Caito

United California Bank appeals from judgment declaring the interests of Philip and Theodora Caito in proceeds of a nonjudicial foreclosure of real property to be senior to those of the bank.

From 1952 to 1973, Mr. and Mrs. Caito and A. P. and Marie Caponi were co tenants in a 130-acre farm near Calexico. The Caitos resided in Indiana and the Caponis managed the property until Mr. Caponi was disabled in 1967.

In 1959, to enable the Caponis to borrow $30,000, both Caitos and Caponis executed a $30,000 note in favor of Bank of America, secured by a deed of trust on the farm. The Caitos, who received no part of the loan proceeds, purported to sign the note and deed of trust only as an accommodation to the Caponis, not intending to encumber their interest in the farm. However, the Caitos appear as principals on both the note and recorded deed of trust.

In 1965—to enable the Caponis to again borrow money—the Caitos and Caponis executed a $40,000 note secured by new deed of trust in favor of Bank of America. The Caponis used a portion of the loan proceeds to pay the balance then owing on the $30,000 note, retaining the remainder of the proceeds. Again, the Caitos signed…