United States v. California-Oregon Plywood, Inc., a Corporation

Today we are asked to decide whether the principle of “first in time, first in right” gives priority to the United States’ deeds of trust on real property over subsequently accruing local property taxes. We hold, in this action by the government to foreclose SBA liens, that the principle does not apply and that state and county tax liens are entitled to priority. We affirm the judgment of the district court which relied upon Ault v. Harris, 317 F.Supp. 373 (D.Alaska 1968), as affirmed in Ault v. United States, 432 F.2d 441 (9th Cir. 1970).

The Area Redevelopment Administration (ARA), predecessor to the Economic Development Administration (EDA), loaned in excess of $1,000,000 to the Joseph Plywood Corporation in 1962. The Small Business Administration (SBA) acted as the servicing agent and its name alone appeared on the deed of trust of land in Siskiyou County, California, given as security for the loan. California-Oregon Plywood, Inc. later assumed the indebtedness.

A second loan was made directly to the successor corporation in 1965 by the U. S. National Bank of Portland in the amount of $200,000 and was secured by a second deed of trust on the same property. This…