80. Encumbrancer Who Purchases may Give Receipt in Payment of Part of Purchase Money.

When an encumbrancer entitled to receive a portion of the proceeds of the sale in liquidation of his encumbrance upon the property sold becomes a purchaser at the sale thereof, the referee may take his receipt in payment of so much of the purchase money as he will be entitled to receive upon its distribution.10

10 See Code Civ. Proc., sec. 786. Liens-11

TITLE 5.

EXTINCTION OF ENCUMBRANCES FOR

SECURITY.1

81. Encumbrance extinguished like any other accessory obligation.

82. Extinction by destruction of encumbered prop

erty.

83. Extinction by performance or offer to perform. 84. Extinction by lapse of time.

85. Extinction by sale.

86. Extinction by wrongful dealing with property. 87. Surrender of property extinguishes encumbrance. 88. Extinction as to third parties by voluntary restoration of property.

89. Partial performance of secured obligation does not release security.

81. Encumbrance Extinguished Like Any Other Accessory Obligation.2

An encumbrance for security is extinguishable in like manner with any other accessory obligation.

1 In Southern Pacific Co. v. Prosser, 122 Cal. 413, 416, 55 Pac. 145, it is said that "sections 2909-2913 of the Civil Code contain an exclusive enumeration of the means by which liens are extinguished." This title is founded on these sections.

2 See Civ. Code, sec. 2909, latter portion.

82. Extinction by Destruction of Encumbered Property.

An encumbrance is extinguished by the de- · struction of the encumbered property, or by the extinction by title paramount, without the collusion of the owner of the encumbered interest, of the interest subject to the encumbrance.3

83. Extinction by Performance or Offer to Perform.4

An encumbrance for security (except perhaps

2 Extinction by Destruction of Encumbered Property. Where a contract for the sale and purchase of land is made, the vendor retaining the title as security, and the vendee mortgages his interest, the vendor may, upon default of the vendee and his refusal upon demand to complete the purchase, declare the contract of sale and purchase at an end and thereby terminate the mortgaged interest and the mortgage; but the vendee cannot before the vendor thus terminates the sale, although in default, by any arrangement avoid the mortgage, nor can his successor in interest: Houghton v. Allen (Cal.), 14 Pac. 641, 642.

4 Extinction by Performance or Offer to Perform. Civil Code, section 2905, provides: "Redemption from a lien is made by performing, or offering to perform, the act for the performance of which it is a security, and paying, or offering to pay, the damages, if any, to which the holder of the lien is entitled for delay." Cross v. Eureka Lake and Yuba Canal Co., 73 Cal. 302, 306, 2 Am. St. Rep. 808, 14 Pac. 885.

A sufficient tender has the same effect upon all the incidents of an obligation as the performance thereof, So it discharges a pledge and stops the running of interest thereon: Loughborough v. McNevin, 74 Cal. 250, 254, 5 Am. St. Rep. 435, 14 Pac. 369, 15 Pac. 773.

in certain cases a mortgage)5 is extinguished by performing or offering to perform the obligation the performance of which is secured thereby, the offer being made with intent to extinguish the obligation, and paying or offering to pay any damages to which the encumbrancer may be entitled for delay.

6

Compare Barnhart v. Fulkerth, 73 Cal. 526, 529, 530, 15 Pac. 89.

See note 6 below.

But where certain property in which several persons owned undivided interests was mortgaged by the several owners to secure an obligation of which each was personally liable for a certain portion, the payment by a part of such persons of the entire mortgage obligation and the assignment to them of the evidence of the obligation does not amount to pay. ment of the mortgage between them and the persons who did not pay their portion of the secured obligation, but the mortgage is not extinguished and may be foreclosed against them: Ingham v. Weed, (Cal.), 48 Pac. 318, 320A.

5 Except a Mortgage.-It may be that a tender does not extinguish a mortgage. See section 376 below.

But payment after default operates to discharge a mortgage equally with payment at maturity: Johnson v. Sherman, 15 Cal. 287, 293, 76 Am. Dec. 481.

6 Intent to Extinguish Obligation.-"The mode of offering prescribed in the chapter of the Civil Code, headed 'Offer of Performance' (section 1485 et seq.), applies as well to offers of performance which operate a redemption (Civ. Code, sec. 2905), as to offers to perform. Such offers must be made with intent to extinguish the obligation,' since the lien can be extinguished only by extinguishing the obligation': Chielovich v. Krauss (Cal.), 11 Pac. 781, in bank, Myrick, J., dissenting. See, also, Sanford v. Savings etc. Soc., 80 Fed. (C. C.) 54, 62, 63.

84. Extinction by Lapse of Time.

An encumbrance for security is extinguished by the lapse of time within which an action can be commenced upon the principal obligation, except when, in the case of a mortgage, the principal obligation is not in writing; but where the encumbrancer is in lawful possession of the encumbered property, he cannot be dispossessed thereof without first performing, or offering to perform, the secured obligation, although such obligation has been barred by lapse of time."

85. Extinction by Sale.

The sale of encumbered property in satisfaction of an obligation secured thereby extinguishes

7 When Principal Obligation Barred, Encumbrance Extinguished.-Civil Code, section 2911: "A lien is extinguished by the lapse of the time within which, under the provisions of the Code of Civil Procedure, an action can be brought upon the principal obligation."'

Vendor's lien so extinguished: California Sav. Bank of San Diego v. Parrish, 116 Cal. 254, 259, 48 Pac. 73.

Pledge.-Where a transfer of a benefit certificate in a beneficial order was made for security only, and the secured obligation is barred by lapse of time, the lien is extinguished, and the pledgee is not entitled to a recovery upon the certificate: Conway v. Supreme Council Catholic Knights, 131 Cal. 437, 439, 440, 63 Pac. 727.

8 Mortgage, when extinguished by lapse of time: See section 375, below.

9 Encumbrancer in possession cannot be dispossessed until secured obligation satisfied: See sections 216, 338, and 353, below.