Miller v. Federal Land Bank of Spokane
| Decision Date | 12 October 1978 |
| Docket Number | No. 76-1216,76-1216 |
| Citation | 587 F.2d 415 |
| Parties | Robert W. MILLER and Patricia M. Miller, Harold R. Miller and Bernice Miller, Plaintiffs-Appellees, v. The FEDERAL LAND BANK OF SPOKANE, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
George C. Dalthorp (argued), Crowley, Kilbourne, Huaghey, Hanson & Gallagher, Billings, Mont., for defendant-appellant.
William T. Kelly (argued), Kelly & Foley, Billings, Mont., for plaintiffs-appellees.
Appeal from the United States District Court for the District of Montana.
Before DUNIWAY and WRIGHT, Circuit Judges, and KUNZIG, * Judge, United States Court of Claims.
In this civil action, jurisdiction rests upon diversity of citizenship. The plaintiffs (the Millers) are citizens and residents of Montana and the defendant is a federally chartered federal land bank having its principal office in Spokane, Washington.
The appeal is from a judgment in favor of the Millers, upon a verdict in their favor in a trial of certain issues to a jury, together with an earlier partial summary judgment.
The Millers were the owners of a 2,600 acre ranch in Treasure County, Montana. On June 5, 1966, they borrowed $47,800 from the defendant, the Federal Land Bank of Spokane (the Bank), at an interest rate of 5 1/2%. As security for the loan, the Millers mortgaged the ranch to the Bank. The loan was payable in annual amortizing payments of $3,999.88, beginning on May 1, 1967, the last payment being due on May 1, 1986.
On August 28, 1972, the Burlington Northern Railroad (the Railroad) filed a condemnation action against the Millers, seeking to condemn a right of way easement for railroad purposes across 8 acres of the Millers' land. The action named the Millers and the Bank as defendants. Shortly thereafter, the Millers negotiated a settlement with the Railroad, in which the Railroad agreed to pay the Millers $31,400. The settlement check was issued on November 6, 1972, and was made payable to Robert W. Miller and Patricia M. Miller and the Bank. Attached to the check was a statement breaking down the payment made as follows:
Payment in full for land and damages in connection with the purchase of right of way . . .
Land $ 4,708.00
Damages 26,692.00
-----------
Total $ 31,400.00
The Federal Land Bank Association of Billings, Montana, (the Association) acts as The Millers claim that, when they learned of the Railroad's desire for a right of way, they consulted with officers of the Association in Billings and were told by those officers that the Bank would demand only one-half of whatever part of the moneys obtained from the Railroad was allocated to the taking of the 8k acres that the Railroad desired to acquire, and that the Millers could keep the other one-half of that amount, together with all moneys, if any, that were awarded as damages arising from the effect of the taking upon the remaining acreage of the ranch. The Millers therefore claimed, in the first count of their complaint, that they should only be required to pay to the Bank one-half of the $4,708.00, i. e., $2,354.00, which the attachment to the Railroad's check assigned to the value of the land taken.
an agent for the Bank in negotiating loans and servicing loans to farmers under the federal statutes creating the federal land banks. See 12 U.S.C. former §§ 672 Et seq. now §§ 2001 Et seq. The federal land banks were created for the purpose of lending money at low interest to farmers. A farmer who wishes to borrow money from a federal land bank makes an application through the appropriate association and the association, after obtaining the necessary information, makes a recommendation to the bank that the loan be granted. If a loan is granted, the borrower must become a member of the association by buying its stock, and must pledge the stock to the bank as further security for the loan.
They also assert that they were thereafter told by agents of the Association and the Bank that the Bank had taken the position that they would have to pay the Bank one-half of the total amount paid by the Railroad, that is, $15,700.00, or, if they did not do so, the Bank would not endorse the check and, consequently, the Millers could not cash it. The Millers allege that they told the Manager of the Association that they would pay one-half of the amount paid for the land, namely, $2,354.00.
In their complaint, filed March 7, 1973, which contains two counts, the Millers alleged, in the first count, the foregoing claim and charged the Bank with fraud in demanding one-half of the total.$31,400.00 settlement. They also alleged that the Bank demanded that they either pay one-half of the settlement or agree that they would enter into a new mortgage with a higher annual interest rate for the balance then due on the loan from the Bank. They claimed that they had been defrauded and that by reason of the fraud, they were entitled to $29,046.00 of the proceeds of the check, and to compensatory damages of $25,000.00, punitive damages of $75,000.00, interest on the $29,046.00 at the rate of 10% From November 10, 1972, the date of the settlement check, and other relief.
In their second count the Millers repeated the allegations of the first count and then alleged that the Bank was relying upon a provision in the mortgage (the eminent domain clause) which reads as follows:
If any of the mortgaged property shall be taken under right of eminent domain, the mortgagee (the Bank) shall be entitled at its option to receive all compensation for the portion taken and damages to the remaining portion, to be applied by the mortgagee upon the indebtedness hereby secured in such manner as it shall elect.
