In re Jones

314 F. Supp. 1200, 1970 U.S. Dist. LEXIS 11010
CourtDistrict Court, N.D. Mississippi
DecidedJuly 8, 1970
DocketNo. DBK 6930-K
StatusPublished
Cited by1 cases

This text of 314 F. Supp. 1200 (In re Jones) is published on Counsel Stack Legal Research, covering District Court, N.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Jones, 314 F. Supp. 1200, 1970 U.S. Dist. LEXIS 11010 (N.D. Miss. 1970).

Opinion

MEMORANDUM OPINION

KEADY, Chief Judge.

On June 18, 1969, Billy T. Jones was duly adjudged a bankrupt upon the filing of his voluntary petition in bankruptcy. At the first meeting of creditors on July 3, 1969, Andrew C. Baker was appointed trustee in bankruptcy, which appointment was on the same date approved by the Referee.

On March 4, 1970, William A. Jones, father of the bankrupt, filed a petition for reclamation and release of $3,179.74 allegedly held by Agricultural Stabilization and Conservation Service (ASCS) of Panola County, Mississippi, as cotton production payments for which the bankrupt had signed up in the early part of 1969 when he indicated an intention to operate the farm property subject to ASCS agreement; by his petition, William A. Jones alleged that the bankrupt did not, in fact, plant or cultivate the cotton acreage subject to the ASCS agreement, and that he, petitioner, had actually produced the 1969 cotton crop and was entitled to receive the said cotton production payments.

On June 2, 1970, an evidentiary hearing was conducted before the court due to the disqualification of Honorable Eugene J. Raphael, Referee in Bankruptcy, who acted as attorney for the trustee prior to his appointment as Referee. The essential facts are not in dispute. In early 1969 Billy T. Jones, the bankrupt, had under his control four tracts of land, three of which were rented by him from third parties and the other owned by William A. Jones. The previous year he had farmed these tracts with a cotton allotment of approximately 52 acres, and signed up for 1969 cotton production payments with ASCS during the regular February-March sign-up period, indicating at that time his intention to produce a cotton crop. In mid-March 1969 the bankrupt went to work for the State Department of Agriculture and was away from the farm property for a period of five weeks following Easter Sunday, which occurred on April 6, 1969. He, in fact, expended no efforts on making any 1969 crops. William A. Jones, then about 63 years of age and in poor health suffering from vertigo, owned some farm equipment in common with the bankrupt and he, with the help of his neighbors, planted, cultivated and harvested a cotton crop on the aforesaid tracts of land.. The bankrupt did not at any time execute an assignment of the program payments to petitioner, nor did he ever notify ASCS that he was no longer the farm operator and crop producer and that had been succeeded in interest by William A. Jones.

Cotton support payments for Panola County farmers were due to be released on September 1, 1969, and payment checks, including one for $3,179.74 made out to the bankrupt, were prepared during the preceding month. The trustee in bankruptcy in late August notified ASCS of the fact of Billy T. Jones’ bankruptcy and demanded the funds on behalf of the bankrupt’s creditors. The trustee did not take possession of a cotton crop, nor did he have any connection with its cultivation, harvesting and sale. Soon after this demand by the trustee, [1202]*1202William A. Jones notified ASCS of his claim to the crop production payment, stating he was the actual producer of the crop, and requesting that the funds be paid to him. Thereafter William A. Jones completed the crop harvest.

During the latter part of October, the Panola County ASCS committee met, received testimony from witnesses and made a factual determination that William A. Jones was the crop producer and entitled to receive the program payments. The government check, which had been originally made in favor of Billy T. Jones, was never released and was voided, as per regulation, at the expiration of 30 days from issue date. The trustee in bankruptcy admits that this determination was made by the Panola County ASCS committee but denies that it should be controlling in this dispute.

Three issues arise for our decision. They are:

(1) Are the funds withheld by ASCS within the “possession” of the bankruptcy court so as to afford summary jurisdiction ?

(2) Has petitioner carried the burden of proof in this reclamation proceeding to establish his right to receive the funds in question ?

(3) What effect, if any, is to be given by this court to the factual determination made by ASCS P

As to the first question, it is well settled that the bankruptcy court’s exclusive jurisdiction “is not limited to actual possession but extends to constructive possession as well, including property held not only by but for the bankrupt”, 2 Collier on Bankruptcy, 14th Ed., § 23.05, p. 479. This rule applies to property in the hands of the bankrupt’s agent or other person making no claim to it. Ibid 482-3. “Where the intangible consists of a chose in action, such as a debt owed the bankrupt or a contract claim, such intangible may be said to be in the constructive possession of the bankruptcy court so as to enable the court summarily to determine the rights of various claimants to the chose in action, if the bankrupt remained the legal owner up to the time of the filing of the petition.” Ibid 487. ASCS, by withholding the funds, was not itself making any claim adverse to the bankrupt but merely asserted that a person other than the bankrupt was the beneficial owner. Under such circumstances the withheld funds may be regarded as being within the constructive possession of the bankruptcy court. Moreover, since the adverse claimant, William A. Jones, by the filing of his reclamation petition has voluntarily submitted the question of his claim for the bankruptcy court’s determination, jurisdiction has thus been conferred by consent, so that neither the trustee nor the claimant may question summary jurisdiction or contend that a plenary action naming ASCS as a party should have been instituted. Collier, supra, p. 547-8.

Regarding the burden of proof, a reclamation petition is basically a proceeding by a claimant not in possession asserting title against a trustee in bankruptcy who is in possession. The familiar rule is that “[T]o regain such property the claimant must affirmatively establish his own right to possession by proving ownership, absolute or qualified. Thus the general burden of proof is on the claimant, and where he fails to sustain this burden his petition will be denied. 4 Collier, Bankruptcy, § 70.39(3) at 1312.” Allen v. Lokey, 307 F.2d 353 (5 Cir. 1962). This burden is upon petitioner to adduce “facts sufficient to establish that its [his] claim to possession is superior to the prima facie right of the trustee.” National Silver Co. v. Nicholas, 205 F.2d 52 (5 Cir. 1953). In this case because of illness petitioner did not appear and testify and chiefly relied upon establishing that such cotton production payments are payable only to a crop producer, and after the conflicting claims arose, the ASCS Panola County committee, upon hearing evidence, made a factual determination that William A. Jones was the only person eligible to receive payment [1203]*1203and that he was entitled to 100% thereof. The petitioner also offered on his behalf W. T. McLemore, County Extension Agent, who was one of the witnesses who appeared before the ASCS committee. Mr. McLemore’s testimony was of a general nature that during 1969 William A. Jones and Billy T. Jones did not farm together, that William A. Jones, with the help of his neighbor, a Mr.

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Cite This Page — Counsel Stack

Bluebook (online)
314 F. Supp. 1200, 1970 U.S. Dist. LEXIS 11010, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-jones-msnd-1970.