Borchard v. California Bank
| Decision Date | 20 May 1940 |
| Docket Number | No. 752,752 |
| Citation | 310 U.S. 311,84 L.Ed. 1222,60 S.Ct. 957 |
| Parties | BORCHARD et al. v. CALIFORNIA BANK et al |
| Court | U.S. Supreme Court |
Messrs. Lloyd S. Nix, of Los Angeles, Cal., and William Lemke, of Fargo, N.D., for petitioner.
Mr. Thomas W. Henderson, of Los Angeles, Cal., for respondent.
We granted certiorari in this case, 309 U.S. 648, 60 S.Ct. 721, 84 L.Ed. —-, for the reason that it presents important questions with respect to the procedure required by § 75, sub. s, of the Bankruptcy Act, as amended.1
The precise matter in controversy is whether the bankruptcy court may permit foreclosure of mortgage liens where the procedure prescribed by § 75, sub. s, has not been followed.
The petitioners, husband and wife, are farmers. Over the period January 24, 1927 to June 19, 1933, they borrowed from the respondent, the California Bank, a total of $87,566.93, in varying amounts, executing to the bank their promissory notes for the respective loans together with deeds of trust2 on their farm real estate as security. From time to time they made payments which reduced the principal of the indebtedness to s53,919.20. The lender, in the meantime, had made some advances towards the payment of taxes on the property. Further to secure their indebtedness they executed, on January 30, 1934, a mortgage on all the crops standing or growing, or which should thereafter be planted, grown, cultivated, cut, gathered, packed, or harvested, during the life of the mortgage on certain of their farm real estate.
November 17, 1934, they filed their petition under § 75 of the Bankruptcy Act, which was approved and referred to a Conciliation Commissioner. In January 1935 the respondent bank declared defaults, and recorded notices thereof and of its election to cause the property to be sold pursuant to the deeds of trust, and the law of California.
March 25, 1935, the Conciliation Commissioner appointed appraisers who filed an appraisal on May 1 valuing the debtors real estate at $68,550. It is to be noted that § 75 contains no provision for appraisal during the course of the conciliation proceedings covered by subsections a to r; nor do we find any rule of the District Court providing for appraisal at this stage of the cause. The transcript of record does not disclose whether this appraisal was asked by any creditor or by the debtors. So far as appears, the order for the appointment of appraisers was made by the Conciliation Commissioner of his own motion.
The debtors were unable to obtain the requisite acceptance of creditors to the composition and extension proposal they submitted. As a consequence, they amended their petitions and prayed to be adjudicated bankrupts in accordance with the provisions of § 75, sub. s. The petition was granted and an adjudication entered May 6, 1935. Apparently no further proceedings were taken until June 26, 1935, when the bankruptcy cause was dismissed on the ground that this court had held § 75, sub. s, unconstitutional.3 On the same day the debtors petitioned a local court for relief under a State moratorium act and obtained an order granting a moratorium, which remained in effect until September 20, 1935, when the debtors filed a petition for reinstatement of the bankruptcy cause in accordance with the amendment of § 75, sub. s, adopted to meet the decision in the Radford case.4 On the same date the District Court approved the petition, ordered the proceedings reinstated, and referred the case to a Conciliation Commissioner in accordance with the provisions of § 75, sub. s. The court restrained the respondents from selling, or proceeding with a sale of, the real estate covered by the deeds of trust and also enjoined them from collecting from packers or processors the proceeds of crops covered by mortgage, until the further order of the court.
October 18, 1935, the petitioner Franz J. Borchard presented his petition to the conciliation Commissioner praying that appraisers be appointed; that his exempt property be set aside to him, and that he be allowed to retain possession, under the supervision and control of the court, of all of the remainder of his property, and for such further order as might be just and proper in the premises, as authorized by § 75, sub. s. Shortly thereafter the debtors filed a petition for an order on the bank to compel it to release its asserted claim to the crop of oranges grown on their property in 1935. In opposition the bank not only asserted the validity of its lien, but urged that the proceedings be dismissed because § 75, sub. s, as amended, was unconstitutional. The District Judge held that the bank had a lien on the 1935 orange crop but refrained from passing upon the validity of § 75, sub. s, stating that he would decide that question at a later date if the parties so desired. Apparently the parties requested a ruling, and, on May 15, 1936, the Judge overruled the contention of the bank and refused to dismiss the proceedings.
Nothing having been done pursuant to the petition for appraisal and award of possession to Franz J. Borchard, the petitioners and respondents, on May 27, 1936, filed in the District Court a stipulation by the terms of which $3,900, held by third parties, being the proceeds of 1935 crops harvested from the premises, was to be paid to the bank and by it expended for the cultivation and improvement of the land. The District Court accordingly ordered the sum paid to the bank. June 10, 1937, the parties stipulated that $2,494, like proceeds of crops harvested, be paid to the bank, to be expended for the cultivation of the farm. The court so ordered. December 20, 1937, a stipulation was filed and an order made that $2,000 be paid to the bank, $1,500 to the debtors, and $946 applied to taxes. Finally, on March 7, 1938, pursuant to stipulation, $1,763 was released from the hands of third parties to be expended for the cultivation and preservation of the mortgaged real estate. The stipulation further provided that the bank should receive the monies realized from the sale of then growing crops and should apply them, so far as necessary, to maintain and protect the orange grove on the property.
All of the stipulations reserved the rights of the parties and were to be without prejudice to such rights.
May 24, 1938, the debtors petitioned the Conciliation Commissioner for an...
To continue reading
Request your trial
-
Welch v. Brown
... ... Edmund G. BROWN, Jr., Governor of the State of California, In His Official Capacity, Anna M. Caballero, Secretary of California State and Consumer Services ... U.S. Philips Corp. v. KBC Bank N.V., 590 F.3d 1091, 1094 (9th Cir.2010) (quoting Sierra OnLine, Inc. v. Phoenix Software, Inc., ... ...
-
Hobbs v. Thompson
... ... Shafer, 1968, 392 U.S. 639, 88 S.Ct. 2119, 20 L.Ed.2d 1319; Damico v. California, 1967, 389 U.S. 416, 88 S.Ct. 526, 19 L. Ed.2d 647. See generally Note, Exhaustion of State ... ...
-
Davis v. DiPino
... ... In California v. Robles, 48 Cal.App.4th Supp. 1, 56 Cal.Rptr.2d 369 (1996), for example, the defendant's ... at 183, 340 A.2d 736 ... We are also guided by Federal Land Bank of Baltimore, Inc. v. Esham, 43 Md.App. 446, 406 A.2d 928 (1979). There, we observed that the ... ...
-
State v. Baccala
... ... Wilson , 405 U.S. 518, 525, 92 S.Ct. 1103, 31 L.Ed.2d 408 (1972) ; Cohen v. California , 403 U.S. 15, 20, 23, 91 S.Ct. 1780, 29 L.Ed.2d 284 (1971) ; L. Tribe, American Constitutional ... to whom he spoke, addressed such language to one locked in a prison cell or on the opposite bank of an impassable torrent, and hence without power to respond immediately to such verbal insults by ... ...