183 F2d 367 Gowanda Cooperative Saving Loan Ass'n v. Gray
183 F.2d 367
GOWANDA COOPERATIVE SAVING & LOAN ASS'N et al.
United States Court of Appeals Second Circuit.
Argued June 7, 1950.
Decided July 5, 1950.
Newcomb & Walsh, Buffalo, N. Y., John T. Walsh, Buffalo, N. Y., for plaintiffs.
George L. Grobe, United States Attorney, R. Norman Kirchgraber, Assistant United States Attorney, Buffalo, N. Y., Edward E. Odom, Solicitor, Veterans Administration, David A. Turner, Assistant Associate Solicitor, Veterans Administration, Washington, D. C., for defendant.
The individual plaintiffs, Magro and Gentile, bought some real estate as tenants in common, each acquiring a one-half undivided interest in the property. To make the purchase, they borrowed $8,500 from plaintiff Association. Under 38 U.S.C.A. § 694(a), any loan made by an eligible veteran "* * * is automatically guaranteed by the Government * * * in an amount not exceeding fifty per centum of the loan: Provided, That the aggregate amount guaranteed shall not exceed * * * $4,000 in the case of real-estate loans * * *."
Gentile had previously used all but $250 of his guaranty privilege, while Magro had the full amount of his guaranty privilege remaining.
Since the aggregate guaranties available to the two veterans totalled $4250, plaintiff Association applied to the Veterans Administration for a certificate of guaranty in that amount. The Veterans Administration refused to issue the requested certificate on the theory that each of the veterans had acquired an undivided half interest in the property and that Magro's unused guaranty could not be used to cover Gentile's half of the loan. Rather, the Veterans Administration concluded, Magro was entitled to a guaranty of 50% of his half of the loan — 50% of $4,250, or $2,125 — and Gentile was entitled to use all of his unused guaranty — $250 — to cover his half. Accordingly, the Veterans Administration issued and tendered a certificate of guaranty in the amount of $2,375. Plaintiff Association refused to accept the certificate. The three plaintiffs brought this action asking for (1) a guaranty certificate for $4,250; and (2) a declaratory judgment that the interest of each veteran in property acquired in conjunction with other veterans shall not determine the amount of the loan guaranty. The District Court dismissed the complaint on the merits. Plaintiffs appeal from the judgment of dismissal.
Before AUGUSTUS N. HAND, CLARK and FRANK, Circuit Judges.
FRANK, Circuit Judge.
Under the statute, 38 U.S.C.A. § 694d, the Administrator is authorized to issue rules and regulations. His regulations, if within his authority, have the force and effect of law. See Caha v. United States, 152 U.S. 211, 14 S.Ct. 513, 38 L.Ed. 415; Boske v. Comingore, 177 U.S. 459, 20 S.Ct. 701, 44 L.Ed. 846. On October 19, 1947, the date plaintiff Association applied for the certificate of guaranty, Regulation § 36.4307, 38 CFR, 1946 Supp., was in effect. It reads:
"(a) The fact that other parties (1) will have an undivided interest with the veteran in the ownership of property, or (2) have joint and several liability with the veteran on a guaranteed or insured obligation shall not make a loan ineligible, but the amount of the loan upon which the guarantee or insurance shall be based in the case of a real estate loan, shall be proportional to the value of the veteran's interest in the property or estate. * * * "(b) If two or more eligible veterans are joint-obligors and request a guaranty or credit to an insurance account, the total amount guaranteed or credited shall be charged equally to their respective guaranty benefits, or apportioned otherwise as they may designate. Regardless of the number of eligible veterans who are joint-obligors the maximum guaranty or insurance shall be calculated as if the obligation were several."
As we read the Regulation, the maximum guaranty available to any single veteran on any given loan is determined by the words we have italicized. The Veterans Administration followed these mandates of the Regulation in issuing and tendering the certificate of guaranty, for it offered to guarantee Magro's half of the loan to the statutory limit, and offered Gentile all of the guaranty remaining to him.