Union Bank v. Dorn

FLEMING, J.

Suit against respondents as guarantors of a secured note for a deficiency after a nonjudicial foreclosure of real property under power of sale. The note was executed by Playa Del Rey Medical Center, a partnership in which each individual respondent was in effect a partner, and reflected moneys’lent for interim construction, not'for the purchase price. The demurrer of respondents was sustained without leave to amend, and plaintiff bank has appealed.

The sole question is whether section 580d of the Code of Civil Procedure, which prohibits a deficiency judgment after foreclosure of real property under a power of sale, applies to guarantors who are also partners of the entity primarily liable for the debt. Unquestionably after the creditor has resorted to foreclosure under a power of sale in a deed of trust, it is not entitled to pursue the principal obligors for a

[159]

deficiency. Assuming that guarantors, unlike principal obligors, are not protected against a suit for a deficiency which follows a nonjudicial foreclosure on a power of sale, a point not entirely free from doubt

(Stephenson

v.

Lawn,

155 Cal.App.2d 669, 671 [318 P.2d 132]

; Riddle

v.

Lushing,

203 Cal.App.2d 831, 837 [21 Cal.Rptr. 902]), still in the present ease it clearly appears that the supposed guarantors against whom suit has been brought are nothing more than principal obligors under another name. It is settled that liability as a guarantor adds nothing to the primary liability of a principal obligor.

(Valinda Builders, Inc.

v.

Bissner,

230 Cal. App.2d 106 [40 Cal.Rptr. 735].) In our view, respondents, both as principal obligors and as supposed guarantors, are entitled to the full protection of Code of Civil Procedure, section 580d, just as the guarantors in