Spangler v. Memel
California Supreme Court
498 P.2d 1055, 7 Cal. 3d 603 (1972)
Facts
Ralf Spangler and May Spangler (plaintiff) owned a single-family home in Los Angeles. Memel-Kossoff Ventures (Memel-Kossoff), a general partnership with four members (defendants), expressed interest in buying the Spanglers’ home to develop a commercial office building. The parties negotiated a deal partly financed by a purchase-money deed of trust. That is, May accepted, as part of the purchase price, a promissory note from Memel-Kossoff secured by a deed of trust on the property itself. May also agreed to subordinate her security interest in the property to any liens granted by issuers of debt for the construction costs of the office building. Memel-Kossoff took out construction loans and built the office building. However, Memel-Kossoff failed to secure tenants and defaulted on its construction loans. The construction creditors foreclosed on the land and purchased it at a foreclosure sale, rendering May’s security interest worthless. May then sued the Memel-Kossoff partners to recover the debt under the promissory note. The Memel-Kossoff partners argued that § 580b of the California Code of Civil Procedure barred May’s claim. The trial court ruled in favor of May, and the partners appealed.
Rule of Law
Issue
Holding and Reasoning (Sullivan, J.)
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