Rader v. Boyd

• Decision Date: 14 May 1958
• Docket Number: No. 5669.,5669.
• Citation: 252 F.2d 585
• Parties: Earl RADER, Appellant, v. J. Marvin BOYD, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

252 F.2d 585 (1958)

Earl RADER, Appellant, v. J. Marvin BOYD, Appellee.

No. 5669.

United States Court of Appeals Tenth Circuit.

December 23, 1957.

Rehearing Denied April 4, 1958.

Leave to File Second Petition for Rehearing Denied May 14, 1958.

Charles D. Crandall, Oklahoma City, Okl., for appellant.

James A. DeBois, Duncan, Okl., for appellee.

Before MURRAH, PICKETT and LEWIS, Circuit Judges.

MURRAH, Circuit Judge.

The question presented here is whether the trial court erred in reversing an order of the Referee in Bankruptcy, confirming a real property arrangement under Chapter XII, Title 11 U.S.C.A., apparently on the grounds that it was not feasible, because it did not fairly and equitably afford the appellee, Boyd, a nonassenting creditor, adequate protection contemplated by Chapter XII. The first contention is that Boyd, the only nonassenting creditor, had no equitable standing to assert claims in the bankruptcy proceedings, because he obtained such claims through breach of a fiducial relationship then existing between him and the debtor-appellant.

The pertinent facts in that regard are that appellant, Earl Rader, is the owner of oil and gas leases upon which he has incurred indebtedness in excess of $420,000, more than $200,000 of which was owed to secured creditors, including the First National Bank of Fort Worth, Texas, and the United Supply and Manufacturing Company of Tulsa, Oklahoma. In September 1955, United Supply filed an action in the Oklahoma state court for the foreclosure of its mortgage upon Rader's property and for the appointment of a receiver. The receiver was duly appointed and has been acting in that capacity ever since. In July, 1956, Rader came in contact with appellee, Boyd, and they discussed a plan for the pooling of their oil and gas holdings and the payment of Rader's indebtedness. Boyd was going East in an attempt to obtain refinancing for his own properties and he appears to have agreed to make some effort to refinance Rader's properties. To this end, Rader provided Boyd with well logs and other data concerning the properties. Rader says that during their negotiations, he informed Boyd that several of the secured creditors would discount amounts owed to them twenty-five percent and would waive interest and attorneys fees. The parties remained in contact for several months, but the record indicates rather conclusively that no actual agreement between them ever came into existence, for, on October 19, 1956, Rader wrote Boyd, advising that he could not "wait longer for a definite financial proposal from you. Unless you have some definite offer to submit for my immediate consideration, I shall be obliged to look elsewhere." On November 12, 1956, at a meeting in Duncan, Oklahoma, Boyd informed Rader that he was not going through with the deal. Rader testified, however, that on the following day he received a long distance telephone call from Boyd in which Boyd stated that he would "go along with the deal" if Rader would come to his office in Dallas the following Monday so they could work it out. On the same day, Rader was served with a summons issued from the State District Court in the foreclosure action, originally filed by United Supply and pursuant to which the operating receiver had been appointed. At that time Boyd had apparently obtained assignments of notes and mortgages held by Rader's secured creditors, all of which, except the indebtedness of the First National Bank of Fort Worth, had been discounted twenty-five percent. Boyd was substituted for the original creditors in the state court proceedings and prayed for immediate foreclosure. Rader thereupon instituted this Chapter XII proceedings. All of the unsecured creditors accepted the proposed arrangement, but Boyd, as holder of all the secured indebtedness, objected.

A court of bankruptcy is a court of equity, exercising equitable powers of broad sweep. And, within the statutory scheme, the court may exert such powers in full vigor with respect to the allowance, rejection or subordination of claims. It is empowered to "sift the circumstances surrounding any claim to see that injustice and unfairness is not done in the administration of the bankrupt estate." Pepper v. Litton, 308 U.S. 295, 60 S.Ct. 238, 246, 84 L.Ed. 281. See also Woodruff v. Heiser, 10 Cir., 150 F.2d 869, reversed on other grounds, 327 U.S. 726, 66 S.Ct. 853, 90 L.Ed. 970; Central States Corp. v. Luther, 10...