239. Application of Proceeds of Sale.

After the pledgee has lawfully sold the pledged property, or otherwise collected its proceeds, he may apply the same to the necessary expenses of sale or collection, and to the satisfaction of the amount due on the secured obligation, and must pay the surplus to the pledgor on demand.15

240. Pledgee may Maintain Action for Deficiency.

After a lawful sale of the pledged property has been made, the pledgee may maintain an action to recover any unsatisfied deficiency that may result against any person personally liable for the payment thereof, 16

so it was in this state before the enactment of this section: Wright v. Ross, 36 Cal. 414, 442.

Before March 8, 1895, this section read: "A pledgee or pledgeholder cannot purchase the property pledged, except by direct dealing with the pledgor.” section is interpreted in Hill v. Finigan, 62 Cal. 426, 439.

15 See Civ. Code, sec. 3008.

This

That pledgee must account for the surplus is also affirmed in Dewey v. Bowman, 8 Cal. 145, 151, 152; Haber v. Brown, 101 Cal. 445, 452, 453, 35 Pac. 1035. 16 Mauge v. Heringhi, 26 Cal. 577.

TITLE 2.

CONTRACT ENCUMBRANCES INDEPEND

ENT OF POSSESSION.

CHAPTER 1.

MORTGAGE.

ARTICLE 1.

NATURE OF MORTGAGE.

Subdivision 1. What is Mortgage.

241. Mortgage defined.

Subdivision 2. The Instrument of Mortgage.

242. Mortgage must be evidenced by formal writing. 243. Form of instrument of mortgage.

244. Description of mortgaged property must be sufficient for identification.

245. As against mortgagor instrument of mortgage may be reformed.

Subdivision 3. Most Formal Hypothecations Mortgages. 246. Most transactions hypothecating property as security deemed mortgages. Extrinsic evidence admissible.

247.

Subdivision 4. What Property Mortgageable.

249. Future interests mortgageable.

250. Every interest in immovable property mortgage. able.

251. Enumeration of mortgageable movable property. 252. Enumeration to be liberally construed.

Subdivision 5. Possession.

253. Possession of mortgaged property may be conferred on mortgagee.

254. Upon change of possession of movable property transaction deemed pledge.

Subdivision 6. Power of Sale.

255. Mortgage may confer power of sale. 256. Power of sale deemed part of security.

Subdivision 7. Insurance.

257. Mortgage may confer power to insure.

Subdivision 8. Interpretation.

258. Mortgage construed in connection with other related writings.

259. Ambiguities to be resolved in favor of mort

gagor.

260. Mortgage only secures obligations expressly secured thereby.

Subdivision 1. What is Mortgage.

241. Mortgage Defined.

A mortgage is a charge or encumbrance created by formal contract against specific property, without the necessity of a change of possession of the property, as security for the future performance of an obligation, whether previously

existing or contemporaneously made or there after to arise.1

Subdivision 2. The Instrument of Mortgage.

242. Mortgage must be Evidenced by Formal Writing.

A mortgage can be created, renewed, or extended to secure an additional obligation, only

1 What is Mortgage.—See Civil Code, section 2920; "Mortgage is a contract by which specific property is hypothecated for the performance of an act, with out the necessity of a change of possession."'

Section 2923: "The lien of a mortgage is special, unless otherwise expressly agreed, and is independent of possession."

A pre-existing debt is a sufficient consideration for a mortgage: Frey v. Clifford, 44 Cal. 335, 342, 45 Cal. 580, 583, and many other cases.

May Secure Future Advances: Tapia v. Demartini, 77 Cal. 383, 11 Am. St. Rep. 288, 19 Pac. 641; Irwin v. McDowell, 91 Cal. 119, 27 Pac. 601; Lemon v. Wolff, 121 Cal. 272, 53 Pac. 801; Moss v. Odell, 134 Cal 464, 66 Pac. 581.

May be Given as Indemnity: Waldrip v. Blake, 74 Cal. 409, 16 Pac. 226.

2 Civil Code, section 2922: "A mortgage can be created, renewed, or extended, only by writing, executed with the formalities required in the case of a grant of real property': See, also, Porter v. Muller, 53 Cal. 677.

That a power of attorney to execute a mortgage must likewise be in writing, see Civil Code, sections 2933 and 2309.

3 Extended to Secure an Additional Obligation."The term 'extended,' as here used [that is, in Code, section 2922 (note 2, above)], refers to a broadening

in writing, executed with the formalities required in the case of a grant of real property. The obligation secured by the mortgage need not, however, be evidenced by a separate writing.4

243. Form of Instrument of Mortgage.

A mortgage may be made in substantially the following form:

That the mortgagor mortgages to the mortgagee [here describe the property], as security

for the payment to him of

[or before] the

year

day of

dollars on

in the

,

with interest thereon [or, as se

curity for the payment of a note or obligation, describing it, etc.].

(Signed) A B.

In the case of a mortgage of immovable property, the phrase "by occupation a

be omitted.5

may

of the security to cover additional advances': London etc. Bank v. Bandmann, 120 Cal. 220, 223, 52 Pac. 583.

"The extension of a lien is not the prolongation of its life, but is making it security for an additional obligation': Southern Pacific Co. v. Prosser, 122 Cal. 413, 418, 55 Pac. 145.

4 Whitney v. Buckman, 13 Cal. 536. Compare Blankman v. Vallejo, 15 Cal. 638, 644.

5 Civ. Code, secs. 2948, 2956.