United States v. Tholen
Decision Date | 24 August 1960 |
Docket Number | Civ. No. 674. |
Citation | 186 F. Supp. 346 |
Parties | UNITED STATES of America, Plaintiff, v. Ben THOLEN and Annie N. Tholen, Defendants. |
Court | U.S. District Court — Northern District of Iowa |
COPYRIGHT MATERIAL OMITTED
F. E. Van Alstine, U. S. Dist. Atty., and William R. Crary, Asst. U. S. Dist. Atty., Sioux City, Iowa, for plaintiff.
A. Fred Berger (of Berger & Shaw), Davenport, Iowa, for defendants.
This is an action by the plaintiff as assignee of a written instrument which it alleges is the negotiable promissory note of the defendants, Ben and Annie Tholen. The plaintiff has moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A.
The plaintiff acquired the instrument from Allied Building Credits, Inc. by reason of indemnifying that corporation pursuant to an insurance contract negotiated under the provisions of the National Housing Act of June 27, 1934, c. 847, 48 Stat. 1246, 12 U.S.C.A. § 1701 et seq. and the subsequent amendments thereto. The defendants made due and timely demand for a jury trial.
In connection with the motion, the parties submitted a number of affidavits. The defendants were orally examined and cross-examined at considerable length and one Glenn McClain, a former branch manager of Allied Building Credits, Inc., who handled the transaction here involved in behalf of that company, was also orally examined and cross-examined at considerable length. Transcripts of the examinations were submitted with the motion, so there was available for consideration by the Court practically all the evidence the parties would present at the trial of the case.
Ben Tholen and Annie Tholen, the defendants, reside on a farm home owned by the former near the City of Tipton, Cedar County, Iowa. Allied Building Credits, Inc. is a corporation engaged in finance operations. It operates in many states. Its head office is in Los Angeles, California. It has a branch office at Davenport, Iowa. Glenn McClain was the manager of that office from 1948 until October, 1955. The Belle Aire Construction Company is an Iowa corporation engaged in construction work with its principal place of business at Davenport, Scott County, Iowa. The Belle Aire Construction Company will hereinafter be usually referred to as Belle Aire and Allied Building Credits, Inc. will hereinafter be usually referred to as Allied.
In December, 1952, the defendants, Ben and Annie Tholen, were approached by the representatives of the Belle Aire Construction Company. They were persuaded to enter into a written agreement engaging the Belle Aire Construction Company to replace the siding on the Tholens' farm home. The contract price for the required labor and materials was $1,500 with nothing to be paid down and the balance to be paid in six equal semi-annual installments. Interest and carrying charges were to be added to the installment payments as an addition to the original contract price. The total price, including interest and carrying charges, was to amount to $1,755.06. The contract specified that the labor and materials were guaranteed by the contractor.
It is the plaintiff's contention that this note was given to Belle Aire in order to secure payment in the above described transaction. The face value of the note is $1,755.06 and the installment payments provided for in the note are identical with those detailed in the form contract for labor and materials previously described. It is the contention of the defendants, Ben and Annie Tholen, that the form contract for labor and materials constituted the entire agreement between the parties. They admit that the signatures upon the note are their signatures but contend that they do not remember signing the instrument. The Tholens admit signing their names more than once but allege that they were told by one Jack Horber, president of Belle Aire, that the additional signatures were required only as a matter of form, that nothing they signed would be negotiated, and that Belle Aire would guarantee the work to be done. Mrs. Tholen admitted that they were told at the time of signing that their installment payments were to be made at the offices of Allied Building Credits, Inc.
In October, 1952, Belle Aire made application to the Davenport office of Allied for service under the Federal Housing Administration Title I Program. Allied made inquiry as to Belle Aire through a national reporting agency and then approved Belle Aire as a dealer for whom it would handle home-improvement transactions. Allied processed the application in the same manner as it processed the applications of hundreds of dealers. On December 11, 1952, Belle Aire submitted to Allied's Davenport office an FHA conforming credit application as to the Tholen transaction. The application was accompanied by a written credit report from a local reporting agency reporting as to the financial condition and paying habits of the Tholens. The credit application contained representations from the Tholens as to their occupation, income, obligations, and the equity in the property to be improved in support of their application for credit in connection with the remodeling of their farm home. The credit application was made on an approved FHA Title I form. It bears the handwritten date of December 11, 1952. Preceding the blanks provided for signatures there appears in bold print the following:
Upon review of the application, Allied agreed to purchase the Tholen note from Belle Aire on a nonrecourse basis upon completion of the improvement and the submission of the proper supporting documents. On January 5, 1953, Belle Aire submitted a completion certificate signed by Ben Tholen and the other necessary supporting documents, and on that date Allied purchased the note in question.
The FHA Title I Completion Certificate is addressed to Allied Building Credits, Inc. It reads, in part, as follows:
At the bottom of the form the following appears:
In the form the warning appeared in italics.
The work had not been completed on January 1, 1953. It was not completed until February, 1953.
After purchasing the note, Allied furnished the Tholens with a coupon book authorizing the transaction and containing installment coupons to be used by the Tholens in making their payments to Allied. At the time of the purchase, Allied issued its check to Belle Aire for $1,500. It was heretofore noted that the contract price for the work was $1,500 but the amount of the note was $1,755.06 because of the addition of interest and carrying charges. Those charges were retained by Allied. The first semiannual installment of the note, due on July 1, 1953, was paid by the Tholens to Allied on July 2, 1953, and the second semiannual installment, due on January 1, 1954, was paid by the Tholens to Allied on January 5, 1954. Prior to July 1, 1954, the due date of the third semiannual installment, the Tholens expressed their dissatisfaction with the improvement but paid that semiannual installment. They made no more payments on the note. Allied, upon learning of the dissatisfaction of the Tholens with the improvement, applied pressure upon Belle Aire to rectify the situation. Belle Aire made some offer to the Tholens which was refused by them. When it appeared that Belle Aire was not going to straighten out the matter, Allied removed Belle Aire from its list of approved dealers. Upon default of the Tholens, Allied was indemnified by the Federal Housing Administration in accordance with the applicable regulations and the note was assigned to the plaintiff.
It is the contention of the defendants that the quality of...
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