United States v. Shimer

PETITIONER: United States
RESPONDENT: Shimer
LOCATION: Circuit Court of Montgomery County

DOCKET NO.: 392
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 367 US 374 (1961)
ARGUED: Apr 27, 1961
DECIDED: Jun 12, 1961

Facts of the case

Question

Media for United States v. Shimer

Audio Transcription for Oral Argument - April 27, 1961 in United States v. Shimer

Earl Warren:

Number 392, United States, Petitioner, versus George E. Shimer.

Mr. Barnett.

Wayne G. Barnett:

Mr. Chief Justice, may it please the Court.

Under the Pennsylvania Deficiency Judgment Act, if a mortgagee forecloses on property and purchased the property himself at the foreclosure sale, then the debtor and his guarantors are released from any further liability to the mortgagee.

Unless within six months, he petitions to the Court to have the fair market value of the property he determined and credits that against the indictment.

In effect, a purchasing mortgagee is required to give credit against the indebtedness for the fair market value of the property he acquires which is deemed to be equal to the full indebtedness unless he proves it to be otherwise within six months.

The basic question in this case is whether that statute relieves the United States of its liability as guarantor on loans to veterans guaranteed by the Veterans' Administration under the Servicemen's Readjustment Act of 1944, that's commonly known -- known as the GI Bill.

The -- on January -- in January, 1948, the respondent, a World War II veteran borrowed $13,000 from the Pennsylvania Bank for the purchase of a home in Pennsylvania.

On his application, the Veterans' Administration guaranteed $4000 of that loan.

Because of the guarantee, he was not required to make a down payment and the loan was given for the full purchase price of the property.

After the first three monthly payments, the respondent defaulted in his payments on the loan.

And a year later, on May 12, 1949, the bank entered judgment in the state court to foreclose the abandoned mortgage.

Execution was had on the judgment at a share of sale on June 29th, that's six weeks later, at which the bank bought in the property on a bid of $250.

That's the nominal amount covering cost.

A few weeks later on July 8th, the bank submitted its claim for payment of the guarantee under the Servicemen's Readjustment Act.

The VA in due course paid the bank $4000 on the guarantee.

Now, at no time did the bank follow the procedure under the Pennsylvania Deficiency Judgment Act to have the fair market value of the property determined.

William O. Douglas:

Did the Government at any time ask the bank --

Wayne G. Barnett:

No, we do not.

William O. Douglas:

(Voice Overlap)

Wayne G. Barnett:

We do not.

This action is an action brought by the United States against the respondent, the veteran to recover indemnity from him for the $4000 payment that we have paid the bank.

The District Court granted summary judgment for respondent and the Court of Appeals for the Third Circuit affirmed.

It agreed that the respondent was liable to the United States for indemnity for any amounts that we were required to pay the bank.

But it held that the VA was relieved of liability to the bank by virtue of the Pennsylvania Deficiency Judgment Act.

Therefore, we should not have paid the bank the $4000 and accordingly, we're not entitled to recover it from the veteran.

Potter Stewart:

Do I understand (Inaudible) that you were, therefore, looking for volunteer?

Wayne G. Barnett:

Yes.

Oh, we -- we have -- we agreed that if we were not liable to the bank, we can't recover from the veteran.

What it held was we weren't liable to the bank and our position is that we were liable to the bank.