Miller v. Long, 5430.

• Decision Date: 10 December 1945
• Docket Number: No. 5430.,5430.
• Citation: 152 F.2d 196
• Parties: MILLER v. LONG et al.
• Court: U.S. Court of Appeals — Fourth Circuit

152 F.2d 196 (1945)

MILLER v. LONG et al.

No. 5430.

Circuit Court of Appeals, Fourth Circuit.

December 10, 1945.

Henry T. Gaud and G. L. B. Rivers, both of Charleston, S. C. (Hagood, Rivers & Young, of Charleston, S. C., on the brief), for appellant.

Lionel K. Legge, of Charleston, S. C. (Legge & Gibbs and J. C. Long, all of Charleston, S. C., on the brief), for appellees.

Before SOPER and DOBIE, Circuit Judges, and BARKSDALE, District Judge.

DOBIE, Circuit Judge.

Sidney E. Miller, hereinafter called plaintiff, brought a civil action in equity in the District Court of the United States for the Eastern District of South Carolina seeking a declaratory judgment against L. D. Long and others, hereinafter called defendants, to the effect that a specified note and mortgage held by certain of the defendants be declared null and void. Defendants moved for dismissal of the bill for lack of jurisdiction, failure to state a cause of action, and for failure to seek appropriate relief under the circumstances.

No diversity of citizenship existed, so that it was necessary to establish the existence of a federal question in order to give jurisdiction to the District Court. The Court found that no such question was present and dismissed the bill on this ground only. From this order of dismissal plaintiff has appealed to us.

We state briefly the facts as alleged in the complaint. Plaintiff contracted with defendant Long, in 1939, that the latter would supply him with a home on a lot he selected in an area being developed by defendants, the agreed cost of the home ($4,500) to be financed in full by an FHA — insured mortgage loan, which defendant Long undertook to obtain. In due course, Long delivered a deed to the lot and Miller executed sundry papers purporting to relate to the insured mortgage loan. More than a year later, Miller discovered that among these papers which he signed was a note and second mortgage in substantial amount payable to defendant Howell, Long's father-in-law. This second mortgage was not presented for recordation until 1944. Since recordation, it has been assigned by Howell to a corporation, also made defendant in these proceedings.

The complaint also alleges that, in furtherance of this fraud, the defendant, Long, made extensive false statements to the Federal Housing Administration in applying for insurance of the first mortgage, such statements indicating that there was no second mortgage contemplated, that Miller had made substantial downpayments, and that his equity in the property had already been perfected. Finally, it is alleged that there are more than thirty other parties similarly situated, upon whom approximately identical frauds have been perpetrated by the same defendants.

The plaintiff's contention is that the fraud here complained of was not only against him but also against the Federal Housing Administration, since it was committed in order to procure the insured basic loan, and since FHA policy would not approve any loan made under the circumstances actually existing here; that the false statements made violated criminal provisions of the National Housing Act, 12 U.S.C.A. § 1701 et seq.; that these false statements and the fraudulent execution of the second mortgage were all part and parcel of a single scheme which must be considered as a unit; and that a decision of the instant case turns upon the interpretation of the National Housing Act, so that a substantial federal question is involved.

We do not find that the existence of a federal question is shown on these facts. If the facts alleged are correct, certainly a grievous fraud has been committed, which merits the closest investigation by the federal authorities, but that fact alone does not make a federal...