Opinion ID: 303769
Heading Depth: 1
Heading Rank: 1

Heading: Procedural and Common Factual Background

Text: 2 In May and July 1966 petitions were filed in the District Court under Chapter X of the Bankruptcy Act for reorganization of Parkwood, Inc., and Adams Properties, Inc. (wholly owned subsidiary of Parkwood). In October 1966 Equitable Life Insurance Company filed a proof of claim as a secured creditor of Parkwood in the principal amount of $226,654.10; Manufacturers Life Insurance Company did likewise in the principal amount of $562,963.62; and Hartford Life Insurance Company filed as a secured creditor of Adams Properties, Inc., in the principal amount of $78,803.31. All claims were evidenced by a note or notes and a deed of trust. 3 On 1 May 1968 the Trustee objected to all three claims. By order of 26 March 1969 the Referee in Bankruptcy denied the Trustee's objections and allowed all three claims. 4 On petition for review of this order, after hearing argument the District Court, by order of 4 February 1970, denied the Trustee's petition for review, ratified the order of the Referee, and confirmed and adopted the Referee's memorandum and his findings of fact and conclusions of law. 5 While there are important differences, the facts common to the three assertedly secured creditors are these. In each instance the original borrower obtained a loan from a corporation allegedly engaged in the business of lending money in the District of Columbia, executing a note or notes therefor and securing the indebtedness by a deed of trust on property located in the State of Maryland. Each original note bore interest in excess of 6%, thus running afoul of the District of Columbia Loan Shark Law, 1 if such law applies to the transaction. Thereafter, in the instance of Equitable, the original debtor sold the property to Parkwood, which took the property subject to the deed of trust but did not assume the note. In the instance of Manufacturers, the original loan was made by Manufacturers through a mortgage loan correspondent in the District of Columbia, and thereafter the original debtor sold the property to Parkwood, who took the property subject to the deeds of trust but did not assume the two notes. In the instance of Hartford, the original debtor sold the property to Adams, who likewise took the property subject to the deed of trust but did not assume the note. 6 The issues involve principally the standing of the Trustee to attack the validity of the deeds of trust held by the secured claimants; the applicability of Sec. 601 of the District of Columbia Loan Shark Law to loans by insurance companies; whether the real estate brokermortgage banker, the original maker of the loan held by Hartford, is exempt under Sec. 610 of that law; and, even if the above issues be decided in favor of the Trustee, whether certain facts peculiar to each individual claim would enable the secured claimant to maintain its position. 7