Central Production Credit Ass'n v. Reid (In Re Reid)

MEMORANDUM OPINION

DAVID P. McDonald, Bankruptcy Judge.

INTRODUCTION

This proceeding presents the question of whether after satisfying a foreclosed mortgage the remaining surplus should be paid to the junior lienor or the debtor’s trustee in bankruptcy. The Court holds that the junior lienor is entitled to the surplus.

STATEMENT OF THE CASE

On May 14, 1986, Debtors, husband and wife, filed their voluntary joint Chapter 7 petition and on that date the Court appointed Fredrich J. Cruse (“Cruse”) interim trustee. On May 15, 1986, Canton State Bank (“Canton”) filed an Application For Order Directing…