Court Opinion

ID: 3719326
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:50:59.813227+00
Date Added: 2024-06-11T18:01:09.809491
License: Public Domain

This case presents a situation which is unprecedented in my judicial experience. A federal agency (the FDIC) seeks to enforce the full amount of a judgment against a debtor in the amount of $160,000 despite an allegation by the debtor and an admission by the FDIC that the judgment (taken in 1976) was at least partially satisfied in 1978 when the FDIC took title to fifteen trucks and other heavy equipment which secured the debt.
The record discloses that in 1973, the debtor, Willoughby, applied for a loan from the now-defunct Northern Ohio Bank, to pay for the purchase of certain heavy equipment. Northern Ohio Bank took chattel mortgages on the equipment to secure the debt. Willoughby defaulted on the loan. When the Northern Ohio Bank failed, the FDIC succeeded to its assets, including the chattel mortgages and the cognovit notes executed by Willoughby. On August 20, 1976, the FDIC took a cognovit judgment on the notes. Sometime thereafter, according to Willoughby, the FDIC repossessed fifteen trucks and other heavy equipment, and took title to the trucks in January 1978.
Willoughby filed a motion for relief from judgment in 1978, contending that the judgment had been at least partially satisfied when the FDIC had repossessed the equipment. In its brief in opposition to the motion for relief from judgment, filed November 13, 1978, the FDIC stated:
"Defendants' claim that the proceeds from the repossessed chattels was not applied to reduce the judgment is not a legal defense to the judgment nor is such claim supported by operative facts.
"Defendants baldly allege in numbered paragraph 5 of their Motion to Vacate that:
"`The Plaintiff repossessed various chattels under a financing agreement and never applied the proceeds from the sale of said chattels to the alleged debt.'
"Plaintiff admits that it repossessed and sold certain chattelsin which it had a security interest but categorically denies thatit has not applied that proceeds of such sale to the judgment. In any event, such claim if true would not constitute a legal defense to the judgment. The most that can be said for this claim is that if it were true, it would reduce the amount of the judgment, including interest thereon, which remains unpaid. It is certainly not a basis for vacating the judgment.
"Further, defendants have failed to enumerate the collateral and proceeds which were sold and the proceeds therefrom which have not been applied to the judgment. As such, no operative facts have been demonstrated from which this Court can conclude that there is any basis to defendants' claim." (Emphasis added.)
Willoughby's motion for relief from judgment was denied on the basis that he had not stated grounds for relief under Civ. R. 60(B), that he had failed to present a defense, and that it was not timely filed.
This decision by the trial court denying the motion for relief appears to have been incorrect. Satisfaction of judgment is a ground for relief under Civ. R. 60(B)(4). Payment is a proper defense to enforcement of a judgment, and it does not appear that the motion was untimely. Willoughby, however, failed to appeal this decision, and the court's determination became final.2
The FDIC is now *Page 58 
pursuing insurance proceeds by way of a creditor's bill, to enforce the full amount of the judgment.
What is unsettling about this case is that, while the truth of Willoughby's allegations have never been formally adjudicated, in oral argument before this court, counsel for the FDIC, upon direct question by the court, again admitted that the FDIC had taken possession of some of appellant's equipment which secured the loan, and disputed only the amount of the equipment and its value. Counsel for the FDIC was unable to state what equipment had been taken, whether it had been sold, and whether the proceeds of any sale were applied against appellant's debt.
Even though Willoughby did not prevail in his attempt to secure relief from judgment, the FDIC is now estopped from attempting to enforce the entire amount of the judgment. Having admitted that it at least partially satisfied this judgment by repossessing the appellant's property, the burden rests upon the FDIC to show that a deficiency remains.
I would reverse and remand this matter for an evidentiary hearing to determine the extent to which this judgment has been already satisfied.
2 The majority states that appellant should have raised the defense of payment in the "note action." This was impossible, for judgment was taken upon a cognovit note. Willoughby did not "default," as stated in the majority opinion. Furthermore, according to appellant's brief on appeal, the property was repossessed after judgment on the note.