Beecher v. Federal Land Bank, 10391.

• Decision Date: 25 January 1946
• Docket Number: No. 10391.,10391.
• Citation: 153 F.2d 982
• Parties: BEECHER v. FEDERAL LAND BANK OF SPOKANE, WASH., et al.
• Court: U.S. Court of Appeals — Ninth Circuit

153 F.2d 982 (1945)

BEECHER v. FEDERAL LAND BANK OF SPOKANE, WASH., et al.

No. 10391.

Circuit Court of Appeals, Ninth Circuit.

August 3, 1945.

As Amended on Denial of Rehearings January 7 and February 25, 1946.

S. P. Beecher, of Peshastin, Wash., in pro. per., for appellant.

Henry R. Newton, of Spokane, Wash., for appellee Federal Land Bank of Spokane.

C. D. Randall, of Spokane, Wash., and Herman Howe, of Seattle, Wash., for appellee Leavenworth State Bank.

Before DENMAN, STEPHENS, and HEALY, Circuit Judges.

PER CURIAM.

Pursuant to our order of June 6, 1945, appellant and appellees have each filed their briefs herein, which have been duly considered by the court.

The order of the referee of April 30, 1940, purporting to stay all judicial proceedings against the bankrupt farmer or his property and to permit the debtor to retain possession of the latter for the period of three years was made without (a) the approved appraisal provided in subsection s of section 75, 11 U.S.C.A. § 203, sub. s, or (b) the setting aside to the debtor of his unencumbered exemptions, or (c) the ordering of the possession of the remainder of the debtor's property to remain in the debtor as prayed for by him, as provided in paragraph (1) of subsection s of section 75 of the Act, or (d) the fixing of a semi-annual rental for the property in the farmer's possession as required by paragraph (2) of subsection s of section 75 of the Act.

Since (a), (b) and (c) are conditions to be complied with prior to the making of the order of April 30, 1940, as provided in paragraph (2) of subsection s of section 75, the failure to comply with them makes the stay and possession order of 1940 void. Cf. our order of June 6, 1945.

On February 6, 1941, a meeting of the creditors was ordered for February 17, 1941, for the purposes of approving or disapproving the appraisement, of determining and setting aside the bankrupt's exemptions, delivering to him all the property of said estate, establishing a semi-annual rental thereon and staying proceedings. The hearing was had and on March 17, 1941, the referee ordered the setting aside of the exemptions and approved the appraisement, but made no order for a three year stay or possession. The order purports to antedate to April 30, 1940, the approval of the appraisal and the setting aside of the exemptions. Such antedating does not create a jurisdiction which did not exist when the 1940 stay and possession was purported to be made.

We therefore hold that the district court erred in refusing to entertain appellant's petition for review of the referee's order of March 17, 1941, and reverse that order insofar as it attempts to antedate the approval of the appraisal and the setting aside of the exemptions.

The order of October 23, 1942, determining the rent due under the void order of April 30, 1940, is void. It is ordered reversed.

Since we agree with appellant that, as yet, there has been made no valid order for a three year stay and rent paying possession to which appellant is now entitled under subsection s (2), the question is what effect does this sustaining of appellant's contention have upon the validity of the other orders appealed from in this proceeding.

Subsection s provides that by petitioning to be declared a bankrupt one may then or later petition "that he be allowed to retain possession" of his farm and other property. The order provided in s(2) allowing the farm and other property to "remain" in the possession is to be made after the period consumed in the appraisement. The Supreme Court recognizes this extended period which may elapse before the stay order starting the rental tenancy of the debtor may be made. Wright v. Vinton Branch of Mountain Trust Bank of Roanoke, Va., 300 U.S. 440, 469, 57 S.Ct. 556, 81 L.Ed. 736, 112 A.L. R. 1455. The question then is what is the relationship of the bankrupt farmer to the possession of his farm, after, as here, he has amended his petition and has been adjudged a bankrupt but before the order allowing him "to remain" in possession is made.

It is our opinion that by the words "to retain" and "to remain" Congress meant that a farmer bankrupt is to retain possession of his farm and maintain it as a trustee for the creditors until he obtains it in his capacity of rent paying tenant under subsection s(2). It is obvious that the farm requires constant management and since no trustee is provided for such contemplated management prior to the order creating a three year rental tenancy, the words "remain" and "retain" with reference to possession indicate that the farmer is to be manager of the farm in the intervening period. This is confirmed by the language of s(4) providing that "If, at the time that the farmer debtor amends his petition or answer, asking to be adjudged a bankrupt, a receiver is in charge of any of his property, such receiver shall be divested of possession, and the property returned to the possession of such farmer, under the provisions of this title." Such management is "under the supervision and control of the court" as with any trustee or receiver. Cf. Wright v. Vinton Branch, supra, 300 U.S. at page 466, 57 S.Ct. at page 564, 81 L.Ed. 736, 112 A.L.R. 1455.

Regarding the order of the district court of April 30, 1943, restraining payment to appellant of moneys due from the disposition of the 1942 crop held by the Leavenworth Fruit and Cold Storage Company, and directing that that company retain these moneys in its possession, it appears, as appellee banks have heretofore argued, that the order was made "for the purpose of requiring appellant to make an accounting of the amount * * * which rightfully is rent for 1942." The Act makes provision in section 75, sub. s(2) for payment of rental within a year of the date of the order staying proceedings. No specific provision was made for rental payments under the Act prior to the issuance of a stay order, nor may an implication of the propriety of ordering such payments be properly inferred. Hepker v. Equitable Life Ins. Co., 8 Cir., 131 F.2d 926, 927; Mach v. Abbott Co., 8 Cir., 136 F.2d 7, 10. Such income prior to the rental period is held by the farmer, as trustee, subject to the control of the court, where it would be available for the spraying and other maintenance of the property. The order of April 30, 1943, withholding from appellant the crop moneys, is reversed.

It is provided in section 75, sub. n, that the filing of a petition "shall immediately subject the farmer and all his property, wherever located, for all purposes of this section, to the exclusive jurisdiction of the court"; thus it is clear that the court retains a general power of control over the funds of the 1942 crop as over all other property within the farmer-debtor's estate. Such funds so withheld should have been available for the necessary spraying and cultivation for the crop of 1943.

Appellant also appeals from the orders denying the following motions and petitions of appellant: (1) A motion to the court to dismiss pending petitions of creditors to the court or refer them to the conciliation commissioner; (2) a petition to the court to declare void and refer all proceedings under the farm debtor's original petition to the conciliation commissioner; (3) a motion to the court to refer future proceedings to the conciliation commissioner; and (4) an order of April 30, 1943, directing the bankrupt to spray a portion of his property within ten days.

Appellant claims that the district court in such a situation had no original jurisdiction to consider and determine any of...