Martinson, In re, 83-1219
| Decision Date | 03 April 1984 |
| Docket Number | No. 83-1219,83-1219 |
| Citation | 731 F.2d 543 |
| Parties | , Bankr. L. Rep. P 69,791 In re John W. MARTINSON and Linda L. Martinson, d/b/a Martinson Brothers, Debtors. John W. MARTINSON and Linda L. Martinson, d/b/a Martinson Brothers, Appellees, v. FIRST NATIONAL BANK OF OAKES, Appellant. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Roger J. Minch of Tenneson, Serkland, Lundberg, Erickson & Marcil, Ltd., Fargo, N.D., for appellant.
Alan Grindberg, Steele, N.D., for Tom Brigham, trustee Martinson Chapter 7 bankruptcy estate.
Before BRIGHT, ROSS and FAGG, Circuit Judges.
First National Bank of Oakes (Bank) appeals from the district court's 1 order granting debtors John and Linda Martinson additional time to redeem certain real estate upon which the Bank had obtained a judgment of foreclosure. The Bank contends that the district court possessed no authority under section 108(b) of the Bankruptcy Reform Act, the governing statute in this case, to extend the period of redemption. We agree with the Bank and reverse that part of the district court's order granting the Martinsons additional time to redeem their property.
In late 1980, the Bank obtained a judgment of foreclosure upon real estate that the Martinsons had mortgaged to secure repayment of a loan. On February 17, 1981, the Bank purchased the real estate at the foreclosure sale, in accordance with North Dakota foreclosure procedures. Under North Dakota law, the Martinsons retained a statutory right to redeem their property within one year, or by February 17, 1982. See N.D.Cent.Code Secs. 28-23-11, 28-24-01 to 28-24-02 (1974). On October 17, 1981, when four months remained on the period for redemption, the Martinsons filed a petition in bankruptcy under chapter 11. The Martinsons did not redeem their property within those four months, but on December 4, 1981, with seventy-five days remaining on the statutory period of redemption, they petitioned the bankruptcy court to restrain the Bank from obtaining full title to the mortgaged property at the expiration of the redemption period. On March 12, 1982, several weeks after the period of redemption had passed, the bankruptcy court granted the Martinsons relief, ruling that the Bankruptcy Reform Act's automatic stay provision, 11 U.S.C. Sec. 362(a), operated to suspend the running of the redemption period as of October 17, 1981, the day the chapter 11 petition had been filed. The Bank appealed.
On January 12, 1983, the district court reversed the bankruptcy court's order. Rejecting the application of the automatic stay provision, the district court ruled that section 108(b) of the Act governed the suspension of the time in which the Martinsons could exercise their right of redemption. See Johnson v. First National Bank, 719 F.2d 270, 277-78 (8th Cir.1983). Section 108(b) provides that when the debtor
may file any pleading, demand, notice, or proof of claim or loss, cure a default, or perform any other similar act, and such period has not expired before the date of the filing of the petition, the trustee 2 may only file, cure, or perform, as the case may be, before the later of--
1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; and
2) 60 days after the order for relief. 3
11 U.S.C. Sec. 108(b).
Because the statutory redemption period expired more than sixty days after the filing of the petition for bankruptcy, the district court ruled that "[t]he time provided by section 108 for extension under the circumstances of this case is the end of the one year redemption period, including any suspension that has occurred on or after the filing of the Chapter 11 petition." (Emphasis added.) After observing that seventy-five days remained in the redemption period when the Martinsons sought an order restraining the Bank from obtaining full title to their property (December 4, 1981 to February 17, 1982), the district court allowed the Martinsons seventy-five days from the date of its order, or until March 28, 1983, to exercise their right of redemption.
Nothing in the language of section 108(b) authorized the district court to extend the redemption period in this case. Section 108(b) provides in mandatory terms that when the period in which the debtor may "cure a default" has not expired as of the filing of the petition in bankruptcy, the trustee or debtor "may only"...
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