Squaw Pass Co., Matter of, 79-1344
| Decision Date | 21 October 1980 |
| Docket Number | No. 79-1344,79-1344 |
| Citation | 633 F.2d 923 |
| Parties | In the Matter of SQUAW PASS COMPANY, Bankrupt, James R. BRACKETT, Plaintiff-Appellant, v. James P. DANAHEY, Trustee, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
John M. Cogswell, Phyllis Cox Werkman, of Cogswell, Chilson, Dominick & Whitelaw, Denver, Colo., for plaintiff-appellant.
Charles W. Ennis, Denver, Colo., for defendant-appellee.
Before DOYLE, LOGAN and SEYMOUR, Circuit Judges.
In this bankruptcy proceeding the two parties were competitors in the purchase of real estate from the bankrupt estate. The competitors were James R. Brackett and Roman Jacquez. There were a number of proceedings before the bankruptcy judge which had to do with authorizing and confirming sales. The important question in the case is whether a sale which was confirmed on September 27, 1976 was a private sale or a public one. The bankruptcy judge set aside this sale and the appellant contends that he abused his discretion in so doing. Having given a thumbnail sketch of the proceedings and issues we now turn to the facts.
On June 28, 1976 the Trustee in Bankruptcy for Squaw Pass Company, bankrupt, filed and obtained an order with respect to an application for immediate private sale without notice to creditors and without appraisal. The main purpose in obtaining this was to give an exclusive listing to the Moore Realty Company so that it could sell said real property of the bankrupt. The next day, June 29, 1976, the bankruptcy court entered an order allowing the trustee to sell at private sale in accordance with the terms of the application. Moore presented two offers to sell the property. One of these was from James Brackett, the appellant herein, for $63,000; the other was from Roman Jacquez for the sum of $66,000. It is to be noted that this offer of Jacquez had some contingencies attached to it. These involved the closing of another contract between Jacquez and a third party.
Following receipt of these two offers of September 16, 1976 the trustee applied to the bankruptcy court for entry of an order for "public sale with notice to creditors and with appraisal." The order of the court called for a special meeting of creditors for the purpose of public sale. The court set the date of the sale on September 27, 1976. Brackett was present at the meeting but Jacquez was not. The bankruptcy judge entered an order confirming a private sale to Brackett. Meanwhile a hearing involving the same estate had been set for October 4, 1976. At that meeting Mr. Jacquez protested the confirmation of the sale of September 27, 1976. Jacquez maintained that he had not had notice of the September 27 proceedings; that had he been given notice he would have cleared his offer of the contingencies that had been included on September 16, 1976. The bankruptcy judge ruled that if Jacquez had been present at the public sale on September 27th there might have been a different result. Accordingly the court vacated the sale to Brackett in order that a public sale of the property could be held the following day. The sale was conducted by auction and at that sale Brackett and Jacquez appeared and were the sole bidders. Jacquez bid the amount of $86,500 for the property and the court executed an order confirming a public sale to him. Brackett's high bid was $86,000.
The district court ruled that the second sale was invalid; this ruling was predicated on the court's conclusion that a public sale had not been had since the public had not received notice. 1 The case was remanded to the bankruptcy court to consider the validity of the first sale (that was the first one to Brackett in the amount of $63,000). However, at this juncture Brackett was no longer seeking the property. Instead he claimed an equitable lien of the profits amounting to the difference between the $63,000 sale price and Jacquez' $86,500 purchase price.
On remand the bankruptcy court ruled that a public sale was required at the first sale and inasmuch as reasonable notice had not been given to the public the sale was invalid. The court further held that even if the first sale was a valid private sale, the bankruptcy court had not abused its discretion in setting it aside. But even if the sale was valid and was therefore improperly set aside, Brackett was not entitled to recover because he did not state a claim upon which he was entitled to relief.
The issues presented by the appellant are as follows:
1. The primary question is concerned with an allegation as to whether the first sale of the property was a public or private sale. (We are now referring to the sale to Brackett for $63,000). If the sale in question was public, the parties agree that the public was not given legal notice of the sale and therefore that sale was invalid. If a private sale was authorized, however, no public notice was required and the sale was valid.
2. Even if there was a valid private sale the first time around there remains a question whether the bankruptcy court acted within its discretion in setting aside the sale.
3. Assuming the first sale was a valid private sale and assuming that the bankruptcy court did abuse its discretion in setting it aside, there remains the question of whether appellant has a legal or equitable claim upon which relief can be granted.
We are of the opinion that the sale of the property to appellant (for $63,000) was not a private sale; it was an invalid public sale. Accordingly the appellant's claim has to be dismissed and the decision of the bankruptcy court affirmed. We regard this issue as dispositive of the case and hence it is not essential that the second and third issues be considered.
The Question Whether the First Sale was a Private One.
Under Rule 606(b) of the Rules of Bankruptcy Procedures the bankruptcy court is authorized to conduct either a public or private sale of the debtor's property. We must ascertain whether the bankruptcy court intended that this property was to be sold by public or private sale. If a public sale was intended it is clear that the sale has to be held invalid inasmuch as the public was not given notice. Appellant argues that the sale was a valid private sale.
We are called upon to consider the effect of certain forms that were employed. The first form is dated June 29, 1976 and titled "Application for Immediate Private Sale Without Notice to Creditors and Without Appraisal." Section 2 of that form provides "that the property should be sold at private sale by means of (exclusive listing with Moore Realty * * * because this is the best means to sell the property for the best price)". The non-bracketed portion shown above was printed; the bracketed portion was typed. Following the request for the entry of an order for immediate sale, which request was signed by the trustee, Judge Moore signed the printed form which stated "Ordered, that the trustee herein is authorized and directed to offer the property * * * at private sale * * *."
Turning now to the second form which bears the date September 16, 1976, we find the title "Application for Public Sale With Notice to Creditors and With Appraisal". Section 2 of that form contains the provision "the said property...
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Halux, Inc., Matter of
...itself. Both must be given; notice to one alone is insufficient. 3 Collier on Bankruptcy § 58.09(4) (14th ed.). See In re Squaw Pass Co., 633 F.2d 923, 924 (10th Cir. 1980); Equitable Trust Co. of New York v. Vanderbilt Realty Improvement Co., 155 App.Div. 723, 140 N.Y.S. 1008, 1009 Despite......