII. Discharge of negotiable instruments.

ARTICLE I.

FORM AND INTERPRETATION.

§ 3082. Form of negotiable instrument.

§ 3083. Certainty as to sum; what constitutes.

§ 3084. When promise is unconditional.

§ 3085. Determinable future time, what constitutes.

§ 3086. Additional provisions not affecting negotiability.

§ 3087. Omissions; seal; particular money.

§ 3088. When payable on demand.

§ 3089. When payable to order.

§ 3090. When payable to bearer.

§ 3091. Terms when sufficient.

§ 3092. Date, presumption as to.

§ 3093. Antedated and postdated.
$3094. When date may be inserted.

§ 3095. Blanks; when may be filled.

$3096. Incomplete instrument not delivered

§ 3097. Delivery; where effectual; when presumed.

§ 3098. Construction where instrument is ambiguous.

$3099. Liability of person signing in trade or assumed name.

§ 3100. Signature by agent; authority; how shown.

§ 3101. Liability of person signing as agent, etc.

§ 3102. Signature by procuration; effect of.

§ 3103. Effect of indorsement by infant or corporation.

§ 3104. Forged signature; effect of.

§ 3082. FORM OF NEGOTIABLE INSTRUMENT.

negotiable must conform to the following requirements:

An instrument to be

1. It must be in writing and signed by the maker or drawer;

2. Must contain an unconditional promise or order to pay a sum certain in money;

3. Must be payable on demand, or at a fixed or determinable future time;

4. Must be payable to order or to bearer; and

5.

Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty.

History: Enactment approved June 1, 1917, Stats. and Amdts. 1917, p. 1532. In effect July 31, 1917.

§ 3083. CERTAINTY AS TO SUM; WHAT CONSTITUTES.

The sum

payable is a sum certain within the meaning of this act, although it is to be paid1. With interest; or

2. By stated installments; or

3. By stated installments, with a provision that upon default in payment of any installment or of interest, the whole shall become due; or

4. With exchange, whether at a fixed rate or at the current rate; or

5. With costs of collection or an attorney's fee, in case payment shall not be made at maturity.

History: Enactment approved June 1, 1917, Stats. and Amdts. 1917, p. 1533. In effect July 31, 1917.

§ 3084. WHEN PROMISE IS UNCONDITIONAL.

An unqualified order

or promise to pay is unconditional within the meaning of this act, though coupled with1. An indication of a particular fund out of which reimbursement is to be made, or a particular account to be debited with the amount; or

2. A statement of the transaction which gives rise to the instrument. But an order or promise to pay out of a particular fund is not unconditional.

History: Enactment approved June 1, 1917, Stats. and Amdts. 1917,

p. 1533. In effect July 31, 1917.

§ 3085. DETERMINABLE FUTURE TIME, WHAT CONSTITUTES. An instrument is payable at a determinable future time, within the meaning of this act, which is expressed to be payable

1. At a fixed period after date or sight; or

2. On or before a fixed or determinable future time specified therein; or

3. On or at a fixed period after the occurrence of a specified event, which is certain to happen, though the time of happening be uncertain.

An instrument payable upon a contingency is not negotiable, and the happening of the event does not cure the defect.

History: Enactment approved June 1, 1917, Stats. and Amdts. 1917, p. 1533. In effect July 31, 1917.

§ 3086. ADDITIONAL PROVISIONS NOT AFFECTING NEGOTIABILITY. An instrument which contains an order or promise to do any act in addition to the payment of money is not negotiable. But the negotiable character of an instrument otherwise negotiable is not affected by a provision which—

1. Authorizes the sale of collateral securities in case the instrument be not paid at maturity; or

or

2. Authorizes a confession of judgment if the instrument be not paid at maturity;

3. Waives the benefit of any law intended for the advantage or protection of the obligor; or

4. Gives the holder an election to require something to be done in lieu of payment of money.

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