Pindel v. Holgate

• Citation: 221 F. 342
• Decision Date: 18 March 1915
• Docket Number: 2439.
• Parties: PINDEL v. HOLGATE et al. In re PINDEL.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

221 F. 342

PINDEL v. HOLGATE et al.

In re PINDEL.

No. 2439.

United States Court of Appeals, Ninth Circuit.

March 18, 1915

[Copyrighted Material Omitted]

Edwin H. Williams, of San Francisco, Cal., and Ben F. Tweedy, of Lewiston, Idaho, for petitioner.

Finis Bentley, of Lewiston, Idaho, for trustee.

Eugene O'Neill, of Lewiston, Idaho, for claimant.

Before GILBERT, ROSS, and MORROW, Circuit Judges.

MORROW Circuit Judge.

The controversy involved in this case was before this court on a petition for revision of an order in bankruptcy proceedings in the District Court of the United States for the District of Idaho, in the case of Bank of Nez Perce v Pindel, 193 F. 917, 113 C.C.A. 545. The Bank of Nez Perce had recovered a judgment in the state court of Idaho against Frank M. Pindel, on February 15, 1909, for $5,382.28. Upon this judgment the proceeds of the sale of certain attached property, amounting to $1,956.25 had been credited leaving a balance of $3,426.03. While proceedings were still pending in the state court upon this judgment upon a claim of homestead made by the judgment debtor, he filed his petition in voluntary bankruptcy in the United States District Court for the District of Idaho. The petition was filed on February 10, 1910, and on February 14, 1910, Pindel was adjudicated a bankrupt, and thereafter a trustee was regularly appointed. In Pindel's petition in bankruptcy he listed the balance of the judgment in favor of the Nez Perce Bank as an unsecured claim against his estate. No set-off or counterclaim was stated.

The question before this court upon revision related to certain exemptions of property claimed by the bankrupt under the statute laws of Idaho and the Bankruptcy Act. Among others was the claim of homestead which had been pending in the state court. The judgment of the state court in favor of the bank and against the bankrupt, and the balance due thereon, were not questioned by the bankrupt or his wife. The statutes of Idaho provide that a homestead may be selected and claimed by the head of a family of not exceeding $5,000 in value. Where the homestead is of a value exceeding $5,000, a method of procedure is provided in execution proceedings whereby, if the land claimed can be divided without material injury, it shall be so divided, and a homestead, including the residence, of the value of $5,000, be set apart for the claimant, and execution enforced against the remainder; but if the land cannot be so divided it shall be sold and out of the proceeds of sale $5,000 shall be paid to the homestead claimant. The District Court, in the exercise of its jurisdiction 'to determine all claims of bankrupts to their exemptions' (clause 11, Sec. 2, Bankruptcy Act (Comp. St. 1913, Sec. 9586)), found the value of the property claimed as a homestead to be $9,000, or $4,000 in excess of the exemption provided in the state law. The court directed that upon the payment into court by the bankrupt, for the benefit of the creditors of the estate, of the sum of $4,000 within 30 days, the entire tract should be set apart as a homestead. In default of such payment the trustee was authorized to sell the land, under the direction of the referee in the manner provided by law, for not less than $5,000. Out of the proceeds of the sale $5,000 was to be paid to the bankrupt and his wife, and the balance, if any, was to be distributed in due course of administration. Being dissatisfied with this order of the court, the bankrupt and his wife petitioned this court for a revision of the order, on the ground that the District Court was without jurisdiction to determine their homestead rights, and that the matter rested entirely with the state court. It was also contended that the District Court erred in directing that the exemptioner pay the sum of $4,000 into the estate; otherwise, that the homestead be sold for a sum not less than $5,000, and when sold that the said sum of $5,000 be paid to Mrs. Pindel, and the surplus, if any, to the trustee. In the petition to this court the petitioners alleged 'that the Bank of Nez Perce, with a claim of $3,427.93, and C.C. Triplett, with a claim of $70.85, were the only judgment creditors. ' No question was raised as to the balance due the bank, nor was any claim made that there was any set-off or counterclaim as against the bank. The order of the District Court was affirmed. 193 F. 917, 113 C.C.A. 545.

Upon the question there reviewed the decision of this court became the law of the case. The mandate of this court was sent down on October 21, 1912, and thereafter, and after the bankrupt had refused to pay the trustee for the benefit of the creditors of the estate the sum of $4,000, a sale of the property was ordered, and a sale was made for the sum of $10,500 (being $5,500 in excess of the exemption). Thereupon the referee, upon petition of the trustee, proceeded with a hearing which involved, among other things, a set-off or counterclaim of the bankrupt against the judgment of the Bank of Nez Perce and also the confirmation of the sale of the property. The result of this hearing was an order of the referee providing, among other things, that the claim of the Bank of Nez Perce be disallowed, because of a set-off or counterclaim exceeding the judgment, and that the sale of the homestead be not confirmed. The trustee in bankruptcy and the bank thereupon petitioned the District Court for a review of this order of the referee.

Upon a hearing before the District Court, the order of the referee was reversed, the claim of the bank was allowed for the principal sum of $3,294.53, together with interest thereon at the rate of 7 per cent. per annum from February 15, 1909, to February 10, 1910, the date of the filing of the petition, amounting to $227.30, making a total of $3,521.83, interest to be thereafter allowed pursuant to the general rules of law and as the facts might warrant. The set-off or counterclaim was disallowed. The order further provided that the order of the referee refusing to confirm the sale of the homestead be reversed, and that the sale be confirmed. Such confirmation was not, however, to become absolute or final until the expiration of 35 days from the date of the order, and if during that period the bankrupt or his wife should cause to be paid to the trustee the sum of $5,500 (being the excess over the exemption of $5,000), with interest at the rate of 7 per cent. per annum until paid, to be applied and distributed as assets of the estate, thereupon the order should become of no effect, and said lands and the whole thereof should be set apart as the homestead of the bankrupt and his wife, and should be exempt from administration and free from all claims of creditors. Upon the other hand, if the payment was not made within the time specified, upon the expiration of said period the order should be deemed to be final, and the trustee should, upon receiving the full purchase price, execute and deliver to the purchaser or his assigns a proper instrument of conveyance, and said conveyance should be deemed to relate back to the date of the order. The bankrupt is dissatisfied with these orders, and now petitions this court for a review of these two orders of the District Court in matters of law, under section 24b of the Bankruptcy Act.

It is assigned as error that the District Court erred in reversing the order of the referee, disallowing the claim of the Bank of Nez Perce, and allowing such claim, and in the conclusions of law allowing the claim of the bank against the bankrupt estate.

Clause 3 of section 25 of the Bankruptcy Act provides that appeals as in equity cases may be taken in bankruptcy proceedings from the courts of bankruptcy to the Circuit Court of Appeals, from a judgment allowing or rejecting a debt or claim of $500 or over. It is obvious that the order of the District Court allowing the claim of the Bank of Nez Perce comes under this provision of the statute. Each method of procedure for the review of orders in bankruptcy is exclusive of the other. In the Matter of Loving, 224 U.S. 183 32 Sup.Ct. 446, 56 L.Ed. 725; In re Mueller, 135 F. 711, 68 C.C.A. 349; Bothwell v. Fitzgerald, 219 F. 408, 135 C.C.A. 212. Standing alone, this order is, therefore, not reviewable on this petition. But it appears that the petition in bankruptcy was because of this claim against the petitioner. The only other claim against his estate set forth in the petition in bankruptcy was a small one, amounting to only $70.85. The sale of the homestead and the bankruptcy proceedings connected with the distribution of the estate are mainly dependent upon the validity of this claim, and...