United States v. Sykes, 6118.

• Decision Date: 27 October 1930
• Docket Number: No. 6118.,6118.
• Parties: UNITED STATES, for Use of MAGILL-WEINSHEIMER CO., v. SYKES.
• Court: U.S. Court of Appeals — Ninth Circuit

44 F.2d 334 (1930)

UNITED STATES, for Use of MAGILL-WEINSHEIMER CO., v. SYKES.

No. 6118.

Circuit Court of Appeals, Ninth Circuit.

October 27, 1930.

Percilla Lawyer Randolph, of Los Angeles, Cal., for appellant.

Edward C. Mills, of Los Angeles, Cal., for appellee.

Before RUDKIN and WILBUR, Circuit Judges, and NORCROSS, District Judge.

WILBUR, Circuit Judge.

Appellant brought this action to recover upon the bond of Sherman M. Sykes, receiver in bankruptcy. The trial court sustained the demurrer of the surety company and dismissed the action as to that company. The plaintiff takes this appeal from the judgment of dismissal. For convenience the Magill-Weinsheimer Company will be hereinafter referred to as the appellant.

The complaint alleges that on the 31st day of May, 1927, Sherman M. Sykes was appointed and qualified to act as receiver in the matter of the estates of Edison J. Young and Eva E. Young, bankrupts; that thereupon Sykes, as principal, and the appellee, as surety, executed two bonds in the sum of $15,000 conditioned for the faithful performance of the duties of the receiver in the respective bankruptcy proceedings. The condition of the bonds is as follows:

"Now, therefore, if the said Sherman M. Sykes as receiver, as aforesaid, shall obey such orders as said court may make in relation to said trust, and shall faithfully and truly account for all the moneys, assets and effects of the estates of the said bankrupt which shall come into his hands and possession, and shall in all respects faithfully perform all his official duties as said receiver, then this obligation to be void; otherwise to remain in full force and virtue."

It is further alleged that Sherman M. Sykes, as receiver, assumed control over and took charge of and collected the rents from certain "real properties of the hereinbefore mentioned bankrupt estates standing in the names of Edison J. Young and Eva E. Young," in the complaint particularly described. It is further alleged that all of this real property was sold to Barbara A. Tasker by the sheriff of the county of Los Angeles under and by virtue of a writ of execution by the sheriff of the county of Los Angeles on March 27, 1927, and that the bankrupt estates had an equity of redemption in said properties until the 27th day of March, 1928. It is also alleged that on the 16th of May, 1927, a portion of the same property was sold to Elias V. Rosenkranz and the Title Insurance & Trust Company under decree of foreclosure, and that the bankrupt estates, under the law of California, had "an equity of redemption in the aforesaid property until the 16th day of May, 1928." Appellant alleges that it acquired the interests of the purchaser at said sheriff's sales, and "that under and by virtue of the laws of the State of California the purchaser in an execution sale or foreclosure sale is entitled to the revenues from said property purchased, and if there is a redemption the moneys so collected are to be applied on the redemption price. That if said bankrupt estates had exercised their equity of redemption the rentals collected by the defendant, Sherman M. Sykes, as receiver would have belonged to the said bankrupt estates; that said bankrupt estates did not redeem the heretofore mentioned real properties from said sheriff's execution sale and therefore under the laws of the State of California the purchaser at the said execution sale" is entitled to the rentals collected by the receiver. It is alleged that on December 10 the referee in bankruptcy entered an order to the effect that the purchasers at said sales had assigned their interests in the rentals collected by their receivers to the appellant Magill-Weinsheimer Company and that said company was entitled to said rentals.

It is further alleged that on the 7th of May, 1929, the referee entered an order that the receiver be charged with and pay to Magill-Weinsheimer Company the sum of $4,016.20 and the further sum of $341.35, being the aforesaid rentals. The alleged plaintiff made demand upon both the defendants and that "they both refused and continue to refuse to pay to Magill-Weinsheimer Company the heretofore mentioned amount." The orders are referred to in the complaint and attached thereto as exhibits.

It appears therefrom that on the 10th day of December, 1928, in the bankruptcy proceeding, the referee found the facts substantially as hereinbefore stated and ordered as follows:

"It is further ordered that the aforesaid Sherman M. Sykes, Receiver, and Elias V. Rosenkranz and A. C. Austin, Trustee, deliver to Magill-Weinsheimer Company, a corporation, all moneys which they now have in their possession and may have heretofore received from the rentals from the above described real property."

It appears from the order settling the accounts of Sherman M. Sykes that said account came on for hearing on April 23, 1929; that in said order settling the account Sherman M. Sykes was charged with the sum of $859.75 as rental for a portion of the real property described in the complaint and that of said sum he had paid all except $397.84 to A. C. Austin, who was appointed March 1, 1928, as trustee in said bankrupt proceedings. It was found that the receiver was entitled to $56.49 as expenses in collecting the rental above referred to and that he was charged with the sum of $341.35. This is the amount specified in the complaint which the appellant seeks...