Breeding Motor Freight Lines, Inc. v. Reconstruction Finance Corp.

172 F.2d 416, 1949 U.S. App. LEXIS 3498
CourtCourt of Appeals for the Tenth Circuit
DecidedFebruary 7, 1949
Docket3546, 3547, 3596, 3778, 3779
StatusPublished
Cited by49 cases

This text of 172 F.2d 416 (Breeding Motor Freight Lines, Inc. v. Reconstruction Finance Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Breeding Motor Freight Lines, Inc. v. Reconstruction Finance Corp., 172 F.2d 416, 1949 U.S. App. LEXIS 3498 (10th Cir. 1949).

Opinion

BRATTON, Circuit Judge.

These five appeals are from judgments, orders, and actions of the United States Court for Eastern Oklahoma. Reference to some of the facts and to some of the procedural steps will be omitted, but an extended statement seems necessary to an understanding of the questions presented for determination. Glenn E. Breeding and Irene Breeding, residents of Muskogee, Oklahoma, sometimes hereinafter ^referred to as the Breedings, were engaged as co-partners in the operation of a bus line known as Breeding Coaches. In 1944, they acquired the Lyman Truck Lines from Opal Bowlin Lyman and Lucille Lyman Porter. The purchase included freight operating rights from Kansas City, Missouri, to Dallas, Texas, from Oklahoma City, Oklahoma, to Fort Smith, Arkansas, and between certain supplemental points, rolling equipment, a terminal at Muskogee, and a tract of land near Pryor, Oklahoma. A note in the sum of $107,-000, secured by chattel and real estate mortgages on the property, was given for part of the purchase price. In 1945, the Breedings acquired certain properties from Tri-State Motor Transport, Inc., a corporation organized under the laws of Missouri. ' The properties consisted of freight operating rights extending generally from St. Louis, Missouri, to Oklahoma City, Oklahoma, from Joplin, Missouri, to Kansas City, Missouri, and between supplemental points, rolling equipment, a real estate terminal at St. Louis, and a real estate terminal at Joplin. A note for $120,000, secured by chattel and real estate mortgages covering the property, was given for part of the purchase price.

In June, 1945, the Breedings filed with the Reconstruction Finance Corporation an application that it participate with The Liberty National Bank of Oklahoma City, hereinafter referred to as the bank, in a loan of $600,000 to be made to the Breedings. The application was amended by reducing the amount of the loan to $560,-000. The Reconstruction Finance Corporation agreed to purchase a deferred participation of $380,000 in the loan. On November 9, 1945, the Breedings executed and delivered to the bank their promissory note in the amount of $560,000, payable in monthly installments of $9,334 on the principal, commencing one month from the date thereof, the balance payable on or before five years from the date thereof, and the interest payable monthly as it accrued concurrently with the payments on *419 the principal. The note provided among other things that the payee was authorized to declare all or any part of the indebtedness immediately due and payable in the event of failure to pay any part of the indebtedness when due or in the event of nonperformance of conditions imposed by the payee or the Reconstruction Finance Corporation with respect to the indebtedness. The Breedings also executed deeds of trust, real estate mortgages and a chattel mortgage securing payment of the note. By these instruments, the bank was given a first mortgage lien on the property of the coach business, and a second mortgage lien upon the property of the freight business, junior to the mortgages previously given, respectively, to Opal Bowlin Lyman and Lucille Lyman Porter and to TriState Motor Transport, Inc. The bank disbursed to the Breedings or for their benefit approximately $298,000, and it was used to pay outstanding notes, to pay certain withholding taxes for which a lien had been filed, to purchase equipment, and for operating capital. Pursuant to the terms and provisions of its agreement, the Reconstruction Finance Corporation purchased from the bank its participation in the note. The Breedings paid the first monthly installment due on the note, but the second installment was not paid. The bank endorsed, assigned, and transferred the note and mortgages to the Reconstruction Finance Corporation, and the entire amount of the unpaid indebtedness was declared due.

The Reconstruction Finance Corporation instituted against the Breedings an action to recover judgment on the note and foreclose the mortgages. By answer, the Breedings admitted nonpayment of the second installment due on the note, pleaded that failure to make such payment was not due to any fault on their part but on account of the failure of the Reconstruction Finance Corporation to comply with its commitments, and pleaded that by reason thereof the Reconstruction Finance Corporation did not have the right to declare the indebtedness due and to foreclose the mortgages securing it; and by counterclaim damages were sought for the failure to disburse to the Breedings the full amount of the loan. Opal Bowlin Lyman and Ralph W. Porter, administrator of the estate of Lucille Lyman Porter, deceased, and Tri-State Motor Transport, Inc., became parties to the action, seeking judgment for the balance due upon the notes of $107,000 and $120,000, respectively, to which reference has been made, and to foreclose the mortgage liens securing such notes. When the cause came on for hearing, the Breedings dismissed with prejudice their counterclaim; and judgment was entered in favor of the Reconstruction Finance Corporation in the amount of $253,577.52, together with accrued interest and attorney’s fees, in. favor of Opal Bowlin Lyman and Ralph Lyman Porter, administrator of the estate of Lucille Lyman Porter, deceased, in the sum of $48,000, together with accrued interest and attorney’s fees, and in favor of TriState Motor Transport, Inc., in the sum of $77,720.32, together with attorney’s fees. The judgment decreed foreclosure of the mortgage liens, continued the Breedings in possession of the m'ortgaged property, provided that unless the Breedings should on or before sixty days from the date of the judgment pay the full amount of the judgment they should deliver possession of the mortgaged property to the special master thereafter to be appointed, provided that the master should sell the property at public auction, provided that the sale or sales should be subject to confirmation by the court, provided that the master should execute conveyances of the property sold, and provided that the proceeds should be disbursed in the manner therein specified. After entry of the judgment, the Breedings sought and obtained from the Reconstruction Finance Corporation the sum of $42,250 to be used in paying back wages, current wages, rent, insurance premiums, and utility bills, such as lights and telephone. A supplemental judgment was entered for that amount, together with interest thereon, with provision that it should have the same force, effect, lien, and priority as though included in the original judgment. SomeLime after entry of the original judgment, the Breedings transferred to Breeding Motor Coaches, Inc., a corporation, and to Breeding Motor *420 Freight Lines, Inc., a corporation, certain of the properties described in the mortgages and in the judgment; and the two corporations subsequently became parties to the action.

More than a year after entry of the original judgment, a special master was appointed, and he was directed to take possession of the property and cause it to be sold as provided in the judgment. An execution and order of sale was issued but it was returned unexecuted. An alias execution and order of sale issued, and a notice of sale was published. The Breedings, Breeding Motor Coaches, Inc., and Breeding Motor Freight Lines, Inc., filed a motion to quash and .withdraw the notice of sale and to direct the master to give and publish a new and corrected notice. The motion- was denied. At the sale, the property was sold to the Reconstruction Finance Corporation for $145,000, and the sale was reported to the court for confirmation.

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172 F.2d 416, 1949 U.S. App. LEXIS 3498, Counsel Stack Legal Research, https://law.counselstack.com/opinion/breeding-motor-freight-lines-inc-v-reconstruction-finance-corp-ca10-1949.