In re Plumer

• Decision Date: 21 February 1935
• Docket Number: No. 823.,823.
• Court: U.S. District Court — Southern District of California
• Parties: In re PLUMER.

9 F. Supp. 923

In re PLUMER.

No. 823.

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

February 21, 1935.

Hamilton, Lindley & Higgins, of San Diego, Cal., for petitioner.

Richard F. Kahle, of San Diego, Cal., for debtor.

NETERER, District Judge (after stating the facts as above).

As to the first objection, the bankrupt was and is without any doubt a farmer within the intent of section 75 (s), Bankruptcy Act, as amended (Frazier-Lemke Act), 11 USCA § 203 (s). He lived on the 153-acre farm at issue from the time of purchase in 1930, and steadily, with his family, after April, 1933. His bona fide engagement was farming. He cared for from twelve to seventeen acres of fruit orchards; cultivated and pruned the orchard, harvested the crop on the land when he bought it at a loss, however, of $500, and marketed all the crop then and since, and cropped a small portion of the land personally, but because of the market conditions since, for hay and barley, for which the land was suitable, the expenses for cropping was more than it could be sold for on the market, and the land has not been extensively cropped; the drouth during the year 1933 was unprecedented, and he leased a part of the land in 1933 to another for $75 for the season. He secured for planting 17,000 grape cuttings and heeled them in for planting the following spring, but because of the drouth it was not wise to plant them, so he separated the bundles, 100 cuttings in each bundle, and put the cuttings separately in ditches which he dug along the river bed and watered them during the season, all cuttings now being well rooted and ready for planting. He dug a well "with four hundred lateral holes," at a cost of approximately $3,000. He fixed the "washes" and cleared off brush, hauled rock, repaired the house, and built garage and cut wood. The drouth during 1933 caused the death of 700 fruit trees. The debtor, since adjudication and order of possession, and setting aside exemptions, has removed 700 dead fruit trees, has plowed 70 acres, and is plowing thirty additional acres, all for cropping in 1935, and planting of the 17,000 grape cuttings. The bankrupt was and is a bona fide farmer within the purview of the act.

As to the second objection, section 75 (g), 11 USCA § 203 (g), "An application for * * * extension proposal may be filed * * * after but not before * * * (1) it has been accepted in writing by a majority in number of all creditors." Acceptance being refused, filing was expressly negatived by the act. That proposal was made and refused is not denied. The farmer was qualified to amend his petition and be adjudicated a voluntary bankrupt.

The third and fourth objections will be considered together. The Congress for the common good set forth a plan by which the farmer, unable to pay his debts as they mature, may invite the creditors to conference by presenting to the judge a petition with an inventory of his property and statement of his debts, and if the petition is approved, it is filed and referred to the Conciliation Commissioner, who calls a meeting of the creditors, and the farmer presents his plan; if the creditors agree to the plan in writing, it is filed, and the debtor and creditors proceed voluntarily with the composition. If the creditors do not agree, the effort of the composition ends. Every creditor is left to exercise his own free choice.

Failure to obtain the required acceptance in writing qualified the farmer to be adjudged a voluntary bankrupt, and his estate passes to the control of the bankruptcy court. The farmer may have his property appraised, exemptions subject to liens set aside, and allowed to remain in possession under control of the court, upon payment of taxes and interest, keeping premises free from waste; and by the act, the lien is extended to cover all rentals received as well as increase in live stock held under mortgage. Under the provisions of the amendment, the land must be appraised at its fair and reasonable value. (1) Either party may object to the appraisal and has right of appeal within one year of date of order approving the appraisal. The trustee, with consent of lienholders, may sell to the debtor, aside from the exemptions, the remainder of the estate upon terms set out. On default in the payments, or other conditions, the secured creditor or trustee may enforce the pledge or lien in accordance with law. Any affected creditor may file written objections to the manner of payment and distribution, and thereupon the court, having set aside the exemptions, shall stay all proceedings for five years, during which time the debtor shall remain in possession and under the court's control, providing the debtor pays a reasonable rental annually, taxes, etc., and commits no waste. Upon the request of any lienholder, the court shall cause a reappraisal, and, no doubt, an appeal from such reappraisement may be made to the court, as the entire Bankruptcy Law (11 USCA) must be looked to, all the parts together, in their relation to the end in view. Red Bird v. U. S. (Cherokee Intermarriage Cases), 203 U. S. 76, 89, 27 S. Ct. 29, 51 L. Ed. 96; Talbott v. Board of Com'rs of Silver Bow County, 139 U. S. 438, 443, 11 S. Ct. 594, 35 L. Ed. 210; Billings v. U. S., 232 U. S. 261, 34 S. Ct. 421, 58 L. Ed. 596.

