Peterson v. John Hancock Mut. Life Ins. Co.
| Decision Date | 26 November 1940 |
| Docket Number | No. 11713.,11713. |
| Citation | 116 F.2d 148 |
| Parties | PETERSON v. JOHN HANCOCK MUT. LIFE INS. CO. OF BOSTON, MASS. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Howard L. Bump, of Des Moines, Iowa (R. J. Swanson, of Red Oak, Iowa, and D. L. Ross, William E. Mitchell, and Karl F. Geiser, all of Council Bluffs, Iowa, on the brief), for appellant.
Folsom Everest, of Council Bluffs, Iowa, for appellee.
Before SANBORN, WOODROUGH, and THOMAS, Circuit Judges.
This appeal presents the question whether the district court erred under the circumstances in denying to the appellant, a farmer-debtor, the benefits of the Frazier-Lemke Act, section 75, sub. s of the Bankruptcy Act, 11 U.S.C.A. § 203 sub. s.
The appellant owns and with her husband resides on a farm of 120 acres situated in Montgomery county, Iowa, on which the appellee holds a mortgage. On February 27, 1939, appellant filed her petition under section 75, subs. a to r. The court approved the petition and referred the matter to the Conciliation Commissioner. Prior to the commencement of the bankruptcy proceedings the appellee had instituted foreclosure of its mortgage in the state court. Thereafter the appellee filed its claim in the bankruptcy proceeding.
Having failed to secure a composition with her creditors, the appellant on May 12, 1939, amended her petition, stating that she desired to obtain the benefits of section 75 sub. s of the Bankruptcy Act, praying that she be adjudged a bankrupt, that her property be appraised, that her exemptions be set aside to her, and that she be allowed to retain possession of the remainder of her property for a period of three years as provided in the Act. The amended petition was referred to the Conciliation Commissioner. On May 16, 1939, appellee was adjudged a bankrupt, and on May 18, 1939, an order was entered by the Commissioner acting as referee setting aside her exemptions and providing that a hearing be had on June 5, 1939, "at which time and place the creditors may appear and show cause why said exemptions or any part thereof should not have been set off, and further why an order should not be entered staying all proceedings and continuing the debtor in possession of the remainder of his her property, determine a reasonable rental for said property, or, if necessary, appoint a trustee." Notice in accordance with the order was given May 22, 1939. Appraisers were appointed, and they filed a report appraising all of the debtor's property.
On June 5, 1939, upon application of the appellee the referee entered an order extending the time for filing objections to granting a three-year stay order and to the order setting off exemptions.
On June 14, 1939, the appellee filed objections to the granting of a stay order on the grounds (a) that the application therefor was not made in good faith, (b) that the offer of composition had not been made in good faith by the debtor, and (c) that an emergency no longer exists in the state of Iowa. Appellee prayed that the stay order be denied, that the estate be liquidated, or in the alternative that the land covered by appellee's mortgage be rejected as a burdensome asset in the bankrupt estate.
Without further notice, without a hearing, and in the absence of the debtor or her attorney, the Commissioner acting as referee, on June 21, 1939, entered an order denying a stay order and decreeing that the 120 acres of land covered by appellee's mortgage is a burdensome asset and rejecting the same as such and that "creditors holding mortgages on said lands are hereby given leave to proceed as if no debtor's proceedings had been had hereunder." This order was based upon a finding that "there is no equity in said lands over and above the mortgage indebtedness and that the possibility of financial rehabilitation of said debtor * * * is far too remote to justify the granting of such order * * * that the offer of composition * * * was not made in good faith for the reason that the possibility of performance * * * is practically impossible."
On October 18, 1939, appellant filed an application before the referee reciting the proceedings referred to supra, and alleging that the order of June 21, 1939, denying a stay of the foreclosure proceedings and releasing the land from bankruptcy was entered without a hearing, without the knowledge of appellant, and without taking proof; and that the order is beyond the jurisdiction of the referee and is void and without effect. She prayed that a hearing be had, that the rental value of the land be fixed, and that the order of June 21, 1939, be vacated and an order entered staying further proceedings in the state court for a period of three years and granting to her the rights to which she is entitled under the Act.
After due notice and hearing upon this application the referee entered an order on November 4, 1939, denying the relief sought.
On November 14, 1939, the appellant petitioned the district court for a review of the orders of June 21, 1939, and November 4, 1939. In her petition she alleged that the referee had exceeded his authority in denying a stay of the foreclosure proceedings instituted by appellee in the state court. The prayer of the petition was that the court set aside the orders of the referee; that the court grant a stay of the foreclosure proceedings; and that the court direct the referee to proceed in accordance with the provisions of the statute. Pursuant to this petition the district court on November 17, 1939, entered its order allowing the review and directing the referee to certify to the court the entire record of the proceedings had before him.
On December 2, 1939, following a hearing, the district court signed an order which was filed on December 4, 1939, directing that "the orders appealed from, dated June 21, 1939, and November 4, 1939, should be and the same are hereby approved."
On December 5, 1939, the appellant filed a motion for a rehearing, asking the court to reconsider its order of December 2, 1939. In her motion she called the attention of the court to the decision of the Supreme Court in the case of John Hancock Mutual Life Insurance Company v. Bartels, 308 U.S. 180, 60 S.Ct. 221, 84 L.Ed. 176, decided December 4, 1939. At the conclusion of a hearing on January 15, 1940, the court entered an order denying the motion for a rehearing.
The decision of the Supreme Court in the Bartels case clearly demonstrated that the orders of the referee were erroneous. In approving those orders in its order of December 2, 1939, the district court apparently relied upon the decisions of this court in Cowherd v. Phoenix Joint Stock Land Bank, 8 Cir., 99 F.2d...
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