United States v. Citizens National Trust & Savings Bank of Los Angeles

This is an action arising out of an express warranty indorsement by defendant herein upon a promissory note.

On February 21, 1956 the United' States of America commenced an action in the United States District Court for' the Southern District of California against George D. Bashdre, et al., No. 19,527-WM, to recover upon an installment promissory note which it alleged' the defendant had executed and delivered to Durastone Company, as principal. Execution and delivery of the promissory note were under the terms of Title I of the National Housing Act, 12 U.S.C.A. § 1702 et seq., under which Act the Federal Housing Administrator, acting for and on behalf of the United States of America, insured payment of said promissory note.

Durastone Company, payee of the note, negotiated it to the defendant in this action, Citizens National Trust & Savings Bank of Los Angeles, which then became the holder thereof. The maker, George D. Bashore, paid eighteen monthly installments on the note and then, on the 1st day of November, 1953, refused to make any other or further payments, contending the note was not valid and enforceable as it had been obtained from *411 "ihim by fraud on the part of the…