In re Myers

• Citation: 383 F. Supp. 251
• Decision Date: 18 October 1973
• Docket Number: Bankruptcy No. 36343.
• Parties: In the Matter of Josephine MYERS, a/k/a R. J. Myers Cravens, Bankrupt.
• Court: U.S. District Court — Western District of Missouri

383 F. Supp. 251

In the Matter of Josephine MYERS, a/k/a R. J. Myers Cravens, Bankrupt.

Bankruptcy No. 36343.

United States District Court, W. D. Missouri, W. D.

October 18, 1973.

Dennis G. Muller, Charles R. Nuzum, Kansas City, Mo., for bankrupt.

I. I. Ozar, Kansas City, Mo., for trustee.

AMENDED¹ ORDER DENYING BANKRUPT'S PETITION FOR REVIEW AND AFFIRMING ORDER OF REFEREE IN BANKRUPTCY OF JUNE 20, 1973, DISALLOWING HOMESTEAD EXEMPTION

WILLIAM H. BECKER, Chief Judge.

This cause comes before this Court on the bankrupt's timely petition for review, filed herein on June 29, 1973, pursuant to Section 39c of the Bankruptcy Act. In her petition herein, bankrupt seeks to review and attain reversal of the order of the Referee in Bankruptcy entered June 20, 1973, wherein bankrupt's homestead exemption claim was disallowed.

On August 3, 1973, pursuant to Local Rule 29, the parties herein filed the General Order 47 Stipulation therein agreeing and stating that no additional evidence is to be offered before this Court by any party and that this petition for review is submitted to this Court solely upon the evidence adduced before the Referees.^1a

It is not necessary or desirable to expand the record by a detailed recitation of all that has occurred in this cause. However, because of the protracted nature² and possible complexity of this case, a chronological summary of the record is set forth in respect to matters leading up to the present petition for review.

The bankrupt, Josephine Myers, also known as R. J. Myers Cravens, was adjudged bankrupt upon her voluntary petition filed herein on February 5, 1968, and amended on May 2, 1968.

The Trustee filed herein on August 23, 1968, his petition as amended May 2, 1969, to take possession and control of certain real estate located at 631 East 66th Street Terrace, Kansas City, Missouri, owned by the bankrupt alone and subsequently transferred to her spouse and herself as tenants by the entirety by deed dated January 26, 1968, ten days prior to the filing of her voluntary petition in bankruptcy.

On May 12, 1969, bankrupt filed a motion to dismiss the Trustee's amended petition to take possession and control of said real estate. After an evidentiary hearing on the motion, the Trustee and the bankrupt filed briefs. Thereafter, on January 22, 1970, the Referee made findings of fact and conclusions of law and denied the bankrupt's motion to dismiss. On March 9, 1970, the Referee entered an order overruling the bankrupt's motion for reconsideration of the order entered on January 22, 1970.

On May 25, 1970, another evidentiary hearing was held in respect to the Trustee's action under Section 67d of the Bankruptcy Act in taking possession and control of the real estate in question. Both the bankrupt and the Trustee filed suggestions in support of their respective positions. On December 9, 1970, the Referee entered an order setting forth his findings of fact and conclusions of law, therein finding: (1) that the real estate was in the constructive possession of the Court; (2) that the bankrupt's attempted transfer on January 26, 1968, was not made for fair consideration and was made at a time when the bankrupt was insolvent; (3) that the bankrupt's defense to the action of the Trustee was made in bad faith without any legal justification; and (4) that the transfer in question was made with actual intent to defraud creditors.

On April 2, 1971, the bankrupt filed a motion to dismiss her voluntary petition in bankruptcy, to which the Trustee filed objections on April 20, 1971. After an evidentiary hearing an order was entered on April 27, 1971, denying the motion to dismiss her voluntary petition.

On May 7, 1971, bankrupt filed a motion to set aside and reconsider the order of May 7, 1971, denying her motion to dismiss. This motion was also denied by an order entered on June 22, 1971. On July 2, 1971, bankrupt filed a petition for review of the order of June 22, 1971.

On December 10, 1971, the order of the Referee denying the bankrupt's motion to dismiss her voluntary petition was affirmed. Prior thereto, by order of December 9, 1970, the Referee granted possession of the bankrupt's real estate located at 631 East 66th Street Terrace, Kansas City, Missouri, to the Trustee on a finding that the transfer of said realty by the bankrupt to her spouse and herself as tenants by the entirety by deed dated January 26, 1968, ten days prior to the filing of the petition herein for bankruptcy, constituted a fraudulent conveyance by the bankrupt in violation of the provisions of Sections 67d(2) (a) and (2) (d) of the Bankruptcy Act.³

After notice and hearing, the Referee entered an order on January 11, 1972, to sell the real estate in question which was the residence of the bankrupt. This order further directed the bankrupt to give possession of the premises to the Trustee and to vacate said premises within fifteen (15) days.

