## Facts

- A creditor obtained a money judgment against Eura Stephens and recorded an abstract of judgment, creating a judgment lien.
- Four days after the judgment was recorded, Stephens purchased a parcel of real property.
- As part of the purchase transaction, Stephens executed a purchase-money deed of trust in favor of P.M.C. Investment Company (PMC) to secure funds used to pay part of the purchase price.
- PMC recorded its deed of trust about one month after the judgment lien was recorded.
- The judgment creditor later enforced the judgment by writ of execution; the property was sold at an execution sale to a third party, who conveyed it to Jack Walley.
- Walley filed an action to quiet title, claiming the earlier-recorded judgment lien gave his execution-derived title priority over PMC’s deed of trust.
- The trial court quieted title in Walley, ruling the property was not subject to PMC’s trust deed; PMC appealed.

## Issues

1. Whether a purchase-money deed of trust executed as part of the buyer’s acquisition of title has priority over a previously recorded judgment lien against the buyer when the lien was recorded before the buyer acquired the property and before the trust deed was recorded.
2. Whether an execution purchaser (and successor) can take title free of a purchase-money deed of trust that was part of the judgment debtor’s acquisition transaction.

## Decision

- The Court of Appeal reversed the quiet-title judgment for Walley.
- The court held PMC’s purchase-money deed of trust had priority over Walley’s title derived from enforcement of the judgment lien.
- Walley took the property subject to PMC’s purchase-money security interest.

## Legal Principles

- A purchase-money mortgage or deed of trust given as part of the same transaction by which the purchaser acquires title, and securing funds applied to the purchase price, is entitled to priority over antecedent claims against the purchaser, including prior judgment liens.
- For priority purposes, the conveyance of title and the purchase-money security instrument are treated as one integrated transaction; the purchaser does not take an unencumbered interest to which an earlier judgment lien can attach ahead of the purchase-money lien.
- A judgment lien attaches only to the judgment debtor’s actual interest; an execution purchaser cannot acquire greater rights than the debtor held and therefore takes subject to encumbrances inherent in the debtor’s acquisition of title.

## Conclusion

Because the purchase-money deed of trust arose as part of the same transaction by which the judgment debtor acquired the property, it had priority over the earlier-recorded judgment lien, and the execution purchaser’s successor could not quiet title against the purchase-money encumbrance.


Walley v. P.M.C. Inv. Co., 262 Cal. App. 2d 218 (Cal. Ct. App. 1968)