In re Granite City Bank

• Decision Date: 13 March 1905
• Docket Number: 44.
• Citation: 137 F. 818
• Parties: In re GRANITE CITY BANK OF DELL RAPIDS, S.D.
• Court: U.S. Court of Appeals — Eighth Circuit

137 F. 818

In re GRANITE CITY BANK OF DELL RAPIDS, S.D.

No. 44.

United States Court of Appeals, Eighth Circuit.

March 13, 1905

William Wilka having been adjudged a bankrupt by the United States District Court for the Northern District of Iowa, George H Watson, the trustee in bankruptcy, presented a petition to the court, representing that at the date of the adjudication the bankrupt owned certain personal property on his premises across the state line in South Dakota; that it was of a perishable character, exposed to deterioration, and its retention would entail great expense to the estate. The petition, inter alia, stated that the Granite City Bank of Dell Rapids, S.D., claimed a chattel mortgage on said personal property to secure a large sum of money owing to it by the bankrupt; that when said mortgage was executed said bank had acknowledged that said Wilka was insolvent; and that said mortgage constituted a preference in favor of the bank. The prayer of the petition was for an order 'to sell all the grain on said land at private sale upon the markets, and that said stock be sold on public auction as soon as may be and that a notice or order to show cause why said property should not be sold freed from all liens and claims of the said Granite City Bank, First National Bank, Conrad Schecker and Mrs. William Wilka, and the said bankrupt, William Wilka,' be made; the petition having alleged certain interest claimed in said property be the parties named in the foregoing prayer. On receipt of this petition the referee 'ordered that a hearing be had upon the same, and that ten days' notice of said hearing be served upon the lienholders personally, and a copy thereof be mailed to all other creditors on the 4th day of February, 1904.'

The record further recites that, 'pursuant to the foregoing order, notices were served upon all lienholders of said estate, as is shown by the return upon said notice, and a notice of said hearing was on this 6th day of February, 1904 mailed to all creditors schedules by the bankrupt, postage prepaid, a copy of which is in the following words and figures, to wit:' (Here follows a copy of the notice served and mailed.) In addition to the notices sent by mail to all the creditors of the estate, service of notice of said petition and order was made personally upon the president of said bank at Dell Rapids, S.D., on the 3d day of February, 1904. On the day set for the hearing of said petition, said Granite City Bank of Dell Rapids appeared by counsel, and objected to the jurisdiction of the court over the bankrupt to make the order of sale petitioned for, for the following reasons: (1) That neither the property referred to, nor the said Granite City Bank, is within the territorial limits over which the court has jurisdiction; (2) that no notice of the hearing upon the petition had been served upon the Granite City Bank within the territorial jurisdiction of the court; (3) that the court has no jurisdiction over the said Granite City Bank, and, without personal service upon the said Granite City Bank within the jurisdiction of the subject-matter, to wit, the lien of said bank upon said personal property, said property being without the territorial limits over which the court has jurisdiction; (4) that the court is given no jurisdiction by the bankrupt act to order the sale of the property free from liens, without first determining in some proper proceeding the validity of such liens; and (5) that the bankrupt owns only an undivided one-half of the property sought to be sold. No other creditor interposed any objection. On a hearing before the referee, the objections of said Granite City Bank were overruled, and the referee ordered a sale of the property. The order of sale directed the trustee to sell all the grain kept upon said farm described in the trustee's petition, at private sale, for the highest price obtainable, and keep an accurate account of each article sold, and the price received therefor, and the name of the person to whom sold, which account he shall forthwith file with the referee; and the referee further ordered that 'all the other personal property described in the trustee's petition shall be sold at public or private sale, as the trustee may deem to the best interest of all concerned, and that all of said property shall be sold free from any and all liens and pretended liens or claims upon the same, and that the trustee keep an accurate account of each article, the price obtained therefore, and the name of the person to whom sold,' and that 'the trustee deposit the funds and proceeds derived from the sale of said property in the First National Bank of Rock Rapids, Iowa, and apply the same upon all liens which may be established upon said property, in the order they subsist and become liens thereon.'

Exceptions were taken to the action of the referee by the Granite City Bank, and at its request the matter was certified to the district judge for review. In his certification the referee recites, among other things, that said Granite City Bank filed in writing its special appearance for the purpose of objecting to the jurisdiction of the court to make the order of sale; that neither of the parties called any witnesses to testify at the hearing, and that the only evidence before the referee consisted of the papers filed in relation to said order, namely, trustee's petition for order of sale, order for notices thereon, a copy of notice mailed to creditors, a copy of notice served personally upon the persons claiming to have a lien upon said property, and the return of service of same, and the written objections of the Granite City Bank to the jurisdiction of the court; 'that, upon inspection of these different filings, and after hearing arguments of counsel for trustee and for the Granite City Bank, the referee found that the trustee had taken possession of said property, and that it was of a perishable nature, and, in pursuance of such finding, made an order to sell said property,' etc.

The District Court overruled the objections of the Granite City Bank, and...