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Central Housing Inv. Corp. v. Federal Nat. Mortg. Ass'n

Supreme Court of Arizona

October 9, 1952

CENTRAL HOUSING INV. CORP.
v.
FEDERAL NAT. MORTG. ASS'N

Reversed with directions.

Knapp, Boyle, Bilby & Thompson, and Arthur Henderson, Richard Evans, of Tucson, for appellant.

Hall, Catlin & Molloy, of Tucson, for appellee.

De Concini, Justice. Udall, C. J., and Stanford, La Prade, and Phelps, JJ., concurring.

OPINION

De Concini, Justice.

[74 Ariz. 309] The sole question on this appeal is whether evaporative house coolers placed on mortgaged property subsequent to the execution of the mortgage are subject to the mortgage on foreclosure.

The facts are undisputed, hence there is only a question of law to decide.

In 1947 the Del Webb Construction Company built 700 houses as a post-war housing project known as Pueblo Gardens, south of Tucson, Arizona. The construction company built the houses but the ownership of the land and the improvements was in other corporations owned by the Del Webb interests. The construction was financed by mortgages on the individual improved lots, insured by the Federal Housing Administration, the notes and mortgages being in form required by F.H.A. and were financed through an Arizona insurance and realty company. Federal National Mortgage Association, commonly known as F.N.M.A. or "Fanny May", appellee herein and plaintiff below, as transferee of all the mortgages, brought a series of foreclosure actions against Central Housing Investment Corporation, record owner of the mortgaged premises, and hereafter referred to as appellant.

The unsold houses turned into a rental project. The Del Webb companies conveyed

Page 867

their interest in the unsold houses to the appellant, Central Housing Investment Corporation, subject to the existing F.H.A. mortgages.

The houses in the project were built of frame construction, and, although the walls were well-insulated, cooling was desirable. Under F.H.A. regulations the construction company had installed the required plumbing, electrical connections and duct work into each house for the purpose of installation of an evaporative air-cooler. It, however, did not require that coolers be installed in the houses to qualify them for F.H.A. insured mortgages.

In order to run a successful rental project the defendant installed 70 evaporative coolers at a cost of $ 7,000, payable in installments. The defendant later purchased [74 Ariz. 310] twelve additional coolers, each at $ 100 to $ 115 cash, making a total of 82 coolers owned and used by the appellant corporation on the rental project. The appellant leased the houses both by written term leases and on a month to month basis. Appellant leased coolers separately, however, ...


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