They alleged that this provision was "arbitrary, confiscatory, inequitable, invalid . . . without consideration, and would deprive the plaintiffs of property and liberty without due process of law." They asked for a judgment that the eminent domain clause was invalid and unenforceable. They further alleged that the clause has been waived by the Bank in some cases, has not been uniformly enforced against its mortgagors, and that by not enforcing it uniformly, the Bank has violated the provisions of the Act creating it, 12 U.S.C. former §§ 636-1012 now §§ 2001-2055. They concluded their second count by alleging that they were entitled to the entire.$31,400.00, the principal amount of the settlement check.
Thereafter, each of the parties filed a motion for summary judgment, the Bank claiming that the clause above quoted is The court denied the Bank's motion for summary judgment and granted that of the Millers. It rendered an opinion which is reported in Miller v. Federal Land Bank, D.Mont., 1974, 371 F.Supp. 1105. In that opinion, the court held, first, that the eminent domain clause did not apply because the land was not taken in a condemnation proceeding under the right of eminent domain, but was sold to the Railroad by the Millers in a compromise. Second, the court held that, assuming that the eminent domain clause applied to the case, it was void because its enforcement would shock the conscience of the court, particularly in light of the fact that, as the court said, the clause has not been uniformly enforced by the Bank. Accordingly, the court awarded the Millers a partial summary judgment which ordered the Bank to endorse the check mentioned above, free and clear of any claims on its behalf, so that the same could be cashed by the plaintiffs, and to pay the Millers interest on the sum of.$31,400.00 from November 8, 1972, to April 22, 1974, 1 at 6%, together with costs of suit and attorneys' fees of $4,823.33. In that judgment it also ordered that the Bank recover nothing against the Millers.
valid and enforceable, that the Bank administered it uniformly, and that, independent of the clause, its policies, under which it claimed one-half of the total payment by the Railroad, were valid and uniformly applied.
Thereafter, the court held a jury trial on the charge of fraud in the first count which resulted in a verdict in favor of the Millers. The judgment entered on the verdict awarded the plaintiffs $3,500.00 compensatory damages and $20,000.00 punitive damages. It is from the final judgment and the partial summary judgment that this appeal is taken by the Bank.
The trial judge, as we have seen, held both that the clause did not apply under the facts of this case and that, if it did apply, it was invalid. We need not decide the latter question. We very much doubt that the clause, if applicable, is invalid. However, we do not decide the question because we agree with the trial judge that the clause does not apply to this case.
The clause deals with a situation in which a mortgaged property "shall be taken under the right of eminent domain" and the disposition of "all compensation for the portion taken and the damages to the remaining portion." Here, although the Railroad filed an action to condemn, the action was never tried, and never went to judgment. On the contrary, the Millers contracted with the Railroad to sell the right of way to the Railroad and to receive a certain amount of money in return. This is not literally the taking of property under the right of eminent domain nor compensation for such a taking. The clause was drafted by the Bank, and under well established principles it is to be construed against the Bank. Under these circumstances, we agree with the trial judge that the clause does not apply to this case, and we decide nothing about its validity if it did apply.
The record shows that from a time before the loan was made to the Millers and the mortgage was given to the Bank until the present, the Bank has had in effect certain...
To continue reading
Request your trial
-
Abbit v. ING USA Annuity & Life Ins. Co.
...Accordingly, the Court declines to take judicial notice of the calculations at this stage of the litigation. Cf. Miller v. Federal Land Bank, 587 F.2d 415, 422 (9th Cir.1978) (district court should have taken judicial notice of mathematical calculations when deciding a motion for summary ju......
-
Abbit v. Ing U.S. Annuity & Life Ins. Co.
...the Court declines to take judicial notice of the calculations at this stage of the litigation. Cf. Miller v. Federal Land Bank, 587 F.2d 415, 422 (9th Cir.1978) (district court should have taken judicial notice of mathematical calculations when deciding a motion for summary judgment B. Mot......
-
State v. Kwong
...8 ? pounds per gallon. Thus, four gallons of milk weigh about 33 pounds without the containers and crate."); Miller v. Fed. Land Bank of Spokane, 587 F.2d 415, 422 (9th Cir. 1978) (holding that trial court must take judicial notice of a reduction in mortgage debt because "[t]his is a matter......
-
U.S. v. Baran
...continued against both interests, and the lienholder became entitled to proceed against either interest. See Miller v. Federal Land Bank of Spokane, 587 F.2d 415, 420 (9th Cir.1978), cert. denied, 441 U.S. 962, 99 S.Ct. 2407, 60 L.Ed.2d 1067 (1979); Malinoski v. Mekody, 48 N.Y.S.2d 940, 946......