Von Leidersdorff v. CITY MORTGAGE & INS. CORP.

• Decision Date: 10 April 1950
• Docket Number: No. 6027.,6027.
• Citation: 181 F.2d 338
• Parties: VON LEIDERSDORFF v. CITY MORTGAGE & INS. CORP. et al.
• Court: U.S. Court of Appeals — Fourth Circuit

181 F.2d 338 (1950)

VON LEIDERSDORFF v. CITY MORTGAGE & INS. CORP. et al.

No. 6027.

United States Court of Appeals Fourth Circuit.

Argued March 8, 1950.

Decided April 10, 1950.

Thomas J. Michie and J. T. Camblos, Charlottesville, Va. (Michie & Fishburne, Charlottesville, Va., on brief) for appellant.

W. O. Fife and Claude R. Yardley, Charlottesville, Va. (Paxson, Williams & Fife; Perkins, Battle & Minor; Walker & Copenhaver, and Wingfield, Hamlet & Spitzer, Charlottesville, Va., on brief) for appellees.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

SOPER, Circuit Judge.

John Von Leidersdorff was denied the benefits of Section 75 of the Bankruptcy Act, 11 U.S.C.A. § 203, when he filed a petition to effect a composition with his creditors and the petition was denied by the District Court on the ground that he was not a farmer within the meaning of Section 75, sub. r of the statute. There is much in the evidence to explain the action of the District Court if attention is confined to the financial difficulties and distress suffered by many farmers which the original Frazier-Lemke Act of 1934 and the Amended Act of 1935 were passed to alleviate. 11 U.S.C.A. § 203, sub. s. Wright v. Vinton Branch Bank of Roanoke, Va., 300 U.S. 440, 57 S.Ct. 556, 81 L.Ed. 736, 112 A.L.R. 1455. Von Leidersdorff did not belong to this class. In his early years, when he lived in Denmark and was known as Baron Von Leidersdorff, he had been the manager of a dairy farm. He came to the United States in 1921 and married an American citizen who was possessed of a handsome income so that when he filed his petition in the bankruptcy court he was not in financial need. The point at issue, however, must be decided in the light of Section 75, sub. r, 11 U.S.C.A. § 203, sub. r, where the term "farmer" is defined. It provides: "For the purposes of this section, section 22(b), and section 202, the term `farmer' includes not only an individual who is primarily bona fide personally engaged in producing products of the soil, but also any individual who is primarily bona fide personally engaged in dairy farming, the production of poultry or livestock, or the production of poultry products or livestock products in their unmanufactured state, or the principal part of whose income is derived from any one or more of the foregoing operations, and includes the personal representative of a deceased farmer; and a farmer shall be deemed a resident of any county in which such operations occur."

Prior to 1939 Von Leidersdorff lived in Greenwich, Connecticut, and Westchester County, New York. He was engaged for some years in the sale of objects of art and had a gallery on Fifth Avenue in New York City. In 1939 he moved to Albemarle County, Virginia, and purchased a property known as Guthrie Hall which comprised a run-down overgrown farm of 320 acres and a dwelling house in bad repair. An adjoining farm known as Bonnie Brae of 300 acres was subsequently purchased and title was taken in his wife's name. He brought with him and placed in the house at Guthrie Hall a valuable collection of paintings, statuary, books and furniture. He immediately began extensive improvements to Guthrie Hall which included substantial repairs to the dwelling house, the erection of four new barns, a garage and machine shop, the clearing of 300 acres of land, the erection of miles of new fences and a chicken house to accommodate 1,000 chickens. He employed no general contractor for this work but supervised it himself with the assistance of a superintendent. These large improvements required a payroll of $3,000 a month and the money was borrowed from the bank. Estimates of total expenditures vary from $10,000 to $50,000 and are incapable of exact determination since the debtor kept no adequate set of books and such as he had were lost somewhat prior to this proceeding. The approximate value of the real estate was reported by appraisers appointed by the court at $50,000 and the value of the contents of the residence at $67,000.

Other expenditures were made in the breeding of horses and Angus cattle. These operations were of considerable extent during the early years and so long as the debtor was able to borrow money. At one time he had 40 horses and 200 head of cattle and crops were raised on the farms to feed them. The debtor met with a severe reverse in 1944-5 when he shipped a string of horses to Florida to be sold, expecting a return of more than $85,000 but realized only $5,000 or $6,000 when racing was prohibited under war regulations. Not long after this disaster the debtor was forced to sell his Angus herd to satisfy his creditors and thereafter the farming operations diminished in size until they reached a minimum at the time the petition was filed on February 11, 1949. The total indebtedness was listed as $344,544.14 of which $226,000 was due the debtor's step-son who had advanced to him large sums of money to pay debts after he started his Virginia business. The value of the assets was given in the schedule at $100,000.

The District Judge was doubtful whether the debtor was at any time engaged in such activities as would permit him to be treated as a farmer within the meaning of the Act, since his primary activity seemed to the court to be the breeding and training of race horses and these did not appear to constitute the production of live stock which the Act recognizes as a farming operation. We think, however, that when the raising of race horses...