Valley National Bank of Phoenix v. Glover

• Citation: 159 P.2d 292,62 Ariz. 538
• Decision Date: 23 May 1945
• Docket Number: Civil 4820
• Parties: THE VALLEY NATIONAL BANK OF PHOENIX, a National Banking Association, Appellant, v. CHARLES M. GLOVER, Jr., by Herbert Mallamo, His Guardian Ad Litem; BEULAH ANITA GLOVER, RUEBEN N. MAUTZ, and RUBY LANELL MAUTZ, by Herbert Mallamo, Her Guardian Ad Litem, Appellees
• Court: Supreme Court of Arizona

159 P.2d 292

62 Ariz. 538

THE VALLEY NATIONAL BANK OF PHOENIX, a National Banking Association, Appellant, v. CHARLES M. GLOVER, Jr., by Herbert Mallamo, His Guardian Ad Litem; BEULAH ANITA GLOVER, RUEBEN N. MAUTZ, and RUBY LANELL MAUTZ, by Herbert Mallamo, Her Guardian Ad Litem, Appellees

Civil No. 4820

Supreme Court of Arizona

May 23, 1945

APPEAL from a judgment of the Superior Court of the County of Maricopa. Howard C. Speakman, Judge.

Judgment affirmed as modified.

Messrs Gust, Rosenfeld, Divelbess and Robinette, for Appellant.

Mr Herbert Mallamo, for Appellees.

Mr Walter Roche and Mr. Allan K. Perry, Attorneys Amici Curiae.

Morgan, J. Stanford, C. J., and LaPrade, J., concur.

OPINION

Morgan, J.

In June, 1944, Congress adopted the "Servicemen's Readjustment Act of 1944." The law as approved by Congress appears as Chapter 268, Public 346, 78th Congress, Second Session. It is incorporated in the U. S. Code Ann., Title 38, Sections 693 [62 Ariz. 542] to 697e, both inclusive. Title III of the act provides for loans for the purchase or construction of homes, farms and business property to eligible veterans. For a proper understanding of the issues raised on this appeal, it will be helpful to refer to the pertinent provisions of this act. We quote from Section 500:

"(a) Any person who shall have served in the active military or naval service of the United States at any time on or after September 16, 1940, and prior to the termination of the present war and who shall have been discharged or released therefrom under conditions other than dishonorable after active service of ninety days or more, or by reason of any injury or disability incurred in service in line of duty, shall be eligible for the benefits of this title. Any such veteran may apply within two years after separation from the military or naval forces, or two years after termination of the war, whichever is the later date, but in no event more than five years after the termination of the war, to the Administrator of Veterans' Affairs for the guaranty by the Administrator of not to exceed 50 per centum of a loan or loans for any of the purposes specified in Section 501, 502 and 503: Provided, That the aggregate amount guaranteed shall not exceed $ 2,000. If the Administrator finds that the veteran is eligible for the benefits of this title and that the loan applied for appears practicable, the Administrator shall guarantee the payment of the part thereof as set forth in this title.

"(b) Interest for the first year on that part of the loan guaranteed by the Administrator shall be paid by the Administrator out of available appropriations. No security for the guaranty of a loan shall be required except the right to be subrogated to the lien rights of the holder of the obligation which is guaranteed: Provided, That pursuant to regulations to be issued by the Administrator the mortgagor and mortgagee shall agree that before beginning foreclosure proceedings for default in payment of principal or interest due, the Administrator shall have at least thirty days' notice with the option of bidding in the property on foreclosure or of refinancing the loan with any other agency or by any other means available."

Under the provisions of Subsection (c) loans guaranteed by the Administrator are payable under such terms and conditions as may be approved by him. The interest charged cannot be more than 4 per cent per annum. The whole loan is to be payable within twenty years.

Section 501 provides for purchase or construction of homes. Pursuant to Subsection (a) the proceeds of such loans may be used for the purchase of residential property, construction of a dwelling on unimproved property, subject to the approval of the Administrator upon finding: (1) that the proceeds of such loans will be used for the payment of the property to be purchased or constructed. (2) That the terms of payment required in any mortgage to be given in part payment of the purchase price or construction cost bear proper relation to the veteran's present and anticipated income and expenses, and that the property is suitable for dwelling purposes. (3) That the price to be paid for the property or construction does not exceed the reasonable normal value. The section specifically provides:

"(c) No first mortgage shall be ineligible for insurance under the National Housing Act, as amended, by reason of any loan guaranteed under this title, or by reason of any secondary lien upon the property involved securing such loan."

