Opinion
Civ. A. No. 7322.
April 28, 1961.
Turner B. Morgan, Morgan, Baker, Skeels, Middleton Coleman, Shreveport, La., for plaintiff.
R.J. Donovan, Jr., Love Rigby, Shreveport, La., for defendant.
This is an action for a declaratory judgment, 28 U.S.C.A. § 2201 et seq., brought here under the Diversity Statute, 28 U.S.C.A. § 1332, plaintiff being a fire insurance company, domiciled at Dallas, Texas, and defendant being a citizen of Louisiana, domiciled in this District and Division.
The basis of the action is alleged fraud, and conspiracy to defraud, on the part of defendant, the named insured in two fire insurance policies issued to him by plaintiff, which plaintiff here seeks to be declared null ab initio. Defendant, of course, denies the charges, but has failed to file a brief in support of his position, although the allotted time for doing so long since has expired. The case having been tried on its merits, to the Court without a jury, and now being ready for decision, we proceed to set down our findings of fact and conclusions of law for the record.
Defendant, Revis Ray Chandler, and one Lavelle Baker have been close friends since childhood. At various times during the years preceding the events herein described, they had been associated in business with one another. In all respects they were very close, in friendship and in business.
On April 28th, 1958, Baker acquired by deed from W.I. Lynch title to Lot 5 of Hill Top Acres Subdivision, in Bossier Parish, Louisiana, for a price of $1,000. Prior to this, one Leo Bley had purchased from Lynch the title to Lot 5 of Hill Top Acres, Unit No. 2, and had contracted with Baker for the latter to erect a residence on the property, which had been substantially completed when Baker acquired his vacant lot, located approximately a quarter of a mile away from the Bley property.
Shortly after acquiring his lot, Baker made application to Frank Graham, a loan broker in Shreveport, for a mortgage loan in the sum of $4,000 upon his lot, representing to Graham that he had a practically completed residence built upon it, although at that time Baker's lot was completely vacant. He went with Graham's appraiser, Preston J. Miller, to show him the property, but pointed out Bley's residence, instead of his vacant lot, as the property to be mortgaged. As the result of this inspection, Miller reported to Graham that the house and lot were worth approximately $12,500 and thus would support a loan of $4,000, as applied for. No survey was made.
The loan to Baker by Graham was closed on May 21st, 1958, after a title examination by Graham's attorney was made, this, of course, failing to disclose that Baker's lot was vacant, unimproved property. Immediately before the loan was consummated, Graham required Baker to sign the following letter:
"Mr. Frank Graham "531 Market Street "Shreveport, Louisiana "Re: Lot 5, Hilltop Acres "Subdivision, Bossier "Parish, Louisiana, and improvements.
"Dear Mr. Graham:
"The purpose of this letter is to state that I am the owner of the house located on the captioned lot, that the house has been completed, and that all bills for labor and materials have been paid in full.
"I am making this representation to induce you to purchase a first mortgage note on the property in the amount of $4,000.00, dated May 8, 1958, executed by Lavelle E. Baker.
"Very truly yours, "/s/ Lavelle E. Baker "Lavelle E. Baker"
When this letter was signed, and Baker received the proceeds of the loan, no construction had been started on Baker's lot, and Graham did not learn of the fraud until some time after October 5, 1958.