First State Bank v. Fox

• Citation: 10 F.2d 116
• Decision Date: 05 December 1925
• Docket Number: No. 6934.,6934.
• Parties: FIRST STATE BANK OF CROOK, COLO., et al. v. FOX.
• Court: U.S. Court of Appeals — Eighth Circuit

10 F.2d 116 (1925)

FIRST STATE BANK OF CROOK, COLO., et al. v. FOX.

No. 6934.

Circuit Court of Appeals, Eighth Circuit.

December 5, 1925.

Coen & Sauter, of Sterling, Colo., and Clarence L. Ireland, of Denver, Colo., for appellants.

W. L. Hays, of Sterling, Colo., for appellee.

Before STONE and VAN VALKENBURGH, Circuit Judges, and WILLIAMS, District Judge.

WILLIAMS, District Judge.

This appeal brings under review action of the lower court in confirming an order of the referee in bankruptcy requiring appellant to account to the trustee for certain property, or proceeds thereof.

Charles Edward Hickerson, a farmer and stockman, on his voluntary petition in bankruptcy, filed on November 21, 1923, was adjudicated a bankrupt on November 23, 1923. On January 22, 1923, bankrupt made and delivered his note to appellant bank, payable six months after date, secured by chattel mortgage on certain personal property. On same day bankrupt made and delivered another note, payable six months after date, to Crook Hardware Company, in sum of $239.50, secured by chattel mortgage, made by its terms subject to mortgage in favor of appellant bank, covering same property, with exception of one item. Said note and mortgage to hardware company being also held by appellant bank through assignment on August 21, 1923, before expiration of 30 days from maturity of said notes, affidavit was filed in office of county clerk and recorder, extending mortgage executed to said bank until October 22, 1923, and specifying that $1,000 thereon was unpaid; no extension being made as to hardware company note. On November 14, 1923, appellant bank, by filing affidavit, further extended said mortgage lien until 22d day of February, 1924, specifying amount then unpaid to be $1,000 and interest. On September 29, 1923, appellant S. R. Parvin obtaining judgment against bankrupt, execution was duly issued and placed in hands of sheriff of county in which said property was located, before appellant bank took possession of same on November 19, 1923, under mortgages held by it. On December 4, 1923, said property being sold by appellant bank at public auction under terms of said mortgages, after paying necessary expense and costs, including attorney's fees, and debt and interest, a balance remained in hands of appellant bank in sum of $310.59. On December 5, 1923, sheriff, garnishing appellant bank, said amount being placed in registry of state court, it was then paid to appellant S. R. Parvin. On April 9, 1924, bankrupt, through his attorney, who was also attorney of record for trustee in bankruptcy, commenced, by motion supported by affidavit, proceeding before referee in bankruptcy to have all of said property, or proceeds thereof, delivered to possession of trustee.

On April 26, 1924, appellant bank by affidavit traversed all allegations, except such as specifically admitted, and prayed in part: "That upon final hearing the said Charles Edward Hickerson bankrupt be denied any order for the payment of any sums of money or the delivery of any property by the First State Bank of Crook, Colo. appellant, and that the trustee appellee in the said cause be denied any order requiring the First State Bank of Crook, Colo., to deliver to the said trustee certain property alleged to belong to the said bankrupt. * * *"

The referee found (1) that possession was taken by the appellant bank prior to the filing of the petition in bankruptcy; (2) that lien under mortgage to the hardware company, assigned to said appellant, had expired prior to said date, and that, though possession was taken as found by him, as to the hardware company note and mortgage appellant became an unsecured creditor, and could only as such participate in distribution of said funds; and (3) that, the Parvin judgment having been obtained within four months before filing of petition in bankruptcy, no lien attached as result of the execution and garnishment, and that moneys in hands of appellant in excess of the sum of $1,000, with interest at the rate of 10 per cent. per annum from August 20 to December 4, 1923, together with cost of recovering the property, expense of sale, attorney's fee, not to exceed $100, and taxes, should be paid to trustee in bankruptcy.

1. As to jurisdiction of the referee, contention is made that, the proceeding being instituted in the name of the bankrupt, and not the trustee, though for benefit of the trustee, the referee was without jurisdiction; the trustee being proper party to commence such proceeding. As initiated, it was for the benefit of the estate, and obviously with consent of the trustee, as the attorney who commenced the proceeding in the name of the bankrupt was also attorney of record for the trustee. Appellants, in traversing allegations as made by the bankrupt, specifically ask for relief against trustee of the estate. At what period in the proceeding this question was brought to attention of the referee is not disclosed by the record. No such objection was made in the pleadings or evidence, as reported, before the referee as same appear in the record.

In the certificate of the referee we find the following: "Appearances: First State Bank of Crook, S. R. Parvin, by Coen & Sauter, attorneys; * * * Gladys F. Fox, trus...