Lamb v. Ralston Purina Co.
| Decision Date | 02 March 1945 |
| Citation | 21 So.2d 127,155 Fla. 638 |
| Parties | LAMB et al. v. RALSTON PURINA CO. |
| Court | Florida Supreme Court |
Rehearing Denied March 16, 1945.
Appeal from Circuit Court, Orange County; Frank A Smith, judge.
Lester Harris and G. P. Garrett, both of Orlando, for appellants.
Clark W Jennings, of Orlando, for appellee.
Myrtle E. Lamb, a married woman, was the owner of a small farm in Orange County, Florida, where she and her husband maintained their residence and upon which she engaged in the business of raising and selling poultry and eggs. Ralston Purina Company brought its bill in equity in the circuit court of Orange County seeking to charge the real property and the poultry business maintained thereon, for the payment of a bill of account for poultry feed, insecticide and tonics furnished Mrs. Lamb in the conduct of such poultry business. The bill of complaint charged that the merchandise furnished by Ralston Purina Company was sold to Mrs. Lamb upon her sole credit and upon the sole credit of her separate statutory real and personal property and that the merchandise so sold became and was her separate statutory property and went into enhanced and benefited the business on the property. The prayer of the bill was for an accounting, a receivership of the business, and a decree charging the real and personal property with the payment of said account as a lien on the separate statutory property of a married woman. Subsequently, a receiver was appointed by the court, pursuant to the prayer of the bill, to take over the stock of poultry owned by Mrs. Lamb and to preserve the same pending the outcome of the suit.
In due course Myrtle E. Lamb filed her answer to the bill in which she averred that she was the head of a family residing in the State of Florida and that as such family head she claimed the right to have the property sought to be charged set aside to her as homestead and exempted from forced sale for the payment of the debt, by virtue of the provisions of Article X, section 1 of the Constitution of Florida.
Testimony was taken on this issue by the chancellor. After the testimony had been submitted, but before the chancellor had made his ruling thereon, Mrs. Lamb filed her petition in the United States District Court for leave to effect an agricultural composition, under section 75 of the Bankruptcy Act, as amended. See FrazierLemke Act, 11 U.S.C.A. § 203. The district court, finding that Myrtle E. Lamb was an insolvent farmer-debtor within the meaning of the Bankruptcy Act, took jurisdiction of the proceeding and entered an order staying all suits against the debtor, including the pending equity suit being prosecuted in the state court by Ralston Purina Company. At the same sitting the district court entered an order naming a conciliation commissioner to take over the assets of the debtor, and an order directing that the poultry in the possession of the state court receiver be returned to Myrtle E. Lamb upon payment by her of all expenses incurred in the receivership. Subsequently, the receivership costs were paid by the farmer-debtor and the property which had been taken over by the State court receiver came under the jurisdiction of the bankruptcy court.
After the agricultural composition matter had been referred to the conciliation commissioner certain proceedings were had, namely: Ralston Purina Company, as a creditor of Myrtle E. Lamb, filed its proof of claim in the proceeding upon the identical items being sued upon in the state court chancery suit. The conciliation commissioner entered an order allowing the claim against the farmer-debtor for the sum of $1,268.09. A meeting of creditors was held to examine the farmer-debtor and to consider the plan of composition or extension proposed by the debtor. The farmer-debtor filed a claim to homestead in the real property upon which she and her husband maintained their residence in Orange County, Florida. On November 18, 1943, after hearings pursuant to notice given, the conciliation commissioner entered an order allowing the homestead claim as to the real property claimed for such purpose by Myrtle E. Lamb. No objection was ever made by creditors to such order of allowance.
