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United States v. Hannon

decided: February 16, 1984.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLANT,
v.
JOHN P. HANNON, DEFENDANT-APPELLEE



Appeal from a judgment of the United States District Court for the Western District of New York, John T. Elfvin, Judge, denying summary judgment to the appellant, granting summary judgment to the appellee, and dismissing appellant's suit to renew a money judgment previously rendered against the appellee.

Kaufman, Newman and Davis,*fn* Circuit Judges. Newman, Circuit Judge, concurring. *

Author: Davis

DAVIS, Circuit Judge:

The question in this case is whether the appellant (the Government) may sue on a federal money judgment it previously obtained against the appellee (Hannon), in order to renew that judgment for the balance of the amount still unpaid plus accumulated interest. We hold that such a suit is proper. Accordingly, we reverse the district court's denial of summary judgment to the Government, its corresponding grant of summary judgment to Hannon, and its dismissal of the Government's complaint. The case is remanded to the district court with instructions to enter a new money judgment against Hannon.

I

On October 3, 1968, the Government filed a complaint in the district court for the Western District of New York against Hannon and two other parties, seeking judgment on a defaulted note. Hannon and one of the other parties failed to appear, answer, or raise any objection to the complaint.*fn1 The court entered a default judgment against them for $4,514.67 on June 2, 1969. On June 10, 1969, the default judgment was docketed in the Erie County Clerk's office and became a lien on Hannon's local realty pursuant to 28 U.S.C. § 1962 (1976).*fn2

According to the Government, Hannon made eight partial payments on the judgment between 1973 and 1976, reducing his obligation by $625.00.*fn3 The Government also alleges that it sought several writs of execution between 1974 and 1977, but was not successful in obtaining any levies on Hannon's property. The lien resulting from the 1969 judgment expired by New York law on June 2, 1979, ten years after the judgment was docketed.*fn4

Following the expiration of the New York lien period, the Government again filed (in January 1982) a complaint against Hannon, seeking a judgment on the balance of the 1969 judgment plus accumulated interest. On January 21, 1983, the court denied the Government's motion for summary judgment on its complaint and, treating Hannon's oral opposition*fn5 to the Government's motion as a cross-motion for summary judgment, granted that cross-motion and dismissed the Government's complaint. The court said that the Government could not sue to renew the prior money judgment since the "only purpose served . . . is to reduce to judgment the interest on the former judgment". In the court's view, this would result in an award of "interest on interest" exceeding the rate of interest allowed pursuant to 28 U.S.C. § 1961.*fn6

II

Federal courts have consistently recognized that a party who obtains a federal money judgment against a second party may later bring an action upon that judgment, although not upon the original cause of action. See, e.g., Gaines v. Miller, 111 U.S. 395, 399, 28 L. Ed. 466, 4 S. Ct. 426 (1884); United States v. Kellum, 523 F.2d 1284 (5th Cir. 1975); Indemnity Ins. Co. v. Smoot, 152 F.2d 667 (D.C. Cir.), cert. denied, 328 U.S. 835, 66 S. Ct. 981, 90 L. Ed. 1611 (1946); United States v. Levin, 550 F. Supp. 859 (E.D. Mo. 1982); United States v. Estes, 448 F. Supp. 971, 976-77 (N.D. Tex. 1978). See generally Restatement (Second) of Judgments § 18 comment c (1980).

Although the lien on Hannon's realty expired in 1979, the judgment itself continued, and the Government was free to bring an action to renew that judgment in order to revive the lien, or for any other purpose. See Kellum, supra, at 1287; United States v. Overman, 424 F.2d 1142, 1147 (9th Cir. 1970).

There is no applicable limitation bar in New York law even if it assumed (contrary to Kellum, supra, at 1286-87 and Overman, supra, at 1147) that a state statute could limit the Federal Government's right to sue for a renewed judgment. The federal limitation statute, 28 U.S.C. § 2415 (1976), refers only to contract and tort actions and is inapplicable to actions on judgments. Kellum, at 1287; United States v. Johnson, 454 F. Supp. 762, 763 (D. Idaho 1978); United States v. Welborn, 495 F. Supp. 833, 836 (M.D.N.C. 1980).

In his answer to the Government's complaint, Hannon alleged that the original debt was not supported by adequate consideration. This would have been a proper defense in the original action, but may not be considered in a suit to renew the judgment. Indemnity Ins. Co. of America, supra, at 669; Restatement (Second) of Judgments § 18 comment c (1980).

The ground for the district court's denial of summary judgment to the Government and its simultaneous granting of such relief to Hannon may have been the court's mistaken belief that New York law does not permit the awarding of interest on interest, in the sense that the new judgment would thereafter bear interest on the total of the principal plus accrued interest since 1969. To the contrary, when a prior judgment consisting of both principal and accumulated interest is not paid, a court renewing the judgment may award interest on the entire amount due. See Hellenic Lines Limited v. Gulf Oil Corporation, 359 F.2d 403, 404 (2d Cir. 1966); Dorey v. Dorey, 609 F.2d 1128, 1133 (5th Cir. 1980). Appellant seeks and is entitled to a new judgment for the amount of the unpaid ...


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