United States v. Dold, Civ. No. 77-4052.
| Decision Date | 18 December 1978 |
| Docket Number | Civ. No. 77-4052. |
| Citation | 462 F. Supp. 801 |
| Parties | UNITED STATES of America, Plaintiff, v. Sheryl A. (Samuelson) DOLD, Defendant. |
| Court | U.S. District Court — District of South Dakota |
Robert D. Hiaring, Acting U. S. Dist. Atty., D. S. D., Sioux Falls, S. D., for plaintiff.
Paul J. Dold, Howard, S. D., for defendant.
This suit was initiated by the United States of America in an effort to recover money loaned to the defendant, Sheryl A. (Samuelson) Dold, by the First National Bank of Watertown, South Dakota. (The loan was insured by the federal government under the auspices of The Federally Insured Student Loan Program).
A court trial was held on October 16, 1978. The plaintiff and defendant were given an opportunity to brief the issues. The following constitute the findings of fact and conclusions of law of this Court.
1.) Sheryl A. (Samuelson) Dold, the defendant, attended the University of South Dakota, during the normal academic year, from September of 1966 to May of 1970.
2.) During the time the defendant attended U.S.D., she made several loans in an effort to finance her education.
3.) Among the loans which she made during the years 1966 through 1970 are the
loans which are the subject of controversy in this suit.
4.) Sometime during the early summer of 1968, the defendant filled out an application for a Federally Insured Loan in which she requested a loan for $1,000. The application form was sent to the U.S.D. Financial Aid Office so that part B of the form could be completed by the school, which was done on July 23, 1968. Part D of the application was completed by the lender on August 9, 1968. (Gov't Ex. 2).
5.) A promissory note for $1,000 was signed by the defendant on August 5, 1968. A copy of the note was provided to the defendant, as was the custom of the bank. (Gov't Ex. 3).
6.) The note stated that the parties understood that:
7.) The note sets out the terms and conditions of the loan. There are no cancellation provisions contained in the note whereby the maker is excused from paying part of all of the principal and interest if he engages in the profession of teaching. The terms and conditions do provide that the borrower's liability may be discharged where the borrower dies or becomes permanently and totally disabled or is relieved of his obligation to repay such loan through a discharge in bankruptcy.
8.) A second application for a Federally Insured Loan was filled out by the defendant on April 18, 1969, requesting a loan for $500. Part B was completed by the school on May 6, 1969. Part D was completed by the lender on June 4, 1969. (Gov't Ex. 1).
9.) A second promissory note, containing similar terms and conditions as the first note, was signed by the defendant on June 4, 1969. This note was for $500. A copy of this note was provided to the defendant, as was the custom of the bank. (Gov't Ex. 4).
10.) The defendant received valuable consideration in exchange for her promissory notes.
11.) The stated rate of interest on both promissory notes in question is 7%.
12.) According to defendant's application for a Federally Insured Loan, the defendant was born April 28, 1948. (Gov't Ex. 3). This comports with her testimony at the court trial where she stated that she was 20 years old when the first note was executed on August 5, 1968.
13.) The defendant graduated from the University of South Dakota, on May 24, 1970.
14.) The defendant was enrolled as a student at U.S.D. during the following academic year, September 1970 through May 1971. She was taking a total of three hours each semester which constitutes less than a full-time academic work load.
15.) The defendant was employed as a teacher in Centerville, South Dakota, from the fall of 1971 through the spring of 1973.
16.) The defendant was employed as a teacher in Howard, South Dakota, from the fall of 1973 through the spring of 1976.
17.) The First National Bank of Watertown, South Dakota, wrote several letters to the defendant in an effort to set up a repayment schedule. (Gov't Exs. 5, 6 & 7). The defendant did not respond to any of the lender's letters. The bank also wrote a letter to Mrs. Mabel Hanson, who was listed by the defendant as her nearest relative with whom she was not living. (Gov't Ex. 8).
