United States v. Don G. Anderson and Beverly I. Anderson

Appellants in May 1962, obtained a loan from the Farmers Home Administration for the purpose of purchasing and developing 189 acres of land in the Columbia Basin Irrigation Project. At that time, the federal government was the only source from which the money could be obtained. The interest rate on the loan was 5% and the market rate on such loans was 5%% to 6%. The appellants executed a promissory note and a real estate mortgage agreement. Included in the mortgage agreement was a provision that stated:

By letters of March 8, 1973, and July 13, 1973, the government informed the appellants that it had determined that the loan could be refinanced and requested that they do so. The appellants determined that they could borrow money to refinance the loan but only at the then prevailing market rate of 8V2% to 9%. The appellants therefore refused to refinance. On February 19, 1974, the government notified the appellants that it had exercised its option under the agreement to accelerate the indebtedness and that the entire amount was then due and owing. The government filed suit in federal district court to foreclose the mortgage. On cross motions for summary judgment, the district…