Wragg v. Federal Land Bank of New Orleans, 11078.

Citation145 F.2d 816
Decision Date11 December 1944
Docket NumberNo. 11078.,11078.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Jack Crenshaw and Walter J. Knabe, both of Montgomery, Ala., for appellant.

Robert T. Milner, of Wetumpka, Ala., and Harold Moses and H. D. Finlay, Jr., both of New Orleans, La., for appellees.

Before SIBLEY, McCORD, and LEE, Circuit Judges.

SIBLEY, Circuit Judge.

The appellant, Mrs. Wragg, in 1934 bought of appellee Federal Land Bank of New Orleans a farm of 138 acres in Alabama, the price to be paid in twenty annual installments, secured by mortgage. Because of defaults in payment, the Bank began foreclosure proceedings and Mrs. Wragg sought relief in bankruptcy as a farmer-debtor under Section 75, 11 U.S. C.A. § 203. Her proceeding was dismissed and her appeal from this order of dismissal was refused prosecution in forma pauperis by this court, In re Wragg, 95 F.2d 252, and perished. The mortgage foreclosure proceeded, a sale of the farm was decreed, and the Bank as highest bidder was given a deed and put in possession in April, 1938. In April, 1939, the Bank sold the farm to appellee S. P. Storrs. On March 11, 1940, Mrs. Wragg petitioned the district court to reopen her former proceedings, or alternatively to be allowed to refile her former petition and schedules as a new proceeding. The District Court denied both prayers and was affirmed by this court. Wragg v. Federal Land Bank, 125 F.2d 1003. The Supreme Court affirmed the judgment in so far as it refused to reopen the old proceeding, but held that Mrs. Wragg was entitled to begin anew to assert a right of redemption from the mortgage foreclosure sale, which arose under the law of Alabama, Code of Alabama of 1940, Title 7, Sects. 727 to 743, and which had not expired on March 11, 1940; and the cause was remanded to the District Court for further proceedings. Wragg v. Federal Land Bank, 317 U.S. 325, 63 S.Ct. 273, 87 L.Ed. 300. In the District Court the offer of composition and extension made by Mrs. Wragg was rejected, and she amended her petition under Section 75, sub. s, and was adjudged a bankrupt, she praying to be allowed to have possession of the land, under appraisal, to endeavor to redeem it in three years. Pending these proceedings, the United States condemned most of the land, including all the improvements, leaving only sixty acres, that taken being appraised at $4,000, which was paid into court, and that not taken being appraised at $2,200. In February and March, 1944, Mrs. Wragg filed petitions that she have possession of the remaining land and that the original farm be appraised at $3,500, the price at which the Bank sold it to Storrs, which she alleged was its value March 11, 1940, and that she be allowed to redeem on that basis, Storrs accounting for rents and profits since March 11, 1940, and for $1,500 worth of timber cut since that date by him from the land. On a hearing it was agreed that the appraisals made in the condemnation proceedings were the present fair value of the lands. The District Judge held that Mrs. Wragg had been lawfully put out of possession under the sale in 1938; that she had no title or interest in the land and no right to possession, but only the personal right to redeem under the Alabama statute, as modified and extended by Section 75, sub. s of the Bankruptcy Act; that she could redeem at the present value under Section 75, sub. s, (it being less than was required for redemption under the Alabama statute), but was entitled to no account of rents and timber removed after the filing of her petition. He accordingly decreed that she have the privilege of redeeming the land not taken by the United States by paying $2,200 in cash within six months, or that within that time she might apply to have the right of redemption sold and the proceeds administered as an asset of her estate in bankruptcy; and that if neither is done, the land be stricken from the schedules as an asset and released from the jurisdiction of the court. From these judgments appeal is taken.

The right to redeem within two years property sold at execution or foreclosure sale which is established by the Alabama statute is peculiar and strictly limited. It is declared not to be an interest in the land, but a personal privilege, exercisable by the debtor or in succession by other persons named in the statute, but capable of sale by the debtor. The statute requires payment of the entire debt and not merely the price bid at the sale, with ten percent interest per annum, and compensation for taxes paid and improvements made since the sale, and expressly excludes accountability for rents and profits prior to the date of redemption. A court of equity is given jurisdiction to settle any disputes about it. This right the federal Supreme Court (317 U.S. 325, 63 S.Ct. 273, 87 L. Ed. 300) held to be among the redemption rights covered by Section 75 of the Bankruptcy Act. A provision of Subsection n is: "In all cases where, at the time of filing the petition, the period of redemption has not or had not expired * * * the period of redemption shall be extended * * * for the period necessary for the purpose of carrying out...

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