diff --git a/t/t1001-read-tree-m-2way.sh b/t/t1001-read-tree-m-2way.sh
index 4b44e131b2..271bc4e17f 100755
--- a/t/t1001-read-tree-m-2way.sh
+++ b/t/t1001-read-tree-m-2way.sh
@@ -341,4 +341,55 @@ test_expect_success \
      check_cache_at DF/DF dirty &&
      :'
 
+test_expect_success \
+    'a/b (untracked) vs a case setup.' \
+    'rm -f .git/index &&
+     : >a &&
+     git update-index --add a &&
+     treeM=`git write-tree` &&
+     echo treeM $treeM &&
+     git ls-tree $treeM &&
+     git ls-files --stage >treeM.out &&
+
+     rm -f a &&
+     git update-index --remove a &&
+     mkdir a &&
+     : >a/b &&
+     treeH=`git write-tree` &&
+     echo treeH $treeH &&
+     git ls-tree $treeH'
+
+test_expect_success \
+    'a/b (untracked) vs a, plus c/d case test.' \
+    '! git read-tree -u -m "$treeH" "$treeM" &&
+     git ls-files --stage &&
+     test -f a/b'
+
+test_expect_success \
+    'a/b vs a, plus c/d case setup.' \
+    'rm -f .git/index &&
+     rm -fr a &&
+     : >a &&
+     mkdir c &&
+     : >c/d &&
+     git update-index --add a c/d &&
+     treeM=`git write-tree` &&
+     echo treeM $treeM &&
+     git ls-tree $treeM &&
+     git ls-files --stage >treeM.out &&
+
+     rm -f a &&
+     mkdir a
+     : >a/b &&
+     git update-index --add --remove a a/b &&
+     treeH=`git write-tree` &&
+     echo treeH $treeH &&
+     git ls-tree $treeH'
+
+test_expect_success \
+    'a/b vs a, plus c/d case test.' \
+    'git read-tree -u -m "$treeH" "$treeM" &&
+     git ls-files --stage | tee >treeMcheck.out &&
+     test_cmp treeM.out treeMcheck.out'
+
 test_done
diff --git a/unpack-trees.c b/unpack-trees.c
index 54f301da67..15c9ef592b 100644
--- a/unpack-trees.c
+++ b/unpack-trees.c
@@ -494,7 +494,7 @@ static int verify_clean_subdirectory(struct cache_entry *ce, const char *action,
 	 * anything in the existing directory there.
 	 */
 	int namelen;
-	int pos, i;
+	int i;
 	struct dir_struct d;
 	char *pathbuf;
 	int cnt = 0;
@@ -515,24 +515,20 @@ static int verify_clean_subdirectory(struct cache_entry *ce, const char *action,
 	 * in that directory.
 	 */
 	namelen = strlen(ce->name);
-	pos = index_name_pos(o->src_index, ce->name, namelen);
-	if (0 <= pos)
-		return cnt; /* we have it as nondirectory */
-	pos = -pos - 1;
-	for (i = pos; i < o->src_index->cache_nr; i++) {
-		struct cache_entry *ce = o->src_index->cache[i];
-		int len = ce_namelen(ce);
+	for (i = o->pos; i < o->src_index->cache_nr; i++) {
+		struct cache_entry *ce2 = o->src_index->cache[i];
+		int len = ce_namelen(ce2);
 		if (len < namelen ||
-		    strncmp(ce->name, ce->name, namelen) ||
-		    ce->name[namelen] != '/')
+		    strncmp(ce->name, ce2->name, namelen) ||
+		    ce2->name[namelen] != '/')
 			break;
 		/*
-		 * ce->name is an entry in the subdirectory.
+		 * ce2->name is an entry in the subdirectory.
 		 */
-		if (!ce_stage(ce)) {
-			if (verify_uptodate(ce, o))
+		if (!ce_stage(ce2)) {
+			if (verify_uptodate(ce2, o))
 				return -1;
-			add_entry(o, ce, CE_REMOVE, 0);
+			add_entry(o, ce2, CE_REMOVE, 0);
 		}
 		cnt++;
 	}
@@ -588,7 +584,7 @@ static int verify_absent(struct cache_entry *ce, const char *action,
 		return 0;
 
 	if (!lstat(ce->name, &st)) {
-		int cnt;
+		int ret;
 		int dtype = ce_to_dtype(ce);
 		struct cache_entry *result;
 
@@ -616,13 +612,15 @@ static int verify_absent(struct cache_entry *ce, const char *action,
 			 * files that are in "foo/" we would lose
 			 * it.
 			 */
-			cnt = verify_clean_subdirectory(ce, action, o);
+			ret = verify_clean_subdirectory(ce, action, o);
+			if (ret < 0)
+				return ret;
 
 			/*
 			 * If this removed entries from the index,
 			 * what that means is:
 			 *
-			 * (1) the caller unpack_trees_rec() saw path/foo
+			 * (1) the caller unpack_callback() saw path/foo
 			 * in the index, and it has not removed it because
 			 * it thinks it is handling 'path' as blob with
 			 * D/F conflict;
@@ -635,7 +633,7 @@ static int verify_absent(struct cache_entry *ce, const char *action,
 			 * We need to increment it by the number of
 			 * deleted entries here.
 			 */
-			o->pos += cnt;
+			o->pos += ret;
 			return 0;
 		}