Wragg v. Federal Land Bank of New Orleans

Decision Date04 January 1943
Docket NumberNo. 172,172
Citation87 L.Ed. 300,63 S.Ct. 273,317 U.S. 325
PartiesWRAGG v. FEDERAL LAND BANK OF NEW ORLEANS
CourtU.S. Supreme Court

Messrs. Jack Crenshaw and Walter J. Knabe, both of Montgomery, Ala., and Elmer McClain, of Lima, Ohio, for petitioner.

Messrs. Thomas H. Hedgepeth, E. F. Steiner, and H. D. Finlay, Jr., all of New Orleans, La., for respondent.

Mr. Chief Justice STONE delivered the opinion of the Court.

After her petition for a composition or extension of her debts in farmer-debtor proceeding under § 75 of the Bankruptcy Act, 11 U.S.C. § 203, 11 U.S.C.A. § 203, had been dismissed, petitioner applied to reopen the proceeding or, in the alternative, to be permitted to institute a new proceeding under § 75. The questions for our decision are whether the courts below erred in denying her application and whether, at the time of her application, her right as mortgagor to redeem Alabama real estate after its sale on foreclosure of the mortgage was such that it can be administered by the court in a § 75 proceeding.

In 1937, after respondent mortgagee had obtained a decree of foreclosure, but before foreclosure sale, petitioner filed a petition under § 75 seeking a composition or extension of her debts. The bankruptcy court referred the proceeding to a conciliation commissioner; petitioner filed proposed terms of composition or extension to which respondent filed objections; the conciliation commissioner then recommended that the offer be not approved on the ground that it did not contain an equitable and feasible method of liquidating respondent's claim and of securing petitioner's financial rehabilitation.

The court confirmed the report of the conciliation commissioner, holding that petitioner was not entitled to amend her petition so as to proceed under § 75 sub. s, and directed that the proceeding be dismissed as of January 19, 1938. Petitioner's motion for leave to appeal to the Circuit Court of Appeals in forma pauperis and her petition for certiorari to this Court were denied. 5 Cir., 95 F.2d 252; 305 U.S. 596, 59 S.Ct. 80, 83 L.Ed. 377. After the farmer-debtor proceeding was dismissed respondent purchased the mortgaged property at a foreclosure sale, which was confirmed in April, 1938. Nearly a year later, respondent contracted to sell the property to a third party, the contract stipulating that it was 'subject to the statutory right of redemption following foreclosure if any exists'.

Alabama law allows to the mortgagor a two-year redemption period after foreclosure sale. Title 7, § 727 Code of Alabama, 1940. On March 11, 1940, one day before the expiration of this period,1 petitioner filed her application in the bankruptcy court. It referred to her prior § 75 proceeding, alleging that her property had not been fully administered in that proceeding and that she was entitled to further relief, especially in the light of the changed conditions and interpretation of the Act (obviously a reference to the decision in John Hancock Mut. Life Ins. Co. v. Bartels, 308 U.S. 180, 60 S.Ct. 221, 84 L.Ed. 176, decided December 4, 1939). She accordingly prayed that the case be reopened and reinstated. In the alternative she asked that, if she were entitled only to file a new petition, then her former schedules should be deemed a part of her petition, and she offered to pay such filing fees as the statute requires.

The district court thought that even though the dismissal of the original proceeding was erroneous under the rule subsequently announced in the Bartels case, there were no circumstances sufficient to persuade the court, in the exercise of its discretion, that the proceeding should be reopened upon an application filed more than two years after it had been dismissed. The court accordingly denied the application. 34 F.Supp. 374. The Circuit Court of Appeals for the Fifth Circuit affirmed. 125 F.2d 1003. We granted certiorari, 317 U.S. 608, 63 S.Ct. 40, 87 L.Ed. -, the questions raised being of importance in the administration of the Bankruptcy Act.

We do not differ with the conclusion of both courts below that it was within the sound discretion of the bankruptcy court to decline to reopen the original order of dismissal. A motion to reopen a proceeding may not properly be substituted for an appeal from its decision. See Wayne United Gas Co. v. Owens-Illinois Glass Co., 300 U.S. 131, 135, 57 S.Ct. 382, 384, 385, 81 L.Ed. 557; Pfister v. Northern Illinois Finance Corp., 317 U.S. 144, 63 S.Ct. 133, 138, 87 L.Ed. —-, decided November 16, 1942. But the dismissal of the original proceeding the denial of the application to reopen it were not bars to a new proceeding under § 75 to secure whatever relief the Act would afford with respect to petitioner's remaining interest in the mortgaged property. We find no intimation in the language and purposes of the Act that an unsuccessful earlier proceeding would preclude a new petition so long as the farmer retains an interest which could be administered in a proceeding under § 75.

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  • Titlemax of Ala., Inc. v. Hambright (In re Hambright)
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    ...in the foreclosed property that passes to the bankruptcy estate under Bankruptcy Code section 541. See Wragg v. Fed. Land Bank , 317 U.S. 325, 328-29, 63 S.Ct. 273, 87 L.Ed. 300 (1943) (holding the Alabama statutory right to redeem realty post-foreclosure is an interest in mortgaged propert......
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