In re Windsor Square Development

• Decision Date: 02 July 1937
• Docket Number: No. 7765.,7765.
• Citation: In re Windsor Square Development, 91 F.2d 493 (9th Cir. 1937)
• Parties: In re WINDSOR SQUARE DEVELOPMENT, Inc. BARRINGER et al. v. LILLEY et al.
• Court: U.S. Court of Appeals — Ninth Circuit

91 F.2d 493 (1937)

In re WINDSOR SQUARE DEVELOPMENT, Inc BARRINGER et al. v. LILLEY et al.

No. 7765.

Circuit Court of Appeals, Ninth Circuit.

July 2, 1937.

Wm. H. Mackay and John L. Gust, both of Phœnix, Ariz. (Ellinwood & Ross and Kibbey, Bennett, Gust, Smith & Rosenfeld, all of Phœnix, Ariz., of counsel), for appellant.

Thomas W. Nealon and Alice M. Birdsall, both of Phœnix, Ariz., for appellee Lilley, trustee.

Thos. Armstrong, Jr., R. Wm. Kramer, J. E. Morrison, Walter Roche, and Frank J. Duffy, all of Phœnix, Ariz., for appellee Central Arizona Light Co.

Cunningham & Carson, of Phœnix, Ariz., for appellee Grose.

Before WILBUR, GARRECHT, and DENMAN, Circuit Judges.

WILBUR, Circuit Judge.

On October 25, 1930, the Windsor Square Development, Inc., filed a voluntary petition in bankruptcy, and on October 28, 1930, was adjudicated a bankrupt. On June 6, 1931, appellee George E. Lilley, trustee in bankruptcy, filed a petition entitled, "Trustee's petition to marshal liens and sell property free and clear of encumbrances." In this petition he alleged that among the assets belonging to the estate of the bankrupt and in the trustee's possession were certain lots located in Windsor Square in Maricopa county, Ariz. He alleged that the appellant, Margaret B. Barringer, claimed to have a lien on this property by virtue of a "declaration of trust," the parties to which were the said Margaret B. Barringer, the Phœnix Title & Trust Company, and Thomas J. Tunney, but that the alleged lien upon the property was void as against the trustee in bankruptcy and the creditors of the bankrupt because not recorded as required by the statutes of the State of Arizona. He alleged that the appellant Phœnix Title & Trust Company claimed to have an interest in the property and denied the validity of such interest because of lack of "information sufficient to form a belief in regard thereto." He alleged that appellees Salt River Valley Water Users' Association, Central Arizona Light & Power Company, County of Maricopa, John D. Calhoun, County Treasurer of the County of Maricopa, State of Arizona, Mitt Sims, Treasurer of the State of Arizona, and Thomas J. Tunney, claimed liens or some interest in the property and asked the court to determine the validity and amount of such liens or interest. He alleged that the best interest of the bankrupt estate required the sale of the property at private sale free and clear of all encumbrances and that any liens against the property should be transferred to the proceeds derived from the sale. He prayed for an order "marshaling the liens upon and interests in said property, determining the validity, amount and priority of liens and interests, ordering its sale at private sale, either as a whole or in parcels, free and clear of all encumbrances and interests, and transferring the rights of the parties to the fund derived from said sale."

An order to show cause was served on the parties claiming an interest in the property.

On October 19, 1931, the Phœnix Title & Trust Company answered the trustee's petition. It alleged that on December 17, 1928, appellant Margaret B. Barringer was the owner of the property described in the petition; that on that day she agreed to sell the property to Thomas J. Tunney who was acting as agent for L. D. Owens, Jr., H. C. Dinmore, and S. W. Mills; that in pursuance of that agreement appellant Barringer conveyed the property to Phœnix Title & Trust Company, which deed was recorded; that the Phœnix Title & Trust Company executed a declaration of trust which provided among other things that the Trust Company held the property in trust to secure the balance of the purchase price of the property owed by the beneficiary of the trust, Thomas J. Tunney; that thereafter Tunney assigned and transferred his interest in the trust and the property to L. D. Owens, Jr., H. C. Dinmore, and S. W. Mills; that L. D. Owens, Jr., H. C. Dinmore, and S. W. Mills assigned all their interest in the trust and property covered by the trust to the Windsor Square Development, Inc., the bankrupt; that thereafter the Windsor Square Development, Inc., assigned and transferred all of its interest in the declaration of trust and the property to L. D. Owens, Jr., which assignment was accepted by the Phœnix Title & Trust Company; that thereafter Len D. Owens, Jr., assigned and transferred to the Windsor Square Development, Inc., all his interest in the trust and the property therein described excepting certain described lots. The Trust Company prayed that the trust be recognized and that the estate of the bankrupt include only such beneficial interest under the trust that had been assigned to it or to which it had otherwise rightfully succeeded.

