Monte Vista Lodge v. The Guardian Life Insurance Co. Of America

This appeal is from an order of the district court rendered in a Chapter X proceeding of the Bankruptcy Act. Jurisdiction of the district court over such proceeding is granted by Section 2 of the Act ( 11 U.S.C. § 11 ), and this court has jurisdiction pursuant to Section 24 ( 11 U.S.C. § 47 ).

Prior to May 1, 1963, the parties entered into negotiations for a loan to be used by Monte Vista Lodge, a California corporation, for the construction of a housing facility for the elderly. On that date Guardian Life Insurance Company of America secured a commitment for loan insurance from the Federal Housing Administration pursuant to Section 231 of the National Housing Act (12 U.S.C. § 1715v). On July 1, 1963, Monte Vista executed a promissory note secured by a deed of trust in favor of Guardian Life. Thereafter, Guardian Life made various advances of funds to Monte Vista, each advance being made by reason of a certificate of mortgage insurance issued by the Federal Housing Administration.

The first payment under the note was due December 1, 1964. However, Monte Vista has never made any payment. Guardian Life obtained permission from the Federal Housing Administration to expend funds…