Foster v. McMasters

• Decision Date: 18 October 1926
• Docket Number: No. 7071.,7071.
• Citation: 15 F.2d 751
• Parties: FOSTER v. McMASTERS.
• Court: U.S. Court of Appeals — Eighth Circuit

15 F.2d 751 (1926)

FOSTER v. McMASTERS.^*

No. 7071.

Circuit Court of Appeals, Eighth Circuit.

October 18, 1926.

James S. Twyford, of Oklahoma City, Okl. (Solon W. Smith, of Oklahoma City, Okl., on the brief), for appellant.

Ephraim H. Foster, of Muskogee, Okl., for appellee.

Before VAN VALKENBURGH and BOOTH, Circuit Judges, and PHILLIPS, District Judge.

BOOTH, Circuit Judge.

Appellant seeks reversal of an order of the District Court, approving and confirming an order of the referee in bankruptcy, which disallowed in part his claim against the estate of the bankrupt, together with an alleged accompanying lien. The salient facts are as follows:

July 3, 1922, John H. Rebold was adjudicated a bankrupt under an involuntary petition filed April 13, 1922. On both dates he was the owner of three parcels of land in Okmulgee county, Okl. A trustee was elected August 5, 1922, who qualified August 24, 1922, and took possession of the land. On November 2, 1921, the county treasurer of Okmulgee county, had sold one of the parcels of land (which for short may be called the first parcel) for delinquent taxes. Appellant, Foster, was the purchaser, paying the sum of $353.82, being the taxes assessed against the property for the year 1920 plus a penalty of 18 per cent. per annum from date of delinquency to date of sale. Thereupon tax certificate No. 2015 was issued to Foster.

April 24, 1922, subsequent to the filing of the creditors' petition, Foster paid delinquent taxes on the property for the year 1921 in the sum of $644.31, and caused said amount to be indorsed on his certificate. Said amount was made up of the taxes assessed for the year 1921, plus penalty of 18 per cent. per annum from date of delinquency until date of indorsement.

March 15, 1923, Foster paid delinquent taxes for the year 1922 in the sum of $560.36, and caused said amount to be indorsed upon his certificate. This amount was also made up of the taxes assessed against the property for the year 1922, plus penalty of 18 per cent. per annum from date of delinquency until date of indorsement.

The second and third parcels of land were sold subsequent to bankruptcy for delinquent taxes. Foster became the purchaser, received similar certificates, and caused the amounts of subsequent delinquent taxes paid by him to be indorsed thereon. The 18 per cent. per annum penalty was included in each of the payments. All of the sales subsequent to bankruptcy were made without leave of the bankruptcy court.

On February 16, 1924, the trustee in bankruptcy filed with the referee in bankruptcy a petition alleging that the trustee had made tender to the county treasurer on August 6, 1923, of the amount of all the taxes assessed on the several parcels with interest at the legal rate of 6 per cent.; that the county treasurer refused to accept the amount, stating that the land had been sold for taxes, and that he had no authority to accept any sum less than the amount of the taxes plus the 18 per cent. per annum penalty from date of delinquency. The petition prayed that the trustee be authorized to redeem the land by paying the taxes assessed, with interest at 6 per cent. from date of delinquency, and further prayed that the county treasurer and Foster, the owner of the tax certificates, be ordered to show cause why the trustee should not be allowed to redeem on payment of the taxes and interest. Order to show cause issued, requiring the county treasurer and Foster to appear and present whatever claim or lien they had against the real estate on account of the assessments or sales for taxes, and to show cause why the trustee should not redeem on payment of whatever sum might be justly due on account of the taxes assessed. The cited parties appeared. Foster interposed an answer. Hearing was had. Evidence was introduced.

The referee made findings of fact substantially as above set forth. As conclusions of law he held that tax certificate No. 2015 on the first parcel was valid; that the trustee should pay the amount, $353.82 (the amount of the tax for 1920, plus penalty of 18 per cent. per annum from date of delinquency to date of sale), with interest at 6 per cent. from date of certificate to date of payment; that such payment should be to the county treasurer for the benefit of the certificate holder; that the indorsements on said certificate, being subsequent to bankruptcy, were void; that payment should be made by the trustee to the county treasurer of the amount of the taxes for 1921 and 1922, with 6 per cent. interest from dates of delinquency until the date of payment. The referee further held that the certificates covering the second and third parcels and the indorsements thereon were void; that the trustee should pay the county treasurer the several amounts of taxes assessed, with interest at 6 per cent. from date of delinquency to date of payment. The referee further held that the indorsements on tax certificate No. 2015, the other tax certificates, and the indorsements thereon, should all be canceled and set aside, and that Foster should surrender the certificates and indorsements for such cancellation.