Appellant Barringer filed an answer to the trustee's petition setting up the declaration of trust and her rights thereunder. She denied that the bankrupt corporation had any right or interest in the premises described in the trustee's petition and prayed for an order fixing the validity, extent and priority of her lien.

Appellees, the County of Maricopa and John D. Calhoun, treasurer of the county, answered the trustee's petition. They alleged the validity of claims for taxes which they had filed and prayed that the same be allowed and paid in full.

Appellee W. R. Wells answered the petition and alleged that certain lots of Windsor Square were sold to him by the bankrupt through its trustee Phœnix Title & Trust Company. He prayed for an order and decree that would fully protect his rights and that no interest by way of lien or otherwise be adjudicated prior to his interest.

Appellee J. Allen Wells answered the petition alleging that he purchased a lot in Windsor Square from the bankrupt.

Appellee Raymond L. Nier answered the trustee's petition alleging the purchase of one of the lots, payment of part of the purchase price, and claiming a lien on the lot for the amount paid.

Appellee E. L. Grose answered the trustee's petition and alleged that he had entered into an agreement with Phœnix Title & Trust Company for the purchase of two lots in Windsor Square and had made part payments on these lots. He alleged that the partnership of Owens-Dinmore was selling agent for the beneficiaries of the trust of the lands set forth in the declaration of trust, and as such agents, to induce the sale of the lots, made representations in regard to certain street improvements to be made. He alleged that these improvements were not made, and because of the failure to make these improvements, and because of the petition in bankruptcy, he failed to make any further payments upon his contract. He alleged that because of the failure of the beneficiaries to carry out these improvements the value of the lots were less than the amount he had already paid on the contract and prayed that the Phœnix Title & Trust Company be required to execute and deliver to him a warranty deed to the premises free from all liens.

Appellee Salt River Valley Water Users' Association answered the petition and claimed a lien on the land by virtue of a subscription to the association by a party who owned the land prior to the dates of ownership of any of the parties in the bankruptcy proceeding. It alleged that by such subscription the property was bound for the amount of assessments against said land imposed by the association.

Appellee Central Arizona Light & Power Company entered into a stipulation with the trustee in bankruptcy by which it was agreed that in any order entered by the referee there would be entered an order confirming the title of the appellee to rights of way and easements as they appeared on the plat or map of record of the Windsor Square Development, Inc., the bankrupt.

On September 17, 1932, the referee entered an "order and decree" providing that "neither Margaret B. Barringer nor the Phœnix Title & Trust Company hold any lien against, or interest in the property involved in this proceeding." The order fixed the liens and property interests of the Central Arizona Light & Power Company, and other appellees, including those who had answered the trustee's petition.

On September 29, 1932, appellants filed exceptions to the referee's order and petitions to review the order.

On December 13, 1934, the District Court affirmed the order of the referee. On December 17, 1934, upon motion of appellants, the District Court vacated its order affirming referee's order for the purpose of allowing the appellants to file further authorities. Thomas W. Nealon, counsel for the trustee in bankruptcy, was present at this proceeding.

On January 7, 1935, the District Court again affirmed the order of the referee reciting: "After an examination of the authorities and a further consideration of the entire matter, I see no reason to change my ruling."

On February 5, 1935, the appellants filed petitions for appeal from the order of the District Court of January 7, 1935. An appeal was allowed by the District Court on February 5, 1935, and by this court on October 21, 1935.

Appellee E. L. Grose, and George E. Lilley, trustee in bankruptcy, have moved this court to dismiss the appeal or affirm the order of the District Judge upon the ground that the appeal was not taken in the time allowed by law. It is contended that as no motion or petition for rehearing was filed subsequent to the District Court's order of December 13, 1934, affirming the referee's order, the District Court had no jurisdiction to vacate the order, and that the order of the District Court of December 17, 1934, vacating that order, and the order of the District Court of January 7, 1935, again affirming the referee's order, were void.

There is no merit in this contention. The bankruptcy court has power to set aside any of its orders as long as the estate is not closed. Sandusky v. Bank, 23 Wall. 289, 23 L.Ed. 155; In re Ives (C.C.A.) 113 F. 911; see McLeod v. Boone, 91 F.(2d) 71, decided by this court June 7, 1937. It is...