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UNITED STATES v. CAPRICE

August 31, 1976

UNITED STATES of America, Plaintiff,
v.
Thomas J. CAPRICE et al., Defendants



The opinion of the court was delivered by: BIUNNO

 BIUNNO, District Judge.

 The U.S. Court of Appeals for the Third Circuit has filed an opinion August 23, 1976, 541 F.2d 275, remanding the case (without deciding the appeal), "with directions to proceed forthwith" so that the parties and the court can address what the opinion designates as a "threshold question", expressed as follows:

 
"Whether, under federal law, there can be resort to a deficiency judgment proceeding where a foreclosure sale has been ordered by the district court and a writ of execution has been returned unexecuted because the property was not sold when it was offered for sale?"

 To assist the parties in preparing their submissions, but without in any way limiting their scope or depth, the following items are mentioned.

 A. History of Action.

 1. Complaint was filed August 15, 1969 and the suit was assigned to the late Judge Robert Shaw on August 18, 1969.

 2. Judgment of foreclosure, etc., was filed March 29, 1971. Writ of execution was issued June 18, 1971 and report of sale was filed August 25, 1971. [Note: The writ itself was not returned and filed until September 20, 1972].

 3. A motion for deficiency judgment (based on the absence of any bids) was filed November 18, 1971, returnable December 13, 1971.

 4. At the hearing on the motion the following colloquies occurred:

 
(P. 2, ll. 5 to 10): "THE COURT: The property has never been sold, has it? MISS ARCH: There was a writ of execution issued to the United States Marshal and a foreclosure sale was held, but no bidders appeared at the sale. THE COURT: Nobody bid. MISS ARCH: And consequently there was no sale." (P. 3, ll. 8 to 20): "THE COURT: Why don't you try another sale? MISS ARCH: We could do that. THE COURT: I would assume that the property had some value. MISS ARCH: As you know, ordinarily the Veterans Administration or any Federal agencies normally bid in at foreclosure sales of property being foreclosed by them. In this case it was felt by the Veterans Administration that the property had little or no value to it, and consequently it did not bid in at the sale, and there were no third parties interested. THE COURT: You are more or less proceeding on the bond. MISS ARCH: Yes, sir. THE COURT: And the only matter at issue now, I would assume, is the amount of the loss? MISS ARCH: That is correct."
 
(Tr. p. 8, l. 24 to p. 8, l. 16): "THE COURT: Is there any reason why you can't proceed in this litigation on the bond obligation, on the bond? MISS ARCH: I'm not sure I understand. THE COURT: You have a mortgage and a bond. The bond states the amount of the obligation. Is there any reason you can't proceed with this litigation as a suit on the bond to recover a loss that the government has sustained? MISS ARCH: I thought that was what I was doing here today, but if you want to set a specific trial date for it -- THE COURT: He indicates he has certain equitable defenses. I'm not impressed with the references so far, but I will resolve the doubt in favor of the defendants and direct that this be placed on my next non-jury calendar, and you can bring in whatever evidence you want. MISS ARCH: I take it you are denying my motion without prejudice. THE COURT: Your motion is denied without prejudice."

 5. On October 5, 1972 following the death of Judge Shaw, the case was reassigned to Judge Leonard I. Garth.

 6. On August 10, 1973, following Judge Garth's appointment to the Court of Appeals, the case was reassigned to Judge Biunno.

 7. Trial was held November 14, 1974. After submission of briefs on both sides, the case was decided by opinion dated December 11, 1974.

 B. Nature and tenor of federal law.

 1. It has been said that "there is no Federal law of mortgages." See, Southland, etc. v. Oil, etc., 248 F. Supp. 520 (D.C.La., 1965); First Federal, etc. v. Zequeira, 288 F. Supp. 384 (D.C.P.R., 1968).

 2. The only statute dealing with mortgage foreclosures that the court has found is 28 U.S.C. 2410. This is evidently a statute waiving the sovereign immunity of the United States so as to permit enumerated kinds of suits to be brought against the United States when it claims a mortgage or other lien in the subject property (real or personal). These include suits to quiet title, to foreclose a mortgage or other lien, to partition, to condemn or to interplead. It appears to apply only to cases involving mortgage liens held by the United ...


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