May 3, 1924, petition for review was filed on behalf of Foster and the county treasurer. October 8, 1924, the order of the referee was confirmed. November 3, 1924, motion for rehearing was filed. March 19, 1925, the same was "denied and dismissed."

The record contains no petition for appeal, and no order allowing an appeal; but it is the contention of appellant that this omission is not of vital importance, in view of the fact that the citation was signed by the judge. We shall assume, but without so deciding, that the contention is correct. Nevertheless the omission leaves the record uncertain whether appellant has intended to appeal from the order of October 8, 1924, confirming the order of the referee, or from the order of March 19, 1925, denying and dismissing the petition for rehearing. The order of October 8, 1924, was appealable, but the right of appeal, once lost, could not be revived by a petition for rehearing (Rode & Horn v. Phipps, 195 F. 414, 115 C. C. A. 316; In re Thompson C. C. A. 264 F. 913), and no appeal lies from an order denying a petition for rehearing (Conboy v. First Nat. Bank of Jersey City, 203 U. S. 141, 145, 27 S. Ct. 50, 51 L. Ed. 128). The citation bore date April 8, 1925.

At the outset we are met by a motion to dismiss the appeal on two grounds: (1) That said appeal was not taken or allowed within the time provided by law; (2) that no assignment of errors was filed, as provided by rule 11 of this court.

The first ground raises the question: What section of the Bankruptcy Act governed the taking of the appeal? Appellant contends that section 24 (Comp. St. § 9608) controlled; appellee contends that section 25a (Comp. St. § 9609) controlled.

In Coder v. Arts, 213 U. S. 223, 233, 29 S. Ct. 436, 440 (53 L. Ed. 772, 16 Ann. Cas. 1008), the court, speaking of appeals under these two sections, said:

"* * * The mode of appeal in a given case depends upon the character of the proceeding. And the question to be solved in such cases is: Does the case present a proceeding in bankruptcy or is it a controversy arising in bankruptcy proceedings?"

Section 25a reads as follows:

"Sec. 25. Appeals and Writs of Error. — (a) Appeals, as in equity cases, may be taken in bankruptcy proceedings from the courts of bankruptcy to the Circuit Court of Appeals of the United States, and to the Supreme Court of the territories, in the following cases, to wit: (1) From a judgment adjudging or refusing to adjudge the defendant a bankrupt; (2) from a judgment granting or denying a discharge; and (3) from a judgment allowing or rejecting a debt or claim of five hundred dollars or over. Such appeal shall be taken within ten days after the judgment appealed from has been rendered, and may be heard and determined by the appellate court in term or vacation, as the case may be."

This section deals with appeals taken in "proceedings in bankruptcy," as distinguished from appeals in "controversies arising in bankruptcy proceedings," and the time limit for appeal in the three classes mentioned in the section is exclusively controlling.

The time for taking appeals under section 24a is governed by the law for the regulation of appeals generally. Steele v. Buel, 104 F. 968 (C. C. A. 8), 44 C. C. A. 287; Dodge v. Norlin, 133 F. 363 (C. C. A. 8), 66 C. C. A. 425.

The question therefore arises: Was the order appealed from made in a "proceeding in bankruptcy," or in a "controversy arising in bankruptcy proceedings"?

In determining whether a particular proceeding is a "proceeding in bankruptcy," or a "controversy arising in bankruptcy proceedings," it is not of material importance who instituted the proceeding, whether claimant or trustee. Moody v. Bank, 239 U. S. 374, 377, 36 S. Ct. 111, 60 L. Ed. 336.

The main issue involved in the hearing initiated before the referee was as to the amount of the claim of Foster or the county treasurer, or both, for taxes assessed against the land of the bankrupt. That there were unpaid taxes against the land was admitted, but the difference between the amount admitted by the trustee and the amount claimed by the county treasurer and Foster was about $800.

It is contended by appellant that the main issue before the referee was as to the existence of a lien in favor of Foster by virtue of his tax certificates. We cannot agree with this contention. Section 64a of the Bankruptcy Act (Comp. St. § 9648) reads:

"Sec. 64. Debts Which Have Priority. — (a) The court shall order the trustee to pay all taxes legally due and owing by the bankrupt to the United States, state, county, district, or municipality in advance of the payment of dividends to creditors, and upon filing the receipts...