Federal Deposit Ins. Corp. v. MC Honea, Jr., Inc., Civ. No. C77-915A.

• Decision Date: 07 December 1977
• Docket Number: Civ. No. C77-915A.
• Citation: 440 F. Supp. 1064
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, Liquidator of Hamilton National Bank of Chattanooga, and Kyle R. Weems, Trustee of Hamilton Mortgage Corporation v. M. C. HONEA, JR., INC. and M. C. Honea, Jr.
• Court: U.S. District Court — Northern District of Georgia

440 F. Supp. 1064

FEDERAL DEPOSIT INSURANCE CORPORATION, Liquidator of Hamilton National Bank of Chattanooga, and Kyle R. Weems, Trustee of Hamilton Mortgage Corporation v. M. C. HONEA, JR., INC. and M. C. Honea, Jr.

Civ. No. C77-915A.

United States District Court, N. D. Georgia, Atlanta Division.

November 2, 1977.

Amendment to Opinion December 7, 1977.

Lowell H. Hughen and Thomas E. Prior, Hansell, Post, Brandon & Dorsey, Atlanta, Ga., for petitioners.

Walter C. Alford, Alford & Hamilton, Tucker, Ga., for respondents.

MEMORANDUM OPINION

O'KELLEY, District Judge.

Petitioners, Federal Deposit Insurance Corporation and Kyle R. Weems, filed this proceeding on June 2, 1977, seeking confirmation of two foreclosure sales of certain real property that respondent M. C. Honea, Jr., Inc. had conveyed by security deed to Hamilton Mortgage Corporation pursuant to Ga.Code Ann. § 67-1503, which provides:

When any real estate is sold on foreclosure, without legal process, under powers contained in security deeds, mortgages or other lien contracts, and at such sale said real estate does not bring the amount of the debt secured by such deed, mortgage, or contract, no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceeding shall, within 30 days after such sale, report the sale to the judge of the superior court of the county in which the land lies for confirmation and approval, and obtains an order of confirmation and approval thereon.

(Emphasis added.) During trial on the merits on August 17, 1977, respondents asserted a defense to these proceedings based upon the petitioners' alleged failure to comply with Ga.Code Ann. § 67-1503 in that they did not report the foreclosure sales in suit to the judge of the superior court in which the land lies. Specifically, respondents argue that because the statute in question is in derogation of the common law, it must be strictly construed and that a report of the sale to the judge of the superior court in which the land lies is required, irrespective of jurisdiction and venue. The respondents differentiate between commencement of a confirmation proceeding by "filing" the petition with the court and the specific statutory requirement that the sale be "reported to the judge of the superior court in which the land lies" whether or not a civil action has commenced. See Dukes v. Ralston Purina Co., 127 Ga.App. 696, 194 S.E.2d 630 (1972). Contrariwise, petitioners argue that the act of reporting the sale is not an end in and of itself and serves no purpose except in connection with "confirmation and approval." Petitioners submit that when the confirmation proceedings are heard in federal court the confirmation statute, reasonably construed, requires only that the foreclosure sale be reported to the judge of the court in which proceedings are to be heard. Cf. State of Georgia v. Coca-Cola Bottling Co., 212 Ga. 630, 94 S.E.2d 708 (1956).

Initially, the court notes that federal jurisdiction in the case sub judice is being invoked because the FDIC is a party and because the confirmation application is a "civil action to wind up the affairs" of an insolvent national banking association under 28 U.S.C. § 1348. In FDIC v. Realtract, Inc., Civil Action No. C77-12A (N.D.Ga. May 25, 1977) (Henderson, J.), the respondents challenged the use of 28 U.S.C. § 1348 as a basis of federal jurisdiction over similar confirmation proceedings by arguing that an action for confirmation of foreclosure sales is merely an administrative proceeding and is not a "civil action." Rejecting such challenges, the court in Realtract found that "because of the vital national interest in a speedy and just liquidation of national banks, where insolvency occurs, Congress expressly conferred federal jurisdiction over actions affecting the liquidation." Realtract, supra. See also FDIC v. M. O. Lee Construction Co., Civil No. CV477-115 (S.D.Ga. Oct. 4, 1977) (Lawrence, J.). In view of the diminishing need for a local trial judge having the unique expertise needed to evaluate a property's true market value in its locality,¹ this court joins in and reaffirms this finding in Realtract. Moreover, this court emphasizes that however extensive the power of a state to create and define substantive rights, it has no power to limit or defeat the jurisdiction of the federal courts:

It is apparent that a court, in determining its own jurisdiction, must look to the constitution and laws of the sovereignty which created it. The laws of the state cannot enlarge or restrict the jurisdiction of the federal courts or those of any other state. It necessarily follows that whenever a state provides a substantive right and a remedy for its enforcement in a judicial proceeding in any state court, a judicial controversy involving the right may be adjudicated by a United States District Court if it has jurisdiction under the Constitution and laws of the United States.

(Emphasis added.) Markham v. City of Newport News, 292 F.2d 711 (4th Cir. 1961).

Given this clear finding of federal jurisdiction over actions for confirmation of foreclosure sales involving liquidation of...