## Facts

- Purchasers (the Hunts) bought real property from the seller (Smyth) and executed a promissory note secured by a second deed of trust.
- The note required periodic installment payments; the Hunts developed a pattern of late and insufficient payments.
- Smyth notified the Hunts that further delinquencies would not be tolerated.
- After continued delinquency and inadequate tender, Smyth initiated a nonjudicial foreclosure (trustee’s sale) under the deed of trust.
- The Hunts sued to enjoin the threatened sale, claiming the note had been modified/novated and that Smyth had waived strict performance by accepting prior delinquencies.

## Issues

1. Whether substantial evidence supported the finding that no novation or modification altered the note’s payment terms.
2. Whether Smyth’s prior acceptance of late/partial payments waived the right to declare default and foreclose after giving notice that delinquencies would no longer be tolerated.
3. Whether the trial court abused its discretion by striking a proposed amendment and denying leave to amend to conform to proof on a waiver-based theory.
4. Whether the Hunts, given default and inadequate tender, were entitled to injunctive relief to stop the trustee’s sale.
5. Whether attorney’s fees were properly awarded to Smyth and denied to the Hunts under the contractual fee provisions.

## Decision

- The Court of Appeal affirmed the judgment in full.
- Substantial evidence supported the trial court’s finding that the note had not been modified or novated; the Hunts remained bound by its original terms.
- The default finding was upheld: after Smyth’s notice, the Hunts’ continued delinquencies and inadequate tenders did not cure default and did not justify injunctive relief.
- The trial court did not abuse its discretion in striking/denying the proposed amendments due to lack of diligence and because the amendments were futile as an equitable defense.
- The award of attorney’s fees and costs to Smyth, and the denial of fees to the Hunts, was affirmed.

## Legal Principles

- A claimed novation or modification of a promissory note must be supported by evidence of mutual intent; an appellate court will not disturb a contrary finding supported by substantial evidence.
- A beneficiary’s prior indulgence in accepting late or partial payments does not prevent later insistence on strict performance when the beneficiary gives clear notice that further delinquencies will not be accepted.
- A trustor seeking to enjoin a trustee’s sale must show a basis for equitable relief, commonly including cure of default by adequate tender; continued material default defeats injunctive relief.
- Leave to amend pleadings, including to conform to proof, lies within the trial court’s discretion and may be denied for lack of diligence and for futility where no equitable defense is stated.
- Contractual attorney’s fee provisions in the note and deed of trust support a fee award to the prevailing party enforcing the obligation; an unsuccessful borrower is not entitled to fees.

## Conclusion

The court held that the purchasers remained obligated under the original promissory note, that the seller could proceed with foreclosure after notice and uncured default, that late pleading amendments were properly rejected, and that contractual attorney’s fees were correctly awarded to the seller as the prevailing party.


Hunt v. Smyth, 25 Cal. App. 3d 807 (Cal. Ct. App. 1972)