United States v. Heasley

• Decision Date: 24 October 1960
• Docket Number: No. 16470,16542 and 16543.,16470
• Citation: 283 F.2d 422
• Parties: UNITED STATES of America, Appellant, v. Fay HEASLEY et al., Appellees. Fay HEASLEY and Selma Heasley, Appellants, v. UNITED STATES of America and Henry W. Anderberg, Receiver, Appellees. Fay HEASLEY and Selma Heasley et al., Appellants, v. UNITED STATES of America and Henry W. Anderberg, Receiver, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

283 F.2d 422 (1960)

UNITED STATES of America, Appellant, v. Fay HEASLEY et al., Appellees.

Fay HEASLEY and Selma Heasley, Appellants, v. UNITED STATES of America and Henry W. Anderberg, Receiver, Appellees.

Fay HEASLEY and Selma Heasley et al., Appellants, v. UNITED STATES of America and Henry W. Anderberg, Receiver, Appellees.

Nos. 16470, 16542 and 16543.

United States Court of Appeals Eighth Circuit.

October 24, 1960.

Helen Buckley, Atty., Tax Division, Dept. of Justice, Washington, D. C., for the United States. Howard A. Heffron, Acting Asst. Atty. Gen., Lee A. Jackson and A. F. Prescott, Attys., Dept. of Justice, Washington, D. C., on the brief.

J. F. X. Conmy, Bismarck, N. D., for the Heasleys.

Philip B. Vogel, Fargo, N. D., for appellees Stutsman Implement Co., Inc., and Midwest Motors.

Herman Weiss, Jamestown, N. D., for Henry W. Anderberg, receiver.

Before SANBORN, WOODROUGH and MATTHES, Circuit Judges.

MATTHES, Circuit Judge.

These appeals, separately taken, were consolidated for oral argument, and while they involve different orders of the district court, they grow out of the same litigation and can be disposed of in one opinion.

In No. 16,470, the Government appeals from that portion of the order of the district court entered on April 8, 1960, finding that inasmuch as the monies on deposit with the clerk of that court, and the note secured by mortgage on the real estate satisfied the Government's lien, all other property belonging to the receivership estate should stand released from the Government's lien.¹ Briefs on this issue have also been filed by the Stutsman County Implement Co., Inc., and Midwest Motors, defendants in the original foreclosure action brought by the United States. As holders of certain personal property encumbered by the lien, these companies support the portion of the order releasing the lien.

In appeal No. 16,542, Fay Heasley and Selma Heasley, his wife, two of the defendants in the action, appeal from the order of the district court, confirming the sale by the receiver of the real estate, and rejecting the bid of Fay Heasley, Trustee.

In appeal No. 16,543, Fay Heasley, Selma Heasley, Bob Hendrix, Arley Herr and Paul Heasley appeal from the order confirming the sale of real estate and from the order entered on April 8, 1960, concerning redemption of outstanding tax certificates.²

Much of the factual background is developed in the March 6, 1959 memorandum opinion of the district court adjudicating the respective rights of the parties in the original foreclosure action, reported in D.C., 170 F.Supp. 738. Fay Heasley was indebted to the Government for income taxes for the calendar years 1944 through 1949, and upon trial of the main action brought to foreclose the Government's lien against Fay's properties, it was stipulated that for said years the tax liability, with statutory penalties and interest, was $198,198.92 as of December 29, 1958, with interest accruing thereon at the rate of $25.22 each day since that date.³

After a plenary hearing, the district court found that the Government had a valid and subsisting lien upon all of the property owned by the defendant Fay Heasley, consisting of certain cash on deposit with the clerk of the court, cattle, farm machinery, equipment and grain described in the inventory filed by the receiver, and a large tract of real estate in Stutsman County, North Dakota. See 170 F.Supp. 742 and 743. Following the filing of the court's memorandum opinion, and on April 4, 1959, its formal judgment and decree was entered whereby the rights of all the parties were adjudicated. Fay Heasley filed a notice of appeal from this judgment, but failed to prosecute the same, and on December 28, 1959, the appeal was dismissed for want of prosecution. 272 F.2d 947.

In conformity with the order of the court, the receiver advertised the real estate for sale and received a number of different bids. On March 24, 1960, after hearing, the court confirmed a sale of all the real estate to Arvel Glinz and Marjorie Glinz, husband and wife, for the total consideration of $225,300, payable $45,300 in cash upon confirmation of the sale, $100,000 of the balance payable in four equal annual installments, commencing March 1, 1961, and final installment of $80,000 due on March 1, 1965. The entire unpaid balance was to be evidenced by note secured by mortgage on the real estate, bearing interest at 5% per annum.⁴

A small portion of the real estate was owned by Fay and Selma Heasley, as joint tenants, and approximately 12½% of the purchase price was attributed to the joint tenancy. One-half of this amount, $13,833.42, was set aside for Selma.

