Source: https://supreme.justia.com/cases/federal/us/320/243/
Timestamp: 2019-04-22 08:53:41+00:00

Document:
The conciliation commissioner, making a reappraisal of the debtor's property pursuant to § 75(s)(3) of the Bankruptcy Act, erred in basing the valuation partly on evidence obtained by his personal investigation without the knowledge or consent of the parties; but, in the circumstances of this case, the error was cured upon review in the District Court, which reexamined all the competent evidence introduced at the hearing before the commissioner and thereupon modified the latter's valuation. P. 320 U. S. 246.
Certiorari, 318 U.S. 753, to review the affirmance, upon appeal by the debtor, of a judgment modifying an order of a conciliation commissioner.
The narrow issues presented by this case are whether it was error under § 75(s)(3) of the Bankruptcy Act [Footnote 1] for a conciliation commissioner to fix a valuation partly on the basis of his personal investigation and, if so, whether that error was cured on review by the District Court.
determine the correct appraised value and fix a reasonable time within which the debtor shall redeem the farm from the mortgage lien, failing in which, a public sale is ordered."
"After hearing the testimony given by the several witnesses and studying the briefs furnished by the defendant and the plaintiff, and upon a personal investigation by the conciliation commissioner of the value of said farm, I hereby fix the value of said farm at $150 per acre (approximately $25,000 for the entire farm)."
The commissioner did not indicate when or under what circumstances his personal investigation had been made.
"because made and fixed by the conciliation commissioner upon a personal investigation . . . made outside of and independent of the hearings . . . at which personal investigation neither the petitioner herein nor his counsel was afforded opportunity to offer counter-evidence or to cross-examine concerning the evidence adduced by said personal investigation."
high, and reduced the valuation to $20,000. It does not appear that the District Court made any use or mention of the commissioner's personal investigation in arriving at this valuation, or that any evidence was utilized other than that properly introduced at the hearing before the commissioner.
Petitioner renewed his objection to the personal investigation in his appeal to the Circuit Court of Appeals. The latter, however, merely stated that there was no abuse of judicial discretion by the District Court in fixing the valuation at $20,000, and that there was no reversible error. 131 F.2d 222. We granted certiorari, limited to the question of the propriety of the commissioner's personal investigation, because of an asserted conflict with Moser v. Mortgage Guarantee Co., 123 F.2d 423.
We are of the opinion that the conciliation commissioner erred in fixing the value of the property partly upon his personal investigation, but that, under the circumstances of this case, such error was cured inasmuch as the District Court reexamined all the evidence properly introduced at the hearing before the commissioner and thereupon modified the latter's valuation.
Society v. Deutschle, 132 F.2d 525. And the parties are entitled to a valuation based on a strict adherence to this orderly procedure. John Hancock Mutual Life Ins. Co. v. Bartels, 308 U. S. 180; Borchard v. California Bank, 310 U. S. 311.
"the judge, after hearing, may adopt the report or may modify it, or may reject it in whole or in part, or may receive further evidence, or may recommit it with instructions."
Had the District Court done no more than summarily affirm and adopt without change the commissioner's finding of a $25,000 value, the defect upon which that finding rested would not have been cured, and petitioner would have been deprived of the fair hearing to which he was entitled. Moser v. Mortgage Guarantee Co., supra. But here, the commissioner's error was brought to the judge's attention by petitioner, and we cannot assume that the judge was unmindful of this objection. The District Court disregarded the commissioner's $25,000 valuation, heard argument by counsel, made an independent and complete review of the conflicting evidence introduced at the hearing before the commissioner, and fixed the valuation at $20,000 "under the evidence before me." All of this was authorized by Order 47, inasmuch as the commissioner's personal investigation made his finding as to value "clearly erroneous."
the hearing contemplated by § 75(s)(3) has been had. A party is not entitled to a trial de novo as of right on the review in the District Court, Equitable Life Assurance Society v. Carmody, 131 F.2d 318, and none was requested by petitioner. Nor is there any requirement that the judge must reverse and remand the case to the commissioner for further hearings or for his considered judgment based solely on the competent evidence. To so hold would render nugatory the discretionary power given the judge by Order 47 to receive further evidence himself or to modify or reject, in whole or in part, the commissioner's findings on appeal. In addition, it would make mandatory what is, at most, a discretionary power of the judge under § 75(s)(3) to authorize a hearing before the commissioner.
"upon request of any secured or unsecured creditor, or upon request of the debtor, the court shall cause a reappraisal of the debtor's property, or, in its discretion, set a date for hearing, and after such hearing, fix the value of the property in accordance with the evidence submitted, and the debtor shall then pay the value so arrived at into court . . . , and thereupon the court shall, by an order, turn over full possession and title of said property, free and clear of encumbrances to the debtor."
See also Atlantic & Birmingham Ry. Co. v. Cordele, 125 Ga. 373, 54 S.E. 155; Ralph v. Southern Ry. Co., 160 S.C. 229, 158 S.E. 409; Denver Omnibus & Cab Co. v. J. R. Ward Auction Co., 47 Colo. 446, 107 P. 1073; Elston v. McGlauflin, 79 Wash. 355, 140 P. 396; Anderson v. Leblang, 125 Misc. 820, 211 N.Y.S. 613.
11 U.S.C. following section 53.
Sec. 75(s)(4) of the Bankruptcy Act, 11 U.S.C. § 203(s)(4); Order 50(11) of the General Orders in Bankruptcy; Equitable Life Assurance Society v. Carmody, 131 F.2d 318, 322; Rait v. Federal Land Bank, 135 F.2d 447, 450.

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