Moser v. Mortgage Guarantee Co., 9822.

• Decision Date: 18 November 1941
• Docket Number: No. 9822.,9822.
• Citation: 123 F.2d 423
• Parties: MOSER et al. v. MORTGAGE GUARANTEE CO.
• Court: U.S. Court of Appeals — Ninth Circuit

123 F.2d 423 (1941)

MOSER et al. v. MORTGAGE GUARANTEE CO.

No. 9822.

Circuit Court of Appeals, Ninth Circuit.

November 18, 1941.

Lloyd S. Nix and Lilian M. Fish, both of Los Angeles, Cal., for appellants.

Clarence E. Fleming, Clay Robbins, and C. S. Tinsman, all of Los Angeles, Cal., for appellee.

Before DENMAN, MATHEWS, and STEPHENS, Circuit Judges.

STEPHENS, Circuit Judge.

Petitioners, having been adjudged bankrupt, continued in possession of a certain farm under a "rental" order after appraisal in accordance with Sec. 75, sub. s, of the Bankruptcy Act, as amended by the Act of August 28, 1935, 49 Stat. 943, 11 U.S. C.A. § 203, sub. s.

Subsequently petitioners requested a reappraisal as provided for in subdivision 3 of § 203, sub. s, and an appraiser was appointed who fixed and duly reported the value of the farm to be the sum of $9,000. No objection, exception or appeal was ever made or filed thereto, and no action was taken by the conciliation commissioner regarding such appraisal except to notice a hearing before himself at which hearing several witnesses, including the person who made the reappraisal, gave testimony, and thereafter the commissioner fixed the value of the farm at the sum of $12,000. The Judge of the Bankruptcy Court upon review of the proceedings received the transcript of such hearing with the commissioner's certificate, and without further evidence approved and confirmed the commissioner's conclusion as to the value of the farm. Petitioners appeal upon the ground that the statutory procedure has not been followed; that the Commissioner took evidence outside the hearing and that petitioners were thereby deprived of the right of cross examination; and that the evidence adduced at the hearing does not support the conclusion that the value of the farm is the sum of $12,000.

The proceeding under which the court was acting is a statutory scheme under the bankruptcy provisions of the Constitution whereby a farmer who, under the stress of being unable to meet his debts as they mature, may retain possession of his farm by paying a reasonable rental and "at the end of three years, or prior thereto, * * * may pay * * * the amount of the appraisal of the property * * * into court * * * and thereupon the court shall, by an order, turn over full possession and title of said property, free and clear of encumbrances to the debtor: * * *". Subsection s (3).

Nothing appears in this case to cast the slightest question upon the reappraisal that was had and reported, but instead of acting upon this appraisal directly the commissioner as we have seen proceeded in a hearing before himself for the determination of the farm's value. A hearing before the commissioner is provided for by the statute as an alternative method to the reappraisal by an appointed appraiser.

At the opening of the hearing the conciliation commissioner said, "We have the appraisement of the Official Appraiser appointed to appraise the real property belonging to this Estate. The return of the Appraiser fixes the estimate and appraisal of the real property in the sum of $9,000. Now, I am prepared to hear evidence from any source to either accept or reject this appraisement".

In this merger of the two methods provided for reappraisal it is clear that the commissioner misconceived the plain direction of the statute.¹ It may be argued that this was harmless error since the hearing constituted a legal and sufficient appraisal. But it was not a legal and...