## Facts

- Barbieri loaned defendants $700 and took a third mortgage on a tract of land as security.
- Two prior recorded mortgages encumbered the same property: one securing a note originally for $11,334 and another securing notes totaling $14,500.
- At the time suit was filed, amounts due (principal and interest) on the two senior mortgages exceeded the property’s market value.
- The trial court found Barbieri’s mortgage was “valueless as a security” because foreclosure would yield nothing after satisfying the senior liens.
- Barbieri sued at law for a personal money judgment on the debt, not to foreclose the mortgage.
- Defendants argued the suit was barred by California Code of Civil Procedure § 726’s one-action requirement for debts “secured by mortgage.”
- The trial court entered judgment for Barbieri for $700 plus interest; defendants appealed.

## Issues

1. Whether Code of Civil Procedure § 726 bars a personal action on a debt when the creditor holds a mortgage that is wholly valueless due to prior encumbrances exceeding the property’s value.
2. Whether a debt is “secured by mortgage” within § 726 when the mortgage provides no realizable security.

## Decision

- The California Supreme Court affirmed the judgment for Barbieri.
- Section 726 did not require foreclosure because the junior mortgage was worthless as security.
- A mortgage that is wholly valueless does not make the underlying debt “secured by mortgage” for purposes of § 726.

## Legal Principles

- Code of Civil Procedure § 726’s one-action rule applies to debts meaningfully secured by mortgage, not to debts accompanied only by a formal lien that has no realizable value.
- A debt is not “secured by mortgage” under § 726 when the mortgage is valueless as security because senior encumbrances exhaust the property’s value.
- When a mortgage provides no actual security, the creditor may proceed directly on the underlying obligation without first foreclosing.

## Conclusion

Because the property’s value was insufficient to satisfy the senior mortgages, Barbieri’s junior mortgage provided no security in fact; therefore § 726 did not bar his ordinary action for a personal judgment on the $700 debt, and the judgment was affirmed.


Barbieri v. Ramelli, 84 Cal. 154 (Cal. 1890)