Mangus v. Miller

• Decision Date: 07 December 1942
• Docket Number: No. 74,74
• Citation: 317 U.S. 178,63 S.Ct. 182,87 L.Ed. 169
• Parties: MANGUS et al. v. MILLER
• Court: U.S. Supreme Court

317 U.S. 178

63 S.Ct. 182

87 L.Ed. 169

MANGUS et al.

v MILLER.

No. 74.

Argued Nov. 17, 1942.

Decided Dec. 7, 1942.

Mr. Edwin J. Skeen, of Salt Lake City, Utah, for petitioners.

Mr. Hadlond P. Thomas, of Salt Lake City, Utah, for respondent.

[Argument of Counsel from page 179 intentionally omitted] Mr. Chief Justice STONE delivered the opinion of the Court.

The question is whether the interest of one of two joint tenants of a land purchase contract can be administered in farmer-debtor proceedings under § 75 of the Bankruptcy Act as amended, 11 U.S.C. § 203, 11 U.S.C.A. § 203, although subsequent to the filing of his petition the interest of his co-tenant had been forfeited by default in payment of installments of the purchase price.

Petitioners, husband and wife, as 'joint tenants with full right of survivorship and not as tenants in common', entered into a contract with respondent's assignor for the purchase of a plot of land. They apparently entered into possession under the contract, although the fact does not explicitly appear in the record. The contract stipulated for a down payment of $500 of the purchase price and for payment of the balance in equal monthly installments extending over a period of more than seven years. Nearly two years later, the buyers being in default in payment of installments, respondent gave appropriate notice, in conformity to state law, that the contract would be forfeited unless all payments due were made. Five days before the date on which the forfeiture was to become effective, the husband alone, without reference to his co-tenant, filed his petition as a farmer-debtor under § 75. After the date of forfeiture, respondent moved, on a showing of the facts as stated, to strike the land in question from the schedules of the debtor's property, challenging the jurisdiction of the court to administer it. The wife thereupon filed in the bankruptcy proceeding a 'joinder of Rose L. Mangus' in which she asked to be permitted to adopt the petition of her husband for relief under § 75 and his schedules of property, referring to the land in question. It does not appear whether she was an insolvent farmer-debtor within the meaning of § 75, sub. r, and so entitled to the benefits of the Act. Upon respondent's filing of a supplemental motion to strike the land from the schedules of the debtor's property, with a showing that at the time of the wife's attempted joinder she had forfeited her interest in the property, the court denied both of respondent's motions.

The Court of Appeals for the Tenth Circuit reversed, 125 F.2d 507, holding that the right or interest which the wife had acquired in the land by the contract of purchase had been forfeited before her attempted joinder in the bankruptcy proceedings, see Federal Land Bank of Berkeley v. Sorenson, Utah, 121 P.2d 398; Leone v. Zuniga, 84 Utah 417, 34 P.2d 699, 94 A.L.R. 1232, and that in consequence she had no remaining interest in the land which she could ask the bankruptcy court to administer. It thought that by the forfeiture respondent became vested as her successor with the interest which she had acquired in the land by virtue of the contract. But it was also of opinion that notwithstanding the forfeiture she remained a joint tenant of the contract with her husband and so was an indispensable party to any judgment or order of the bankruptcy court making disposition of the debtor's interest in the contract and the property. It also pointed out that although the interest of a bankrupt joint tenant may be sold in a regular bankruptcy proceeding, the proceedings under § 75, subs. a to r, do not look in the first instance to a sale of the debtor's property or operate to pass title to a trustee or the court, but contemplate maintenance of the status quo by a moratorium pending an adjustment or composition of his debts, and his ultimate emergence from bankruptcy with all his property. See John Hancock Mut. Ins. Co. v. Bartels, 308 U.S. 180, 184, 60 S.Ct. 221, 223, 84 L.Ed. 176; Wright v. Union Central Life Ins. Co., 311 U.S. 273, 61 S.Ct. 196, 85 L.Ed. 184.

