Bargioni v. Hill

• Decision Date: 14 February 1963
• Citation: 378 P.2d 593,59 Cal.2d 121,28 Cal.Rptr. 321
• Court: California Supreme Court
• Parties: , 378 P.2d 593 Frederick BARGIONI, Plaintiff and Respondent, v. Fanny HILL, Defendant and Appellant. S. F. 21225.

Page 321

28 Cal.Rptr. 321

59 Cal.2d 121, 378 P.2d 593

Frederick BARGIONI, Plaintiff and Respondent, v. Fanny HILL, Defendant and Appellant.

S. F. 21225.

Supreme Court of California, In Bank.

Feb. 14, 1963.

Theodore M. Monell, San Francisco, for defendant and appellant.

William Berger, San Francisco, for plaintiff and respondent.

TRAYNOR, Justice.

Defendant purchased a motel and executed a $5,000 note to plaintiff, who had acted as broker in the transaction. The note was secured by a junior trust deed on the motel. Defendant defaulted on the note and plaintiff sued for the balance due, the security having been lost through a private sale under a senior trust deed. The trial court entered judgment for the amount due. Defendant appeals.

Defendant contends that plaintiff's recovery is barred by section 580d of the Code of Civil Procedure. That section however, bars recovery only on a note secured by a trust deed or mortgage that has been rendered valueless by a sale under a power of sale contained in the trust deed or mortgage securing the note sued upon. (Roseleaf Corp. v. Chierighino, 59 A.C. 45, 53-54, 27 Cal.Rptr. 873, 378 P.2d 97.) Section 580d does not bar a junior lienor, such as plaintiff, whose security has been sold out by a senior lienor.

Defendant also contends that plaintiff's recovery is barred by section 580b of the Code of Civil Procedure, which provides that no deficiency judgment shall lie after any sale of real property 'under a deed of trust, or mortgage, given to secure payment of the balance of the purchase price of real property.' This section compels a purchase money mortgagee to assume the risk that the security is inadequate. The purposes are to discourage land sales that are unsound because the land is overvalued and, in the event of a depression in land values, to prevent the aggravation of the downturn that would result if defaulting purchasers lost the land and were burdened with personal liability. (See Roseleaf Corp. v. Chierighino, 59 A.C. 45, 52, 27 Cal.Rptr. 873, 378 P.2d 97.) These purposes are served by relieving the purchaser of personal liability to any person who finances the purchase and takes as security a trust deed or mortgage on the property purchased, provided the financier intended the loan to be used to pay all or part of the purchase price. (See Riesenfeld, California Legislation Curbing Deficiency Judgments (1960) 48 Cal.L.Rev. 705, 711-715.) The reasoning to the contrary in Peterson v. Wilson, 88 Cal.App.2d 617, 630-631, 199 P.2d 757, 6 A.L.R.2d 258, is disapproved.

The trial court found that the parties did not intend that plaintiff's commission be part of the purchase price of the motel. This finding is not supported by the evidence. Plaintiff was employed by the seller, plaintiff's brother, to act as broker in the sale of the motel, and plaintiff...