Taylor

This appeal raises a question apparently of first impression in California: Whether a security assignment of a leasehold interest is a security interest in real property within the meaning of Code of Civil Procedure section 726, thereby invoking the “one action” rule requiring a creditor to first exhaust the security before seeking a personal judgment. We conclude that it is not.

Appellants Bouissiere bought a hair design business for $50,000, giving sellers and respondents Taylors their $35,000 promissory note secured by a security agreement on business furniture, fixtures and equipment. As additional note security, they gave their written “Assignment of Lease as Collateral Security,” encumbering their tenants’ leasehold interest in the business premises.

The Bouissieres paid the note down to $17,863, but then stopped paying. The Taylors sued on the promissory note, and moved for summary judgment. The Bouissieres opposed, admitting the unpaid obligation, but contending the lease assignment constituted real property security. They claimed section 726 prevented the Taylors from recovering a personal judgment before first realizing on their security. The trial court…