United States v. Jones, Civ. A. No. 643.

• Decision Date: 03 September 1957
• Docket Number: Civ. A. No. 643.
• Citation: 155 F. Supp. 52
• Parties: UNITED STATES of America v. James Lamar JONES.
• Court: U.S. District Court — Middle District of Georgia

155 F. Supp. 52

UNITED STATES of America v. James Lamar JONES.

Civ. A. No. 643.

United States District Court M. D. Georgia, Columbus Division.

September 3, 1957.

Robert B. Thompson, Asst. U. S. Atty., Macon, Ga., for plaintiff.

Vincent P. McCauley, Columbus, Ga., for defendant.

BOOTLE, District Judge.

The plaintiff sues the defendant for recovery of a sum it claims to have had to pay as guarantor on a loan obtained by defendant pursuant to Title III of the Servicemen's Readjustment Act of 1944, as amended, Title 38 U.S.C.A. § 694. For disposition now are cross motions for summary judgment. By pleadings, answers to interrogatories and affidavits, the following facts are made plainly to appear without controversy or issue.

For the plaintiff, this showing is as follows. The defendant, a veteran, procured a loan from the Georgia Loan and Trust Company, Macon, Georgia, in the sum of $5,750 and, upon his application, said loan was guaranteed by the Government to the extent of fifty per cent, or $2,875, the loan being evidenced by a promissory note and secured by a security deed covering a house and lot. The note and security deed were subsequently transferred to the Reconstruction Finance Corporation. After default by defendant, the Reconstruction Finance Corporation duly and regularly and in accordance with the terms and provisions of the security deed foreclosed the same and sold the house and lot at public auction before the courthouse door of Muscogee County Superior Court on November 7, 1950 for the sum of $4,228. The Reconstruction Finance Corporation was the successful bidder. The foreclosure sale failed to the extent of $865.23 bringing enough money to pay the guaranteed debt. Accordingly, the Reconstruction Finance Corporation made claim against the United States of America, through the Veterans Administration, under said guaranty for the said sum of $865.23, which amount was, accordingly, paid by the United States to Reconstruction Finance Corporation on February 3, 1951. It is for this amount, plus lawful interest from February 3, 1951, that this suit is brought in three counts, count 1 resting upon a claimed right of subrogation, and counts 2 and 3 resting upon a claimed right of indemnification as to the sum so paid out by plaintiff under its obligation as guarantor. Plaintiff's motion for summary judgment is upon counts 2 and 3.

For the defendant, the showing is as follows. Sometime after the foreclosure sale, the purchaser at said sale, Reconstruction Finance Corporation, conveyed the house and lot to the Veterans Administration for an undisclosed consideration, or purchase price. Thereafter, the Veterans Administration sold the said property to a Mrs. Wells for $5,200, being made up of a $500 down payment and a mortgage loan for $4,700. Thereafter, and on or about February 9, 1952, Mrs. Wells sold to A. J. (Jack) Hayes her equity in said property, Hayes assuming an existing loan to the Veterans Administration on which he has kept payments current at $41.86 monthly. At the time the loan was made by Georgia Loan and Trust Company of Macon, Georgia, the defendant resided in Columbus, Georgia and had his dealings with the Jefferson Company, which was the Columbus correspondent for the Georgia Loan and Trust Company. When defendant's loan became in arrears, Mr. Jack Jefferson, of the Jefferson Company, went out to defendant's home to see what defendant could do about it. Jefferson told defendant that he had a letter from the Georgia Loan and Trust Company about the loan. While they were talking about it, defendant asked Jefferson if Jefferson could sell the house for defendant. Jefferson and a salesman with him then told defendant that when the house was sold through foreclosure the defendant need not worry and that defendant's interests would be protected. Mr. Jefferson is now deceased and the defendant does not recall the identity of the salesman. Jefferson and the unidentified salesman then and there advised defendant that it would not be necessary for him to appear at any sale and that they would see to it that the proceeds of the sale would extinguish any indebtedness on defendant's part. The defendant alleges in his answer that all of these actions were done willfully and with knowledge upon the part of the holder of the security deed and note with the intention of chilling the sale "all of which constitutes a fraud upon the defendant, which said fraud the defendant herein asserts was known or upon reasonable investigation could have been known by the plaintiff herein. Further that the disparity in the procedure of the sale, and the value of the house was known to the plaintiff because of certain appraisals made by the Veterans Administration at the time the note referred to in the complaint was guaranteed by the plaintiff."

A guarantor is entitled to indemnity from his principal for any loss sustained by virtue of the contract of guaranty. The law raises an implied promise on the part of the principal to reimburse him and the guarantor has a cause of action for such reimbursement. 38 C.J.S. Guaranty § 111, page 1298. Furthermore, the regulations promulgated by the Administrator of Veterans Affairs, by authority conferred by Title 38, Section 694d(a), U.S.C.A. expressly provide:

"Any amounts paid by the Administrator on account of the liabilities of any veteran guaranteed or insured under the provisions of the Act shall constitute a debt owing to the United States by such veteran."

Title 38, Code of Federal Regulations (1949 Edition), Section 36.4323.

As was said in the case of the United States v. Henderson, D.C.Iowa, ...