Smith v. Federal Land Bank

150 F.2d 318, 1945 U.S. App. LEXIS 3297
CourtCourt of Appeals for the Ninth Circuit
DecidedJune 25, 1945
DocketNo. 10666
StatusPublished
Cited by4 cases

This text of 150 F.2d 318 (Smith v. Federal Land Bank) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smith v. Federal Land Bank, 150 F.2d 318, 1945 U.S. App. LEXIS 3297 (9th Cir. 1945).

Opinion

STEPHENS, Circuit Judge.

An order made by a conciliation commissioner as referee was set aside and vacated by the district court sitting in bankruptcy. The farmer-debtors appeal. This court affirmed the decision of the district court in an opinion filed January 30, 1945, 147 F.2d 505. The matter is now before us on a rehearing.

Appellant-debtors own a citrus grove. Appellee-creditors hold two trust deeds on the property securing notes executed by appellants. In September, 1937, appellants filed a petition under § 75, subs a-r, of the Bankruptcy Act, 11 U.S.C.A. § 203, subs, a-r. The petition was approved by the court and the matter referred to a conciliation commissioner. A three-year extension proposal,1 dated November 2, 1937, was submitted by appellants, accepted by the required majority of creditors, approved by the conciliation commissioner on December 14, 1937, and thereafter approved by the court.

Appellees filed a petition, dated January 13, 1941, for an order dismissing the § 75, subs, a-r, proceedings or authorizing them to have the power of sale in the trust deeds exercised. A hearing on the petition was held March 12, 1941.

On March 21, 1941, appellants’ attorney, Mr. Stone, wrote a letter to appellees’ attorney, Mr. Hoffman, which read in part: “The matter of filing a petition under subsection s [of Bankruptcy Act, § 75] has been thoroughly discussed with Mr. and Mrs. Smith, the above named debtors. They have concluded that they will abandon the property and simply let the matter go by default if the Randolph Marketing Company and their agent, Mr. Omer Avery of this city, can be protected as to the present grapefruit crop which is now on the trees. * * * If you are willing to allow Mr. Avery to take the grapefruit crop now on the trees, the Smiths are willing to let the matter go any way that is satisfactory to you.” A letter of March 26, 1941, from Mr. Hoffman agreed to let the Randolph Marketing Company pick the grapefruit and retain the proceeds, but only in the amount necessary to reimburse it for advances, if the debtors would consent to the order prayed for in appellees’ petition and if either the conciliation commissioner and judge would order dismissal or the conciliation commissioner would order a sale under the trust deeds and thereafter appellants would execute the enclosed possession agreement.

On May 1, 1941, appellant Mrs. Smith, signed a possession agreement authorizing appellees to take possession. The agreement was not the same as that enclosed in Mr. Hoffman’s letter but a shorter version from which certain sentences objectionable to Mrs. Smith had been deleted. The omitted material contained an admission that appellants had had a fair trial under subsections a-r, were unable to show any results, and were willing voluntarily to ask the commissioner for a dismissal.

The commissioner, on February 9, 1942, made findings of fact and conclusions of law in response to appellees’ petition. He found' in part that the intention of those concerned in the extension proposal was an extension of three years from November 2, 1937, that the term of the extension proposal had expired, that the debtors had defaulted under its terms, and that the debtors had consented to such relief as was demanded by the secured creditors in their petition. He ordered that appellees might, with the consent of the court, exercise the power of sale in their deeds of trust in accordance with the laws of the State of California. No appeal was taken from the order.

Several months after the commissioner’s order, appellants filed an amended petition asking to be adjudicated bankrupts under § 75, sub. s, of the Bankruptcy Act, 11 U.S.C.A. § 203, sub. s, on the ground that they were aggrieved by the composition or extension. The conciliation commissioner recommended such adjudication. On June 11, 1942, District Judge McCormick adjudged them bankrupts and enjoined creditors from proceeding with any trust deed sale of the bankrupts’ property until further order of the court. The proceedings that led directly to the instant appeal followed.

On July 21, 1942, appellees petitioned and moved that the order adjudicating the debtors bankrupts be set aside and vacated and that the proceedings be dismissed, that the citrus grove property be stricken from the debtors’ schedule, or that the June 11th order of adjudication be held to have no effect [320]*320■on the February 9th order and that appellees be held entitled to proceed under the terms of the latter order. Hearing was held before the conciliation commissioner on the matter September 3, 1942. On November 2nd the commissioner considered a related point and ordered that the possession of the property remain in appellants, that they pay a rental of $500 a year, and that all proceedings be stayed for three years.2 On December 17, 1942, he denied appellees’ petition and motion.

On January 8, 1943, appellees petitioned the district court for a review of the commissioner’s order. Hearing was held May 10th. On July 9th District Judge Beaumont filed a memorandum opinion holding that appellants had waived their right to amend under § 75, sub.,s. Then on September 17, 1943, the court entered findings of fact and conclusions of law in accordance with its memorandum opinion and ordered that the conciliation commissioner’s findings, conclusion, and order of December 17, 1942, be set aside and vacated, that the citrus grove property be stricken from appellants’ schedules, and that appellees might proceed to have the power of sale in their deeds of trust exercised in accordance with the laws of the State of California.

On October 16, 1943, appellants filed a motion for a new trial, petition for rehearing of review, and motion to vacate judgment, order, and findings on review. The motion and petition was denied on October 25th. An affidavit of appellants’ attorney in support of the motion and petition included two letters from attorney Stone to attorney Hoffman and one from attorney Hoffman to .attorney Stone. The letters were intended to show an absence of waiver by appellants. Appellees question our right to consider the letters on this appeal.

On October 27, 1943, appellants filed a notice of appeal to this court from Judge Beaumont’s order of September 17, 1943, and from his order denying the motion for new trial, etc., of October 25, 1943.

The question of chief concern herein is whether, the term of an extension plan formulated under § 75, subs, a-r, having expired and leave to sell the farmer-debtor’s lands under deeds of trust having been granted, the district court sitting in bankruptcy has jurisdiction over the lands for the purposes of § 75, sub. s proceedings.

Under the terms of § 75, sub. s “Any farmer failing to obtain the acceptance of a majority in number and amount of all creditors whose claims are affected by a composition and/or extension proposal, or if he feels aggrieved by the composition and/or extension, may amend his petition or answer, asking to be adjudged a bankrupt. [Emphasis added.]” Appellees insist that after the expiration of a voluntary extension proposal a debtor may not become “aggrieved” within the meaning of the section.

In Cohan v. Elder, 9 Cir., 1941, 118 F.2d 850

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Bluebook (online)
150 F.2d 318, 1945 U.S. App. LEXIS 3297, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-federal-land-bank-ca9-1945.