18.) On May 1, 1972, the First National Bank of Watertown, South Dakota, applied to the U.S. Office of Education for the insurance claim on the Federally Insured Student Loan for Sheryl A. (Samuelson) Dold, the defendant. (Gov't Ex. 9). Correspondence between the Office of Education and the First National Bank of Watertown, South Dakota, continued through August 7, 1972. During this period the First National Bank of Watertown, South Dakota, applied to and received from the Commissioner payment for the amount of loss it had sustained on its loan to the defendant. (Gov't Exs. 10-14).
19.) The insurance claim made by the First National Bank of Watertown, South Dakota, was paid by the U.S. Government, which then took an assignment of interest from the bank.
20.) The government made numerous attempts to contact the defendant in an effort to set up a repayment schedule. Contact was made in early 1973. (Gov't Exs. 15 and 16).
21.) The government attempted to contact the defendant by phone on numerous occasions. The government left messages at the defendant's place of employment but the defendant never contacted the government as requested.
22.) On May 29, 1975, a certified letter was sent to the defendant regarding the student loan and the fact that payments were not being made as required. The defendant received the letter; however, there was no response from her.
23.) On April 20, 1977, the defendant was contacted by phone, a conversation ensued but no payments on the loans were forthcoming.
24.) The Denver office of the Federally Insured Loans Branch of the Office of Education received a letter from Mr. Paul Dold dated February 17, 1973. The letter stated that: (Gov't Ex. 15).
25.) This suit was filed by the government on May 31, 1977.
The defendant, through her answers, raises numerous defenses. First, that the court lacked jurisdiction over the subject matter of this litigation. Second, that the statute of limitation had run prior to the filing of this suit. Third, that the defendant, at the time she signed the promissory note was a minor and without the capacity to enter into a contractual relationship. Fourth, that the First National Bank of Watertown, South Dakota, was an indispensable party to the action. Fifth, that the doctrine of laches bars recovery under this action. Sixth, that the obligation as alleged in the complaint has been satisfied.
1.) The defendant argues that this court lacks jurisdiction because the assignment by the First National Bank of Watertown, South Dakota, to the United States was inadequate. The court has found that the First National Bank of Watertown, South Dakota, was reimbursed by the United States for the loss the bank sustained on its loan to the defendant. This was in accordance with the promissory notes (Gov't Exs. 3 & 4) and 20 U.S.C.A. Section 1071 et seq. (1976). 20 U.S.C.A. Section 1080(b) (1976) states specifically that:
"Upon payment of the amount of the loss pursuant to subsection (a) of this section, the United States shall be subrogated for all of the rights of the holder of the obligation upon the insured loan and shall be entitled to an assignment of the note or other evidence of the insured loan by the insurance beneficiary." (emphasis added).
2.) This court concludes that the payment by the United States to the First National Bank of Watertown, South Dakota, was pursuant to subsection (a) of 20 U.S.C.A. Section 1080 (1976); therefore, the United States was subrogated for all of the rights of the holder of the obligation. The assignment was not inadequate and this court does not lack jurisdiction.
3.) The defendant argues that the statute of limitations had run before the United States filed this suit. It is the conclusion of this court that the statute of limitations in this action is six years as provided in 28 U.S.C.A. Section 2415(a) (1976).
4.) The statute of limitations began to run when the defendant defaulted on her loan. 20 U.S.C.A. Section 1080(e)(2) (1976) states that:
"the term `default' includes only such defaults as have existed for (A) one hundred and twenty days in the case of a loan which is repayable in monthly installments, or (B) one hundred and eighty days in the case of a loan which is repayable in less frequent installments."
5.) In addition to the one hundred and twenty to one hundred and eighty day period, there is a grace period of nine to twelve months as provided in 20 U.S.C.A. Section 1077(a)(2)(B) (1976). The promissory notes in question provided for a ten month "grace period." (Gov't Exs. 3 & 4).
6.) The note does not specify a particular repayment schedule. For the purposes of this opinion, the court will assume that the one hundred and twenty day period mentioned in 20 U.S.C.A. Section 1080(e)(2) (1976) applies, since...
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