U.S. ex rel. v. Lufcy

Decision Date02 April 1932
Docket NumberNo. 30091.,30091.
Citation49 S.W.2d 8
CourtMissouri Supreme Court

Appeal from Stoddard Circuit Court. Hon. W.S.C. Walker, Judge.


Wammack, Welborn & Cooper and Hardesty & Limbaugh for appellants.

(1) The Stoddard Circuit Court, though duly requested, refused to recognize and give effect to "the validity of ... authority exercised under the United States" and said court's denial of plaintiff's rights claimed under such "authority" vests the Missouri Supreme Court with jurisdiction of this appeal from said Circuit Court. Mo. Const., Art. VI, Sec. 12; Beekman Lumber Co. v. Acme Harvester Co., 215 Mo. 221, 114 S.W. 1087; Acme Harvester Co. v. Beekman Lumber Co., 32 S.C. 96, 222 U.S. 300; Dupasseur v. Rochereau, 21 Wall. 120; Fish v. Railroad, 263 Mo. 119, 172 S.W. 340; Mitchell v. Joplin Natl. Bank, 201 S.W. 903; Factors etc., Co. v. Murphy, 111 U.S. 738. (2) Both the order of November 18, 1925, and the order of May 12, 1927, were made by the referee and the District Court respectively with full jurisdiction in the premises. Gylling v. Kjergward, 293 Fed. 676; Weber v. Krenzen, 292 Fed. 41; Re Natl. Grocery Co., 181 Fed. 33; 3 Remington on Bankruptcy (3 Ed.) sec. 1281, p. 150; In re Barnett, 32 A.B.R. 585, 214 Fed. 263; In re Antigo Screen Door Co., 10 A.B.R. 359, 362, 123 Fed. 249; In re French, 231 Fed. 255; In re Solomon & Johnson, 254 Fed. 503; In re Marschall, 287 Fed. 187; In re Clark, 11 Fed. (2d) 540. (3) The referee's order of October 9, 1924, allowing the bankrupt his homestead rights and other orders and matters offered in evidence by the defendants are all defensive matters that are conclusively presumed to have been adjudicated against the trustee in and by the orders of the referee and of the U.S. District Court relied on by the plaintiff. 34 C.J. 902, 909. (4) A proper interpretation and application of the terms of the referee's order and of the U.S. District Court's order show that the same impose an unquestioned and absolute, official duty on the trustee to pay the $1,500 with interest to the plaintiff. 34 C.J. 501, 502.

Eugene M. Munger for respondent.

(1) A court of bankruptcy, being a court of limited jurisdiction, has no jurisdiction to make an order or judgment purporting to pass upon the validity of a mortgage. 7 C.J. 363; In re Blanchard, 161 Fed. 797. (2) A United States District Court has no jurisdiction, in cases similar to the one here presented, to hear and determine the validity of a mortgage. (3) The district court nor the court of bankruptcy has no jurisdiction to enforce the right of a creditor under a mortgage which contains a waiver of exemptions. In re Little, 110 Fed. 621; In re Blanchard, 161 Fed. 797; In re Hatch, 102 Fed. 280; In re Castleberry, 143 Fed. 1018; In re Hass, 190 U.S. 294; Bank v. Mell, 185 Mo. App. 510. (4) A district court cannot, in the absence of specific statutory or constitutional authority so to do, assume jurisdiction to enforce a void order or judgment of a bankrupt court which had no jurisdiction to make such order or judgment in the first instance. (5) A trustee in bankruptcy, by his application for leave to sell alleged incumbered property belonging to the bankrupt estate, cannot confer jurisdiction upon the bankrupt court or the district court, enabling one or both, to adjudicate the validity of a mortgagee. Jurisdiction cannot be conferred by "agreement of the parties." Meyer v. Phoenix Ins. Co., 184 Mo. 481, 93 S.W. 779; Rodney v. Gibbs, 184 Mo. 1, 82 S.W. 187. (6) The order of Referee Alexander of date November 18, 1925, seeking, as it does, to pass upon the validity of the mortgage of appellant upon the homestead of the bankrupt, under which appellant claims the $1,500 "Homestead Exemptions," was and is wholly void. In re Blanchard, 161 Fed. 797, 20 Am. Br. 422; 161 Fed. 793, 20 Am. Br. 417; In re Little, 110 Fed. 621; In re Hatch, 102 Fed. 280; In re Grimes, 96 Fed. 529, 2 Am. Br. 730. (7) A court of bankruptcy has jurisdiction to determine the bankrupt's claim for exemptions and allow same. 7 C.J. 358; McGrahan v. Anderson, 113 Fed. 115; 51 C.C.A. 92, 7 Am. Br. 641, reversing 103 Fed. 854; In re Andrews, 139 Fed. 776, 27 Am. Br. 116; In re Gener, 186 Fed. 693, 108 C.C.A. 511, 26 Am. Br. 608; In re Culwell, 165 Fed. 828, 21 Am. Br. 614. (8) It was the duty of the trustee, after taking possession of the property of the bankrupt, to file in the court of bankruptcy, a schedule of the property exempted and file his petition for an order of the court to set the exempted property aside to the bankrupt. Bankruptcy Act, sec. 47, sub-div. 11; Barns Federal Code, 1919, 2168; In re Brown, 100 Fed. 441. (9) The bankruptcy court, after allowance of the exemptions and ordering the exemptions set aside the bankrupt, had no further jurisdiction over said exemptions. Bankrupt Act, sec. 70; Barnes Federal Code, 1919, sec. 9154. (10) Exemptions, whether in property or money, after allowance by the referee in bankruptcy and having been set aside to the bankrupt, is the property of the bankrupt and title there immediately vests in him as the date of adjudication. The exemptions, as a matter of law, never were the property of anyone but the bankrupt and title never was divested of him. Sullivan v. Mussey, 184 Fed. 60, 107 C.C.A. 78, 25 Am. Br. 781; In re Highfield, 163 Fed. 924, 21 Am. Br. 92; In re Rice, 115 Fed. 993, 8 Am. Br. 411. (11) A court of bankruptcy is without jurisdiction to adjudge a bankrupt's exemptions to a mortgagee or to anyone except the bankrupt. In re Blanchard, 161 Fed. 797; In re Hatch, 102 Fed. 280; Burmingham Finance Corporation v. Chislom, 284 Fed. 840. (12) A court of bankruptcy has jurisdiction only to determine the rights of the bankrupt to exemptions as against the general creditors only. 7 C.J. 359.


