THE VALLEY NATIONAL BANK OF PHOENIX, a National Banking Association, Appellant,
CHARLES M. GLOVER, Jr., by Herbert Mallamo, His Guardian Ad Litem; BEULAH ANITA GLOVER, RUEBEN N. MAUTZ, and RUBY LANELL MAUTZ, by Herbert Mallamo, Her Guardian Ad Litem, Appellees
APPEAL from a judgment of the Superior Court of the County of Maricopa. Howard C. Speakman, Judge.
Judgment affirmed as modified.
Messrs. Gust, Rosenfeld, Divelbess and Robinette, for Appellant.
Mr. Herbert Mallamo, for Appellees.
Mr. Walter Roche and Mr. Allan K. Perry, Attorneys Amici Curiae.
Morgan, J. Stanford, C. J., and LaPrade, J., concur.
[62 Ariz. 541] In June, 1944, Congress adopted the "Servicemen's Readjustment Act of 1944." The law as approved by Congress appears as Chapter 268, Public 346, 78th Congress, Second Session. It is incorporated in the U. S. Code Ann., Title 38, Sections 693 [62 Ariz. 542] to 697e, both inclusive. Title III of the act provides for loans for the purchase or construction of homes, farms and business property to eligible veterans. For a proper understanding of the issues raised on this appeal, it will be helpful to refer to the pertinent provisions of this act. We quote from Section 500:
"(a) Any person who shall have served in the active military or naval service of the United States at any time on or after September 16, 1940, and prior to the termination of the present war and who shall have been discharged or released therefrom under conditions other than dishonorable after active service of ninety days or more, or by reason of any injury or disability incurred in service in line of duty, shall be eligible for the benefits of this title. Any such veteran may apply within two years after separation from the military or naval forces, or two years after termination of the war, whichever is the later date, but in no event more than five years after the termination of the war, to the Administrator of Veterans' Affairs for the guaranty by the Administrator of not to exceed 50 per centum of a loan or loans for any of the purposes specified in Section 501, 502 and 503: Provided, That the aggregate amount guaranteed shall not exceed $ 2,000. If the Administrator finds that the veteran is eligible for the benefits of this title and that the loan applied for appears practicable, the Administrator shall guarantee the payment of the part thereof as set forth in this title.
"(b) Interest for the first year on that part of the loan guaranteed by the Administrator shall be paid by the Administrator out of available appropriations. No security for the guaranty of a loan shall be required except the right to be subrogated to the lien rights of the holder of the obligation which is guaranteed: Provided, That pursuant to regulations to be issued by the Administrator the mortgagor and mortgagee shall agree that before beginning foreclosure proceedings for default in payment of principal or interest due, the Administrator shall have at least thirty days' notice with the option of bidding in the property on [62 Ariz. 543] foreclosure or of refinancing the loan with any other agency or by any other means available."
Under the provisions of Subsection (c) loans guaranteed by the Administrator are payable under such terms and conditions as may be approved by him. The interest charged cannot be more than 4 per cent per annum. The whole loan is to be payable within twenty years.
Section 501 provides for purchase or construction of homes. Pursuant to Subsection (a) the proceeds of such loans may be used for the purchase of residential property, construction of a dwelling on unimproved
property, subject to the approval of the Administrator upon finding: (1) that the proceeds of such loans will be used for the payment of the property to be purchased or constructed. (2) That the terms of payment required in any mortgage to be given in part payment of the purchase price or construction cost bear proper relation to the veteran's present and anticipated income and expenses, and that the property is suitable for dwelling purposes. (3) That the price to be paid for the property or construction does not exceed the reasonable normal value. The section specifically provides:
"(c) No first mortgage shall be ineligible for insurance under the National Housing Act, as amended, by reason of any loan guaranteed under this title, or by reason of any secondary lien upon the property involved securing such loan."
Somewhat similar provisions appear in Sections 502 and 503, which authorize the guaranteeing of loans to eligible veterans for the purchase of farms and farm equipment and business property.
Section 505 (a) contains the following:
". . . In any case wherein a principal loan, for any of the purposes stated in Section 501, 502, or 503, is approved by a Federal agency to be made or guaranteed [62 Ariz. 544] or insured by it pursuant to applicable law and regulations, and the veteran is in need of a second loan to cover the remainder of the purchase price or cost, or a part thereof, the Administrator, subject otherwise to the provisions of this title, including the limitation of $ 2,000 on the total amount which may be guaranteed, may guarantee the full amount of the second loan; Provided, That such second loan shall not exceed 20 per centum of the purchase price or cost and that the rate of interest thereon shall not exceed that on the principal loan by more than 1 per centum: And provided further, That regulations to be promulgated jointly by the Administrator and the head of such agency may provide for servicing of both loans by such agency and for refinancing of the principal loan to include any unpaid portion of the secondary loan with accrued interest, if any, after the curtailment thereon equals twice the amount of the secondary loan."
The age of majority in Arizona is 21. It became evident to the legislature that many of the veterans who might be eligible for benefits under the federal law would be barred from accepting its benefits through minority. Under the law of Arizona all property acquired by married persons is presumed to be community. In order that a married veteran, whose wife was a minor, could avail himself of the privileges of the act, the disability of such minor spouse would also have to be removed. To meet this situation, the legislature adopted House Bill 170, now appearing as Chapter 48, Session Laws, Regular Session, 17th Legislature, 1945, with the emergency clause. It was approved by the governor and became effective on March 8, 1945. The law eliminating the emergency clause is as follows:
"An Act Relating to veterans; providing that minority shall not be a legal disability in receiving servicemen's benefits; and declaring an emergency.
"Section 1. Minority not a disability. -- No veteran entitled to benefits under the provisions of the servicemen's [62 Ariz. 545] readjustment Act of 1944 (Chapter 268, Public 346, 78 congress, second session), or the spouse of any such veteran, shall be under legal disability by reason of minority to make any contract, nor shall any contract made by any such veteran ...