United States v. Longo

• Decision Date: 02 August 1972
• Docket Number: 72-1013.,No. 71-1583,71-1583
• Citation: 464 F.2d 913
• Parties: UNITED STATES of America, Appellee, v. Joseph A. LONGO and Mary M. Longo, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

464 F.2d 913 (1972)

UNITED STATES of America, Appellee, v. Joseph A. LONGO and Mary M. Longo, Appellants.

Nos. 71-1583, 72-1013.

United States Court of Appeals, Eighth Circuit.

Submitted June 13, 1972.

Decided August 2, 1972.

Richard J. Dinsmore, Schrempp & Bruckner, Omaha, Neb., for appellants.

William K. Schaphorst, U. S. Atty., Omaha, Neb., for appellee.

Before VAN OOSTERHOUT and MURRAH,^* Senior Circuit Judges, and HEANEY, Circuit Judge.

VAN OOSTERHOUT, Senior Circuit Judge.

This is an appeal by defendants Joseph A. Longo and Mary M. Longo, husband and wife, from final judgment foreclosing a $1,404,600.00 mortgage on a high-rise apartment and medical center complex in Omaha, Nebraska. An appeal is also taken from the order confirming the foreclosure sale.

The Government's petition is in two counts. Count One seeks foreclosure of the mortgage and Count Two seeks an accounting for income and expenditures from the mortgaged property.

The Government moved for summary judgment on the foreclosure count. The defendants resisted on the basis that a genuine issue of material fact was presented. Extensive affidavits were filed by both parties. The motion was heard by Judge Denney. He determined, upon the basis of the pleadings, affidavits, and concessions of counsel, that the defendants made, executed and delivered the note and mortgage which were made to the First National Bank of Omaha, guaranteed by the Federal Housing Authority (FHA), assigned to Metropolitan Life Insurance, and by it to the Government pursuant to the loan guarantee agreement; that the note and mortgage are now owned by the government. He also determined that the loan is in default, that the Government exercised the acceleration provision contained therein, and that nothing contained in various forbearance and workout agreements bars the right to foreclosure; and that nothing had been paid on the $1,404,600.00 principal on the note and that interest due up to March 31, 1970, is $106,147.07.

Defendants in brief do not seriously challenge the foregoing findings. In any event, they are adequately supported by the evidence. Judge Denney in his memorandum opinion supporting the granting of the summary judgment of foreclosure, dated June 18, 1971, states the controlling controverted issue as follows:

"The one disputed fact requiring discussion before a determination upon this motion for summary judgment can be had is whether defendants\' assertions of misrepresentations contained in a feasibility survey conducted by plaintiff\'s agents can be used by defendants to invalidate the note and mortgage, if proven. If not, the disputed facts as to these alleged misrepresentations are irrelevant to the motion for summary judgment upon Count I of plaintiff\'s Amended Complaint for foreclosure."

During the course of the opinion he states:

"Chief Judge Robinson of this Court issued an order Filing 13 previously in this case which dismissed the counter-claim based upon the very assertion raised here as a defense to this foreclosure. The basis of that dismissal was that the alleged wrong was within the immunities reserved to the United States pursuant to 28 U.S. C.A. § 2680(h). If such immunity exists, this Court can see no reason to hold estoppel lies as a defense based upon the same matter in this foreclosure action. The counter-claim has arisen again before the Court in the cloak of a defense. It violates the spirit, if not the letter of 28 U.S.C.A. § 2680 (h)."

The court determined as a matter of law that no genuine issue as to material fact exists on the foreclosure count and determined pursuant to Rule 54(b), Fed.R.Civ.P., that no just reason for delay in entering final judgment on count one existed. Direction for entry of decree of foreclosure of the mortgage was given and decree of foreclosure was entered. No personal judgment was awarded as the note and mortgage protected the defendants against personal liability on the mortgage debt.

The issues raised by Count Two were continued for an evidentiary hearing and are not now before us.

The Government by commenceing the foreclosure action has doubtless precluded itself from raising sovereign immunity as a bar to any appropriate defense to its action. The Government has the burden of establishing the essential elements of its foreclosure action. Thus defendants by way of defense could deny that they had executed the mortgage papers or assert the claim that they had made payments for which they were not given credit. We may assume for the purposes of this case without so deciding that a defense that the mortgage is void because it was induced by fraud on the part of the Government might be available. However, this does not aid the defendants.

This action is based on the note and mortgage originally guaranteed by the Government under the provisions of federal housing law. The note was assigned to Metropolitan Life Insurance Company and upon defendants' default, assigned to the Government under the provisions of the guaranty agreement. No fraud is asserted with respect to the execution and delivery of the note and mortgage upon which this action is based. Defendants received the...