Thereafter, on March 3, 1944, during the pendency of the proceedings in the bankruptcy court, Ralston Purina Company presented a petition to the United States District Judge alleging that on November 18, 1943, the conciliation commissioner, in accordance with General Order 50(3), 11 U.S.C.A. following section 53, had set off to the farmer-debtor certain real and personal property as her homestead exemption under state law and that by virtue of such order of exemption such real and personal property had been removed from the jurisdiction of the federal court; that the claim which Ralston Purina Company held against Myrtle E. Lamb had been proved and allowed in the agricultural composition proceeding; that the nonexempt property of the debtor remaining within the jurisdiction of the bankruptcy court was insufficient to pay the petitioner's claim; that prior to the agricultural composition proceeding the petitioner had instituted suit in the state court to subject all of Myrtle E. Lamb's property, as separate statutory property, to the payment of petitioner's claim for merchandise sold to her on her sole credit and the sole credit of such property; that on September 2, 1943, the state court suit had been stayed by order of the federal court during the pendency of the agricultural composition proceeding in the bankruptcy court. The petitioner prayed that 'in view of the order of the conciliation commissioner dated November 18, 1943 [setting aside the homestead] and the order of said commissioner of February 2, 1944 [allowing petitioner's claim against the debtor], * * * the restraining order against it under date of September 2, 1943, * * * be rescinded in so far as the property set aside by the conciliation commissioner to the debtor as exempt is concerned, and that petitioner be authorized to proceed in said suit in the [state] circuit court with respect to said exempt property solely.' On March 13, 1944, the District Judge entered an order on the petition, decreeing that the restraining order of September 2, 1943, which stayed the further prosecution of the pending suit, 'is rescinded and vacated as to that certain real estate located in Orange County, Florida, which has been set aside by the conciliation commissioner to Myrtle E. Lamb, debtor, as exempt property.'
After this order had been entered, Ralston Purina Company proceeded with the dormant equity suit in the circuit court of Orange County. As a part of the testimony adduced before the chancellor in the revitalized state court suit, a stipulation between counsel for the respective parties was filed which recited all of the essential steps that had been taken in the agricultural composition proceeding. Attached to the stipulation as exhibits were true copies of all orders made therein, including the order of the conciliation commissioner setting aside the real property to Myrtle E. Lamb as her homestead exemption and the order of the District Judge allowing Ralston Purina Company to go forward with its state court suit. Upon all of the testimony, including the stipulation and exhibits, the chancellor entered a final decree in favor of Ralston Purina Company and against Myrtle E. Lamb and her husband, finding that 'as a matter of law * * * the * * * real estate [involved] * * * is the separate statutory property of defendant Myrtle E. Lamb, and that she is not the head of a family under the laws of this state, hence that said property is not homestead property. * * * that the above indebtedness owing by defendant Myrtle E. Lamb to plaintiff constitutes an equitable lien or charge in equity in favor of plaintiff against the aforesaid separate statutory property of defendant Myrtle E. Lamb, * * *.' The final decree required that the amount due Ralston Purina Company be paid within a time fixed in the decree and that in default thereof the property be sold. From that decree Mrs. Lamb has taken this appeal.
The first question presented is whether the order of the conciliation commissioner setting aside to Myrtle E. Lamb, as homestead, the property upon which she and her husband maintained their residence in Florida is binding upon Ralston Purina Company who proved up its claim and otherwise participated in the agricultural composition proceeding in the bankruptcy court.
Section 75 of the Bankruptcy Act as amended prescribes a statutory procedure whereby farmers who are insolvent or unable to meet their debts as they mature may petition a court of bankruptcy for leave to effect a composition or extension of time to pay their obligations. See Frazier-Lemke Act, 11 U.S.C.A. § 203.
Once the petition is filed, the farmer-debtor and all of his property wherever located immediately become subject to the exclusive jurisdiction of the court of bankruptcy. 11 U.S.C.A. § 203 sub. n; Kalb v. Feuerstein, Wis.1940, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370, 41 A.B.R.,N.S., 501; Mangus v. Miller, 317 U.S. 178, 63 S.Ct. 182, 87 L.Ed. 169, 51 A.B.R.,N.S., 136; Byerly v. Union Joint Stock Land Bank of Detroit, 6 Cir., 1939, 106 F.2d 576, 41 A.B.R.,N.S., 6, reversed on other grounds 310 U.S. 1, 60 S.Ct. 773, 84 L.Ed. 1041, 42 A.B.R.,N.S., 402, rehearing denied 310 U.S. 657, 60 S.Ct. 1071, 84 L.Ed. 1420; Wilcons v. Penn. Mut. Life Ins. Co., 10 Cir., 91 F.2d 417; Nettles v. Doss, Tex. Civ.App. 1942, 161 S.W.2d 138; In re O'Brien, 2 Cir., 1935, 78 F.2d 715, 29 A.B.R.,N.S., 556, affirmed D.C., 9 F.Supp. 892, 27 A.B.R.,N.S., 376; Eaves v. Glenn, D.C.N.D.Tex., 9 F.Supp. 647; In re Wilkinson, D.C.Okl., 25 F.Supp. 217; 5 Collier on Bankruptcy, 14th...
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