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Berns Construction Co. v. Highley

May 26, 1964

BERNS CONSTRUCTION COMPANY, INC., PLAINTIFF-APPELLEE,
v.
HERMAN H. HIGHLEY, THELMA G. HIGHLEY, HELEN L. NICKELSEN, HELEN L. NICKELSEN, ADMINISTRATRIX OF THE ESTATE OF JOHN M. NICKELSEN, DECEASED, CHARLES A. PRATT, TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HERMAN H. HIGHLEY, DEFENDANTS-APPELLEES, AND UNITED STATES OF AMERICA, INTERVENOR-APPELLANT. J. L. WILSON, PLAINTIFF-APPELLEE, V. HERMAN H. HIGHLEY, THELMA G. HIGHLEY, HELEN L. NICKELSEN, HELEN L. NICKELSEN, ADMINISTRATRIX OF THE ESTATE OF JOHN M. NICKELSEN, DECEASED, CHARLES A. PRATT, TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HERMAN H. HIGHLEY, DEFENDANTS-APPELLEES, AND UNITED STATES OF AMERICA, INTERVENOR-APPELLANT.



Author: Hastings

Before HASTINGS, Chief Judge, and KNOCH and CASTLE, Circuit Judges.

HASTINGS, Chief Judge.

Plaintiffs, Berns Construction Company, Inc. (Berns), and J. L. Wilson (Wilson), brought these interpleader actions against defendants, inter alia, Helen L. Nickelsen, individually and as administratrix of the estate of John M. Nickelsen, deceased (mortgagees), and the United States.*fn1 The Government was dismissed from both cases due to sovereign immunity. The Government thereafter intervened and the two cases were consolidated for trial.

From a judgment in favor of the mortgagees, the Government appealed.

The following is a summary of the facts, which were stipulated, giving rise to the legal questions in issue.

On or about June 26, 1956, Herman H. Highley and Thelma G. Highley, executed a promissory note to the mortgagees, secured by a first mortgage on the Highleys' property, which was located in Indiana. This mortgage was recorded on or about March 28, 1957.

On March 28, 1960, plaintiff Berns entered into a contract with Herman Highley, without the knowledge or consent of the mortgagees. This contract provided that Berns could remove dirt and gravel from the mortgaged property for an agreed sum per cubic yard. Berns agreed to replace all topsoil. The dirt and gravel were to be used in the construction of an Indiana state highway nearby.

Plaintiff Wilson entered into a similar contract with Herman Highley. This contract contained an additional provision that the property would be left in a satisfactory drainage condition.

On May 6, 1960, the District Director of Internal Revenue made an assessment against the Highleys for income tax deficiencies for the years 1955 through 1958.

On June 16, 1960, the mortgagees notified plaintiffs that they would be held liable for damages resulting from removal of the "topsoil."*fn2 Although on such notice, plaintiffs continued removing dirt and gravel but advised the mortgagees that all sums due and owing to the Highleys would be held pending final determination of the rights of the mortgagees.

On or about July 29, 1960, the note and mortgage were reduced to judgment through foreclosure by the mortgagees, in the Circuit Court, Hamilton County, Indiana.

oin August 21, 1960, the Government filed and recorded tax liens with respect to the May 6, 1960 assessment against all property and rights to property of the Highleys.

On September 1, 1960, the Hamilton County Circuit Court issued execution on its judgment of foreclosure.

On September 13, 1960, the Government served a notice of levy on Berns, demanding payment of ...


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