Swanson v. Krenik

The Kreniks (defendants) took out a bank loan secured by a deed of trust in 1977, then sold the property in 1981 to Marie Swanson (plaintiff), who assumed their loan and gave them a second deed of trust; in 1983, Swanson sold the property to Rush and Luther, who assumed the loan and gave Swanson a third deed of trust. The 1983 contract made all four parties jointly and severally liable to the bank but expressly preserved the existing relative liability between the Kreniks and Swanson. When Rush and Luther defaulted in 1986 and later declared bankruptcy, the bank foreclosed on all four parties in 1988, leaving a large deficiency after the property sold for less than owed; Swanson counterclaimed against the Kreniks, arguing they were her co-sureties who should share equally in the deficiency, but the trial court ruled for the Kreniks and Swanson appealed.