The order of confirmation was amended in certain respects on April 8, 1960. Pertinent to and forming the basis of appeal in No. 16,470 is the ruling that the Government's lien was satisfied by the funds on deposit with the clerk and the amount of the note given by the purchasers, and directing that the Government's lien on all other property of the taxpayer Heasley stand released. This would have the effect of releasing personalty said to have a value of approximately $68,000 from the Government's lien.

Here, it should be noted that this is the second time certain facets of this litigation have reached this Court. In United States v. Stutsman County Implement Co., 274 F.2d 733, we considered and reversed the action of the district court in releasing the Government's lien from farm machinery and an automobile taken in trade on new machinery purchased by Heasley.

Further discussion of the facts will ensue as the questions presented are met and disposed of.

Appeals Nos. 16,542 and 16,543.

The main thrust of the argument of appellants in these appeals is that the Court erred in rejecting the bid of Fay Heasley and in confirming the sale to Arvel and Marjorie Glinz. The events precipitating this controversy, in summary, are: Following the order of the Court directing the sale of the real estate at private sale bids were filed with the receiver, including the one from the Glinzes and one from Selma Heasley, the latter being the highest of the lot obtained. At the hearing to determine whether sale should be confirmed, the receiver recommended that the Selma Heasley bid should not be approved because of her inability to fulfil the obligation and because the bid was not made in good faith. At the conclusion of the hearing, it was determined that the real estate should be re-advertised and new bids accepted. This was done and bids were received until 5 p. m. on February 23, 1960. Three bids were received. Arvel and Marjorie Glinz filed their bid in the amount of $225,300 payable in the manner hereinabove set out. On March 5, 1960, a hearing was held to determine whether the receiver's recommendation that the Glinz bid be accepted, should be approved. On the morning of that hearing Selma Heasley submitted another bid in an amount greater than the Glinz bid. No earnest money was attached to this bid. Again, upon hearing, the receiver testified that in his opinion Selma's bid was not made in good faith. On March 9, 1960, the Court entered its order approving the report of the receiver and directed that the sale to the Glinzes would be confirmed on the terms contained in the order unless a bona fide offer to purchase "shall be filed with the Clerk of the U. S. District Court, Fargo, North Dakota, prior to hearing on confirmation of sale, which offer guarantees at least a ten percent increase over the price offered by said bid now on file herein." In the order the Court also found that the bid of Selma Heasley was not made in good faith, timely, nor in compliance with the receiver's advertisement soliciting bids and that it was therefore rejected.

On March 19, 1960, there was a hearing on the receiver's application for an order confirming the sale to the Glinzes. On the morning of this hearing another bid was made by Fay Heasley as trustee for the family, for $247,830, with a down payment of $47,830, $100,000 of the balance payable in four equal annual installments, and $100,000 in a final payment. To this bid were attached checks totalling $1,000. The Court conducted a hearing in which the ability of Fay Heasley to carry through on his bid was fully explored. Nothing can be added to this opinion by a recital of the testimony bearing upon the issue of good faith of Heasley in submitting the bid and his ability to comply with the terms of his bid. We have carefully reviewed the full record, and are convinced that the Court was fully justified in concluding at the close of the hearing:

"Well, I may say to you gentlemen that the Court feels that Fay Heasley and the entire Heasley family have had every opportunity to produce a tangible bid that would be acceptable to the receiver and that the receiver could recommend, and the Court feels that the receiver has done his utmost as has counsel for the receiver so it would be possible to keep this land with the Heasleys, and I think it is not overstatement to say that the Government of the United States through its United States Attorney has felt the same way. That is the impression the Court has gotten.

"It has been impossible to deal with a man of the obduracy and the stubbornness and the defiant attitude and the failure to cooperate by Fay Heasley. It is the root of his troubles. There isn\'t anything his attorneys can do. He has chosen, after a fashion, to defy everyone including the Government of the United States. We have been in court interminably doing our best to give them an opportunity. We were in here two weeks ago. Fay Heasley was here and some of his children were here. They have had an opportunity to come in here, if they were going to, to release some of the funds that were due them under a Court order. That could have been arranged.

* * * * * *

"The Court thinks that the bid of Fay Heasley submitted today is not in good faith, and it feels that the bid of Arvel Glinz and

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