Luther v. United States

• Decision Date: 27 July 1955
• Docket Number: No. 4929.,4929.
• Citation: 225 F.2d 495
• Parties: Frank LUTHER, Trustee of the Garden Grain & Seed Co., Inc., Cross-Appellant, v. UNITED STATES of America, Cross-Appellee. In the Matter of Garden Grain and Seed Co., Inc., Bankrupt.
• Court: U.S. Court of Appeals — Tenth Circuit

225 F.2d 495 (1954)

Frank LUTHER, Trustee of the Garden Grain & Seed Co., Inc., Cross-Appellant, v. UNITED STATES of America, Cross-Appellee In the Matter of Garden Grain and Seed Co., Inc., Bankrupt.

No. 4929.

United States Court of Appeals Tenth Circuit.

October 25, 1954.

Rehearing Denied July 27, 1955.

Malcolm Miller, Wichita, Kan., for cross-appellant.

John G. Laughlin, Atty., Dept. of Justice, Washington, D. C. (Warren E. Burger, Asst. Atty. Gen., William C. Farmer, U. S. Atty., Wichita, Kan., and Melvin Richter, Atty., Dept. of Justice, Washington, D. C., were with him on the brief), for cross-appellee.

Before BRATTON, MURRAH, and PICKETT, Circuit Judges.

BRATTON, Circuit Judge.

This is another link in the chain of controversies arising out of the Garden Grain & Seed Company bankruptcy proceeding. At the intervention of bankruptcy, the bankrupt had in storage in its grain elevators certain wheat and certain milo which were subsequently sold under order of the bankruptcy court and the proceeds of the sale were placed in a separate account to await the disposition of claims thereto. The United States filed in the proceeding a proof of claim, with an assertion of priority. It was pleaded in the proof of claim that the bankrupt was indebted to the Commodity Credit Corporation, hereinafter referred to as Commodity, for certain wheat and certain milo which had been deposited with the bankrupt for storage, and for other items of indebtedness. The trustee filed in the proceeding an answer to the claim, a counter-claim, and an action to recover; and he also filed two actions in the nature of interpleaders, one dealing with the wheat and the other with the milo which came into his hands. The referee considered the entire controversy presented upon the pleadings in that form. The referee entered an order determining that the bankrupt was indebted to Commodity in a certain amount; that the bankrupt was entitled to an offset for certain overpayments in income tax; that a certain amount should be paid to the United States out of the wheat fund and a certain sum out of the milo fund; and that the remaining portion of the amount due Commodity should be paid as a fifth priority under the Bankruptcy Act, 11 U.S.C.A. § 1 et seq. Both the United States and the trustee petitioned the district court for review of the order of the referee. While the petitions for review were pending, the Comptroller General of the United States issued certificates of settlement of overpayments of income tax by the bankrupt and the Treasurer of the United States issued to the treasurer of Commodity checks for the amount of the overpayments in income tax and by bookkeeping entries the checks were deposited to the credit of Commodity in the Treasury. Thereafter, the trustee filed in the district court a motion to dismiss the petition for review filed by Commodity on the ground that, having received and accepted the benefits of the order or judgment of the referee, Commodity forfeited all right to a hearing on its petition for review. The district court denied the motion to dismiss the petition for review and sustained the order of the referee. The United States appealed and the trustee perfected a cross-appeal. Upon the trustee's representation that a hearing of his cross-appeal would, if he were sustained, render it unnecessary to consider the Government's appeal, this court deferred the printing of the record and a hearing on the Government's appeal pending a disposition of the cross-appeal; and the cause is now before the court on the cross-appeal.

The trustee assigns error upon the action of the district court in denying the motion to dismiss the petition for review filed by the United States. It is argued in support of the contention that by obtaining payment of the tax refund while the question of the right of Commodity to the benefit of the refund was being litigated in this proceeding, the United States lost its right further to challenge the order of the referee on review in the district court. It is a well established general rule of solid foundation that a litigant who accepts all or any substantial part of the benefits of a judgment or decree is precluded from asking that such judgment or decree be reviewed on appeal. He cannot avail himself of its advantages and then challenge its disadvantages on appeal. After accepting all or any substantial part of its benefits, he cannot escape its burdens. Chase v. Driver, 8 Cir., 92 F. 780; Finefrock v. Kenova Mine Car Co., 4 Cir., 37 F.2d 310; Smith v. Morris, 3 Cir., 69 F.2d 3; Kaiser v. Standard Oil Company of New Jersey, 5 Cir., 89 F.2d 58; In re Denney, 7 Cir., 135 F.2d 184, certiorari denied, 320 U.S. 747, 64 S.Ct. 50, 88 L.Ed. 444; In re Electric Power & Light Corp., 2 Cir., 176 F.2d 687; Kantor v. American & Foreign Power Co., 1 Cir., 197 F.2d 307. Engrafted upon that general rule is the firmly established exception that where a judgment or decree adjudicates separable or divisible controversies, the appealing party may accept the benefit of the separate or divisible feature in his favor and challenge the feature adverse to him, or where the appealing party is entitled to some amount in any event, he may accept such sum and ask that the balance of the judgment or decree be reviewed. Embry v. Palmer, 107 U.S. 3, 8, 2 S.Ct. 25, 27 L.Ed. 346; Worthington v. Beeman, 7 Cir., 91 F. 232; Reynes v. Dumont, 130 U.S. 354, 394, 9 S.Ct. 486, 32 L.Ed. 934; Carson Lumber Co. v. Saint Louis & San Francisco Railroad Co., 10 Cir., 209 F. 191; Peck v. Richter, 8 Cir., 217 F. 880; Spencer v. Babylon Railroad Co., 2 Cir., 250 F. 24; Armstrong v. Lone Star Refining Co., 10 Cir., 20 F.2d 625.

But in this instance there was no receipt or acceptance of an advantage or benefit under the order of the referee, within the intent and meaning of the general rule or the exception to which reference has just been made. The Department of Agriculture notified the Commissioner of Internal Revenue that the bankrupt owed Commodity approximately $122,000 and requested that payment of any tax refund due the bankrupt be withheld in order that the matter might be referred to the General Accounting Office for purposes of partially liquidating the Government's claim. The General Accounting Office was similarly informed, with a request that any tax refund due the bankrupt should be used to partially liquidate the bankrupt's indebtedness to the...