State Bank of Hardinsburg v. Brown

317 U.S. 135, 63 S. Ct. 128, 87 L. Ed. 140, 1942 U.S. LEXIS 1098
CourtSupreme Court of the United States
DecidedJanuary 18, 1943
Docket23
StatusPublished
Cited by23 cases

This text of 317 U.S. 135 (State Bank of Hardinsburg v. Brown) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Bank of Hardinsburg v. Brown, 317 U.S. 135, 63 S. Ct. 128, 87 L. Ed. 140, 1942 U.S. LEXIS 1098 (1943).

Opinions

Mr. Justice Roberts

delivered the opinion of the Court.

The court below has construed § 75 (n) of the Bankruptcy Act1 as bringing within the court’s jurisdiction property mortgaged by the debtor as to which, after foreclosure, the debtor’s equity of redemption had expired.2 Because of conflict of decision3 we granted certiorari.

[136]*136Subsequent to the adoption of § 75 the respondents borrowed $2,500 from the petitioner and gave a promissory-note secured by mortgage on their farm in Indiana. In a foreclosure proceeding in an Indiana state court petitioner obtained judgment November 20, 1939, ordering that the property be sold to satisfy the debt. May 25, 1940, the sheriff sold the farm to the petitioner. The respondents, who had not redeemed, filed their petition under § 75 on May 28, 1940, listing the farm in their schedules.

June 1,1940, the sheriff executed and delivered his deed to the petitioner; and, June 30, 1940, petitioner filed, in the District Court, a motion to strike the farm from the schedules on the ground that, at the date of the petition, the respondents had no right or equity in the property as the period of redemption provided by state law expired at the time of the sheriff’s sale. The court granted the motion and struck the property from the schedules. The Circuit Court of Appeals, by a divided court, reversed the judgment.

Section 75 (n), so far as pertinent, provides:

“The filing of a petition . . . praying for relief under . . . [this section] shall immediately subject the farmer and all his property, wherever located, for all the purposes of this section, to the exclusive jurisdiction of the court, including all real or personal property, or any equity or right in any such property, including, among others . . . the right or the equity of redemption where the period of redemption has not or had not expired, or where a deed of trust has been given as security, or where the sale has not or had not been confirmed, or where deed had not been delivered, at the time of filing the petition.
“In all cases where, at the time of filing the petition, the period of redemption has not or had not expired, or where the right under a deed of trust has not or had not become absolute, or where the sale has not or had not been [137]*137confirmed, or where deed had not been delivered, the period of redemption shall be extended or the confirmation of sale withheld for the period necessary for the purpose of carrying out the provisions of this section.”

The applicable statute of Indiana is Chapter 90 of the Acts of 1931.4 Although this statute appears not to have been construed by the state courts, it seems plain that under its provisions a sale in foreclosure can not be had until one year after the institution of the proceedings and that a sale, then made, cuts off all equity of redemption. The court below so conceded.

The question then is, should § 75 (n) be so read that, although the debtor has no interest or equity in the land which has been sold, and is at most a trustee of the bare legal title, the land is to be drawn into the bankruptcy if the sheriff has not delivered his deed at the date of the initiation of the proceedings. The respondents insist that the section literally so provides and should be given effect accordingly. The petitioner replies that the fair meaning of the section as a whole is that only if the debtor still retains an equity of redemption does the land come under the bankruptcy jurisdiction. It adds that if the language be of doubtful import the legislative history fully supports the construction for which it contends. We hold with the petitioner.

Section 75 (n), after declaring that all the debtor’s property shall come under the exclusive jurisdiction of the bankruptcy court, adds that any equity or right in such property shall be within the court’s jurisdiction. It then attempts to detail such rights, by a clause opening with the phrase “including, among others, . . . the right or the equity of redemption where the period of redemption has not or had not expired., ...” This language would seem adequate to vest in the trustee any unexpired equity of redemption and furnish the basis for dealing with the [138]*138property subject to such equity of redemption. Apparently out of an excess of caution the sentence then proceeds to catalog certain instances where, under state law, some act or thing has not occurred whose occurrence is essential to the termination of the equity of redemption. Thus the section proceeds “or where a deed of trust has been given as security, or where the sale has not or had not been confirmed, or where deed had not been delivered, at the time of filing the petition.” It is, of course, common knowledge that, in various states, one or other of the events mentioned is necessary finally to cut off the equity of redemption.

The second paragraph of the section merely extends the period of redemption in cases where, at the time of filing the petition, the period of redemption has not or had not expired. Here again, however, in an excess of caution, the statute provides, after mentioning the expiration of the period of redemption, “or where the right under a deed of trust has not or had not become absolute, or where the sale has not or had not been confirmed, or where deed had not been delivered, the period of redemption shall be extended . . .” It seems clear that if no right of redemption exists there can be no period of redemption to extend.

A fair reading of the entire section indicates a clear intent to extend the bankruptcy jurisdiction over all property which still remains subject to redemption under state law at the time of filing the petition. The section does not evidence any intent on the part of Congress to bring back into the bankruptcy proceeding property which was once owned by the bankrupt and as to which his ownership and interest has been extinguished, unless such intent can be drawn from the provisions qualifying the general words of the section. We think that if Congress intended that a bankruptcy might reach back into the past and bring under the court’s jurisdiction a former interest in [139]*139property, which, under state law, had irrevocably passed to a third person, it would have so stated in terms too clear to leave any doubt.

If it be conceded that the construction of the section is doubtful, the legislative history is overwhelmingly in support of the view we have stated.

Subsection (n) as originally enacted5 provided that the filing of a petition under § 75 “shall subject the farmer and his property, wherever located, to the exclusive jurisdiction of the court.” In administering this section the federal courts held diverse views as to their power to deal with the equity of redemption of a mortgagor after foreclosure.6 When Congress came to amend the Act to meet the decision of this court in Louisville Joint Stock Land Bank v. Radford, 295 U. S. 555

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Cite This Page — Counsel Stack

Bluebook (online)
317 U.S. 135, 63 S. Ct. 128, 87 L. Ed. 140, 1942 U.S. LEXIS 1098, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-bank-of-hardinsburg-v-brown-scotus-1943.