Bank of America National Trust & Savings Ass'n v. Embry

VAN DYKE, P. J.

This is an appeal from a decree of foreclosure and order of sale of certain real property.

A deed of trust to the subject property was executed in favor of respondent by the defendant Embry on September 18, 1952. It appears from the face of the deed of trust that it was given to secure the payment of a promissory note in the amount of $12,000, together with interest thereon, and to secure the payment of future loans or advances that might be made by respondent to, or for the benefit of Embry, and to secure the payment of reasonable attorneys’ fees if action were brought to foreclose the deed of trust. After the deed of trust was executed the appellant United States of America filed tax liens against the property and the respondent loaned further sums to the defendant Embry and advanced amounts for insurance premiums and real property taxes. The question presented is as to the priority between appellant’s tax liens and the lien of respondent for all amounts loaned and advanced after September 18, 1952, and for the attorneys’ fees allowed by the court in foreclosure. Appellant concedes that respondent’s lien for the balance due on the original note of $12,000 together with interest thereon, has priority over appellant’s tax liens but contends that the trial court erred in holding that respondent’s liens for the other amounts have priority.

The determination of the priority between the liens in question is controlled by federal law.

(United States

v.

Security Trust & Sav. Bank,

340 U.S. 47 [71 S.Ct. 111, 95 L.Ed. 53, 56].) Section 6323 of 26 United States Code Annotated provides that liens for taxes due the United States “shall not be valid against any mortgagee, . . . until notice thereof has been filed. ’ ’ As noted above, appellant does not question the priority of respondent’s lien for the loan made prior to the filing of the tax liens but claims lien priority as to all amounts loaned or advanced after the filing of its first tax lien upon the principle that “ ‘the first in time is the

[427]

first in right.’ ”