Securities – Application of Antideficiency Judgment Statute to Second Purchase Money Trust Deed Where Security is Exhausted by Foreclosure of First Deed

To secure the purchase price of land, defendant executed a promissory note and first deed of trust in favor of a savings and loan association, and a second note and deed in favor of plaintiff-vendor. On default of both obligations, the savings and loan association foreclosed upon the land. The resulting sale completely exhausted the security, and plaintiff brought the present action upon his note. Defendant interposed section 580b of the California Code of Civil Procedure, which specifies that “no deficiency judgment shall lie in any event after any sale of real property for failure of the purchaser to complete his [secured obligation], given to secure payment of the balance of the purchase price of real property.” The trial court and the court of appeals2 found the statute inapplicable. On appeal, held, reversed. A creditor is barred by the antideficiency judgment statute where foreclosure of a prior purchase money claim has consumed the security, even though no foreclosure sale has taken place under the second trust deed. Brown v. Jensen, (Cal. 1953) 259 P. (2d) 425.