Rait v. Federal Land Bank of St. Paul

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: SANBORN, WOODROUGH, and JOHNSEN, Circuit
• Citation: Rait v. Federal Land Bank of St. Paul, 135 F.2d 447 (8th Cir. 1943)
• Decision Date: 24 May 1943
• Docket Number: 12452.,No. 12401,12401
• Parties: RAIT v. FEDERAL LAND BANK OF ST. PAUL et al.

135 F.2d 447 (1943)

RAIT v. FEDERAL LAND BANK OF ST. PAUL et al.

Nos. 12401, 12452.

Circuit Court of Appeals, Eighth Circuit.

April 7, 1943.

Motion to Modify Denied May 24, 1943.

COPYRIGHT MATERIAL OMITTED

William Lemke, of Fargo N. D. (E. A. Tannas, of Crosby, N. D., on the brief), for appellant.

John F. Lord, of St. Paul, Minn. (Robert J. Barry and A. L. Quilling, both of St. Paul, Minn., on the brief), for appellees.

Before SANBORN, WOODROUGH, and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

In a proceeding under section 75, sub. s, of the Bankruptcy Act, 11 U.S.C.A. § 203, sub. s, the farmer-debtor's land was appraised at $2,160, which amount he paid into court two months later, for the purpose of making a redemption. On request of the first and second mortgagees, whose liens against the property totalled over $11,000, the conciliation commissioner held a hearing, and he similarly fixed the value at $2,160. The secured creditors then filed a petition for review, and the district judge, on a review of the record, held that the evidence did not support the finding of the conciliation commissioner and that the latter's order should be modified to fix the value of the property at $4,800. The farmer-debtor has appealed from the order of the district judge.¹

One of the contentions made here is that, where there has been a reappraisal of the property, in a proceeding under section 75, sub. s, or where the conciliation commissioner has fixed the value after a hearing, the district judge is without jurisdiction to review the valuation. We have previously assumed that the right to review an order of the conciliation commissioner approving a reappraisal or fixing the value of the property after a hearing has always existed under the general provisions of subsection c of section 39 of the Bankruptcy Act, 11 U.S.C.A. § 67, sub. c.² Compare Equitable Life Assur. Soc. of United States v. Carmody, 8 Cir., 131 F.2d 318. If there has heretofore been any real question in the matter, which we have failed to recognize, it has now been sufficiently settled, we believe, against appellant's contention, by the expressions in Pfister v. Northern Illinois Finance Corporation, 317 U.S. 144, 63 S.Ct. 133, 136, 87 L.Ed. ___. See also Nalder v. Federal Land Bank of Berkeley, 10 Cir., 131 F.2d 74; Donald v. Bankers Life Co., 5 Cir., 107 F.2d 810. We accordingly hold that, in a proceeding under section 75, sub. s, of the Bankruptcy Act, an order of the conciliation commissioner approving a reappraisal made of the farmer-debtor's property, or fixing the value of the property after a hearing, properly is subject to review by the district judge, under the general provisions of section 39, sub. c, of the Act.

Like any finding of a referee in bankruptcy, however, a reappraisal approval by the conciliation commissioner or the value fixed after a hearing must not lightly be disturbed and should be set aside only when it is clearly erroneous. Order 47, General Orders in Bankruptcy, as effective February 13, 1939, 11 U.S.C.A., following section 53. The district judge manifestly must exercise a sound and conscientious restraint and should proceed with necessary regard for the restriction which Order 47 has placed upon his reviewing power. Equitable Life Assur. Soc. of United States v. Carmody, 8 Cir., 131 F.2d 318, 322. But where, from a review of the record and from such other proceedings as may be had before him, the district judge, on the basis of the principles referred to, is clearly convinced that the conciliation commissioner in such a situation has acted arbitrarily and without proper regard for the evidence, or that he has otherwise plainly and prejudicially erred, there can be no question as to his right to modify the conciliation commissioner's report or order, or to set it aside and receive further evidence, or to recommit the matter to the conciliation commissioner with instructions. See Order 47, General Orders in Bankruptcy, 11 U.S.C.A., following section 53.

In the present situation, the secured creditors' petition for review alleged that the conciliation commissioner had erred in fixing a value for the property that was "not the present fair and reasonable market value according to the evidence submitted at said hearing." This was simply equivalent to an allegation that the value fixed was clearly erroneous. The district judge found, as we have heretofore indicated, that "there was no testimony or evidence to support a value as low as $2,160."

The farmer-debtor testified in his own behalf that the land was worth $2,800. His son, who farmed the place, testified to the same valuation. A neighboring farmer, who was the only other witness for the farmer-debtor on specific valuation, similarly testified to a value of $2,800. On behalf of the secured creditors, two experienced land appraisers testified to a value of from $4,800 to $5,300. Despite the farmer-debtor's own testimony and that of his two other value witnesses, the conciliation commissioner declared in his findings: "The value of the lands involved as fixed by the appraisement heretofore made is $2,160, and this amount is, if anything, more than the fair and reasonable market value of the lands involved"; and, again, "If the conciliation commissioner, acting as referee, felt called upon to change the appraisal of the lands heretofore made in this court he would have to lower the appraisement. There is absolutely nothing in the evidence submitted at this hearing to warrant a raising of the appraised values."

While the conciliation...