Roseleaf Corp. v. Chierighino
California Supreme Court
59 Cal. 2d 35 (1963)
Facts
Roseleaf Corporation (plaintiff) sold a hotel to Willy Chierighino (defendant). Chierighino covered a portion of the purchase price with purchase-money debt. That is, Chierighino issued Roseleaf a promissory note secured by a deed of trust on the hotel itself. Additionally, Chierighino covered a portion of the purchase price with non-purchase-money debt secured by unrelated properties. That is, Chierighino issued Roseleaf three notes secured by trust deeds on other pieces of real property. Those latter trust deeds were junior to more senior trust deeds that Chierighino had issued to creditors unrelated to the hotel transaction. Under the power of the senior trust deeds, the senior creditors ordered the sale of Chierighino’s nonhotel property, rendering Roseleaf’s security interest under the three non-purchase-money notes worthless. Roseleaf then sued Chierighino personally to recover the debt owed to it under the three notes. The trial court ruled in favor of Roseleaf, and Chierighino appealed.
Rule of Law
Issue
Holding and Reasoning (Traynor, J.)
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