In re Wright, 6183
| Decision Date | 20 September 1937 |
| Docket Number | No. 6183,6184.,6183 |
| Citation | 91 F.2d 894 |
| Parties | In re WRIGHT. WRIGHT v. UNION CENT. LIFE INS. CO. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Samuel E. Cook, of Huntington, Ind., for appellant.
Arthur P. Feigen and Albert J. Feigen, both of Chicago, Ill., and Roscoe D. Wheat, of Portland, Ind., for appellee.
Before SPARKS, MAJOR, and ALSCHULER, Circuit Judges.
These appeals involve bankruptcy proceedings under section 75 of the Bankruptcy Act (as amended, 11 U.S.C.A. § 203) in which appellant was the debtor. The first appeal is from an order of the District Court, on December 14, 1936, overruling the debtor's petition to review the decision and recommendations of the Conciliation Commissioner and approving the latter's recommendation that certain real estate listed as assets be stricken from the debtor's schedules. The second appeal is from an order of the court, on December 31, 1936, denying the debtor's application for permission to amend his schedules by reinstating as assets therein, the real estate theretofore stricken in Cause No. 6183.
The questions presented in both cases are practically the same and they arise out of the following facts: On October 1, 1925, the debtor was the owner of 200 acres of land in Jay County, Indiana. On that date he with his wife, Emma G., executed a mortgage upon this land to appellee to secure the payment of a note in the sum of $9,000. On the same day the debtor was the owner of an additional tract of land in the same county containing 80.31 acres, upon which appellee held a mortgage lien to secure the payment of a note for $3,000 executed by the debtor and his wife on October 1, 1925. These two tracts adjoined, constituting one farm.
On October 14, 1931, the debtor and his wife executed and delivered three separate warranty deeds to their two children and son-in-law for certain portions of the farm; that is to say, — to their son, Walter C. Wright, they deeded the 80.31 acre tract; to their daughter, Edna E. Coon, and her husband John E. Coon, they deeded separate 40-acre tracts, one to each, out of the 200-acre tract. On the same day the debtor also executed and delivered to his wife a separate warranty deed for a third 40-acre tract out of the 200 acres. The consideration named in each deed was $1 and other consideration, the receipt of which was acknowledged. The deed to Walter C. Wright was made subject to appellee's mortgage thereon for $3,000; and the deeds to Edna E. Coon, her husband and her mother, were made subject respectively to a mortgage indebtedness of $2,500, $1,500, and $1,400 of the $9,000 mortgage indebtedness to appellee; however, there was no express assumption of such indebtedness by any of the grantees. The deeds of the children and son-in-law were duly recorded on the day they were executed, and the one to the debtor's wife was duly recorded on February 25, 1932.
On January 3, 1934, appellee instituted an action in the Jay Circuit Court of Indiana, against the debtor and Walter C. Wright to foreclose the $3,000 mortgage on the 80.31-acre tract. The debtor's wife was not joined in the action because in the meantime she had died. On June 9, 1934, a decree of foreclosure and order of sale was entered. On July 12, 1934, pursuant to the decree, the sheriff sold this tract to appellee and issued to it his certificate of sale therefor; and upon the expiration of the year of redemption, pursuant to the Indiana Statutes, the sheriff of Jay County issued his sheriff's deed therefor to appellee on August 2, 1935.
Prior to October 30, 1934, appellee filed its complaint in the Jay Circuit Court of Indiana, for personal judgment against James M. Wright, and for foreclosure of the $9,000 mortgage, against James M. Wright, Emma G. Wright, Edna E. Coon, John E. Coon, Walter C. Wright, and the Citizens Bank of Portland, Indiana. That cause was venued from Jay County to Adams County, Indiana, and while it was pending on October 30, 1934, the debtor filed his petition in bankruptcy, under the Frazier-Lemke Act (section 75 (s), as added by Act June 28, 1934, 48 Stat. 1289, 11 U.S.C.A. § 203 note), in which he filed under oath a schedule of his property including therein the real estate which he had conveyed on October 14, 1931, to his wife and children and his son-in-law, amounting to 200.31 acres.