Somewhat similar provisions appear in Sections 502 and 503, which authorize the guaranteeing of loans to eligible veterans for the purchase of farms and farm equipment and business property.

Section 505 (a) contains the following:

". . . In any case wherein a principal loan, for any of the purposes stated in Section 501, 502, or 503, is approved by a Federal agency to be made or guaranteed or insured by it pursuant to applicable law and regulations, and the veteran is in need of a second loan to cover the remainder of the purchase price or cost, or a part thereof, the Administrator, subject otherwise to the provisions of this title, including the limitation of $ 2,000 on the total amount which may be guaranteed, may guarantee the full amount of the second loan; Provided, That such second loan shall not exceed 20 per centum of the purchase price or cost and that the rate of interest thereon shall not exceed that on the principal loan by more than 1 per centum: And provided further, That regulations to be promulgated jointly by the Administrator and the head of such agency may provide for servicing of both loans by such agency and for refinancing of the principal loan to include any unpaid portion of the secondary loan with accrued interest, if any, after the curtailment thereon equals twice the amount of the secondary loan."

The age of majority in Arizona is 21. It became evident to the legislature that many of the veterans who might be eligible for benefits under the federal law would be barred from accepting its benefits through minority. Under the law of Arizona all property acquired by married persons is presumed to be community. In order that a married veteran, whose wife was a minor, could avail himself of the privileges of the act, the disability of such minor spouse would also have to be removed. To meet this situation, the legislature adopted House Bill 170, now appearing as Chapter 48, Session Laws, Regular Session, 17th Legislature, 1945, with the emergency clause. It was approved by the governor and became effective on March 8, 1945. The law eliminating the emergency clause is as follows:

"An Act Relating to veterans; providing that minority shall not be a legal disability in receiving servicemen's benefits; and declaring an emergency.

"Section 1. Minority not a disability. -- No veteran entitled to benefits under the provisions of the servicemen's readjustment Act of 1944 (Chapter 268, Public 346, 78 congress, second session), or the spouse of any such veteran, shall be under legal disability by reason of minority to make any contract, nor shall any contract made by any such veteran or spouse be invalid or voidable, by reason of the minority of such veteran or spouse."

The appellant will be referred to as plaintiff and the appellees as defendants.

Plaintiff is a national banking association. Defendant Charles M. Glover, Jr., is a minor, aged 20 years. Buelah Anita Glover is his wife, aged 22 years. Defendant Rueben N. Mautz is aged 24 years. Ruby Lanell Mautz is his wife, aged 20 years. The defendants Charles M. Glover, Jr., and Rueben N. Mautz are veterans of the present world war, eligible for and entitled to benefits of the Servicemen's Readjustment Act of 1944. Glover and his wife made application to plaintiff for a loan to be made under the provisions of the Servicemen's Readjustment Act, and for a loan to be made under the National Housing Act, 12 U.S.C. A. § 1701 et seq., offering as security for the payment of such loans mortgages on real estate, title to which has been or is to be taken by them through deed and on a building yet to be constructed on such real estate from the proceeds of the loans. Similar application was made by Mautz and his wife. The administrator of Veterans' Affairs found that both Glover and Mautz were veterans eligible for the benefits of the Servicemen's Readjustment Act and approved the applications for guaranty of the first-mentioned loans. The Federal Housing Administrator made commitment to insure the other loans under the National Housing Act. The buildings on the premises to be so acquired by the veterans are to be constructed by contractors under a contract to be made between such contractors and veterans and their spouses who also proposed to make, execute and deliver to the plaintiff notes evidencing the loans, with mortgages on the real estate to secure their payment. The plaintiff entered into an agreement with the defendants, under which it agreed to make to the Glovers a loan of $ 4,800 to be insured by the Federal Housing Administration, and a further loan of $ 1,290 to be guaranteed by the Administrator of Veterans' Affairs, being a total of $ 6,090. It agreed to loan to the defendants Mautz the sum of $ 3,800 to be insured by the Federal Housing Administration, and $ 950 to be guaranteed by the Administrator of Veterans' Affairs, being a total of $ 4,750. All loans had been approved by the Administrator of Veterans' Affairs, and commitment made by the Federal Housing Administrator for insuring such loans under the Federal Housing Act.

The contract was subject to these conditions: (1) Assurances that the following instruments and contracts, either received or executed by the veterans and their wives...