Lakeshore Apartments, Inc. v. United States of America, Elazar Behar Et Ux. v. United States

These two actions (Case Numbers 19554 and 19555) were tried together in the district court and have been consolidated here on appeal.

The appeal in No. 19554 is from the judgment foreclosing a mortgage executed by the Lakeshore Apartments, Inc.; the issue is the coverage of that mortgage.

In No. 19555 the appeal is from a money judgment entered against Elazar Behar and John E. Brown, Lakeshore’s shareholder-managers; the issue in it is their personal liability for disbursing Lakeshore’s money.

The district court had jurisdiction under 28 U.S.C. § 1345 and 12 U.S.C. § 1743 . Jurisdiction over the appeals is granted this court by 28 U.S.C. §§ 1291 and 1294(1).

There was little conflict in the evidence. In the foreclosure action (No. 19554) it appears that in 1947 Lakeshore borrowed $3,000,000 from the National Life Insurance Co., giving as security a mortgage on the large apartment complex that Lakeshore proposed to build and operate. The loan was insured under the provisions of the Federal Housing Act. For several years following completion of the project Lakeshore made all its payments promptly as they fell due, but in 1960 business declined and Lakeshore defaulted. Thereupon,…