1. The filing by a farmer debtor of a petition for composition
and extension, and an amended petition to be adjudged bankrupt,
under § 75 of the Bankruptcy Act before its amendment by the Act of
August 28, 1935, did not bring within the control of the bankruptcy
court mortgaged land listed in the schedules as his property and of
which he acquired the equity during the proceeding, but in which he
held no interest when the petitions were filed. P.
304 U. S.
507.
2. Land in which a farmer debtor had an equity of redemption,
but which was not subject to administration in a pending proceeding
under § 75 of the Bankruptcy Act because his interest in it was
acquired after the filing of his petition, was not brought within
the jurisdiction by the enactment of the amendatory Act of August
28, 1935, and the filing of an amended petition under subsection
(s) as amended, where those events occurred after his interest had
been extinguished by a foreclosure of the mortgage in a state court
followed by a judicial sale of the land and expiration of the
period for redemption allowed by the state law. P.
304 U. S.
508.
3. Land subject to mortgage was scheduled by a farmer debtor as
his property, in a proceeding for composition and extension brought
under § 75 of the Bankruptcy Act. He had no interest in the land
when the petition was filed, but later received a conveyance of it
from owners of the equity of redemption. The mortgage was
foreclosed and the mortgagee bought in the land at a judicial sale,
but the period for redemption allowed by the state law had not
expired before § 75 was amended by the Act of August 28, 1935, and
the debtor filed his petition to be adjudged bankrupt, under
subsection (s), as so amended.
Held, applying amended
subsection (n), that, upon the filing of the amended petition, the
property was brought within the control of the bankruptcy court.
and the time for redemption was extended. P.
304 U. S.
509.
4. The provision of § 75(n) of the Bankruptcy Act, as amended,
for extension of period for redemption,
held
constitutional as
Page 304 U. S. 503
applied against a mortgage creditor who foreclosed by suit in an
Indiana court and bought in the land at judicial sale, but as to
whom the right of the debtor to redeem, under the Indiana law, had
not expired when his petition to be adjudged bankrupt was filed
under § 75, as amended. P.
304 U. S. 513.
The provision is within the bankruptcy power, and not
inconsistent with the rights of the creditor-purchaser under the
due process clause of the Fifth Amendment. It is not an invasion of
power reserved to the State by the Tenth Amendment. P.
304 U. S.
515.
91 F.2d 894 affirmed in part, reversed in part.
Certiorari, 303 U.S. 630, to review the affirmance of two orders
of the District Court in bankruptcy, the one striking certain
described real estate from the debtor's schedules, the other
refusing to permit an amendment of the schedules.
MR. JUSTICE REED delivered the opinion of the Court.
Petition for writs of certiorari to the United States Circuit
Court of Appeals for the Seventh Circuit was granted by this Court
to review the judgments in two appeals brought to the lower court
by petitioner here.
Wright v. Union Central Life Ins. Co.,
91 F.2d 894. The judgments affirmed two orders of the District
Court of the United States for the Northern District of Indiana,
entered there in proceedings under § 75 of the Bankruptcy Act,
instituted by Wright.
The earlier order approved the recommendation of the
Conciliation Commissioner to strike certain described real estate
from the debtor's schedules, and the later
Page 304 U. S. 504
order refused to permit the debtor to amend the schedules by
showing the circumstances under which the debtor claimed an
interest in the same real estate covered by the earlier motion. The
correctness of the orders depends largely upon the constitutional
validity of certain provisions of § 75(n) of the Bankruptcy Act, as
amended by § 4 of the Act of August 28, 1935, 49 Stat. 942. These
provisions, held unconstitutional by the lower court, operate to
extend the period of redemption from a foreclosure sale allowed the
mortgagor under state law. To decide this important constitutional
question, our writs of certiorari were issued. In view of § 1 of
the Act of August 24, 1937, c. 754, 28 U.S.C. § 401, [
Footnote 1] enacted subsequent to the
decision of the case below, the Court certified to the Attorney
General the fact that the constitutionality of an Act of Congress
affecting the public interest was drawn in question in this cause.
The Attorney General disclaimed intention to intervene.
