## Facts

- Estelle Marrion Brown sold real property to Rose M. Jensen and Leota Triplett.
- As part of the purchase price, the buyers executed:
  - An $11,300 note to a savings and loan association secured by a first deed of trust.
  - A $7,200 note to Brown secured by a second deed of trust.
- The buyers defaulted on both notes.
- The first-lien beneficiary foreclosed under the power of sale, purchased the property at the trustee’s sale, and received a trustee’s deed.
- The foreclosure extinguished Brown’s junior security interest.
- Brown did not bid at the trustee’s sale to protect her junior deed of trust.
- Brown sued the buyers personally on the $7,200 note, alleging her security had become valueless due to the senior foreclosure.

## Issues

1. Whether a beneficiary of a junior deed of trust may sue on the note under the “exhausted security” exception to the one-action rule in Cal. Code Civ. Proc. § 726 after a senior trustee’s sale extinguishes the junior lien.
2. Whether Cal. Code Civ. Proc. § 580b bars a personal judgment on a junior purchase-money note when the junior deed of trust is eliminated by foreclosure of a senior purchase-money deed of trust.

## Decision

- The California Supreme Court reversed the judgment for Brown.
- The court held Cal. Code Civ. Proc. § 580b barred Brown’s action on the $7,200 purchase-money note.
- The court concluded that allowing suit on the note after the senior foreclosure would, in substance, impose a prohibited purchase-money deficiency liability, even though the action was not brought as part of a foreclosure.

## Legal Principles

- Cal. Code Civ. Proc. § 726 generally requires a single action (foreclosure) to recover a debt secured by a deed of trust; an action on the note may be permitted if the security is exhausted or valueless without the creditor’s fault.
- Cal. Code Civ. Proc. § 580b is an independent, substantive bar to personal liability on purchase-money obligations secured by real property, preventing deficiency recovery after sale under a power of sale.
- Section 580b applies to purchase-money deeds of trust regardless of lien priority; a junior purchase-money lender or seller-financier cannot obtain a personal judgment merely because the junior lien was extinguished by a senior foreclosure.
- A separate action on a purchase-money note filed after the security is lost may be treated as the functional equivalent of a deficiency judgment barred by § 580b.

## Conclusion

Because both notes were purchase-money obligations and the buyers lost the property through trustee’s sale, § 580b barred Brown from shifting the loss to the buyers via a personal judgment on the junior note, even though her lien had been wiped out by the senior foreclosure.


Brown v. Jensen, 41 Cal. 2d 193 (Cal. 1953)