Redingler v. Imperial Savings & Loan Assn.

Opinion

THE COURT:

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Plaintiff appeals from a judgment which awarded

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Imperial Savings & Loan Association of the North certain proceeds from a fire insurance policy covering property which had been mortgaged by plaintiff to Imperial but which had' been reacquired by Imperial at a foreclosure sale for less than the amount due under the deed of trust after the fire damage occurred. Appellant contends that this award violated the antideficiency provisions of section 580b of the Code of Civil Procedure and was unwarranted because the foreclosure sale extinguished the debtor-creditor relationship between the parties after which the lender had no interest in the insurance proceeds. We do not agree with these contentions under the facts of this case.

While section 580b of the Code of Civil Procedure prohibits a judgment against a debtor following foreclosure, it does not prevent a creditor from realizing on additional security.

(Freedland

v.

Greco

(1955) 45 Cal.2d 462, 466 [289 P.2d 463];

Hatch

v.

Security-First Nat. Bank

(1942) 19 Cal.2d 254, 260-261 [120 P.2d 869];

Mortgage Guarantee Co.

v.

Sampsell

(1942) 51 Cal.App.2d 180, 183-186 [124 P.2d 353]; 3 Witkin, Summary of Cal. Law (8th ed. 1973) Security Transactions in Real Property, § 117, pp. 1585-1587.) Since Imperial held the policy as security for the performance of the trust and was named as a loss payee in the policy, the policy constituted additional security for the debt, and receipt of the insurance proceeds by the mortgagee was not prohibited by section 580b of the Code of Civil Procedure. Contrary to appellant’s contention, the debtor-creditor relationship between the parties was not totally extinguished during the foreclosure proceedings because Imperial purchased the property for less than the amount of the balance due under the deed of trust.