In re White
| Decision Date | 18 February 1965 |
| Docket Number | No. 38349.,38349. |
| Parties | In the Matter of Joseph F. WHITE, Sr., Bankrupt. |
| Court | U.S. District Court — District of Colorado |
William R. Young, Englewood, Colo., for bankrupt.
John R. Hickisch, Denver, Colo., for General Ins. Co. of America.
Petitioner, Joseph F. White, Sr., seeks review of an order of the Referee in Bankruptcy dated October 23, 1964, in an involuntary proceeding initiated by bankruptcy petitioner General Insurance Company of America. While three errors are alleged, it appeared at a hearing held on January 25, 1965, that Joseph White relies primarily on the contention that he was a "farmer" at the times of the alleged acts of bankruptcy.
Section 4, sub. b of the Bankruptcy Act, Title 11 U.S.C. § 22, sub. b provides:
"Any natural person, except a wage earner or farmer * * * may be adjudged an involuntary bankrupt * * * The status of an alleged bankrupt as a wage earner or farmer shall be determined as of the time of the commission of the act of bankruptcy."
The definition of a "farmer" is set forth in Title 11 U.S.C. § 1(17):
"`Farmer' shall mean an individual personally engaged in farming or tillage of the soil, and shall include an individual personally engaged in dairy farming or in the production of poultry, livestock, or poultry or livestock products in their unmanufactured state, if the principal part of his income is derived from any one or more of such operations;"
Petitioning creditor concedes that it has the burden of proving that Joseph White is not a farmer within the meaning of the above sections. Hinrichs v. John Deere Co. of Moline, 7 Cir., 314 F.2d 384 (1963).
The involuntary bankruptcy petition filed May 1, 1964, alleged two acts of bankruptcy: the execution by Joseph White on February 14, 1964 of a deed of trust as security for an antecedent debt; and failure to vacate a judgment lien obtained by petitioning creditor on February 17, 1964. By a subsequent amendment, a third act of bankruptcy was alleged in that Joseph White conveyed nonexempt real property to his son, William W. White, and his daughter-in-law, Rita J. White.
The only oral testimony produced at the hearing before the referee was that of Joseph White. This evidence, together with documentary evidence, tended to establish that Joseph White had been President of the J. F. White Engineering Company since 1947, when the corporation was organized, to about 1962 when it became defunct. This firm was engaged in heavy construction contracts, such as power plants and dams. Joseph White never formally resigned from his position as President. He did, however, simply cease his activity in that capacity.
In 1958, the corporation acquired the Jackson Creek ranch in Douglas County, Colorado, and this ranch was transferred to Joseph White and his wife, Orcelia White, on December 31, 1959. The property was sold on or about August 30, 1963, and another ranch which is located in Nevada was purchased with the proceeds. This occurred between November 22, 1963 and January 9, 1964. Essentially, each ranch was used to breed heifers bought in early spring to purebred bulls. The pregnant heifers would then be sold as replacement cattle in the fall, although if the market warranted or necessitated it, they would be retained until they calved the following spring. The 1963 joint income tax return filed by Joseph White and his wife indicates that the gross income obtained from the sale of that year's herd was $70,000.00. In addition, crops consisting primarily of alfalfa were planted and harvested on about 6,000 acres of the 17,000-acre Nevada ranch. In short, there can be little doubt that the operation of the ranch did involve the production of livestock within the meaning of 11 U.S.C. § 1(17). The question is, therefore, whether there is sufficient evidence to support the referee's finding that Joseph White was not a farmer.
The evidence establishes that Joseph White's son, William White, was foreman of the ranches in Colorado and in Nevada since 1958. At that time, Joseph White was concerned with the management of his company which in 1960 and 1961 was involved in the performance of contracts exceeding one million dollars. Until that time, therefore, his son, and possibly to some extent his wife, ran the ranch. The cattle on the ranch was purchased with money secured by a note negotiated by his son, William. In short, Joseph White's participation in the operation of the ranch may have been found to be negligible by the referee. The evidence is sufficient to support the proposition that Joseph White's connection with the ranch was insubstantial — was merely formal. Even the extent of this interest is not clear since his son and his daughter-in-law signed the note on the $200,000.00 mortgage given to Connecticut Mutual Insurance Company to purchase the Nevada ranch, and on June 19, 1964 Joseph White transferred his interest in the ranch to his son and his daughter-in-law and received no consideration in return. Furthermore, while failure of the farming enterprise does not negate the status of farmer, failure over a period of years to receive any income from farming may indicate that the putative farmer is not really relying on farming as his primary source of income. In this case, Joseph White concedes that he received no net income from his alleged farming activities through 1964. In this vein, we note that Joseph White testified, on page 70 of the transcript of the hearing before the referee, that he was attempting to reestablish his business. In other words, it appears that although the company became defunct in 1962, Joseph White's efforts were directed to the reestablishment of that or another business, but not farming.
The evidence tending to support Joseph White's position that he was a farmer is insubstantial. The titles of the Colorado and Nevada ranches were...
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Beery, Matter of, s. 77-1991
...from farming may indicate that the putative farmer is not really relying on farming as his principal source of income. In re White, 238 F.Supp. 454, 456 (D.Colo.). Likewise, a showing of positive net income in farming over several years, accompanied by a corresponding loss in other ventures......
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...Creditor—Ray E. Friedman, 664 F.2d 184, 186 (8th Cir.1981); In re Hinrichs, 314 F.2d 384, 385 (7th Cir.1963); In re White, 238 F.Supp. 454, 455 (D.Colo.1965). Regardless of which view this Court supports, the government must establish that there is no genuine issue as to the alleged debtors......
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...the burden of proving that the alleged bankrupt is not a farmer. See In re Hinrichs, 314 F.2d 384, 385 (7th Cir. 1963); In re White, 238 F.Supp. 454, 455 (D.Colo.1965). We believe the definitional standard of § 1(17) is satisfied in this case. The bankruptcy court specifically found that Je......
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