International Paper Co. v. Whitson

595 F.2d 559, 27 Fed. R. Serv. 2d 488
Court of Appeals for the Tenth Circuit·Decided April 2, 1979·No. No. 77-1393·Published·Cited by 18 cases

Opinion

McWILLIAMS, Circuit Judge.

The issue presented by this appeal is whether in connection with the foreclosure of a mortgage the United States is precluded from obtaining a deficiency judgment because it failed to seek such a judgment within 90 days of the foreclosure sale as required by Oklahoma statute. The trial court held that the United States was so precluded, and the United States now appeals.

Edmund and Carolyn Whitson determined to build an apartment complex in Edmond, Oklahoma, which project would be financed pursuant to the National Housing Act, 12 U.S.C. § 17157, a mortgage insurance program “designed to assist private industry in providing housing for low and moderate income families and displaced families.” Both the construction loan and the permanent loan were insured by the Secretary of Housing and Urban Development under that Act. International Paper Company supplied materials which were used in the construction of the project. The Whitsons were unable to complete the project and eventually abandoned it. At that point in time the Whitsons owed International Paper in excess of $132,000 for materials furnished and not paid for. Subsequently, the money lender called upon the Secretary of HUD to honor the mortgage insurance commitment, which the Secretary did, and in connection therewith the note and mortgage given the lender by the Whit-sons was assigned to the Secretary.

[561] In this general setting International Paper brought suit against the Whitsons, HUD, and others, in an Oklahoma state court, seeking, inter alia, money judgments against the Whitsons and HUD and foreclosure of its materialmen’s lien. The action was then removed by HUD to the United States District Court for the Western District of Oklahoma. HUD filed an answer denying liability and alleging that its mortgage lien was superior to International Paper’s materialmen’s lien. By a cross-claim HUD sought judgment against the Whit-sons and foreclosure of its mortgage lien upon the Whitsons’ property.

Trial of the case was to the court. Judgment was entered in favor of International Paper against the Whitsons in an amount of $132,629. However, International Paper’s claim against HUD was denied. By this same judgment HUD’s lien was declared to be superior to that of International Paper. Judgment was also entered in favor of the United States against the Whitsons in the amount of $809,534.14, plus interest in the amount of $36,833.86, and foreclosure was ordered.

From the judgment thus entered International Paper appealed that part of the judgment which disallowed its claim against HUD. In this connection it was International Paper’s theory that it was a third party beneficiary under certain agreements between HUD, the several money lenders, and the Whitsons, and that as a third party beneficiary it had a money claim directly against HUD. On appeal, we agreed with International Paper, reversing the judgment of the trial court and remanding with directions to enter judgment in favor of International Paper against HUD. International Paper Co. v. Whitson, 571 F.2d 1133 (10th Cir. 1977).

In the meantime, HUD foreclosed and the Whitson property was sold for $675,000, leaving a substantial deficiency on the judgment earlier entered in favor of HUD against the Whitsons. However, the United States did not thereafter file a motion for a deficiency judgment against the Whit-sons. Later, the Whitsons filed a “Motion to Vacate and Set Aside Deficiency Judgment” on the ground that the United States had not moved for a deficiency judgment within 90 days of the foreclosure sale as provided for by Oklahoma statute, 12 Okl. Stat. § 686. That statute is attached to this opinion as an appendix.

By its judgment and order the trial court refused to vacate the judgment previously entered in favor of HUD and against the Whitsons. However, at the same time, the trial court went on to hold that because the United States had failed to move for a deficiency judgment within 90 days after the foreclosure sale as provided by 12 Okl. Stat. § 686, the earlier judgment “has been paid and satisfied by operation of law.” Thus the trial court’s order effectively precluded HUD from seeking satisfaction from the Whitsons for the difference between the earlier judgment (including both prejudgment and post-judgment interest) and the lesser amount realized in the foreclosure sale. HUD now appeals that order.

The judgment here complained of was entered when the earlier appeal was pending in this Court. Because of the pendency of that appeal, the United States initially argues that the trial court in the instant case was without jurisdiction to enter the order in question. We disagree.

The general rule is that the timely filing of a notice of appeal divests the trial court of jurisdiction. There are, however, exceptions to that rule. The general rule, as well as certain exceptions thereto, is set forth in 9 Moore’s Federal Practice If 203.11 at 734 as follows:

The filing of a timely and sufficient notice of appeal has the effect of immediately transferring jurisdiction from the district court to the court of appeals with respect to any matters involved in the appeal. It divests the district court of authority to proceed further with respect to such matters, except in aid of the appeal, or to correct clerical mistakes under Rule 60(a) of the Federal Rules of Civil Procedure or Rule 36 of the Federal Rules of Criminal Procedure, or in aid of [562] execution of a judgment that has not been superseded, until the district court receives the mandate of the court of appeals. (Emphasis added.)

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International Paper Co. v. Whitson, 595 F.2d 559, 27 Fed. R. Serv. 2d 488 (10th Cir. 1979).

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International Paper Company v. Whitson
595 F.2d 559 (Tenth Circuit, 1979)