In re Carter, B-2092.

• Decision Date: 17 May 1941
• Docket Number: No. B-2092.,B-2092.
• Citation: 38 F. Supp. 726
• Court: U.S. District Court — District of Washington
• Parties: In re CARTER.

38 F. Supp. 726

In re CARTER.

No. B-2092.

District Court, E. D. Washington, S. D.

May 17, 1941.

George O. Beardsley, of Prosser, Wash., for debtor.

Moulton & Powell, of Kennewick, Wash., for H. S. Murray and A. L. Grover.

B. E. McGregor, of Prosser, Wash., for J. Q. Hamby.

Judd D. Kimball, of Walla Walla, Wash., for Pacific Coast Joint Stock Land Bank of Portland, Ore.

SCHWELLENBACH, District Judge.

This matter comes up on the debtor's objections to findings of fact and conclusions of law of Andrew Brown, Special Master. The reference to the Master was made in order that testimony might be taken on the amended motion of H. S. Murray and A. L. Grover and the motion of the Pacific Coast Joint Stock Land Bank, a corporation, and of J. Q. Hamby. While the three motions are different in form, in each of them the object sought is to secure the dismissal of the debtor's petition on the ground that he is not a farmer, that he did not file the petition in good faith, and that he is not the owner of or entitled to the possession of the real property involved in these proceedings. The testimony taken and the exhibits admitted in evidence were brought up with the findings and conclusions of the Special Master in support of the Special Master's recommendation that the debtor's petition should be dismissed.

The debtor's objections to the Special Master's report go to the details of the findings of fact and to the fact that the conclusions of law were inserted by the Master although the Order of Reference did not require them. Because of the complicated nature of the situation and the serious import of the Master's recommendations, I have reviewed in detail the files both of this Court and of the Master and the testimony taken by the Master and the exhibits introduced before him. From such review, I am convinced that the following are the material, pertinent facts:

William O. Carter, the debtor, and Margaret K. Carter are husband and wife. On March 17, 1937, Carter leased from parties named Murray, Grover and Imlay certain real property in Benton County, Washington. It is the property involved in this proceeding. The lease was for a term ending November 1, 1941. It was not acknowledged. The Pacific Coast Joint Stock Land Bank held a mortgage against the farm property in the amount of $14,500. By the time of the filing of the petition in this proceeding, the amount of that mortgage, with interest, was $18,795. The debtor brought to the property certain farm machinery and farm stock. During 1937 Carter operated the farm himself. Early in 1938 Carter sustained severe injuries in an automobile accident and since that time complete management and control of the operation and all business in connection with the farm has been in the hands of Carter's wife Margaret. She has a separate estate secured by inheritance the amount of which is not disclosed by the record. When in 1938 Carter became disabled and transferred to his wife the position of manager of the community consisting of himself and wife, she started commingling community money with her separate money in her own bank account. The Carters remained in personal possession of the farm land until December, 1939. Then, in an effort to restore Carter's health, Mrs. Carter, with her own funds, took him to Honolulu for the winter. They placed a party in charge of the property. They found on their return on March 9, 1940, that Grover and Murray had placed Hamby in charge. Grover and Murray took the position that because the lease was unacknowledged it constituted merely a lease from year to year and was subject to cancellation on March 17, 1940. Imlay, the third owner of the property, had died in the meantime. Hamby refused the Carters' demand for possession and with threats of force prevented the Carters from obtaining possession. As a result of this situation, a number of suits were started by the various parties involved in the Superior Court of Benton County. Included among these was one for the foreclosure of the mortgage of the Pacific Coast Joint Stock Land Bank.

Sometime during this period the farm machinery and equipment and the horses, cows, sheep and other animals were removed from the farm property involved here and placed in temporary possession of other persons on the debtor's behalf. On March 16, 1939, Carter executed to his wife promissory note in the amount of $5,000, and gave her a chattel mortgage on all of the personal property here involved. It is contended by the debtors that this five thousand dollars is owed by the community to Mrs. Carter for funds she had loaned the community out of her separate estate. On May 23, 1940, Margaret Carter took a quit claim deed to the real property from the heirs of Imlay. She gave her own promissory note in the amount of two hundred dollars and paid in cash from the bank account above-described the sum of two hundred dollars. Imlay owned an undivided one-half interest in the real property. The other undivided one-half interest belonged to Murray and Grover. Both Carter and his wife during this period in the spring of 1940 knew of the pendency and status of the mortgage foreclosure action. On July 27, 1940, debtor's petition under Section 75 of the Bankruptcy Act, 11 U.S.C.A. § 203, was filed in this Court. It was filed by William Oscar Carter alone. Neither Margaret Carter nor the community joined in the petition. Carter listed as secured claims the note of Margaret Carter in the amount of $5,000, with the mortgage on the personal property which he listed as of a value of $5,331.65. He listed the Joint Stock Land Bank mortgage saying...