IN RE PHYSICIANS & DENTISTS INVESTMENT CORPORATION

• Decision Date: 13 January 1966
• Docket Number: No. 4708.,4708.
• Court: U.S. District Court — District of South Carolina
• Parties: In re Matter of PHYSICIANS & DENTISTS INVESTMENT CORPORATION.

248 F. Supp. 968

In re Matter of PHYSICIANS & DENTISTS INVESTMENT CORPORATION.

No. 4708.

United States District Court D. South Carolina, Columbia Division.

January 13, 1966.

Marion L. Powell, Aiken, S. C., for Vernon R. Scott, trustee, for debtor.

James D. Walters, Columbia, S. C., for W. J. Brockington, creditor.

HEMPHILL, District Judge.

Exceptions to the Report of the Referee in Bankruptcy precipitate decision by this Court. Necessary to a clear understanding is an almost complete recitation of the Referee's Report:

Pursuant to general order of reference I have conducted a reference in my office on the Petition of William J. Brockington for order confirming State Court adjudication hereinafter mentioned.

* * * * * *

An action was brought in the Court of Common Pleas of Richland County by William J. Brockington as plaintiff against Physicians and Dentists Investment Corporation, and others having an interest in the premises, to declare forfeited a lease between Brockington as Grantor and Physicians and Dentists Investment Corporation as Lessee. This action was instituted on April 19, 1962. Subsequent to the institution of the action, Physicians and Dentists Investment Corporation was placed in receivership by the State Court and Walter S. Montieth was appointed Receiver. He, as Receiver was given leave by the Court to file his answer to the Complaint, and along with all other defendants filed his answer setting up various defenses. The matter was referred to Harry M. Lightsey, Esq., Master in Equity, who after hearing the matter rendered his report dated October 28, 1963.

The Master recommended as follows:

I, therefore, would recommend that this court pass its order approving the above findings and recommendations; that this court do further order:

(1) That as of October 2, 1961, the unencumbered fee simple title and the possession of the building on the land described in the land lease designated as Exhibit A in this record was vested and as a matter of law transferred to the plaintiff in this action subject to all rights and leasehold interest of defendant W. A. Nimmer in and to that written lease agreement by Physicians and Dentists Investment Corporation, as Lessor, and William J. Brockington, as Lessee, dated February 18, 1960, and identified in the record of this case as Exhibit B.

(2) That all net rents after commissions heretofore received by Walter S. Monteith, Receiver of the defendant Physicians and Dentists Investment Corporation, less all taxes paid by the Receiver, be paid over by the Receiver to the plaintiff in this case.

(3) That all liens filed in the office of the Clerk of Court for Richland County against the building which is the subject of this action be declared released and discharged from the building which is the subject of this action on the ground that all liens and judgments set forth in the record of this case were filed in the office of the Clerk of Court for Richland County subsequent to the date of the forfeiture, namely October 2, 1961. That this court do order that the fee simple unencumbered title to the building which is the subject of this action, and the portion of the building which is the subject of this action subject to the leasehold interest and rights of the defendant W. A. Nimmer be confirmed in the plaintiff in this action as of October 2, 1961.

* * * * * *

By order of * * * (Hon. J. Robert Martin, Chief Judge) filed January 8, 1964, it is provided that the removal of the stay order of the proceedings in the State Court was for the purpose that the same might proceed orderly to judgment in the State Court and that the Trustee and his attorney provide proper representation for debtor in said State Court proceedings, with the rights and property to be preserved as if the cause were held in the District Court.

The receiver of bankrupt was appointed by State Court and vigorously defended the interest of the bankrupt corporation. However, the Trustee in Bankruptcy after adjudication was not substituted as a party defendant in the State Court proceedings. It appears to the Referee that this should have been done in the course of orderly practice and procedure. I do not mean to say that the result in the said court would have been different from the conclusion reached by the State Court. However, it does seem that the Trustee in Bankruptcy has not had his day in court, so to speak. A review of the Judgment Roll (7082) in the State Court reveals that the Receiver therein offered to pay to Brockington all past due rentals and to keep up the same, and to reimburse Brockington for taxes and insurance premiums paid by him on the property in question. The State Court refused to permit this to be done and held that there had been a forfeiture under the terms of the lease and ordered vestiture of the leased premises in Lessor Brockington. The rental of the land is One Hundred Dollars ($100.00) per month. The building constructed thereon by Physicians and Dentists is divided into two parts. One part is rented to Brockington for Three Hundred Twenty-Nine Dollars ($329.00) per month, which rental has been assigned to W. A. Nimmer who advanced money to Physicians and Dentists to construct the building, taking a note therefor secured by the assignment of lease with Brockington. The other part of the building is rented for Three Hundred Dollars ($300.00) per month. Thus, there would be adequate funds to comply with the financial terms of the lease of the land from Brockington to Physicians and Dentists.

Attention is called to orders of Judge Grimball of March 12, 1964, which dismisses exceptions to the Master's report filed by Messrs. Powell, George, and Poston, attorneys for the defaulting Physicians and Dentists Investment Corporation. This order recites that the testimony before the Master indicated that the equities in favor of plaintiff outweighed the equities in favor of the defendant Physicians and Dentists Investment Corporation. Subsequent appeal to Supreme Court was never perfected and was dismissed.

The only phase of this mangled proceedings which concerns the Referee is that the Trustee in bankruptcy was not substituted as a party defendant, and for that reason it might be held that the Trustee representing the creditors did not have his day in court.

For the reason just mentioned, it is the recommendation of the Referee that the State Court be requested to reopen the case in order that the Trustee may be made a party defendant, with the right to plead to the Complaint and be heard thereon.

Respectfully submitted /s/ W. C. Boyd Referee in Bankruptcy

Petitioner Brockington filed timely exceptions to this Report, alleging that:

1. That the Referee erred in finding that the Trustee in Bankruptcy should have been made a party defendant in the State Court action in that the interest of the creditors and of the debtor was fully and competently represented by the State Court Receiver and counsel for the State Court Receiver.

2. That the Referee in Bankruptcy erred in recommending that the Trustee in Bankruptcy be made a party defendant in the State Court action with right to plead to the Complaint, whereas the Referee should have recommended that the Trustee be allowed to file exceptions to the Master's Report which was the stage of the progress of the State action in which the Trustee petitioned to intervene.

In a particular controversy, a litigant is entitled to only one "day" in Court. "When the sun sets on that `day', no exhortation, no matter how eloquent, can persuade its return." Cooper Agency...