Manning

This ease presents a novel question concerning the rights of a beneficiary under a subordinate deed of trust. Respondents purchased a parcel of real property from appellants by assuming a first deed of trust securing a note payable to Guarantee Savings & Loan Association in the sum of $15,900, and executing a second deed of trust to secure the balance of the purchase price, in the sum of $2,750.

The first deed of trust provided that in the event the trustors failed to pay taxes, insurance and other items necessary to protect the property, the beneficiary (Guarantee Savings & Loan) had the right to advance the sums necessary to make such payments and add these amounts to the principal sum without declaring a default, or, in the alternative, to pay them, declare a default and add the amount of such payments to the principal. Appellants’ second deed of trust contained similar provisions.

Respondents, the trustors under both deeds of trust, failed to pay taxes and to make certain other payments as required by both deeds of trust. Guarantee Savings & Loan advanced respondent-trustors the money to make the payments, including penalties, which amounts were added to the sum owed under…