Mulligan v. Federal Land Bank of Omaha

• Decision Date: 29 April 1942
• Docket Number: No. 12187.,12187.
• Citation: 129 F.2d 438
• Parties: MULLIGAN v. FEDERAL LAND BANK OF OMAHA et al.
• Court: U.S. Court of Appeals — Eighth Circuit

129 F.2d 438 (1942)

MULLIGAN v. FEDERAL LAND BANK OF OMAHA et al.

No. 12187.

Circuit Court of Appeals, Eighth Circuit.

April 9, 1942.

Rehearing Denied April 29, 1942.

Kenneth S. Wherry, of Pawnee City, Neb., and G. E. Price, of Lincoln, Neb., for appellant.

William W. Graham, of Omaha, Neb. (J. C. Pryor, of Burlington, Iowa, and Harold J. Reed, of Omaha, Neb., on the brief), for appellees.

Before SANBORN, WOODROUGH and VAN VALKENBURGH, Circuit Judges.

VAN VALKENBURGH, Circuit Judge.

Appellant is the owner of 160 acres of land in Pawnee County, Nebraska. About three years prior to May 25, 1940, she and her husband moved from the farm on account of ill health and took up their residence at Alliance, Box Butte County, Nebraska. The land in question was rented to a tenant, and for three years or more the relationship of landlord and tenant existed between the parties. June 4, 1940, Mrs. Mulligan, as a resident of Alliance, Box Butte County, Nebraska, filed a petition in the Lincoln Division of the Judicial District of Nebraska, praying that the Pawnee County land be subjected to the provisions of Section 75 of the Bankruptcy Act, 11 U.S.C.A. § 203, for the purpose of effecting a composition or extension of time to pay debts.

In this petition she alleged that she was primarily bona fide personally engaged in producing products of the soil. The case was referred to the commissioner June 4, 1940. The offer of composition and extension was made July 24, 1940, and was refused by a majority of creditors in number and amount August 6, 1940. Appellees filed a motion to dismiss for want of prosecution December 13, 1940, and December 31, 1940, appellant filed her amended petition asking to be adjudged a bankrupt under Subsection "s" of said Section 75. January 8, 1941, the adjudication was made without hearing, and the case was referred to the Commissioner. The first meeting of creditors, under the amended petition, was held May 7, 1941. May 12, 1941, appellees filed petition to dismiss the action for want of jurisdiction, on the ground that the debtor is not a farmer and that the district court was without jurisdiction. The court entered an order setting the case for hearing on this motion before the Supervising Conciliation Commissioner. In his report to the court the Conciliation Commissioner held that it was clear from the evidence that at the time of the commencement of this proceeding the relation of landlord and tenant existed between the debtor and the man on the farm, and that, under controlling authorities, the debtor was not a farmer.

Cases cited by the debtor, to wit, In re Moser, 9 Cir., 95 F.2d 944, and First National Bank v. Beach, 301 U.S. 435, 57 S.Ct. 801, 81 L.Ed. 1206, were analyzed and convincingly rejected as not in point. However, the Commissioner found that appellees "could have filed a motion to dismiss at any time after June 4, 1940, on the ground that the debtor was not a farmer, but they failed so to do until May 12, 1941; that, on account of such delay, said Federal Land Bank and said Federal Farm Mortgage Corporation were guilty of unreasonable delay and laches", and concluded that they "are now estopped from having the proceedings dismissed on the ground that the debtor was not a farmer". Appellees filed exception to this last finding and conclusion. The district court, after hearing this exception, held that appellant was not a farmer, that appellees were not estopped by laches, and ordered that the debtor's amended petition be dismissed.

In this appeal counsel for appellant state the primary law questions upon which they depend thus:

"1. The application of the Federal Land Bank and Federal Farm Mortgage Corporation to vacate the adjudication not having been timely and promptly made is barred.

"2. That the debtor, Anna D. Mulligan, is a farmer within the meaning of the term `farmer' used in the Frazier-Lemke Act and therefore is entitled to the benefits of the Act".

Subsection c of Section 75 of the Bankruptcy Act, as amended, 11 U.S.C.A. § 203, sub. c, provides that "a petition may be filed by any farmer, stating that the farmer is insolvent or unable to meet his debts as they mature, and that it is desirable to effect a composition or an extension of time to pay his debts".

Subsection r of the same section defines the term "farmer" for the purposes of that section as follows: "The term `farmer' includes not only an individual who is primarily bona fide personally engaged in producing products of the soil, but also any individual who is primarily bona fide personally engaged in dairy farming, the production of poultry or livestock, or the production of poultry products or livestock products in their unmanufactured state, or the principal part of whose income is derived from any one or more of the foregoing operations"; and a farmer shall "be deemed a resident of any county in which such operations occur."

The Supreme Court of the United States has held that lack of jurisdiction in a federal court over the subject matter of the litigation cannot be waived by the parties; and that when the matter is brought to its attention, the district court should decline sua sponte to proceed in the cause. It is further held that "if the record discloses that the lower court was without jurisdiction this court will notice the defect, although the parties make no contention concerning it". United States et al. v. Corrick et al., 298 U.S. 435, 440, 56 S.Ct. 829, 831, 80 L.Ed. 1263; McNutt v. General Motors Acceptance Corporation, 298 U.S. 178, 184, 56 S.Ct. 780, 80 L.Ed. 1135.

The district court is without jurisdiction of a proceeding for an agricultural composition or extension unless the debtor is engaged in farming operations within the meaning of § 75, sub. r as amended. Davis v. Shackleford, 8 Cir., 91 F.2d 148, 150. It is there held that the court may inquire into its jurisdiction on its own motion or upon motion of any interested party, and at any stage of the proceedings. Id., 91 F.2d loc. cit. 150. And an erroneous order made during the progress of a bankruptcy proceeding, although not appealed from, may subsequently be set aside unless rights have become vested in reliance upon it, which will be disturbed by its vacation. Wharton v. Farmers & Merchants Bank, 8 Cir., 119 F.2d 487, 489; Sandusky v. National Bank, 23 Wall. 289, 293, 23 L.Ed. 155; Wayne Gas Company v. Owens-Illinois Company, 300 U.S. 131, 136, 137, 57 S.Ct. 382, 81 L.Ed. 557. A creditor may attack an adjudication in a voluntary bankruptcy proceeding on the ground of lack of jurisdiction or fraud on the court. Chicago Bank of Commerce et al. v. Carter, 8 Cir., 61 F.2d...