On April 13, 1935, Walter C. Wright, Virgie M. Wright, his wife, John E. Coon and Edna E. Coon, his wife, executed and delivered to the debtor a quit-claim deed for the real estate which he had deeded to them, and to his wife who was then deceased.
On May 27, 1935, appellee recovered a personal judgment against the debtor in the Adams Circuit Court for $11,975.11 and a decree of foreclosure of its $9,000 mortgage which covered the 200-acre tract, 120 acres of which had been conveyed by three of the four deeds hereinbefore referred to. Pursuant to that decree, on July 20, 1935, the Sheriff of Jay County, in compliance with the applicable laws of Indiana, sold the fee simple of that real estate to appellee for $12,174.31, that being the highest and best bid received, and executed and delivered to it a certificate of sale. No one having redeemed the property within the year of redemption, the Sheriff of Jay County, upon presentation of the certificate by appellee on July 20, 1936, executed and delivered his sheriff's deed to appellee for the 200 acres described in the certificate.
On September 13, 1935, appellee instituted an action in the Jay Circuit Court, against Walter C. Wright and his wife Virgie M. Wright, for possession of the 80.31 acres. The debtor by leave of court was admitted as a party defendant, and answered that he had been duly declared a bankrupt in the Federal Court and that the State Court, for that reason, was without jurisdiction. Judgment for possession and damages went for appellee, whereupon appellants appealed to the Supreme Court of Indiana, and the judgment was affirmed April 2, 1937. See Wright et al. v. Union Central Life Insurance Co., 7 N. E.(2d) 206. On October 11, 1935, the debtor filed an amended petition in bankruptcy under the provisions of section 75 (s), as amended August 28, 1935 (11 U. S.C.A. § 203 (s).
Both records in the appeals to this court were filed February 20, 1937. The cases were consolidated for hearing, and on June 3, 1937, appellee filed its motion and petition to dismiss the consolidated appeals. On June 11, 1937, appellant filed his verified petition for a temporary order without notice, restraining appellee, until notice could be given, and for a permanent order upon hearing, from enforcing the judgment which the Indiana Supreme Court had affirmed, for possession of the 80.31-acre tract. This court issued the order and continued it until June 25, and notified both parties that both appeals would be heard on their merits at that time, and that also all pending petitions and motions would be then heard.
On June 14, 1937, appellant filed his second paragraph of petition for a restraining order, and the merits and motions were submitted and presented on the appointed day.
All questions here presented by appellant are based upon subsection (s) of section 75, as amended by the new Frazier-Lemke Act, August 28, 1935, 11 U.S.C.A. § 203 (s).
Aside from this enactment it is obvious that the debtor had no interest in 200.31 of the 280.31 acres of the mortgaged property at the time he filed his original bankruptcy petition on October 30, 1934, for he had deeded it to his wife, children and son-in-law more than three years before, and he did not again receive a deed for it until six months thereafter, which was nine months after the sheriff had sold the 80.31-acre tract, and within a very short time prior to the sale of the 200-acre tract under the foreclosure decree. At the time the debtor filed his amended petition for relief under the amended Act of August 28, 1935, appellee had received a deed from the sheriff for the 80.31-acre tract on August 2, 1935, and he held a sheriff's certificate of sale for the 200-acre tract, and under the Indiana law would have been entitled to a deed therefor on July 20, 1936, if there were no redemption. Hence, at the time of the enactment on August 28, 1935, the only interest that debtor had in the mortgaged property was a right to redeem the 200-acre tract, provided he did so on or before July 20, 1936. Indeed, that was all the interest he had when he filed his amended petition on October 11, 1935, unless the amendment of August 28, 1935, operated to extend his right of redemption.
It is contended by appellant that the amendment did so operate, not only to extend the time for redemption of the 200-acre tract, but also to void the deed for the 80.31-acre tract, and to extend the time for redemption of it.
In Lafayette Life Insurance Company v. Lowmon, 79 F.(2d) 887, we held that Congress had no power to extend the time for the...
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