It argues that the effect of the aforesaid provision was to grant a moratorium on its default, pending the disposition of the state court action, since removed to this Court.
At oral argument counsel for the adverse parties conceded that the government's motion, although supported by documents, was unaccompanied by affidavits, thereby converting it to one for judgment on the pleadings under Rule 12(a) F.R.Civ.P. The supporting documents, extraneous to the pleadings, were depositions of certain FHA personnel. Accordingly, either under Rule 12(c) providing for judgment on the pleadings, or under Rule 56(b) for summary judgment, if a judgment is granted, it is essentially on the merits and may be entered only upon a conclusive determination of the legal issues presented. Farbenfabriken Bayer, A G v. Sterling Drug, Inc., 148 F. Supp. 733 (D.N.J.1957). If a genuine issue of material fact is generated in either situation, judgment is precluded. Huntt v. Government of Virgin Islands, 339 F.2d 309 (3 Cir. 1964); United States v. Blumenthal, 315 F.2d 351 (3 Cir. 1963). So that, on this motion for a judgment on the merits, all facts well pleaded in the complaint as well as the averments contained in the answer and separate defenses, but not conclusions of law, must be accepted as true.
Examining these pleadings, the supporting documents and the depositions, the plaintiff United States of America, as the reinsurance-assignee of the realty mortgage on Chelsea's apartment property, is entitled to judgment as a matter of law unless, of course, Chelsea has isolated an issue of material fact requiring plenary trial. This Court is of the opinion that Chelsea has utterly failed in this regard. The most favorable view which can be attributed to its opposition to foreclosure is that, inasmuch as it couldn't meet its mortgage financing commitments, it should be relieved of its bad bargain because of some afterthought of alleged fraud and duress of the plaintiff and others. It asserts these defenses as a shield against the plaintiff and seeks to join others in averting to circumstances involving the initiation of the entire project. However, it seems clear that, if the cooperative tenants have a damage action at all regarding the purchase of the project, which is what they claim in the removed action Civil 640-64, recourse is not against this plaintiff. The plaintiff, acting through the FHA, was not an original party to this mortgage. The subject mortgage was made with the Retirement Fund and, after continuous unremedied default, the plaintiff succeeded to the mortgagee's rights. Yet, in order to avoid the lawful consequences of its default, Chelsea seeks to impose a duty in retrospect upon the plaintiff, through the FHA, which alleged duty did not and does not exist either in fact or law. United States v. Neustadt, 366 U.S. 696, 81 S. Ct. 1294, 6 L. Ed. 2d 614 (1961). Significantly, Chelsea has been in continuous default since November, 1964. It even defaulted under the "workout agreement" by which a gratuitous opportunity was extended to it by the plaintiff to place its house in order and bring the mortgage current, thereby making the mortgagee whole. After this "workout agreement" expired by its express terms, the plaintiff, as was its right even during its two year term, commenced foreclosure in evident response to Chelsea's inability to extricate itself from its financial distress. Chelsea overlooks the rights reserved to the FHA in the "workout agreement," which expressly defeat the waiver and estoppel it contends for. Paragraph 5 thereof
specifically provides for its termination on August 31, 1967.
Insofar as Chelsea's allegations are concerned, that FHA misrepresented operating costs and rentals to the detriment of the cooperative, assuming arguendo that such averments are true, nevertheless, they do not go to the inception and validity of the mortgage in suit. On the record presented on this motion the issue is: Is the conduct of the plaintiff, claimed by the defendant to be violative of the National Housing Act, relevant to the Government's right to foreclose its assigned mortgage? This is a legal issue and not a factual question. United States v. Lawrence Towers, Inc., 236 F. Supp. 208, 210 (E.D.N.Y.1964). As aptly stated at page 210:
"We begin with the premise that the Commissioner did not make the loan but he merely insured it. * * * The legislative history of the Act does not disclose or intimate any intent on the part of Congress to benefit or protect anyone but the Government. "