In re Bowman

• Decision Date: 17 February 1938
• Docket Number: No. 1048.,1048.
• Citation: 24 F. Supp. 381
• Court: U.S. District Court — Southern District of California
• Parties: In re BOWMAN.

24 F. Supp. 381

In re BOWMAN.

No. 1048.

District Court, S. D. California, S. D.

February 17, 1938.

J. Earl Haskins and Charles Peckham, both of Los Angeles, Cal., for debtor.

Noon & Noon, of San Diego, Cal., for Martin Loperena, Gregorio Loperena, Martin J. Loperena, and Phyllis Bouton, objecting creditors.

NETERER, District Judge.

This matter is before the Court (a) on a petition to review an order of this court denying review of an order to set aside adjudication; (b) on a petition to review an order of the Referee calling a meeting of creditors for electing, and electing a trustee, in the above entitled estate.

Foreclosure proceedings on a trust deed had been commenced and sale of the property fixed on May 24th, 1935. On May 23rd, 1935, the debtor filed with the approval of the court, a petition wherein he states "that he is unable to meet his debts as they mature, and that he desired to effect an agreement to tender a plan for extension of time to pay his debts, under Sec. 74 of the Bankruptcy Act 11 U.S.C. A. § 202." The matter was referred to the Referee at San Diego, and the sale restrained, which order is now in force. The debtor's schedule was filed on June 4th, 1935; July 6th, 1935, he submitted his proposed plan as a basis for an extension of time. Secured creditors, in writing, filed objections thereto. After hearing before the then Referee, an order was entered July 26th, 1935, denying the application for the extension, on the ground that the requisite number of creditors did not consent to such extension, and recommended that the debtor be adjudicated bankrupt. On review this order was reversed and the matter referred for further proceedings. Many hearings were had before the Referee. A supplementary proposal was filed by the debtor on Aug. 8, 1936; on Aug. 19, 1936, the Referee certified to the court that the proposal did not provide an equitable and feasible method for secured creditors, and it is not for the best interests of all the creditors, and recommended the debtor be adjudicated bankrupt, and adjudication accordingly followed. A petition to review was filed Oct. 16, 1936, and the matter was referred to the Referee for further proceedings. Thereafter, a hearing was had at which all interested parties appeared in person and by attorney.

The third supplemental proposed plan was filed Dec. 11, 1936. On Dec. 16th, 1936, the Referee by order, required the debtor to pay to the secured creditors, the sum of $100 per month; $50 per month to the Brunswick Drug Co.; $10 per month to the Malone estate; also that current taxes and assessments upon Market street property (property under trust deed) and some payments on delinquent taxes be paid, and further hearing was continued to March 15, 1937. The said payments were made except payment of the taxes.

On March 15th, the order was continued until May 20, 1937, and further continuance thereof granted to June 11, 1937. On June 11, 1937, the debtor filed a further supplementary proposed plan, in which two alternative plans were proposed; the third plan duplicated the first plan, except the proposed payment of taxes was changed. The second plan was to pay taxes in full by Jan. 1st, 1938, by the payment of $140 monthly, and the payment of $1000 on the indebtedness either in cash or credit before Jan. 1, 1938. The Referee certified that he has income as follows:

Net receipts from business "based upon figures for period January-November 1936, inclusive," $154.61 claimed; rental value of living quarters at 16th and Market streets, per annum $900.00; total $1054.61.

The debtor proposes to pay the following sums:

"Loperena obligations per annum $1320.00; current taxes on Loperena property $222.76; 1-10 of delinquent taxes per annum, $78.09, total $1620.85."

Upon argument for rehearing it is shown that taxes upon this Drug store property, lots 7, and 8, block 2, are as follows:

"City-light assessments $471.87; taxes for 1937, $397.57; taxes delinquent $1107.64; total $1977.08. The conceded amount due on the objecting creditors claims, now is principle $11,750.00.

"Interest 1/1/34 to 1/1/38, 4 years, at $822.50, $3290.00.

"Interest from 1/1/38 to 2/1/38, at $68.54; total $17,085.62."

To this indebtedness, six $110 payments on order of Referee Dec. 16, 1936, $660 should be credited, leaving a balance due, Feb. 1, 1938, $16,425.62.

It also appears that this property was sold June 29, 1934, for the delinquent taxes for 1933, and period of redemption is about to expire.

The Drug store property is valued by the Referee, at $10,500, the indebtedness against this property is $16,425.62. There is other indebtedness of approximately $9,100.

It is obvious that the proposed plan is not pursued in good faith. The property has not been redeemed from the sale for the 1933 taxes. No interest has been paid on any of the indebtedness since Jan. 1st, 1934. The debtor has been, and is now, in possession of all of the property. He has collected $900 per annum rentals from the property other than the store room he occupied. This money belongs to the bankrupt estate and should have been applied to protect the estate. This money in any event, must be accounted for to the estate, by whomsoever received, except such sums as were necessarily expended for the benefit of the estate; and be distributed to the trustee for creditors, or to the general creditors as right may appear. The debtor in his petition for review of the first order herein states no consideration was given to a $1,000 disputed credit claim; nor is the property given a fair market value. In this the debtor is in error. It is clearly shown that the Referee found that no $1,000 payment was made on the Loperena et al. trust deed claim; and if $1,000 was made, it was made on another claim and credited. The claim now made is an afterthought. If payment had been made it would have been asserted when foreclosure of the trust deed was initiated, instead of filing the petition for extension of time for payment under section 74 supra. Nor does the action commenced in July 1937,...