From all this the court concluded that the difficulties of administration of the bankrupt's interest in § 75 proceedings are so insurmountable as to require dismissal of the proceeding.¹ In the circumstances of this case it attributed these difficulties to the uncertainty as to the rights of the husband as joint tenant of the contract with his wife and as tenant in common with respondent of the land. The uncertainty arose, it was suggested, from the doubt whether the husband upon effecting an adjustment and compromise with creditors would be entitled to acquire all the land upon payment of the balance of the purchase price, or only to demand half of it on payment of one-half of the purchase money due. We granted certiorari, 316 U.S. 657, 62 S.Ct. 1277, 86 L.Ed. 1736, on a petition which challenged the rulings of the Circuit Court of Appeals that the wife was an indispensable party to the farmer-debtor proceeding, and that the interest of the husband alone was not susceptible of administration in that proceeding.

Section 75, sub. n, directs that the filing of the farmer-debtor's petitioner 'shall immediately subject the farmer and all his property * * * for all the purposes of this section, to the exclusive jurisdiction of the court, including * * * any equity or right in any such property, including, among others, contracts for purchase, Section 75, sub. o, provides an effective Section 75, sub. o, provides an effective moratorium, pending further proceedings, against the forfeiture of the debtor's interest in the property over which the court has jurisdiction. This is accomplishes by staying, unless otherwise permitted by the court, proceedings for foreclosure of a mortgage, or for cancellation or rescission of an agreement for the sale of land, or for the recovery of possession of land, or for the seizure or sale of the debtor's property under conditional sales agreement. Kalb v. Feuerstein, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370; John Hancock Ins. Co. v. Bartels, 308 U.S. 180, 60 S.Ct. 221, 84 L.Ed. 176.

We see no reason to doubt that, under these provisions and others presently to be noted, the bankruptcy court had jurisdiction in a § 95 proceeding over the husband's interest as joint tenant in the contract for the purchase of the land. Section 75, sub. n, expressly subjects to the jurisdiction of the bankruptcy court the vendee's interest in such a contract. And, so far as we are advised, Utah accepts the general common law rules relating to joint tenancies, including the rules permitting alienation of the interest of a joint tenant, and making it property subject to execution and separate sale. Cf. Spalding v. Allred, 23 Utah, 354, 64 P. 1100; Neill v. Royce, Utah, 120 P.2d 327; § 104-37-9 Revised Statutes of Utah, 1933; and see 3 Tiffany, Real Property (3rd ed.) § 425; 2 Thompson, Real Property, §§ 1714-17. When so locally recognized the interest of a joint tenant is a property interest subject to the jurisdiction of the bankruptcy court under § 70 of the general Bankruptcy Act, 11 U.S.C. § 110, 11 U.S.C.A. § 110; Matter of DePree, 30 A.B.R.,N.S., 629; In re Williams, 16 A.B.R.,N.S., 218; cf. In re Brown, D.C., 60 F.2d 269; In re Williams' Estate, D.C., 16 F.Supp. 909.

Section 75, sub. n, of the Farm Bankruptcy Act, 11 U.S.C. § 203, sub. n, which provides that the filing of a petition shall subject 'the farmer and all his property' to the jurisdiction of the Court, further directs that 'In proceedings under this section, except as otherwise provided herein, the jurisdiction and powers of the courts, the title, powers and duties of its officers, the duties of the farmer, and the rights and liabilities of creditors, and of all persons with respect to the property of the farmer * * * shall be the same as if a voluntary petition for adjudication had been filed and a decree of adjudication had been entered. * * *' And subsection s(4) of § 75 commands that '* * * the provisions of this title shall be held to apply also to part- nerships, common, entirety, joint, community ownerships * * * and any such parties may join in one petition.'

The final clause of this provision permitting both joint tenants to join in the petition suggests that either, if entitled to the benefits of the Act, may file a petition without the other. Such was declared to be its purpose by the House Judiciary Committee which recommended its addition by way of amendment to § 75, sub. s, as originally enacted. In reporting this amendment the Committee pointed out the diversity of rulings of the courts under § 75, saying, 'Some have held that if a husband and wife were jointly interested or had interests in common or were partners in the farming operation that then neither of them could take advantage of the Act, nor could they join. Obviously such was not the intention of Congress'. H.R. Rep. No. 570, 74th Cong., 1st Sess., ...