United States v. Desert Gold Mining Company
Decision Date | 03 November 1970 |
Docket Number | No. 23175.,23175. |
Citation | 433 F.2d 713 |
Parties | UNITED STATES of America, Plaintiff-Appellee, v. DESERT GOLD MINING COMPANY et al., Defendants, Marlin K. Edwards, Defendant-Appellant. |
Court | U.S. Court of Appeals — Ninth Circuit |
James Moeller (argued), Roger W. Kaufman, Terry D. Oehler of Lewis Roca Beauchamp & Linton, Phoenix, Ariz., for defendant-appellant.
Robert S. Lynch (argued), Edmund B. Clarks, Attys., Shiro Kashiwa, Asst. Atty. Gen., Lands & Natural Resources, Dept. of Justice, Washington, D.C., Richard K. Burke, U.S. Atty., Richard Alleman, Asst. U.S. Atty., Phoenix, Ariz., for plaintiff-appellee.
Before MERRILL, ELY and TRASK, Circuit Judges.
The United States issued eight land patents during 1961 to Desert Gold Mining Company, and others, upon proof that gold had been discovered in and upon public land. After acquiring its patents, Desert Gold borrowed money and executed its promissory note in the sum of $100,000 payable to Marlin K. Edwards. The payment of the note was secured with a mortgage on the patented lands. The note and mortgage were dated June 8, 1962. Desert Gold only received as proceeds from the loan the sum of $84,477.92, because $10,000 was deducted for Edward's commission, and a $5,000 brokerage fee was paid to Phoenician Properties. Miscellaneous other charges for recording, taxes, escrow, and title insurance reduced the loan proceeds to the final figure. Interest on the face amount of the note was charged at 8% per annum. Between August 1, 1962, and April 15, 1963, Edwards assigned all his interest to six other individuals.
In September 1963, the United States brought suit to rescind the patents alleging they had been obtained by fraud or mistake. Edwards was joined as a defendant. In October 1963, he filed a motion for partial summary judgment on the ground that he was a bona fide encumbrancer for value as to his interest in the property because he was the mortgagee, and that his mortgage was entitled to protection against the United States claim as a matter of law. After a hearing before a district judge, Edward's motion was granted and he foreclosed the mortgage in state court.
Following the death of the district judge before whom the matter was pending at this time, the case proceeded to trial. The district court entered judgment in favor of the United States and against Desert Gold cancelling the patents and quieting title in the government upon the ground that the patents were issued by mistake.1
Immediately after the determination of this phase of the case, from which no appeal was taken, the United States filed a motion to reconsider and to vacate the partial summary judgment which had previously been entered in favor of Edwards. A hearing was held on this motion. The court determined that the loan was usurious and that Edwards was not a bona fide purchaser or encumbrancer under Arizona law. On the basis of these findings, the trial court vacated the order for partial summary judgment in favor of Edwards and quieted title in the patented lands in the United States as against all parties.
Jurisdiction in the trial court was based upon 28 U.S.C. § 1345 (United States as Plaintiff) and in this court upon 28 U.S.C. § 1291 ( ).
Edwards asserts four propositions of law on this appeal, urging that the district court erred in its application of them. They are:
We agree with the ruling of the district court on point one. We disagree with the judgment of the court on point two. Finding that the United States is a third party and not entitled to raise the question of usury it becomes unnecessary to consider the remaining issues.
The partial summary judgment entered at the instance of Edwards was one which in substance accorded the lien of the mortgage to Edwards a priority over the potential claim of the United States to cancel the patents and quiet its title. The judgment entered contained neither an express determination that there was no just reason for delay in entering the judgment as final nor an express direction for entry of a final judgment. As such the partial summary judgment under Fed.R.Civ.P. 54(b) was "subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties." A later motion after the death of the first judge, Judge Ling, to make the partial summary judgment a final judgment under the Rule, was denied. The judgment therefore remained subject to reconsideration and revision either by the same judge, a successor judge or a different judge to whom the case might be assigned. Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d 804, 809 (9th Cir. 1963); Castner v. First National Bank of Anchorage, 278 F.2d 376, 380 (9th Cir. 1960). The question before this court then becomes whether or not the action taken was a proper exercise of judicial discretion. Id. Having in mind that one judge should not overrule another except for the most cogent reasons, we do not believe the action of the successor district judge here was an abuse of discretion and thus we proceed to the other issues.
The district court determined that usury was present in the transaction between Desert Gold Mining Company, the borrower, and Edwards, the lender. Having so found, the court then held that the United States was a proper party to invoke the rule that Edwards was not a bona fide encumbrancer because he had actual knowledge of the usurious loan from which his mortgage arose, and quieted title in the United States as against all parties.
The court relied upon some early Alabama cases and a federal district court decision of the Southern District of Alabama for authority.2 Southern Home Building & Loan Association v. Riddle, 129 Ala. 562, 29 So. 667 (1901); Meyer v. Cook, 85 Ala. 417, 5 So. 147 (1888); Smith v. Lehman, Durr & Co., 85 Ala. 394, 5 So. 204 (1888); In re Elmore Cotton Mills, 217 F. 810 (S.D.Ala.1914).
Our examination of the authorities as they existed at the time of this controversy convinces us that usury, not being mala in se either generally or in Arizona, is a personal defense of the debtor. Maestro Music, Inc. v. Rudolph Wurlitzer Co., 88 Ariz. 222, 354 P.2d 266 (1960); Collister v. Inter-State Fidelity Building & Loan Association, 44 Ariz. 427, 38 P.2d 626, 631 (1934) (dicta); Sosin v. Richardson, 210 Cal.App.2d 258, 26 Cal.Rptr. 610, 614 (1962); Commonwealth Trailer Sales v. Bradt, 166 Neb. 1, 87 N.W.2d 705, 708 (1958); Tanner v. Mobley, 209 Tenn. 490, 354 S.W.2d 446, 448 (1962) (semble). It will also inure to the benefit of those in privity with him such as heirs, legal representatives and devisees of the borrower. Hatton v. Greenberg, 9 Ariz.App. 327, 451 P.2d 905, 908 (alternative holding), modified in part on rehearing, 9 Ariz. App. 508, 454 P.2d 178 (1969)3; Tanner v. Mobley, supra....
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