In re Price, 6270

• Decision Date: 13 December 1938
• Docket Number: No. 6270,6289.,6270
• Citation: 99 F.2d 691
• Parties: In re PRICE. FIRST TRUST JOINT STOCK LAND BANK OF CHICAGO v. PRICE.
• Court: U.S. Court of Appeals — Seventh Circuit

99 F.2d 691 (1938)

In re PRICE.

FIRST TRUST JOINT STOCK LAND BANK OF CHICAGO v. PRICE.

Nos. 6270, 6289.

Circuit Court of Appeals, Seventh Circuit.

November 9, 1938.

Rehearing Denied December 13, 1938.

C. M. Granger, of Kankakee, Ill., Sam Brittingham, of Danville, Ill., and Isaac E. Ferguson and Ben I. Greenebaum, Jr., both of Chicago, Ill., for appellant.

Lawrence T. Allen, Everett L. Dalbey, and Ray M. Foreman, all of Danville, Ill., for appellee.

Before EVANS, SPARKS, and MAJOR, Circuit Judges.

SPARKS, Circuit Judge.

This is an appeal in a proceeding under section 75 of the Bankruptcy Act, 11 U.S.C.A. § 203, from an order permitting the conciliation commissioner to have possession of the bankrupt's estate for a period of three years from September 1, 1936, under control and supervision of the court; directing the bankrupt to enter into a lease with the commissioner; directing the commissioner to administer the estate under the provisions of section 75(s), 11 U.S.C.A. § 203(s); enjoining and restraining appellant, the holder of a master's deed to the premises, from conveying, encumbering or otherwise disposing of such premises, or exercising any possession or control over them, and directing appellant to deliver its deed to the commissioner to be held by him until further order of the court; and providing that appellant might at any time submit to the court any facts indicating non-compliance of the bankrupt with the court's orders.

The appeal presents the question whether the court, under the facts here present, had any jurisdiction over the so-called estate of the bankrupt, which jurisdiction could be exercised to prevent the appellant from the free exercise of the rights acquired by it by virtue of the master's deed granted upon expiration of the statutory period of redemption in foreclosure proceedings involving the bankrupt's estate. We withheld decision of this cause pending decision of the Supreme Court in the case, Wright v. Union Central Insurance Company, 58 S.Ct. 1025, 82 L.Ed. 1490, announced by it on May 31, 1938.

The facts are as follows: On July 28, 1927, appellee executed a mortgage on the 160 acre farm involved in this proceeding. Default occurred, and on May 2, 1935, a foreclosure suit was filed in a state court, which proceeded to decree on September 3, 1935, and sale on October 8, 1935, to appellant for $15,062, with a deficiency decree of $2,000. This deficiency of $2,000 was paid by appellee and his wife on May 22, 1936. On September 1, 1936, appellee filed a petition under section 75 to effect a composition of his debts. The petition was referred to a conciliation commissioner on September 5, and on September 29, a plan was proposed by appellee, together with a petition for leave to correct his schedule by showing a credit of $2,000 theretofore paid on the deficiency decree. On November 5, the conciliation commissioner leased the premises to the debtor. On January 14, 1937, appellant, without notice to the debtor, petitioned the court to dismiss the debtor's petition under section 75 with respect to the mortgaged property, setting up the fact that the period for redemption had expired on January 8, 1937, and that it was therefore entitled to a master's deed to the premises. On January 16, without notice to the debtor, the court dismissed the proceeding as to that property, authorized appellant to obtain the deed, and granted it the exclusive right to possession and control, free from the exercise of jurisdiction by court or conciliation commissioner in the bankruptcy proceedings. In accordance with this order, on January 18, the deed was issued, delivered, and recorded, and appellant entered into possession by a tenant. On January 23, the commissioner filed his report, and on January 30, the court ordered that the debtor have leave to amend his petition to include a prayer for adjudication under subsection (s) within ten days, and that in the absence of such amendment he show cause why the original petition should not be dismissed. Responding to the leave granted, on February 2, the debtor filed his amended petition praying adjudication in bankruptcy and such further relief as he might be entitled to, and on that date, the court adjudged him a bankrupt. On April 10, upon petition by the debtor, the court issued a temporary injunction order restraining appellant from transferring or encumbering the premises, and directing it to show cause why such injunction should not become permanent. On May 6, appellant moved to dissolve the order, which motion was denied, and, upon a finding that the debtor was probably in condition to rehabilitate himself during the next several years, it was ordered that the conciliation commissioner have possession of the premises for a period of three years from September 1, 1936, under the control of the court, and that the debtor enter into a lease with him; that the commissioner administer the bankrupt estate under the provisions of section 75(s); and that appellant be restrained from transferring or encumbering the real estate involved, and that it deliver to the commissioner the deed theretofore issued to it, to be held by him until further order of the court.

Subsection (n) of section 75, 11 U.S. C.A. § 203(n), provides as follows:

"The filing of a petition or answer with the clerk of court, or leaving it with the conciliation commissioner for the purpose of forwarding same to the clerk of court, praying for relief under section 75 of this Act, as amended this section, shall immediately subject the...