Schoppe v. First Trust Co. of Lincoln, Neb.
| Decision Date | 01 February 1939 |
| Docket Number | No. 11216.,11216. |
| Citation | 101 F.2d 417 |
| Parties | SCHOPPE v. FIRST TRUST CO. OF LINCOLN, NEB., et al. In re LINCOLN SAFE DEPOSIT CO. |
| Court | U.S. Court of Appeals — Eighth Circuit |
J. Lee Rankin, of Lincoln, Neb. (Maxwell V. Beghtol and Glen H. Foe, both of Lincoln, Neb., on the brief), for appellant.
Ira D. Beynon, of Lincoln, Neb. (Richard O. Williams and Willis R. Hecht, both of Lincoln, Neb., on the brief), for appellee First Trust Co. of Lincoln, Neb.
Before SANBORN, THOMAS, and BOOTH, Circuit Judges.
The appellant, as assignee of Edward R. Danielson, filed an application in the matter of the Lincoln Safe Deposit Company, a corporation, bankrupt, on June 23, 1937, for an order directing L. A. Ricketts, trustee in bankruptcy of that company, to pay to her all dividends under Claim 445 filed January 6, 1933, by the First Trust Company of Lincoln, Nebraska, as successor trustee of the Lincoln Trust Company under a mortgage, which claim was allowed in the sum of $3,850.78 on April 20, 1937. The referee denied this application on August 19, 1937, and, upon petition for review, the court below confirmed the order of the referee on February 9, 1938. The appellant filed her petition for appeal on February 28, 1938, and the appeal was allowed by the District Court on that date. No petition for allowance of an appeal was made to this Court.
The Lincoln Safe Deposit Company and the Lincoln Trust Company, affiliated companies apparently engaged in making and selling mortgage loans, were adjudicated bankrupts on July 9, 1932. On December 28, 1928, Edward R. Danielson and wife mortgaged a 240-acre farm in Polk County, Nebraska, and 9.15 acres of land in Lancaster County, Nebraska, to the Lincoln Safe Deposit Company to secure a loan of $42,500, evidenced by bonds payable June 26, 1929. In the mortgage, the Lincoln Trust Company was named as trustee for the bondholders. The mortgage and bonds were subsequently extended to December 26, 1933. The Polk County farm, with the consent of the trustee, but without the knowledge or consent of the bondholders, was sold by Danielson free of encumbrances, and, out of the proceeds of the sales, the Lincoln Safe Deposit Company received $5,850.78. There were at that time $10,000 of the Danielson bonds outstanding, $2,000 of which were held by the Lincoln Trust Company. The $5,850.78 received by the Safe Deposit Company was not applied to the payment of the bonds, but went into its bank account and was used by it. After these affiliated companies were adjudged bankrupt and on July 21, 1932, the First Trust Company, of Lincoln, Nebraska, one of the appellees, was appointed trustee under the Danielson mortgage, to succeed the Lincoln Trust Company, bankrupt.
The first thing the successor trustee did was to file Claim 445 in the matter of Lincoln Safe Deposit Company, bankrupt, for $5,850.78. The proof of claim recited: "That The First Trust Company, claimant, herein, files this claim for and on behalf of and because of the above named trusteeship and in behalf of all parties in interest under said trust and without prejudice to the rights of the borrowers and note holders." The basis of the claim was the collection of the $5,850.78 by the bankrupt from Danielson, the borrower, which was not applied upon the outstanding bonds secured by the Danielson mortgage, but was retained and used by the bankrupt.