On February 7, 1972, the bankrupt petitioned for reconsideration of the order of sale on the grounds that it did not provide for her homestead exemption of three thousand ($3,000.00) dollars as allowed by Missouri law pursuant to Section 513.475, V.A.M.S.⁴

On March 28, 1972, upon the application of the Trustee and with consent of the bankrupt, an erroneous order was entered authorizing the bankrupt to quitclaim her interest in the real estate to the Trustee in conjunction with the authorization by the Trustee to pay the bankrupt her three thousand ($3,000.00) dollar exemption ". . . upon the day she voluntarily moves totally from the premises . . . ." (Emphasis added.) In this same order, the Court further authorized the Trustee to borrow four thousand ($4,000.00) dollars to pay the bankrupt her homestead exemption —the additional one thousand ($1,000.00) dollars being provided for necessary repair work. With respect to this order of March 28, 1972, it should be noted that the merits of bankrupt's right to the homestead exemption were not decided.⁵

On March 29, 1972, at the continued hearing on amending the order of sale, the bankrupt was verbally ordered in open court by the Referee to vacate said premises by May 1, 1972. Thereafter, on April 17, 1972, the Referee directed the United States Marshal to remove the bankrupt physically from the premises on May 1, 1972. This order was then orally revoked by the Referee on May 1, 1972.

On May 4, 1972, the bankrupt was directed to show cause why an order should not be made to dispossess and evict her immediately from the said premises. Upon notice, a hearing was held on the order to show cause on May 12, 1972. At the conclusion of the hearing, counsel for the bankrupt and for the trustee were granted leave to file suggestions and reply suggestions. No suggestions were filed by the bankrupt. On May 18, 1972, the Referee directed the United States Marshal to remove the bankrupt physically from the premises on June 1, 1972.

On May 30, 1972, the bankrupt filed a motion to reconsider the order of May 18, 1972, including therewith suggestions in support thereof. The next day, the Referee overruled this last motion to reconsider and again erroneously directed the Trustee to pay the bankrupt her homestead allowance, said payment to be ". . . concurrent with Trustee's actual possession of the property." (Emphasis added.) The Referee further directed the United States Marshal to delay any actual physical eviction until further order of the Court.

On August 11, 1972, this cause was reassigned to Chief Referee Frank P. Barker, Jr., for all further administration under the Bankruptcy Act.⁶ On this same day, the Referee issued an order to show cause ". . . in writing on or before August 18, 1972 why an Order should not be entered directing the Trustee with the assistance of the United States Marshal to take possession of said premises and . . . physically remove if necessary the bankrupt. . . ." The order further directed that, in the event the bankrupt failed to show good cause and failed to voluntarily remove herself from said premises, that said bankrupt must then show cause before September 7, 1972, ". . . why a Certificate of Contempt under § 41 of the Bankruptcy Act should not issue forthwith." Bankrupt answered the Court's show cause order on August 17, 1972.

On August 18, 1972, the Referee entered an order of eviction, finding bankrupt's responses to the Court's show cause order of August 14, 1972, to be without merit.⁷ This order was then stayed on September 6, 1972, for the reason that the "Trustee, herein, has reported to the Court Josephine Myers, bankrupt was in good faith attempting to comply with the Order of this Court dated August 18, 1972. . . ." On this same day, bankrupt filed an answer to the Court's show cause order of August 18, 1972, therein setting forth her reasons why her homestead exemption should not be barred under Section 6 of the Bankruptcy Act. The Trustee filed suggestions in opposition thereto on October 13, 1972.

On October 17, 1972, the Referee issued an order confirming the sale of the real estate in question as reported in the Trustee's report of sale filed herein on October 5, 1972.

On November 21, 1972, the Referee entered an order setting aside and declaring to be null and void the fraudulent conveyance of January 26, 1968. This conveyance had been found to be in violation of Sections 67d(2) (a) and (2) (d) of the Bankruptcy Act by order of this Court on December 9, 1970.

On March 19, 1973, bankrupt filed a petition to reconsider this Court's order approving the Trustee's report on exemptions ". . . for the reason that said order would appear to include a determination relative to the allowance of the bankrupt's homestead interest." An evidentiary hearing on the above petition for reconsideration, although not requested, was set for May 22, 1973, by order of May 4, 1973. Bankrupt then filed a request for such a hearing on May 9, 1973.

On June 14, 1973, this cause was...