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Timestamp: 2019-12-10 05:20:31
Document Index: 123727460

Matched Legal Cases: ['§ 75', '§ 75', '§ 75', '§ 75', '§ 75', '§ 75', '§ 75', '§ 75', '§ 75', '§ 75', '§ 75']

BORCHARD V. CALIFORNIA BANK, 310 U. S. 311 (1940) - US SUPREME COURT DECISIONS ON-LINE
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BORCHARD V. CALIFORNIA BANK, 310 U. S. 311 (1940)
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In a proceeding under § 75(s) of the Bankruptcy Act, the debtors petitioned the conciliation commissioner for an appraisal and the setting aside of the property to them (no action having been taken upon a previous petition); appraisers were appointed and made report to the commissioner of the value of the property, but no stay order fixing terms on which the debtors would remain in possession had been entered. Held, the action of the District Court at that stage, in granting leave to a creditor to sell the property under deeds of trust was contrary to the provisions of § 75(s). P. 310 U. S. 316.
Certiorari, 309 U.S. 648, to review the affirmance of an order of the District Court, in a proceeding under chanroblesvirtualawlibrary
We granted certiorari in this case, 309 U.S. 648, for the reason that it presents important questions with respect to the procedure required by § 75(s) of the Bankruptcy Act, as amended. [Footnote 1]
The petitioners, husband and wife, are farmers. Over the period January 24, 1927, to June 19, 1933, they borrowed from the respondent, the California Bank, a total of $87,566.93, in varying amounts, executing to the bank their promissory notes for the respective loans together with deeds of trust [Footnote 2] on their farm real estate as security. From time to time, they made payments which reduced the principal of the indebtedness to $53,919.20. The lender, in the meantime, had made some advances towards the payment of taxes on the property. Further to secure their indebtedness, they executed, on January 30, 1934, a mortgage on all the crops standing or growing, or chanroblesvirtualawlibrary
The debtors were unable to obtain the requisite acceptance of creditors to the composition and extension proposal they submitted. As a consequence, they amended their petitions and prayed to be adjudicated bankrupts in accordance with the provisions of § 75(s). The petition was granted and an adjudication entered May 6, 1935. Apparently no further proceedings were taken until June 26, 1935, when the bankruptcy cause was dismissed on the ground that this court had held § 75(s) unconstitutional. [Footnote 3] On the same day, the debtors petitioned a local court for relief under a State moratorium act and obtained an order granting a moratorium, which chanroblesvirtualawlibrary
remained in effect until September 20, 1935, when the debtors filed a petition for reinstatement of the bankruptcy cause in accordance with the amendment of § 75(s) adopted to meet the decision in the Radford case. [Footnote 4] On the same date, the District Court approved the petition, ordered the proceedings reinstated, and referred the case to a Conciliation Commissioner in accordance with the provisions of § 75(s). The court restrained the respondents from selling, or proceeding with a sale of, the real estate covered by the deeds of trust, and also enjoined them from collecting from packers or processors the proceeds of crops covered by mortgage, until the further order of the court.
October 18, 1935, the petitioner Franz J. Borchard presented his petition to the conciliation Commissioner praying that appraisers be appointed; that his exempt property be set aside to him, and that he be allowed to retain possession, under the supervision and control of the court, of all of the remainder of his property, and for such further order as might be just and proper in the premises, as authorized by § 75(s). Shortly thereafter, the debtors filed a petition for an order on the bank to compel it to release its asserted claim to the crop of oranges grown on their property in 1935. In opposition, the bank not only asserted the validity of its lien, but urged that the proceedings be dismissed because § 75(s), as amended, was unconstitutional. The District Judge held that the bank had a lien on the 1935 orange crop, but refrained from passing upon the validity of § 75(s), stating that he would decide that question at a later date if the parties so desired. Apparently the parties requested a ruling, and, on May 15, 1936, the Judge overruled the contention of the bank and refused to dismiss the proceedings. chanroblesvirtualawlibrary
May 24, 1938, the debtors petitioned the Conciliation Commissioner for an appraisal and the setting aside of the property to them. June 22, 1938, appraisers were appointed, and they reported the value of the real estate as $87,300. It does not appear what, if any, proceedings were had before the Conciliation Commissioner upon the coming in of the appraisers' report. The petitioners assert that the Commissioner was considering the terms of an order for a stay and the conditions to be inserted in that order. On November 10, 1938, however, the bank filed its petition in the District Court for leave to sell under its trust deeds. The petition recited the facts as chanroblesvirtualawlibrary
On appeal by the debtors, the Circuit Court of Appeals affirmed the decree, [Footnote 5] holding that the District Court's action was justified by our decision in Wright v. Vinton Branch of Mountain Trust Bank, 300 U. S. 440.
We are of opinion that the action of the District Court in permitting the creditor to proceed to a sale for the enforcement of its liens at this stage of the proceeding was contrary to the provisions of § 75(s). That this is so is made plain by our decisions in Wright v. Vinton Branch of Mountain Trust Bank, supra, and John Hancock Ins. Co. v. Bartels, 308 U. S. 180. As was said in the latter case (p. 308 U. S. 187):
Instead of prosecuting the cause before the Conciliation Commissioner pursuant to the debtors' petition, the bank resorted to a procedure not contemplated by the statute, evidently on the theory that it could obtain some advantage by that course. By written stipulations, the bank consented to the retention of possession by the debtors and arranged that they should cooperate in the cultivation of the farm, proceeds of the crops being used for further cultivation and conservation of the real estate, for payment of taxes, and for payments to the debtors. For more than thirty-one months after the petition for appraisal was filed, no action was taken. An appraisal was thereafter made. No stay order has been chanroblesvirtualawlibrary
Borchard v. California Bank, 107 F.2d 96.