United States v. Helz, 14771.

• Decision Date: 07 March 1963
• Docket Number: No. 14771.,14771.
• Citation: 314 F.2d 301
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Mary HELZ, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

314 F.2d 301 (1963)

UNITED STATES of America, Plaintiff-Appellant, v. Mary HELZ, Defendant-Appellee.

No. 14771.

United States Court of Appeals Sixth Circuit.

March 7, 1963.

Sherman Cohn, Dept. of Justice, Washington, D. C. (William H. Orrick, Jr., Asst. Atty. Gen., Morton Hollander, Sherman L. Cohn, Attys., Dept. of Justice, Washington, D. C., Lawrence Gubow, U. S. Atty., Detroit, Mich., on brief), for appellant.

Eliot Charlip, Detroit, Mich., for appellee.

Before MILLER, Circuit Judge, BOYD, District Judge, and DARR, Senior District Judge.

DARR, Senior District Judge.

The defendant-appellee, Mary Helz, and her husband executed two notes to a banking institution for the purpose of securing money to improve their home, owned by them as tenants by the entirety. Prior to the making of the loans appellee and her husband executed credit applications on Federal Housing Administration forms, each of which stated that "this application is submitted to obtain credit under the terms of Title I of the National Housing Act." 48 Stat. 1246, as amended, 12 U.S.C. § 1703.

The notes were unsecured, the payment being insured by the terms of Title I of the National Housing Act. These notes were defaulted and the bank assigned them to the United States on behalf of the Federal Housing Administration (FHA) in return for payment by the FHA of the amounts due under Title I of the insurance program.

Appellee's husband was discharged in bankruptcy on December 6, 1960.

On February 15, 1961, the United States, on behalf of FHA, instituted the present action against appellee, individually, to recover the amounts still owing on the promissory notes, plus interest.

Appellee, admitting the execution of the notes and that they were given "for the purpose of obtaining an unsecured FHA home improvement loan," moved to dismiss the complaint on the authority of Fetter v. United States, 269 F.2d 467 (C.A. 6). The District Court dismissed the complaint without opinion. The United States appealed from the judgment.

The Government concedes that under Michigan law, which was involved in the Fetter case, no judgment on the notes could be entered against appellee, a married woman. The Fetter case settles this case should it be that Michigan law applies, but the Government presents in this case a question that was not raised or decided in the Fetter case.

The basic contention of the Government is that the relief sought should be governed by federal law and that the federal law should be determined by the Court, under the circumstances here presented, as requiring a judgment to be entered against appellee.

In diversity cases, since Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, the law of the state governs the remedies. In cases arising under federal statutes, remedies are governed by the directive of the statutes or, if no directive, then by rules fashioned by the federal courts. A rule set up by a decision of the federal court may adopt the state law or may fashion the governing rule of law according to its own standards.

In cases affecting government money and the credit of the government, the authorities set up the principle that federal law should apply. This principle is true in cases arising under the National Housing Act. As an exemple, the Court said in the case of United States v. View Crest Garden Apts., Inc., 268 F.2d 380 (C.A. 9) 1959, cert. denied 361 U.S. 884, 80 S.Ct. 156, 4 L.Ed.2d 120:

"Now the federal policy to protect the treasury and to promote the security of federal investment which in turn promotes the prime purpose of the Act — to facilitate

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