Mutual Building & Loan Ass'n v. King

• Citation: 83 F.2d 798
• Decision Date: 13 May 1936
• Docket Number: No. 7840.,7840.
• Parties: MUTUAL BUILDING & LOAN ASS'N et al. v. KING et ux.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

83 F.2d 798 (1936)

MUTUAL BUILDING & LOAN ASS'N et al. v. KING et ux.

No. 7840.

Circuit Court of Appeals, Ninth Circuit.

May 13, 1936.

D. Joseph Coyne and Grainger & Hunt, all of Los Angeles, Cal., for appellants.

Mathes & Sheppard, of Los Angeles, Cal., and Forgy, Reinhaus & Forgy, of Santa Ana, Cal. (Lloyd Melvin Smith, of Los Angeles, Cal., of counsel), for appellees.

Before WILBUR, GARRECHT, and HANEY, Circuit Judges.

WILBUR, Circuit Judge.

The appellees, John O. King and Helene W. King, are husband and wife. A petition in involuntary bankruptcy was filed against the husband and another against the wife. Both petitions were contested upon the ground, among others, that the petitioners were not creditors. On December 24, 1934, after trial of the issues, the court entered an order refusing adjudication and dismissing the involuntary petition. A motion for rehearing was made and denied March 22, 1935. An appeal was taken from the judgment of December 24, 1934, and from the order of March 22, 1935.

The judgment was based upon the finding that some of those who petitioned as creditors were not in fact such. It will be necessary to state in some detail the situation with reference to the petitioning creditors in order to understand the contention advanced by the appellants.

The petition in involuntary bankruptcy against the husband was filed September 1, 1932. The three creditors who joined in the petition were the Western Hardwood Lumber Company, the Hammond Lumber Company, and the E. K. Wood Lumber Company, all corporations. The petition against the wife was filed on the same day by the Western Hardwood Lumber Company, the E. K. Wood Lumber Company, and the Mutual Building & Loan Association. An answer to each petition was filed March 23, 1933.

The issues thus made were referred to a special master for hearing and report. Subsequently, additional creditors intervened, or sought to intervene, as follows: On April 11, 1933, two creditors of the husband, H. D. Winger, Inc., a corporation, and S. C. Johnson & Son, Inc., a corporation, filed petitions as intervening creditors in support of the involuntary petition against the husband. On the same day the same creditors filed similar petitions in bankruptcy proceeding against the wife. On May 15, 1933, answers were filed to these intervening petitions. On May 20, 1933, the Bank of America National Trust & Savings Association intervened as a creditor in support of the petition against the husband. A similar petition was filed on the same day by the same creditor against the wife. These petitions were answered June 13, 1933.

The two cases were tried together, and on July 13, 1934, the special master reported his conclusions and recommended that adjudication of bankruptcy be refused on the ground that only two creditors had qualified as such against the respective bankrupts. On October 25, 1934, after hearing, the court sustained the report of the special master and made a minute order disallowing the exceptions and approving the report and dismissing the petitions. This was followed by a formal judgment to the same effect on December 24, 1934.

On January 23, 1935, five of the creditors petitioned for rehearing, and on the same day L. Q. Babcock filed a petition claiming to be a creditor of the alleged bankrupts for $340, asking for leave to intervene in support of the petitioners. On February 5th the appellants opposed the proposed intervention upon the ground it was too late and that the petitioning creditor was guilty of laches. Before the objections of the appellants could be heard, Babcock withdrew his petition admitting that he had no valid claim against the appellants. On January 8, 1935, the receiver made his account and report, which was approved, and he was discharged. On February 8th, before Babcock had withdrawn his claim as creditor, three additional creditors asked leave to intervene. Green's, Inc., a corporation, for $280, the Embosso Corporation, a corporation, for $92, asserted claims against both bankrupts, and the Maryland Casualty Company asserted a claim against the husband for $100. Orders to show cause why these creditors should not be allowed to intervene were served, and the intervention was opposed.

On March 22, 1935, the trial court granted the motion of the bankrupts to strike from the files the last-mentioned petitions in intervention of February 8, 1935.

At the time of the argument it was conceded by the appellee that the minute order of October 25, 1934, was not an appealable order because the parties thereafter appeared and agreed to a form of dismissal which was approved, signed, and filed by the trial judge on December 24, 1934. By permission briefs were filed subsequent to the argument, and the appellee now contends that the minute order of October 25, 1934, was a final order refusing to adjudicate bankruptcy, appealable as such, and that time for appeal could not be extended by the entry of the subsequent order to the same effect. Both these propositions are thoroughly established. The minute order is as follows:

"The petitioning and intervening creditors having filed an involuntary petition for an adjudication in bankruptcy herein, and the issues raised thereon having been referred to a Special Master and said Special Master having made his findings and filed his report upon said issues, and exceptions to said findings and report having been taken,

"It is ordered that each and all of the exceptions to the...