And by the same token the provisions of the Bankruptcy Law for notice and hearing on petitions for discharge apply to the phrase "May apply for discharge."

When the Constitution was adopted, agriculture was the backbone of the nation. We became industrialized about 1890, and in a limited way began mass production in 1909. At the close of the World War, when we thought we were turning our spears into pruning hooks and beating our swords into ploughshares, our large war material manufacturing plants changed to mass production plants. Every product from razors to radios, ploughs to threshing machines, bathtubs to automobiles, were mass produced. Billions of dollars of conditional sales contracts were negotiated by high-powered salesmen. Farms were mortgaged. We were in an age of progress and, for the moment, prosperity. Wildcat speculation was inspired in a large measure by leaders in finance. We were in an age of gas and speed, jazz and bare legs. Automobiles raced in the highway and jostled each other in the street. We found a small percentage of the people controlled a large percentage of the wealth of the country. Loans were called. Banks failed, etc. A condition was presented which the wildest dreams of the Constitution makers could not sense. A condition, however, which was provided against by Divine inspiration and "prophetic vision" by article 1, § 8, and general welfare clause of the Constitution. We are changed from an agricultural country to an industrial country.

That this amendment is an emergency measure, and for a limited period, and is germane to the basic principles of the Constitution, life, liberty, and the pursuit of happiness, is expressed as to the first, and obvious as to the second. Liberty to enjoy honest labor and freedom in avenues of human endeavor in improved conditions related to other employments for separate benefits from economic gains and related enterprise for the common good, in maintenance of the economic political system, tempered by social conscience to conserve life and promote the general welfare, inspired the emergency relief. This concept moved the Congress to exercise what Chief Justice Marshall in Sturges v. Crowninshield, 4 Wheat. (17 U. S.) 122, 4 L. Ed. 529, denominated "extensive discretion." The Congress was presented with a "condition and not a theory." It sought to ameliorate public stress, in neutralization of threatened danger, violence, defiance of process, closing public schools at and prior to the enactment in issue. The court knows that threatened danger verging on insurrection did obtain before and at the time of this enactment throughout various farming zones in the United States. Chicago, Mil., St. Paul & P. R. Co. v. Hedges (D. C.) 5 F. Supp. 752.

The Constitution delegates to the Congress "the * * * Power * * * to establish * * * uniform laws on the subject of bankruptcies throughout the United States." Article 1, § 8, cl. 4, Constitution. Under this section, the bankruptcy laws have had a steady progressive growth to reach the current need and afford relief where the common good demanded. The acts were passed in 1800 (2 Stat. 19), 1841 (5 Stat. 440), 1867 (14 Stat. 517), 1874 (18 Stat. 178), 1898 (11 USCA § 1 et seq.), and the enactments 1933, 1934 in issue. Each act is a progressive advancement and extension of benefits to meet the need in the unfolding social economic relation between the individuals (debtors and creditors) and the public general welfare. That the Frazier-Lemke (section 75 (s) Amendment, 11 USCA § 203 (s) is uniform throughout the United States is obvious.

Fundamentally the same question here in issue was decided by the Supreme Court in Traer v. Clews, 115 U. S. 528, 6 S. Ct. 155, 29 L. Ed. 467. The amendment is germane to the subject of bankruptcy and is within the granted plenary power of the Congress, and this power is not exhausted by one act, but may be invoked when present needs, standards, and wisdom and justice require. In re Landquist (D. C.) 70 F.(2d) 929. In re Radford (D. C.) 8 F. Supp. 489, 26 A. B. R. (N. S.) 47. The power of the Congress being fixed, and the act being temporary, the validity is established. Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77. The purpose of the act being temporary, and, as such, is justified. Wilson v. New, 243 U. S. 332, 345, 346, 37 S. Ct. 298, 61 L. Ed. 755, L. R. A. 1917E, 938, Ann. Cas. 1918A, 1024. "A limit in time, to tide over a passing trouble, well may justify a law that could not be upheld as a permanent change." Block v. Hirsh, 256 U. S. 135, 41 S. Ct. 458, 460, 65 L. Ed. 865, 16 A. L. R. 165. The Congress had the power to authorize adjudication, on fixed conditions, on voluntary...