Bank of Hemet v. United States

This is a contest between two junior lien-holders arising because the security, while adequate to satisfy the debt of the senior lienholder, is not enough to satisfy the respective debts of each junior lienholder. Broadly speaking, the issues are which of the junior lienholders is to suffer the most and by what amount, if any, is each to suffer.

As of July 7, 1977, the appellant Bank of Hemet held a non-purchase-money second deed of trust on the property, a residence, to secure an indebtedness of $47,854.42; the government held tax liens against that residence junior to the Bank of Hemet deed of trust in the amount of $35,798.11; and a third party held the first deed of trust on the property securing a debt of $33,134.64. Apparently all debts were then due and owing. The third party initiated foreclosure and gave the Bank and the government notice sufficient to foreclosure their interests in the property. The foreclosure sale occurred on July 8, 1977, at which sale the Bank of Hemet bought the residence with a bid of $33,136.64, two dollars more than the amount of the first lien. On November 7, 1977, the government sought to exercise its right to redeem the property pursuant to…