Kreshek

In this appeal, we are faced with the question of the proper apportionment of fire insurance proceeds between a seller holding the trust deed and buyer when there is no intent to rebuild, but the value of the property has greatly increased so that seller’s security interest has not been appreciably impaired. The trial court ruled that seller was entitled to the insurance proceeds to the extent of the debt, with the remainder given to the buyer. We reverse and hold the proper procedure is to apportion the proceeds according to the extent seller’s security interest is impaired.

Facts

In May, 1968, Saul S. Kreshek, Elise Nina Kreshek, Henry Fox and Fay G. Fox (hereafter sellers) sold a piece of property located at 54th and Avalon in the City of Los Angeles to Jacob and Zvi Sperling (hereinafter buyers). Under the sales agreement, sellers took back an all inclusive promissory note and second trust deed in the sum of $400,000, as a part of the purchase price. The note terms provided for monthly payments at 8V2 percent interest. One of the provisions of the deed of trust was as follows:

“A. To Protect the Security of this Deed of Trust, Trustor Agrees:

“(2) To provide,…