The next thing the successor trustee did was to bring a suit in the State court to foreclose the Danielson mortgage as to the land in Lancaster County, which was the only security which had not been released. In its petition in the foreclosure suit, the successor trustee alleged that there were unpaid $10,000 of these bonds and that, with interest, there was due upon them to January 26, 1935, $12,772.08. The appellant, Helen Schoppe, a daughter of Danielson, who had acquired title to the Lancaster County land, subject to the mortgage, filed an answer in the foreclosure suit, and asserted that the debt secured by the mortgage had been reduced by the payment of the $5,850.78 received by the Safe Deposit Company from Danielson. The successor trustee filed a reply, asserting, in effect, that the mortgage debt had not been reduced by that payment, because the bondholders had never received it and had no knowledge of it. After a trial, the State court in which the foreclosure suit was brought, concluded that the $5,850.78 should be applied in reduction of the mortgage debt. On appeal, the Supreme Court of Nebraska held that $2,000 of this amount should be applied in payment and satisfaction of the $2,000 of bonds which were held by the Lincoln Trust Company, but that the balance of $3,850.78 could not be applied in reduction of the mortgage debt represented by the other bonds, since the holders of those bonds had received none of this $3,850.78 and the payment of it to the Lincoln Trust Company and the Lincoln Safe Deposit Company was not, under the circumstances, to be regarded as a payment made to those bondholders. First Trust Co. of Lincoln, Neb. v. Danielson, 132 Neb. 141, 270 N.W. 680. In accordance with the mandate of the Supreme Court of Nebraska, the lower court determined that there was due upon the Danielson mortgage $9,519 with interest at 10% from October 22, 1935. On April 8, 1937, under the decree in foreclosure, the land in Lancaster County was sold, and was bid in by the successor trustee for $5,500, or about one-half of the total mortgage debt. No deficiency judgment was procured against Danielson.
On April 20, 1937, a hearing was had before the referee in bankruptcy upon Claim 445 filed by the successor trustee for $5,850.78. Helen Schoppe, as "assignee of any claim or interest that the said Edward R. Danielson might have in and to said claim," appeared. The referee determined that, since the Supreme Court of Nebraska had held that $2,000 of the $5,850.78 was to be treated as payment of the two bonds held by the Lincoln Trust Company at the time the $5,850.78 was received, the claim of the successor trustee should be allowed in the sum of $3,850.78. No appeal was taken from the allowance of the claim.
After the claim was allowed, Helen Schoppe, as "assignee of any and all rights or claims or interests therein which Edward R. Danielson had or might have against the Lincoln Safe Deposit Company, bankrupt, either directly or through the First Trust Company, as Successor-trustee," applied to the referee for an order directing the trustee in bankruptcy to pay all dividends upon this claim to her. She asserted in her application that the First Trust Company, as successor trustee, was trustee for her as an assignee of the rights of Danielson; that the Supreme Court of Nebraska, in the foreclosure suit, had in effect held that $3,850.78 of the $5,850.78 received by the Lincoln Safe Deposit Company from the proceeds of the sales of the Polk County farm was not intended as payment to the bondholders, but was the money of Danielson in the hands of his agent (the bankrupt), which that agent was bound to repay to him. The successor trustee filed objections to the appellant's application, and asserted that the $3,850.78 represented the proceeds of the sale of a portion of the security of the bondholders whose bonds had not been paid in full. It also asserted that the appellant had filed no claim herself, and that it had filed no claim on her behalf, and it denied that she had any interest in Claim 445. As already pointed out, the referee denied the application, his order was confirmed by the District Court, and the appellant was allowed an appeal by that court from the order of confirmation.
The first question to be determined is whether this Court has jurisdiction to review this controversy.
The appellant says in her brief: "The action is a controversy in bankruptcy within the terms of Section 47, Title 11 of U.S. C.A. and involves a claim in excess of $500.00 under the terms of Section 48, Title 11 of U.S.C.A."
At the time this appeal was taken, 44 Stat. 665; 48 Stat. 926, Section 48, Title 11, U.S.C., 11 U.S.C.A. § 48 provided: ...
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...questions between the bankrupt and his creditors presented in the ordinary course of the administration of the estate. Schoppe v. First Trust Co., 8 Cir., 101 F.2d 417. It is further said that "proceedings in bankruptcy" include all questions arising in the administration of the bankrupt's ......