Quinn v. Gardner

• Decision Date: 31 August 1928
• Docket Number: No. 8314.,8314.
• Citation: 28 F.2d 270
• Parties: QUINN v. GARDNER et al. In re EWERT.
• Court: U.S. Court of Appeals — Eighth Circuit

28 F.2d 270 (1928)

QUINN v. GARDNER et al.

In re EWERT.

No. 8314.

Circuit Court of Appeals, Eighth Circuit.

August 31, 1928.

Howard G. Fuller, of Pierre, S. D., and R. F. Drewry, Asst. Atty. Gen., of South Dakota, for petitioner.

George E. Longstaff, of Huron, S. D., opposed.

Before STONE, Circuit Judge, and OTIS, District Judge.

STONE, Circuit Judge.

During the administration of the bankrupt estate of Adolph W. Ewert, certain real and personal property belonging to the bankrupt came into custody of the trustee. The trustee attacked certain mortgages thereon for fraud and other reasons. The referee held such mortgages void. A review of that order resulted in its reversal by the District Court which held the mortgage valid. An appeal was taken by the trustee from that order. The trustee was unable to give a supersedeas bond in the amount ($12,000) fixed by the court. That appeal was taken about March 30, 1927, and heard by this court (Judges SANBORN, BOOTH and MUNGER) at the last December term. Before decision, Judge SANBORN died and the case was recently returned to the docket for resubmission. Thereafter, the mortgagees filed a petition to require the trustee to set over to them all of the mortgaged property as burdensome to the bankrupt estate, to abandon and disclaim title thereto, and for leave to foreclose with the trustee adjudicated as not a necessary party thereto. The court affirmed an order of the referee granting the prayer of the above petition. The trustee declined to apply for an appeal therefrom because he deemed an appeal without a supersedeas as ineffectual and he could not furnish a superseding bond. This application for appeal is presented by Charles F. Fiman, receiver of a national bank which is one of the principal creditors of the bankrupt. He presents two alternative petitions for appeal. In one he asks to appeal in his own name and right as a creditor. In the other he asks an appeal in the name of the trustee. In either case he asks leave and offers to file a supersedeas bond as principal.

Appellees raise the point of the jurisdiction of this court to allow the appeal sought. The jurisdiction of this court to allow appeals in bankruptcy matters is derived from the Act of May 27, 1926, amending section 24b of the Bankruptcy Act (44 Stat. 664; 11 USCA § 47 b). It is limited to "proceedings in bankruptcy," as distinguished from "controversies arising out of bankruptcy" (Raich v. Olson, 25 F.2d 865, this court; Stanley's Incorporated Store #3 v. Earl, 25 F.2d 458, this court; Broders v. Lage, 25 F.2d 288, this court; Deeley v. Cinn. Art Pub. Co. C. C. A. 23 F.2d 920, Sixth Circuit; In re Co-operative League of America C. C. A. 22 F.2d 725, Seventh Circuit), and includes all "proceedings in bankruptcy" except the three specific instances: (1) Adjudication on bankruptcy; (2) adjudication on discharge; and (3) adjudication on debt or claim of $500 or more, expressly provided for in section 25a (11 USCA § 489). Stanley's Inc. Store #3 v. Earl, 25 F.(2d) 458, 459, this court; Broders v. Lage, 25 F.(2d) 288, 290, this court; Deeley v. Cinn. Art. Pub. Co. (C. C. A.) 23 F.(2d) 920, 921, Sixth Circuit; In re Co-operative League of America (C. C. A.) 22 F.(2d) 725, Seventh Circuit; Morse & Tyson v. Irving-Pitt Mfg. Co., 18 F.(2d) 692, 695, this court; Rutherford v. Elliott (C. C. A.) 18 F.(2d) 956, Sixth Circuit. Therefore the jurisdiction of this court to grant this appeal depends upon whether the order sought to be appealed is a "proceeding in bankruptcy" or a "controversy arising out of bankruptcy." Only if it is the former have we such jurisdiction.

The order is one declaring the mortgaged property burdensome, disclaiming title of the trustee thereto, and permitting the mortgagees to foreclose without making the trustee a party thereto. Its broad effect is to recognize the validity of the mortgages, and to move all claim to the mortgaged property from the bankrupt's estate. Among the reasons, urged by petitioner, why this order is improper, are that the order makes it difficult, if not impossible, for the trustee to realize the benefits of the pending appeal, if...