Campbell v. United States

16 Cl. Ct. 690, 1989 U.S. Claims LEXIS 63, 1989 WL 40849
CourtUnited States Court of Claims
DecidedApril 28, 1989
DocketNo. 425-86C
StatusPublished
Cited by4 cases

This text of 16 Cl. Ct. 690 (Campbell v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Campbell v. United States, 16 Cl. Ct. 690, 1989 U.S. Claims LEXIS 63, 1989 WL 40849 (cc 1989).

Opinion

OPINION

YOCK, Judge.

This contract case is currently before the Court on the defendant’s motion for summary judgment. Since it is concluded that this Court lacks jurisdiction over the plaintiffs’ claims herein, the defendant’s motion is granted and the plaintiffs’ complaint is to be dismissed. Having decided that this Court does not have jurisdiction over the plaintiffs’ claims herein, the defendant’s counterclaim must also be dismissed.

FACTUAL BACKGROUND

In the early 1970’s, the plaintiffs, Elmer and Marie Campbell, were engaged in the operation of a family dairy farm located near Yale in St. Clair County, Michigan. To facilitate the expansion of their dairy farm business, the plaintiffs, in November, 1973, applied for and received two loans from the Farmers Home Administration (FmHA). The FmHA is an agency within the United States Department of Agriculture, which provides credit for those in rural America who are unable to get credit from other sources at reasonable rates and terms. FmHA operates principally under the Consolidated Farm and Rural Development Act (7 U.S.C. § 1921) and title V of the Housing Act of 1949 (42 U.S.C. § 1471 et seq.).

On November 8, 1973, the plaintiffs received the sum of $50,000 as an operating loan (OL) and, in exchange, executed the appropriate promissory note (6% percent annual interest to be paid up in seven years) and security agreement for chattels and crops in favor of the United States Government. On November 9, 1973, the plaintiffs received the sum of $85,000 as a farm ownership loan (FO) and, in exchange, executed the appropriate promissory note (5 percent annual interest to be paid up in 40 years) and a real estate mortgage in favor of the United States.

Both promissory notes contained a standard default (and acceleration) clause as well as what can be called a regulation incorporation clause. The OL promissory note stated:

DEFAULT hereunder shall constitute default under any other instrument evidencing a debt of Borrower owing to or insured by the Government or securing or otherwise relating to such a debt; and default under any such other instrument shall constitute default hereunder. UPON ANY SUCH DEFAULT, the Government at its option may declare all [692]*692or any part of any such indebtedness immediately due and payable.
This note evidences a loan to Borrower made or insured by the Government pursuant to the Consolidated Farmers Home Administration Act of 1961. This note shall be subject to the present regulations of the Farmers Home Administration and to its future regulations not inconsistent with the express provisions hereof.

Likewise the FO promissory note stated:

DEFAULT: Failure to pay when due any debt evidenced hereby or perform any covenant or agreement hereunder shall constitute default under any other instrument evidencing a debt of Borrower owing to or insured by the Government or securing or otherwise relating to such a debt; and default under any such other instrument shall constitute default hereunder. UPON ANY SUCH DEFAULT, the Government at its option may declare all or any part of any such indebtedness immediately due and payable.
This note is given as evidence of a loan to Borrower made or insured by the Government pursuant to the Consolidated Farmers Home Administration Act of 1961 if the box opposite “FO”, “FONFE”, “RL”, or “SW(Ind.)”, is checked under the heading “KIND OF LOAN” or pursuant to Title V of the Housing Act of 1949 if the box opposite “RH”, “RRH”, or “LH”, is checked. This note shall be subject to the present regulations of the Farmers Home Administration and to its future regulations not inconsistent with the express provisions hereof.

In addition, the OL Security Agreement (Chattels and Crops) had a similar default clause allowing the Government to foreclose and a similar regulation incorporation clause.

Also, the OL security agreement included what can be called a future advances clause. This clause stated:

J. Secured Party will make or insure future loans or advances to Debtor to enable him to raise or harvest farm crops or raise livestock or other animals, provided funds are available and the Debtor meets all then current requirements imposed by regulations of the Secured Party.

Likewise, the real estate mortgage securing the FO loan contained similar regulation incorporation and default clauses. The default clauses provided in part as follows:

(17) SHOULD DEFAULT occur in the performance or discharge of any obligation secured by this instrument, or should any one of the parties named as Borrower die or be declared an incompetent, a bankrupt, or an insolvent, or make an assignment for the benefit of creditors, the Government, at its option, with or without notice, may: (a) declare the entire amount unpaid under the note and any indebtedness to the Government hereby secured immediately due and payable, * * * (d) foreclose this instrument as provided herein or by law [.] [Emphasis added.]

and

(23) At the option of the Government this mortgage may be foreclosed by action, or by advertisement as provided by statute or rules of practice relating thereto, and Borrower hereby irrevocably vests in the Government the statutory power of sale and constitutes and appoints the Government his agent and attorney in fact to sell the property, after due notice, at public auction to the highest bidder, for cash or secured credit at the option of the Government, and to give the purchaser a warranty deed binding upon Borrower and all claiming under him.

All of the above discussed clauses are important for a proper consideration of the claims made in this case.

In 1974, plaintiffs began to experience some difficulties in the operation of their dairy farm. Apparently, in the summer and fall of 1974, plaintiffs suffered a severe crop failure due to an unusual drought condition which resulted in a shortage of feed necessary for the maintenance and welfare of their dairy herd. Consequently, in late 1974 or early 1975, plain[693]*693tiffs initiated an attempt to secure additional loan funds from the FmHA to purchase the necessary feed supplies for their dairy herd. The circumstances surrounding the negotiations involved with this process are disputed. However, it is clear that on April 2, 1975, the FmHA denied the plaintiffs’ request for an FmHA emergency loan (EM) in the amount of $6,000.

Plaintiffs contend that critical to the FmHA’s decision not to grant the emergency loan was a “Farm and Home Plan” (FHP) dated March 27, 1975. An FHP is a type of financial analysis which must be completed as a prerequisite to gaining loan approval from the FmHA. The FHP noted above stated that plaintiffs had a negative net worth of $19,471 as of March, 1975. However, plaintiffs argue that the March FHP was inaccurate in that it misstated some important figures as well as being fraudulent because the FHP bore no signature (especially their own). Moreover, plaintiffs state that an FHP dated January 8, 1975 — which plaintiffs did sign — showed plaintiffs’ net worth to have been some $83,555. The plaintiffs did not discover the March, 1975 FHP until sometime in 1985.

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Cite This Page — Counsel Stack

Bluebook (online)
16 Cl. Ct. 690, 1989 U.S. Claims LEXIS 63, 1989 WL 40849, Counsel Stack Legal Research, https://law.counselstack.com/opinion/campbell-v-united-states-cc-1989.