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Rouse v. United States | 215 F.2d 872 (1954)
An old Gaelic proverb posits that there’s no greater fraud than a promise not kept. In Rouse versus United States, the United States Court of Appeals for the District of Columbia addressed an issue involving broken promises, allegations of fraud, and the rights of a third-party beneficiary.
Associated Contractors Incorporated installed a heating system in Bessie Winston’s home and took a promissory note from her guaranteeing payment for the system over time. The Federal Housing Administration, or FHA, guaranteed Winston’s note through the lending bank. Winston later sold her home to John Rouse, who agreed to make the monthly payments for the heating system until the remaining balance had been paid. Rouse failed to make the payments, and Winston defaulted on the note. The FHA paid the issuing bank and took an assignment of the note.
The FHA then sued Rouse in district court. In his defense, Rouse alleged that Winston had fraudulently represented to him the condition of the heating system and that Associated Contractors had improperly installed the system. The district court granted summary judgment for the United States, and Rouse appealed to the United States Court of Appeals for the District of Columbia.
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