## Facts

- Sally and Alexander Bisno executed a $34,000 promissory note (Jan. 9, 1951) payable $250 monthly (“principal and interest”), secured by a deed of trust on their Beverly Hills residence; Bank of America served as trustee.
- The original beneficiary, Lillian Friedland, died; Rose Sax, as special administratrix of Friedland’s estate, acted as beneficiary.
- After the Bisnos missed installments, Sax caused a notice of default and election to sell to be recorded (May 1, 1958) stating default for nonpayment of the Feb. 1, 1958 installment and “all subsequent” unpaid installments, and declaring the indebtedness accelerated.
- The recorded notice did not state any attorney-fee component, but the trustee later listed “legal charges” of $500 (beneficiary’s attorney) among amounts demanded for reinstatement, and also referenced delinquent taxes identified by a title report.
- The Bisnos attempted an insufficient tender, which Sax refused; they then sought to enjoin the trustee’s sale and obtain declaratory relief.
- The trial court issued a preliminary injunction conditioned on the Bisnos tendering enough to bring the account fully current; the Bisnos complied.
- Despite compliance, the trial court entered judgment for defendants, allowed foreclosure to proceed, and the property was sold at trustee’s sale to Arthur Kartheiser.
- Kartheiser purchased with actual notice of the dispute and pending litigation between Sax and the Bisnos.
- Sax (through the trustee) accepted payments bringing the account current, with only a minimal later delay in one payment.

## Issues

1. Whether a beneficiary may proceed with power-of-sale foreclosure after the trustors cure the default by tendering the full delinquency required to reinstate, including compliance with a court-ordered conditional injunction.
2. Whether reinstatement may be conditioned on payment of a substantial attorney-fee charge not stated in the recorded notice of default.
3. Whether the beneficiary’s acceptance of payments curing arrears waives (or equitably bars) reliance on prior defaults to accelerate and foreclose.
4. Whether a trustee’s-sale purchaser with actual notice of the dispute is protected as a bona fide purchaser.

## Decision

- The Court of Appeal reversed the judgment for defendants.
- The court held the foreclosure and trustee’s sale could not stand because the Bisnos effectively cured the default under the court’s conditions, and the beneficiary’s additional demands (including the unstated $500 charge) could not justify continuing foreclosure.
- The court concluded Kartheiser was not a bona fide purchaser because he bought with actual notice of the dispute and pending action and therefore took subject to defects and the Bisnos’ claims.

## Legal Principles

- Power-of-sale foreclosure is subject to equitable control; when a trustor cures the default and reinstates within the applicable framework, foreclosure based on that cured default is improper.
- A beneficiary may not make reinstatement contingent on substantial charges not fairly stated in the default notice and not properly supported as part of the default basis.
- Acceptance of payments that bring the loan current can waive strict enforcement of acceleration and can bar foreclosure where the beneficiary’s conduct leads the trustor to believe reinstatement has been achieved.
- A purchaser at a trustee’s sale with actual notice of a pending dispute and litigation is not protected as a bona fide purchaser and takes subject to the trustor’s challenges to the sale.

## Conclusion

The appellate court set aside the result of the foreclosure because the trustors cured the delinquency under court-ordered conditions and the beneficiary’s insistence on additional, undisclosed charges could not support acceleration and sale; the purchaser’s actual notice prevented bona fide purchaser protection.


Bisno v. Sax, 175 Cal. App. 2d 714 (Cal. Ct. App. 1959)