William Little v. United States

I

This appeal revolves around a parcel of real property deeded to the State of California in satisfaction of a county property tax lien. The deed to the state was executed pursuant to Cal.Rev. & Tax Code §§ 3511-3520 and conveyed “absolute title to the •property.” Appellee Little subsequently bought the property from the State for $4,500 at a county auction.

In addition to the senior county tax lien that was discharged by the deed to the State, the property had been encumbered by two junior Internal Revenue Service liens. The latter were not extinguished by the conveyance to the State or the sale to Little, and in April 1977 the government tried to sell the property to collect its liens. Little obtained a Temporary Restraining Order barring the sale and brought this action to permanently enjoin the government from selling the property on the grounds that the Internal Revenue Service liens were no longer valid.

The district court found the liens valid and denied the injunction, but ruled for Little on his alternative claim that he was equitably subrogated to the county tax Hen because, in purchasing the property, he had discharged the senior county lien and there by benefited…