In re Armold, 5720

• Decision Date: 20 April 1936
• Docket Number: 5730.,No. 5720,5720
• Citation: 83 F.2d 530
• Parties: In re ARMOLD. ARMOLD v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.
• Court: U.S. Court of Appeals — Seventh Circuit

83 F.2d 530 (1936)

In re ARMOLD ARMOLD v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.

Nos. 5720, 5730.

Circuit Court of Appeals, Seventh Circuit.

April 20, 1936.

Herbert C. Lust, of Fowler, Ind., for appellant.

Henry I. Green and Enos L. Phillips, both of Urbana, Ill., and Ralph T. Maloney, of Champaign, Ill. (Green & Palmer, of Urbana, Ill., of counsel), for appellee.

Before EVANS, SPARKS, and ALSCHULER, Circuit Judges.

SPARKS, Circuit Judge.

No. 5720 is an appeal under section 24a of the Bankruptcy Act (11 U.S.C.A. § 47(a), and No. 5730 is a petition for permission to appeal under section 24(b) (11 U.S.C.A. § 47(b), from an order of the District Court denying the debtor's petition to vacate an order appointing a receiver in bankruptcy for the debtor's estate.

In this court appellee filed its motion to dismiss the appeal in No. 5720, and tendered its objections to granting an appeal by this court in No. 5730. An early hearing was desired by both parties, and the court thereupon set a day for hearing appellee's motion and objections, and also for hearing the case on its merits in case appellee's motion and objections, or either of them, should be denied. Each case presents the same record and the same questions, and but one set of briefs was filed by each party.

Appellant's assignments of error present but one question, whether the court erred in denying the debtor's petition to vacate its order of November 18, 1935, appointing a receiver of his estate. We are convinced that this query involves a proceeding in bankruptcy rather than a controversy, and that appellant properly sought permission to appeal under section 24b. That permission is therefore granted, and we shall consider the appeal in No. 5730 on its merits. Appellee's motion to dismiss the appeal in cause No. 5720 is sustained, and that appeal is dismissed. Since the question raised did not amount to a controversy in a bankruptcy proceeding within the purview of section 24a, the District Court was without power to grant it.

The pertinent facts are as follows: In 1919 the debtor bought a farm of one hundred twenty acres in White County, Indiana. On May 20, 1924, he borrowed $8,100 from appellee, and executed his mortgage on the farm to secure the payment of the loan. Since November 1, 1931, the debtor has paid no interest on the loan, and on January 8, 1935, appellee filed its bill in the United States District Court, Northern District of Indiana, to foreclose its mortgage. That action is still pending. On March 4, 1935, the debtor filed his petition in that court under section 75 of the Bankruptcy Act, as amended (see 11 U.S.C.A. § 203), for composition or extension of his debts. His offer of composition was rejected by his creditors and he thereupon amended his petition and asked to be adjudicated a bankrupt under subsection (s) of section 75, which is known as the first Frazier-Lemke Act (Act June 28, 1934, 48 Stat. 1289). That act was declared unconstitutional on May 27, 1935 (Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 55 S.Ct. 854, 79 L.Ed. 1593, 97 A.L.R. 1106) and it was amended August 28, 1935 (section 6, 11 U.S.C.A. § 203(s). On October 8, 1935, the debtor again amended his petition, in conformity with the amended Frazier-Lemke Act, asking to be adjudicated a bankrupt, for stay of proceedings, and for possession and purchase of his property. He was adjudicated a bankrupt on October 10, 1935.

On November 18, 1935, the District Court, on appellee's motion, appointed a receiver "to take and have custody, control and supervision of all the property and estate of said debtor until the further order of this court." The order further provided: "That said receiver may, if the debtor so requests, permit the debtor to retain physical possession of such part of such property and upon such terms as in the judgment of said receiver be in the best interests of the farmer debtor and his creditors." To this order the debtor excepted, and on December 17, 1935, he filed a petition in the District Court asking leave to withdraw his petition filed December 4, 1935, requesting that the adjudication entered be vacated, "and for leave to dismiss his amended petition, and this proceeding;" also that the order of reference entered under that petition be vacated and set aside, and for general relief. Thereupon the court vacated the order of reference and granted the debtor leave to withdraw his petition, but the order of adjudication was undisturbed. On the same day the bankrupt filed his petition in the District Court to vacate the order of November 18, 1935, appointing the receiver. This petition was denied, and from that ruling this appeal is prosecuted.

Appellant contends that this ruling of the court...