In re Worley
| Citation | 50 F. Supp. 611 |
| Decision Date | 08 July 1943 |
| Docket Number | No. 261.,261. |
| Parties | In re WORLEY. |
| Court | U.S. District Court — District of Nebraska |
Herman Ginsburg, of Lincoln, Neb., for debtor.
C. Petrus Peterson, Robert W. Devoe, and Jack Devoe, all of Lincoln, Neb., for Lura Schuler Smith, secured creditor.
The issue here considered was expressly reserved for future determination in an order made in this proceeding on January 22, 1943, and filed January 23, 1943, filing 197. It involves the question whether in this case the court has jurisdiction over the northeast quarter (N.E.¼) of section twenty-two (22) and the west half (W.½) of section twenty-three (23), all in township twenty-seven (27) north, range forty-eight (48) west of the Sixth Principal Meridian in Box Butte County, Nebraska, which constitutes only a small portion in acreage of the debtor's lands, and for convenience will be referred to as "the farm". It arises (a) upon a petition filed on February 26, 1938, quite early in the history of this case, by the secured creditor in which she prayed for the dismissal of this proceeding so far as the farm is concerned; and (b) upon the oral renewal of the request on August 5, 1938 before the local conciliation commissioner, who then allowed the secured creditor's prayer, "subject, however, to a ruling thereon by a judge of this court."
The unquestioned facts may be stated briefly. Almost exactly twenty years ago one Anna W. Fanning owned the farm and, with a mortgage on it as security, borrowed $9,000 from a trust company, which sold the loan to the secured creditor. In 1927 Anna W. Fanning died intestate, leaving her mother, Celestia S. Worley, as her sole heir. On July 20, 1927, Celestia S. Worley, after an extension of the time for payment of the mortgage debt had been procured, executed and delivered a quitclaim deed of the farm to the debtor who was her daughter. So, the debtor acquired her interest in the equity of redemption in the farm by quitclaim deed long after the negotiation of the secured creditor's loan upon it. The debtor paid no interest on the mortgage debt accruing after January 5, 1931, and defaulted in the payment of taxes on the farm beginning with those for the year 1930. So, in December, 1931, the trust company brought an action for the foreclosure of the mortgage in the District Court of Box Butte County, Nebraska, in which the secured creditor joined later as a plaintiff. Decree of foreclosure was entered on January 20, 1933, and its operation was stayed for the period of nine months as provided by the statutes of Nebraska. Section 20-1506, C.S.Neb.1929. Thereafter, for several years, sale was further stayed by recourse to the procedure then provided in Nebraska under moratory legislation. Finally, an order of sale was issued, and after due notice the farm was sold at sheriff's sale on July 19, 1937, to the secured creditor for $10,500. On September 4, 1937, that sale was confirmed over the debtor's objection and the amount of supersedeas bond was fixed at one thousand dollars. Supersedeas bond was filed and approved on September 17, 1937, within the time allowed therefor by the state statute. No appeal from confirmation was ever lodged in the Supreme Court of Nebraska; but on November 5, 1937, and during the period of three months then allowed by Section 20-1912, C.S.Neb.1929, for the filing in the Supreme Court of the transcript on appeal, this action was filed. No sheriff's deed of the farm has ever been made.
Relying upon that history, the secured creditor seeks relief with the assertion that the debtor, upon the institution of this proceeding, had no interest in the farm which could sustain this court's jurisdiction over it.
Two preliminary observations should be made. The first of these is that the informal order of the local conciliation commissioner for the allowance of the secured creditor's motion is not controlling. It is unnecessary to consider whether he had authority to rule with finality upon the issue. He did not assume to do so, for his order was expressly made "subject * * * to a ruling thereon by a judge of this court." That ruling is now being made. Secondly, no participation by the secured creditor in this proceeding has barred or estopped her from asserting a right to the relief she seeks, if the right were held otherwise to exist. For since the local conciliation commissioner's ruling last noted, she has not taken any part in the proceeding, much less derived any advantage from it. In all the nearly six years of its pendency nothing has been paid in application upon the debt to her, a fact which the debtor acknowledges.
The issue, therefore, remains to be determined upon its merits, notwithstanding the lapse of time. And the court considers that it must be resolved by determining whether on November 5, 1937, the debtor had under the laws of Nebraska any right or interest in the property which is within the protection of Section 75 of the Bankruptcy Act, 11 U.S.C.A. § 203.
The court has concluded that in the light of the Nebraska statutes and the decisions of the state's supreme court, that question must be answered affirmatively. On the date in question the debtor appears clearly to have had (a) the right to make redemption of the farm from the sheriff's sale; and (b) the legal title to the farm with the right to its possession and to the rents arising from it, which title and right were then calculated presumptively to persist until the execution and delivery to the purchaser at sheriff's sale of the sheriff's deed in foreclosure.
The redemption right is governed by Section 20-1530, C.S.Neb.1929. Eliminating provisions touching the mechanics of redemption, it grants to "the owners of any real estate against which a decree of foreclosure has been rendered in any court of record" the right to make redemption, "at any time before the sale of the same shall be confirmed by a court of competent jurisdiction." Upon the statute's bare terms, it might be — and is — argued that the debtor's right to redeem ended with the confirmation of sheriff's sale by the District Court of Box Butte County, Nebraska, and that, the appeal foreshadowed by the supersedeas bond having proved abortive, then, at least on the lapse of three months following confirmation, the status of the foreclosure action related to the date of the unappealed confirmation.
But this court's inquiry must be directed to the debtor's rights in, and relation to, the farm on the day when she instituted this action. And upon those elements certain decisions of the Supreme Court of Nebraska are instructive. They have to do with the effect of supersedeas, the persistence of the right to redeem, and the status of title to and the right of possession of, foreclosed Nebraska real estate prior to the execution of sheriff's deed.
In a leading case it was held in 1879 that "where a proper supersedeas bond is filed and approved", after an order of confirmation of sheriff's sale in foreclosure in which a judgment for deficiency is awarded, "no execution can issue on the judgment until the bond is set aside, modified, or the appellant fails to perfect his appeal." The suspension for every purpose of the decree of confirmation was asserted. State Bank of Nebraska v. Green, 8 Neb. 297, 305, 1 N.W. 210. See further phase of that case in State Bank of Nebraska v. Green, 10 Neb. 130, 4 N.W. 942; also Kountze v. Erck, 45 Neb. 288, 63 N.W. 804; Armstrong v. Mayer, 69 Neb. 187, 202, 95 N.W. 51; Jenkins Land & Live Stock Co. v. Atwood, 80 Neb. 806, 115 N.W. 305; Carroll v. Polfus, 98 Neb. 657, 154 N.W. 213; Walter v. Gillan, 129 Neb. 514, 516, 262 N.W. 33. Therefore, the filing and approval of the debtor's supersedeas bond in the foreclosure action in the state court effectively intercepted the execution of a sheriff's deed to the purchasing secured creditor until the lapse of the statutory period for the lodging of the appeal in the Supreme Court of the state. And it was during that interval that the jurisdiction of this court was invoked.
The Nebraska Supreme Court has also dealt liberally with the right of redemption pending appeals and seems clearly to have affirmed the persistence of that right — as a right and not a matter of judicial grace — until the termination of the appeal adverse to the owner of the equity and the resultant finality of confirmation. Thus, in Philadelphia Mortgage & Trust Co. v. Gustus, 55 Neb. 435, 75 N.W. 1107, 1108, the Nebraska Supreme Court said: ...
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