Farm Credit Bank of St. Louis v. Dorr

• Decision Date: 09 September 1993
• Docket Number: No. 5-92-0031,5-92-0031
• Citation: 620 N.E.2d 549,250 Ill.App.3d 1,189 Ill.Dec. 581
• Parties: , 189 Ill.Dec. 581 FARM CREDIT BANK OF ST. LOUIS, as successor in interest to Federal Land Bank of St. Louis, a Federally chartered corporation, Plaintiff-Appellee, v. Charles L. DORR, Vivian I. Dorr, Randal C. Dorr a/k/a Randy C. Dorr, Dorr Partnership, Ol' Minnie Trust, Defendants-Appellants (Bobbi J. Dorr, Woolsey Bros. Farm Supply, Inc., Dean Bergman, Central Production Credit Association, successor in interest to Charleston Production Credit Association, United States of America acting through Farmers Home Administration, Common Title Bond & Trust, Charles L. Dorr as Cotrustee of Ol' Minnie Trust, Unknown Owners, and Nonrecord Claimants, Defendants).
• Court: United States Appellate Court of Illinois

Page 549

620 N.E.2d 549

250 Ill.App.3d 1, 189 Ill.Dec. 581

FARM CREDIT BANK OF ST. LOUIS, as successor in interest to Federal Land Bank of St. Louis, a Federally chartered corporation, Plaintiff-Appellee, v. Charles L. DORR, Vivian I. Dorr, Randal C. Dorr a/k/a Randy C. Dorr, Dorr Partnership, Ol' Minnie Trust Defendants-Appellants (Bobbi J. Dorr, Woolsey Bros. Farm Supply, Inc., Dean Bergman, Central Production Credit Association, successor in interest to Charleston Production Credit Association, United States of America acting through Farmers Home Administration, Common Title Bond & Trust Charles L. Dorr as Cotrustee of Ol' Minnie Trust, Unknown Owners, and Nonrecord Claimants, Defendants).

No. 5-92-0031.

Appellate Court of Illinois Fifth District.

Sept. 9, 1993.

Jerold W. Barringer, P.C., Carlinville (Jerold W. Barringer, of counsel), for defendants-appellants.

Terry Sharp, Marcus H. Herbert, Law Office of Terry Sharp, P.C., Mt. Vernon, for plaintiff-appellee.

Presiding Justice CHAPMAN delivered the opinion of the court:

This is a mortgage foreclosure action brought by the Farm Credit Bank of St. Louis, as successor in interest to the Federal Land Bank of St. Louis, on a note and mortgage dated January 29, 1982. Defendants appeal from the order of foreclosure and from the court's order which struck their affirmative defenses. We affirm.

The first issue on appeal is whether the trial court erred in allowing the Farm Credit Bank of St. Louis (Farm Credit Bank) to proceed as successor in interest to the Federal Land Bank of St. Louis (Federal Land Bank). Defendants claim that the Farm Credit Bank offered no proof that it is the legal owner and holder of the note and mortgage at issue and that without such proof the Farm Credit Bank was without authority to proceed with the foreclosure action. Farm Credit Bank argues that the issue is not properly before the court as it was not raised in the trial court and that proof was offered from which the circuit court could properly determine that the Farm Credit Bank was the holder and owner of the note and mortgage.

Defendants contest Farm Credit Bank's assertion that they waived the issue below. However, defendants fail to support their contention that they objected in the trial court to the substitution of Farm Credit Bank as a party plaintiff. Defendants argue that it could not be determined until trial whether the Farm Credit Bank was the holder and owner of the note and mortgage and that absent the plaintiff's proof of such status defendants cannot be said to have waived an objection on appeal. We disagree.

The Federal Land Bank filed its complaint on June 23, 1987. On January 23, 1989, counsel for Farm Credit Bank filed a motion for substitution of counsel. The motion stated that Farm Credit Bank was a successor in interest to the Federal Land Bank. Counsel for the Farm Credit Bank requested permission for his law firm to continue to prosecute the foreclosure on behalf of and in substitution for the Federal Land Bank's counsel. According to the record, defendants did not object, and the trial court granted the motion for substitution of counsel. From that point on, the caption on the pleadings in the record read, "Farm Credit Bank of St. Louis, as successor in interest to Federal Land Bank of St. Louis." Moreover, the Farm Credit Bank prosecuted this foreclosure action, and it is undisputed that it has at all times relevant to this action been in possession of the note and mortgage. In any event, defendants' objection was not presented to and ruled on by the trial court, and it may not be raised for the first time here. See People v. Rockford Silver Plate Co. (1944), 388 Ill. 534, 58 N.E.2d 599; First National Bank & Trust Co. v. Maas (1975), 26 Ill.App.3d 733, 327 N.E.2d 205; Rasmussen v. Village of Bensenville (1965), 56 Ill.App.2d 119, 205 N.E.2d 631.

