Court Opinion

ID: 9543788
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:49:15.754007+00
Date Added: 2024-06-11T15:11:12.327561
License: Public Domain

SPENCE, J.
I dissent.
The majority opinion declares that “section 726 is not an obstacle” to plaintiff’s action on her promissory note, but it holds that plaintiff’s action is one for a “deficiency judgment” within the meaning of section 580b of the Code of Civil Procedure and is therefore barred by the terms of that section. I cannot agree with this last mentioned conclusion. The security afforded by plaintiff’s second deed of trust was extinguished by the sale held under the power of sale in the first deed of trust. Therefore, there never had been a sale under the power of sale contained in plaintiff’s second deed of trust.
A reading of sections 580a, 580b, 580c and 580d of the Code of Civil Procedure makes it entirely clear that the words “deficiency judgment” are consistently used therein in their ordinary meaning. They refer to a judgment sought for the balance allegedly due upon the personal obligation imposed by a written instrument secured by a deed of trust or mortgage ‘ ‘ following the exercise of the power of sale in such deed of trust or mortgage ...” (Code Civ. Proc., § 580a; emphasis added) and where “the real property has been sold by the mortgagee or trustee under power of sale contained in such a mortgage or deed of trust” (Code Civ. Proc., § 580d; emphasis added).
The decisions in this state show that this is the meaning which has been heretofore given to the words “deficiency judgment,” as used in section 580a. (Hatch v. Security-First Nat. Bank, 19 Cal.2d 254, 258 [120 P.2d 869] ; Bank of America v. Gillett, 36 Cal.App.2d 453, 456 [97 P.2d 875] ; see Bank of America v. Hunter, 8 Cal.2d 592, 597-598 [67 *200P.2d 99] ; Everts v. Matteson, 21 Cal.2d 437, 448 [132 P.2d 476].) It is also the common meaning attached to the term in other jurisdictions. (Phillips v. Union Central Life Ins. Co., 88 F.2d 188, 189; Bank of Douglas v. Neel, 30 Ariz. 375 [247 P. 132, 133] ; Cragin v. Ocean & Lake Realty Co., 101 Fla. 1324 [133 So. 569, 135 So. 795, 797] ; Harrow v. Metropolitan Life Ins. Co., 285 Mich. 349 [280 N.W. 785, 788] ; Tiedeman v. Dorn, 137 Misc. 136 [241 N.Y.Supp. 490, 492-493] ; Stretch v. Murphy, 166 Ore. 439 [112 P.2d 1018, 1021] ; Bailey v. Block, 104 Tex. 101 [134 S.W. 323, 325] ; 59 C.J.S. 1474.)
Section 580b was originally enacted with section 580a in 1933 (Stats. 1933, pp. 1672, 1673), and the meaning of “deficiency judgment” was undoubtedly intended to be the same for both sections. When section 580d was added in 1940 (Stats. 1st Ex. Sess. 1940, ch. 29, § 2), it was again made clear that “deficiency judgment” referred to a judgment sought for the balance allegedly due a person whose obligation had been secured by a deed of trust or mortgage and where the real property had been sold “under power of sale contained in such a mortgage or deed of trust.” While sections 580b and 580d do overlap to some extent, section 580b cannot be properly characterized as “superfluous.”
In 1935 and shortly after the enactment of section 580b, it was construed with relation to similar facts in Hillen v. Soule, 7 Cal.App.2d 45 [45 P.2d 349]. It was there said: “Appellant first contends that this is an action for a deficiency judgment after a sale under a deed of trust given to secure the balance of the purchase price of real property, and that such action cannot be maintained by reason of the provisions of section 580b of the Code of Civil Procedure. It is a sufficient answer to state that this is not an action for a deficiency judgment. The security was exhausted by the sale under the first deed of trust and no sale was had under respondent’s deed of trust. We are therefore of the opinion that the provisions of said section are inapplicable.” (P. 47.)
The Legislature has twice amended section 580b since this construction was placed upon the words “deficiency judgment.” (Stats. 1935, pp. 1806, 1869; Stats. 1949, ch. 1599, § 1.) As no change was made by these amendments in the phrase “deficiency judgment,” it’ may be assumed that the Legislature approved the construction placed on that term in Hillen v. Soule, supra, 7 Cal.App.2d 45. Furthermore, the *201wording of section 580d as enacted in 1940 also indicates such legislative approval.
The evil motivating the Legislature in enacting these sections was that “creditors were frequently able to bid in the debtor’s real property at a nominal figure and also to hold the debtor personally liable for a large proportion of the original debt. (Hatch v. Security-First Nat. Bank, supra, 19 Cal.2d 254, 259; see 22 Cal.L.Rev. 170, 180.) The purpose was not to prevent any recovery where the security had become completely valueless or a senior mortgagee had foreclosed, leaving no security for the junior debt.
Thus, it appears to me that the majority opinion has stretched the meaning of section 580b far beyond its terms. Both sections 580b and 580d prevent the holder of a purchase money deed of trust from having a “deficiency judgment” after a sale under such a deed of trust. They do not cover the situation where no sale has been held under such deed of trust and no “deficiency judgment” is sought. To so construe these sections results in placing the holder of a purchase money note secured by a second deed of trust in a less favorable position than the holder of an unsecured note given for such purchase money. The Legislature has not so declared. Until it does so, the courts should not enter the legislative field by broadening the terms of statutes beyond their common meaning and contrary to the judicial interpretation which had been placed thereon prior to the time that the parties entered into their contractual relations.
The majority opinion relies on Mortgage Guarantee Co. v. Sampsell, 51 Cal.App.2d 180 [124 P.2d 353]. It is sufficient to state that that case did not present the question here involved. The broad language quoted by the majority opinion is mere dictum, unnecessary to the decision of that case.
I would affirm the judgment.
Respondent’s petition for a rehearing was denied July 28, 1953.
Spence, J., was of the opinion that the petition should be granted.