These two actions brought by appellant were consolidated and tried as one case. One was an action on a bond given by respondent Lufcy as trustee in bankruptcy. The other sought to recover an amount in excess of the penalty of the bond from Lufcy.

On April 26, 1924, Lufcy (hereinafter referred to as the trustee) was appointed trustee of the bankrupt estate of D.F. Walser, who was adjudged a bankrupt April 2, 1924. On December 24, 1923, (less than four months before) Walser and wife had executed a deed of trust, upon certain town lots which included their home, to secure an indebtedness of about $8,000. Appellant later became the owner of the note and trust deed. On June 14, 1924, a petition was filed, by the trustee, to sell the land covered by this deed of trust. Appellant was, thereupon, ordered to show cause why the property should not be sold free and clear of the lien of its deed of trust. Evidently, the bankrupt was willing for this to be done, for he made a claim for his homestead exemption out of the proceeds. Appellant filed its written consent, on June 19, 1924, that the property, which included the bankrupt's homestead, should be sold free and clear of encumbrances, the proceeds of such sale to be held subject to claims, under the deed of trust, with the same force and effect as if on the property itself. An order of sale was made, on August 13, 1924, which directed that "the proceeds of and from the sale of said property shall be held by the trustee subject to the lien of said mortgages, or other liens, to the same intents and purposes as though the said property had not been sold; subject to the final order, judgment and decree of this court ... as to the validity, bona fides, and extent of said mortgages and other liens." The lots were not immediately sold, but on August 21, 1924, the trustee, filed a report of property set apart to the bankrupt as exempt. The property listed was $300 in lieu of the specific personal property set out in the statute, and "Cash in lieu of homestead as claimed $1500." This report was approved on October 9, 1924. The order recited:

"That said report of the trustee setting apart to the bankrupt the property described therein be, and it is hereby in all things approved, and that the property therein described be, and the same is, hereby set apart to the bankrupt, to be retained by him as his own property, under the provisions of the acts of Congress relating to bankruptcy."

On the same day this order was made Walser received a check for $1500, signed by Lufcy, as trustee, and countersigned by the referee. This check was marked "Homestead Exemption," and it was collected by Walser on the next day, October 10th. Thereafter, on October 11, 1924, the referee ordered that the property, including the homestead, covered by appellant's deed of trust, be sold at private sale for $3,000, and directed that this sum be deposited "to the end that a reasonable opportunity may be afforded for adjusting by compromise or litigation the claims of said lienors who have heretofore filed herein their said written consent for said property to be sold free and clear of liens."

Appellant thereafter filed with the referee its proof of secured claim based on its deed of trust. This claim was heard by the referee on the 25th day of June, 1925, upon which the referee took the matter under advisement. On November 18, 1925, the referee made an order allowing the secured claim of appellant as a valid lien against the homestead of the bankrupt in the sum of $1,500, and as a general claim for the balance of $6,666.33. The referee ordered the bankrupt to refund and return the $1,500 wrongfully received by him from said trustee; ordered the trustee to refund and return the sum of $1,500 wrongfully paid out by him to said bankrupt; ordered that the trustee should be reimbursed by any amount paid by the bankrupt;...

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