## Facts

- Edwin J. Loeb held a promissory note secured by a deed of trust on real property.
- H. H. Christie executed an unconditional guarantee of payment of the note (dated May 19, 1930).
- The power of sale under the deed of trust had not been exercised when Loeb sued.
- Loeb sued Christie directly on the guarantee to recover the unpaid debt.
- The trial court entered judgment for Loeb, enforcing the guarantee.

## Issues

1. Whether a creditor may sue a guarantor on an unconditional guarantee of a note secured by a deed of trust before the security is exhausted through sale.
2. Whether rules allowing direct suit against a guarantor of a mortgage-secured note apply equally when the security is a deed of trust, given precedent requiring exhaustion of trust-deed security before suing the maker.

## Decision

- The Supreme Court of California affirmed the judgment for Loeb.
- A creditor may enforce an unconditional guarantor’s liability without first resorting to, foreclosing, or selling the trust-deed security.
- Prior authority requiring sale of trust-deed security before suing on the note was limited to actions against the maker, not the guarantor.

## Legal Principles

- A guarantor’s liability on an unconditional guarantee of payment may be enforced directly upon default, regardless of the existence of real-property security for the underlying note.
- The requirement that secured real property be treated as the “primary fund” and be sold before suit applies to remedies against the maker/primary obligor, not to a separate guarantee contract.
- There is no doctrinal basis to apply a different rule to deeds of trust than to mortgages regarding direct actions against guarantors.

## Conclusion

The court held that a creditor may sue an unconditional guarantor of a note secured by a deed of trust without first exhausting the security, while exhaustion requirements tied to the security govern suits on the note against the maker.


Loeb v. Christie, 6 Cal. 2d 416 (Cal. 1936)