Turning to the next issue, defendants contend that the trial court erred in striking their fourth, fifth, and sixth affirmative defenses. Defendants maintain that had the court not stricken those defenses, they would have prevailed in the foreclosure action.

Defendants' fourth affirmative defense alleges that plaintiff failed to comply with the 1985 amendments to the Farm Credit Act of 1971, which required it to stay the foreclosure proceedings pending notification to the mortgagors that plaintiff was required to consider them for restructuring. (See 12 U.S.C. § 2001 et seq.) Defendants' fifth affirmative defense alleges plaintiff failed to comply with the Food Security Act of 1985, which amended the Farm Credit Act of 1971 and required plaintiff to notify defendants of the procedures to pursue to qualify for rights under the Food Security Act of 1985. (See Farm Credit Amendments Act of 1985, Pub.L. No. 99-205, 99 Stat. 1678 (Dec. 23, 1985).) The sixth affirmative defense alleges the plaintiff failed to comply with the 1987 amendments to the Farm Credit Act of 1971, which required it to stay foreclosure until defendants had a fair opportunity to apply for a reduction of indebtedness or restructuring. See Agricultural Credit Act of 1987, 12 U.S.C. § 2202-2202a (1988).

The trial court granted plaintiff's motion for summary judgment as to these affirmative defenses but gave no reason for its decision. Defendants claim that the trial court's decision is based on the premise that no private cause of action exists under the Farm Credit Act of 1971 or its amendments. Although we cannot determine the basis of the trial court's ruling, the parties' arguments focus on whether defendants may assert a private cause of action.

Plaintiff contends that defendants cannot assert claims based upon a denial of rights under the Farm Credit Act of 1971 or its amendments, regardless of whether said claims are made as part of a complaint or are pled as affirmative defenses. We agree.

It is undisputed that the Farm Credit Act contains no express provision conferring upon individuals a cause of action to enforce the provisions of the Act. Yet, courts have held that a statute which fails to expressly provide a private right of action can nevertheless create an implied private right of action if a private right of action is necessary to effectuate the purpose of the statute. (Smith v. Russellville Production Credit Association (11th Cir.1985), 777 F.2d 1544, 1547.) In Cort v. Ash (1975), 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26, the Supreme Court set forth four factors to consider when determining whether a statute creates an implied right of action.

"First, is the plaintiff 'one of the class for whose especial benefit the statute was enacted,' [citation]--that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? [Citation.] Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? [Citations.] And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law?" (422 U.S. at 78, 95 S.Ct. at 2088, 45 L.Ed.2d at 36.)

In analyzing these factors, the ultimate inquiry remains whether Congress intended to create, either expressly or by implication, a private cause of action. (Touche Ross & Co. v. Redington (1979), 442 U.S. 560, 575, 99 S.Ct. 2479, 2489, 61 L.Ed.2d 82, 95.) Unless congressional intent can be inferred from the language of the statute, the statutory structure, or some other source, the essential predicate for implication of a private remedy simply does not exist. Saltzman v. Farm Credit Services of Mid-America, ACA (7th Cir.1991), 950 F.2d 466, 468.

In Harper v. Federal Land Bank (9th Cir.1989), 878 F.2d 1172, the court conducted an in-depth analysis of the Farm Credit Act and delved into legislative history to discern its purpose and the legislature's intent. As for the first prong of the Cort analysis, namely, whether defendants are among those for whose special benefit the statute was enacted, the Harper court concluded that while one of the purposes of the Act was to provide borrowers with certain limited rights, the Act's overall purpose was to reassure both farmers and financial markets that the Farm Credit System would remain a viable entity. (See also Walker v. Federal Land Bank (C.D.Ill.1989), 726 F.Supp. 211 (in which the court held that Congress carefully drafted the Act in order to achieve two opposing goals: to shore up the financial structure of the Farm Credit System and to benefit financially strapped farmers).) Whatever the reason for the Act, it is clear that the second Cort factor, the presence of congressional intent to create a private remedy, simply does not exist. See Thompson v. Thompson (1988), 484 U.S. 174, 179, 108 S.Ct. 513, 516, 98 L.Ed.2d 512, 520.

Harper pointed out that an express private right of action was proposed in both houses of Congress but deleted in the final conference version. The conference committee's report stating that the committee deleted the private right of action provision 'represents the final statement of the terms agreed to by both houses.' (Harper, 878 F.2d at 1176 (quoting Demby v. Schweiker (D.C.Cir.1981), 671 F.2d 507, 510; Zajac v. Federal Land Bank (8th Cir.1990), 909 F.2d 1181, 1182).) Given the deletion of the private-right-of-action provision and the fact that the Act provides for administrative remedies, Harper concluded that Congress intended administrative review to be the exclusive remedy of the borrower. Harper, 878 F.2d at 1176; see also Zajac, 909 F.2d at 1183 (quoting Massachusetts Mutual Life Insurance Co. v. Russell (1985), 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (wherein the court stated, "[T]he presumption that a private remedy was deliberately omitted from a statute is...