Ballengee v. Sadlier

Opinion

BRAUER, J.

Plaintiffs Edward L. Ballengee et al. (referred to collectively as Ballengee herein) appeal from a judgment against them on their complaint for money due under a promissory note. For reasons discussed below, we affirm the judgment.

Facts

Ballengee loaned money to Timothy and Judy Sadlier (Sadlier). Sadlier executed a promissory note for $70,000 secured by a second deed of trust on real property in Santa Cruz County. The existing first deed of trust was in favor of Crocker National Bank (Crocker). Sadlier subsequently defaulted on payments on both the first and the second. Ballengee instituted foreclosure proceedings under the power of sale contained in the deed of trust. Shortly thereafter Crocker also filed its notice of default.

On November 19, 1982, pursuant to a notice of trustee’s sale, Ballengee’s trustee conducted a public sale on the steps of the county offices. The amount of the opening bid by Ballengee was $79,237.52. No other bidders appearing, the trustee then issued his “Declaration of Trustee’s Sale” declaring under penalty of perjury that he did sell the property on that day to the foreclosing beneficiary for $79,237.52. A trustee’s deed conveying the property to Ballengee was prepared by the trustee, but never executed.

On March 22, 1983, Crocker’s trustee conducted its public sale of the property under the power of sale contained in the first deed of trust. Crocker

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made a credit bid of $117,778.78 which, again, was the only bid. Crocker then took title to the property by a trustee’s deed dated March 23, 1983.

Discussion

Following these events Ballengee filed suit against Sadlier to collect on the promissory note. Sadlier raised Code of Civil Procedure section 580d as an absolute bar to the action. This section, one of the “antideficiency” statutes, provides as follows: “No judgment shall be rendered for any deficiency upon a note secured by a deed of trust or mortgage upon real property hereafter executed in any case in which the real property has been sold by the mortgagee or trustee under power of sale contained in such mortgage or deed of trust.” Ballengee counters that 580d does not apply to him. He claims the property was not “sold” to him since the trustee’s deed was never executed and delivered. Thus, he argues, at the time Crocker purchased the property he was technically still a junior lienholder and not an owner. As a “sold out junior,” his security rendered valueless by the trustee’s sale to Crocker, he would be entitled to proceed directly against Sadlier on the promissory note.