The controversy as to whether or not the land in question was
subject to the administration of the court of bankruptcy had its
origin in this plexus of facts. Petitioner James M. Wright, on
October 1, 1925, together with his wife, executed a mortgage to
respondent company
Page 304 U. S. 505
on a tract of land in Indiana, containing 80.31 acres, to secure
a note of $3,000. At the same time, the same parties executed
another mortgage to the respondent on a different tract of land
containing 200 acres, also in Indiana, to secure a note of $9,000.
In 1931, the first tract was deeded to petitioner's son, and three
separate forty-acre parcels from the second tract were deeded to
his wife, daughter and son-in-law respectively. The property was
conveyed subject to definite portions of the indebtedness, but
without an assumption of any of the obligation by the grantees.
On January 3, 1934, respondent brought suit to foreclose the
smaller mortgage, joining as defendants petitioner and his son.
Judgment of foreclosure was entered, June 9, 1934, and on July 12,
1934, the 80.31-acre tract was sold, on the foreclosure sale, to
respondent. Respondent received a duly executed sheriff's
certificate of sale. Delivery of final deed was delayed in view of
the one-year period of redemption allowed to mortgagors by Indiana
statute. Ind.Ann.Stat., Burns' 1933, §§ 2-3909, 2-4001.
Wright filed a petition under § 75 of the Bankruptcy Act,
October 29, 1934. In listing his property on his schedules, he set
forth all 280.31 acres, despite his previous conveyances of 200.31
acres. On December 19, 1934, stating that no agreement of creditors
could be had, he amended his petition under § 75(s), asking to be
adjudged a bankrupt. [
Footnote
2] On April 13, 1935, petitioner's son
Page 304 U. S. 506
and daughter and their spouses delivered to him a quitclaim deed
for all the property, 200.31 acres, he had previously deeded to
them and his wife. [
Footnote
3]
On May 27, 1935, respondent obtained a personal judgment against
petitioner on the $9,000 note, and a decree of foreclosure of the
200-acre tract, which respondent purchased at the sheriff's sale on
July 20, 1935, receiving a certificate of sale. On August 2, 1935,
petitioner's one-year period for redeeming from sale the 80.31-acre
tract having expired July 12, 1935, respondent surrendered its
certificate of sale and received a sheriff's deed to this land.
On October 11, 1935, petitioner amended his petition as
authorized by § 75(s) of the Bankruptcy Act, as amended August 28,
1935, following the invalidation by the decision in
Louisville
Bank v. Radford, 295 U. S. 555, of
§ 75(s) as originally drafted, 48 Stat. 1289, and again asked to be
adjudged a bankrupt.
On July 20, 1936, the one-year redemption period having expired,
respondent received from the sheriff a final deed for the 200-acre
tract. On July 29, 1936, respondent filed a motion in the District
Court for Northern Indiana, where the proceedings under § 75(s)
were pending, to strike from petitioner's schedules, which had been
filed October 29, 1934, these 280.31 acres of land.
On December 14, 1936, the District Court granted this motion,
and entered an appropriate order. Apparently the order struck from
the schedules eighty acres still owned by Wright in October, 1934,
and properly scheduled at that time. Later in December, 1936,
petitioner asked leave to amend his schedules to set forth the
reconveyances by his children on April 13, 1935. On December 1,
1936, the District Court denied the application to amend the
schedules. Petitioner appealed from
Page 304 U. S. 507
both orders of the District Court, striking the land from the
schedules and denying leave to amend. The appeals were consolidated
in the Circuit Court of Appeals. As stated in the opening paragraph
of this opinion, that court affirmed both orders of the District
Court. These judgments are under review here.
A further aspect of the controversy between petitioner and
respondent may be noted. On September 13, 1935, prior to the
debtor's filing of an amended petition under § 75(s) as amended,
respondent instituted an action in the state court for possession
of the 80.31 acres. A judgment overruling a defense grounded on the
bankruptcy proceedings, and awarding possession and damages to
respondent, was affirmed by the Supreme Court of Indiana on April
2, 1937.
Wright v. Union Central Life Ins. Co., 7 N.E.2d
206. A similar judgment with respect to the rest of the land was
affirmed October 26, 1937,
Wright v. Union Central Life Ins.
