U.S. v. Century Federal Sav. and Loan Ass'n of Ormond Beach, 81-444
| Decision Date | 01 September 1982 |
| Docket Number | No. 81-444,81-444 |
| Citation | 418 So.2d 1195 |
| Parties | UNITED STATES of America, Appellant, v. CENTURY FEDERAL SAVINGS AND LOAN ASSOCIATION OF ORMOND BEACH, a corporation existing under the laws of the United States of America, et al., Appellees. |
| Court | Florida District Court of Appeals |
Gary L. Betz, U.S. Atty., and Wilbur V. Chaney, Asst. U.S. Atty., Orlando, for appellant.
Roger J. McDonald of Butler & McDonald, Orlando, for appellee ITT Diversified Credit Corp.
Louis Ossinsky, Jr. of Ossinsky, Krol & Hess, Daytona Beach, for appellee Halifax Nat. Bank of Port Orange.
No appearance for appellee Century Federal Sav. and Loan Ass'n.
The holder of a valid second mortgage appeals from an order of the trial court ordering excess proceeds (resulting from the sale of the mortgaged property following foreclosure of the first mortgage) distributed to a third and fourth mortgagee, and holding that the second mortgagee had forfeited its claim. We reverse.
Century Federal Savings and Loan Association (Century) filed an action to foreclose its first mortgage. It listed the following as having inferior liens or claims, and the dates of the recording of the respective claims, viz: Small Business Administration (SBA), March 22, 1976; Borg-Warner Acceptance Corp. (Borg-Warner), May 11, 1977, and May 24, 1977; ITT Diversified Credit Corp. (ITT), October 24, 1977; Lawrence Borns, November 2, 1977; Halifax National Bank (Halifax), July 10, 1978.
The United States of America answered for the SBA, asserting its statutory right of redemption under 28 U.S.C., section 2410(c), attached a copy of its note and mortgage on the subject property, and alleged that as of April 24, 1980, there was a balance due of $16,008.16, principal and interest, with interest accruing at the rate of $2.80 per day thereafter. No party controverted this allegation. It requested a right to participate in any excess proceeds. Halifax and Borg-Warner defaulted. ITT answered, requesting participation in any excess proceeds. Borns answered, asserting that he held a valid mortgage and claiming no knowledge of any of the remaining allegations.
Following the sale of the property under the terms of the final judgment foreclosing the first mortgage, Halifax filed a motion requesting leave to intervene, claiming that it now held the third mortgage by virtue of assignment from Borg-Warner, that its mortgage was inferior only to the second mortgage held by SBA, and that it was entitled to whatever remained after payment of the second mortgage. Halifax also filed a motion to disburse proceeds, requesting that the excess proceeds be distributed first to SBA in the amount of $19,965.47 and the balance to it. 1
ITT filed a written objection to Halifax' motion to intervene, alleging that Borg-Warner had defaulted earlier and that its assignee should not now be heard (and that Halifax itself had defaulted); that SBA held the second mortgage with a balance as of January 6, 1981, of $16,964.27; that the excess proceeds should be used to first satisfy the SBA and that any excess thereafter should go to ITT. It then requested an order on disbursing proceeds and called the motion up for hearing. 2
In the order appealed from, the trial court allowed the intervention by Halifax and corrected a minor mathematical error in the amount found due to the first mortgagee. 3 It then found that the mortgage liens and their priorities were as follows: (i) first mortgage--Century Federal Savings & Loan Association; (ii) second mortgage, United States of America through SBA; (iii) Halifax National Bank, as assignee of Borg-Warner; (iv) ITT. It held that the liens of the subordinate mortgages transferred to the excess proceeds "in accordance with the respective priorities of said mortgages as a result of the mortgage foreclosure sale and that said excess proceeds should be disbursed in accordance therewith." However, the order then denied the United States of America any right to participate in the proceeds because "no proof or claim to any part of the excess proceeds has been filed by the United States of America or the Small Business Administration and on account thereof, it is not entitled to participate in the excess proceeds." The court thus ordered that the excess proceeds be distributed first to Century to correct the computational error, then to Halifax and then to ITT. A motion to reconsider was denied, and the United States appeals.
In answering the original complaint, the United States (for the SBA) had asserted its second priority and stated the amount of its claim and the accrual thereon. None of the contesting parties denied the priority of the United States or the amount of its mortgage balance. In fact, both Halifax and ITT, who were the real contestants, admitted the amount of the SBA...
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