In re Collins

• Decision Date: 20 December 1934
• Docket Number: No. 10000.,10000.
• Parties: In re COLLINS. SHERMAN et al. v. COLLINS.
• Court: U.S. Court of Appeals — Eighth Circuit

75 F.2d 62 (1934)

In re COLLINS SHERMAN et al. v. COLLINS.

No. 10000.

Circuit Court of Appeals, Eighth Circuit.

December 20, 1934.

John M. Holmes, of St. Louis, Mo. (Thompson, Mitchell, Thompson & Young, of St. Louis, Mo., on the brief), for appellants.

Before STONE, GARDNER, and VAN VALKENBURGH, Circuit Judges.

STONE, Circuit Judge.

This is an appeal from an order denying a motion to dissolve an order restraining sale of real estate to satisfy a default on a deed of trust covering the property. The appeal is by the trustee and the note holder.

In 1929, the Marner Realty Company, a Missouri corporation, executed a deed of trust upon certain real estate in St. Louis, Mo., to secure payment of a note for $60,000 (with semiannual interest notes) due April 1, 1934. The deed of trust contained the usual provisions as to payment of taxes and as to acceleration for default in payment of taxes or of interest notes. General taxes beginning with 1930 became delinquent and had to be paid by the note holder, as well as a special assessment tax. These delinquencies with an unpaid interest note total something over $9,000. Exercising the right of acceleration, the trustee, on February 8, 1934, commenced the twenty-day advertisement of sale required by the deed of trust.

The day following (February 9, 1934), the Marner Company transferred this property to David J. Collins, Sr., for an expressed consideration of $100. As matter of fact, no actual consideration was agreed to be paid or was paid by Collins. On February 12, 1934, Collins filed a debtor's petition under section 74 of the Bankruptcy Act (as amended by the Acts of March 3, 1933, 47 Stat. 1467, § 1, and of June 7, 1934, § 2, 48 Stat. 922, 923 11 USCA § 202). The same day, the debtor filed in that proceeding a petition to enjoin the above sale. The following day, and without notice to appellants, an order was entered restraining such sale "until further instructions of this court." The trustee and the note holder filed, on February 19, 1934 (refiled February 20, 1934), a petition to dissolve the above order and to authorize the sale to proceed. This petition, after setting forth the deed of trust and other matters leading up to the sale, contained the allegations following:

"That the said David J. Collins, Sr., was and is the sole stockholder, except for directors' qualifying shares, of the said Marner Realty Company and was and is its President; that the above described property constituted either the only asset of said corporation or substantially all of its assets; that said corporation was at the time of said transfer unable to pay its debts as they accrued in the ordinary course of business and was insolvent, and was about to lose through said foreclosure sale its principal or only asset; that your petitioners are unadvised as to the consideration paid by the said David J. Collins, Sr., but state upon information and belief that said corporation received either nothing or no substantial consideration for said deed. Your petitioners further state that the said transfer from Marner Realty Company to David J. Collins, Sr., was not a bona fide transaction, but was entered into for the purpose of hindering, delaying and defrauding the creditors of Marner Realty Company, and more particularly Mercantile-Commerce Bank and Trust Company, and that said transfer was made for the purpose of attempting to prevent the sale of said property by said successor trustee through placing title in David J. Collins, Sr., with the intent and purpose of immediately filing the above entitled cause and using said proceeding as a means of preventing said sale and hindering and delaying Mercantile-Commerce Bank and Trust Company in collecting its indebtedness from said Marner Realty Company through the sale of said property; that the said transfer to David J. Collins, Sr., and the subsequent filing of this proceeding were all part and parcel of an unlawful and fraudulent scheme and device to place said property of said Marner Realty Company beyond the reach of its creditors, and particularly of Mercantile-Commerce Bank and Trust Company, and to hinder and delay said creditors, and particularly Mercantile-Commerce Bank and Trust Company, from collecting their debts against said corporation or proceeding against said property, and the said conduct on the part of said David J. Collins, Sr., constitutes a fraud upon these petitioners and upon the Court; that said transfer is void as to creditors of Marner Realty Company and particularly as to Mercantile-Commerce Bank and Trust Company."

February 23, 1934, this petition was denied, and petitioners appeal...