Co., 10 N.E.2d 726. By temporary restraining order of the
Circuit Court of Appeals, and subsequent stay of mandate,
respondent has been restrained from taking possession of the
land.
First. (a) By October 30, 1934, when petitioner sought
adjustment and extension of debts under § 75, the 80.31-acre tract
had been deeded away to petitioner's son. Accordingly, although
this tract was listed on petitioner's schedules, it did not at that
time pass into the hands of the bankruptcy court for
administration. Nor was the amended petition under § 75(s), filed
on December 19, 1934, any more effective in bringing the tract
within the purview of the bankruptcy court. On April 13, 1935, the
members of Wright's family relinquished all their right and
interest in his lands, including this 80.31-acre tract, so that
petitioner then acquired an interest in the land. But Wright's
receipt of this gift of land was not effective in and of itself to
bring the land within the control of the bankruptcy court. This
Page 304 U. S. 508
is the rule applicable to property received by a bankrupt
subsequent to the filing of an ordinary petition in bankruptcy,
[
Footnote 4] and we see no
reason why the same rule should not apply to debtor proceedings
under § 75. [
Footnote 5]
There is no substance in any contention that this 80.31-acre
tract was brought within the purview of the bankruptcy court by the
Act of August 28, 1935, amending § 75(s), or the filing of an
amended petition under this section on October 11, 1935. Prior
thereto, judgment of foreclosure had been entered in the state
court, and a judicial sale (at which respondent bought in the
80.31-acre tract) held on July 12, 1934. Conveyance and delivery of
possession to the purchaser was deferred for one year, the period
of redemption under the statutes of Indiana. This period expired on
July 12, 1935, and the sheriff's deed was executed on August 2,
1935. With the delivery of the deed, prior to any effective
extension of the period of redemption, the purchaser's rights,
flowing from the judicial sale, were no longer affected by the
court's jurisdiction of petitioner and petitioner's
Page 304 U. S. 509
estate under the Bankruptcy Act. [
Footnote 6] Nothing in § 75 as it now stands indicates any
intention that the bankruptcy courts assume control over land not
previously within the jurisdiction of a bankruptcy court and
already completely divorced from any title of the debtor.
(b) On October 29, 1934, when Wright filed his original petition
under § 75, he was undoubtedly the owner of 80 acres out of the
200-acre tract. He had never conveyed away these 80 acres; no
proceedings to foreclose them had been begun. These 80 acres were
clearly within the jurisdiction of the bankruptcy court, but we
shall not give them separate discussion, for they are controlled
a fortiori by our ruling with respect to the other 120
acres out of the 200-acre tract.
(c) The status of these 120 acres, deeded in forty-acre parcels,
to three members of the family, is governed by other facts. These
parcels passed to the other members of the family prior to the
filing of the petition for composition on October 29, 1934.
Petitioner, however, included them in his schedules. The grantees
had title on December 19, 1934, when petitioner filed his first
amendment to the petition for composition. On April 13, 1935, these
parcels were reconveyed to petitioner; on May 27 judgment for
foreclosure was entered, and, on July 20, 1935, a sale was had.
Respondent became the purchaser. The right of redemption expired
July 20, 1936. Between the sale and the expiration of the period of
redemption, two events occurred. The Congress enacted the Act of
August 28, 1935, which added to the Bankruptcy Act, § 75, a new
subsection (s) to take the
Page 304 U. S. 510
place of the subsection (s) held invalid in
Louisville Bank
v. Radford, 295 U. S. 555.
This new subsection (s) was sustained in
Wright v. Vinton
Branch, 300 U. S. 440.
Secondly, the petitioner, on October 11, 1935, filed a second
amendment to his petition for composition, and was "duly adjudged a
bankrupt." Both of these events are significant in reasoning out
the status of the 120 acres.
If the rule of the General Bankruptcy Act is followed, property
acquired after the filing of a petition for composition under the
provisions of § 75 would not be subject to bankruptcy
administration. Section 75(n), in effect at the time of the filing
of the petition, leads to the conclusion that, at that time, a
similar rule as to property subsequently acquired would apply.
[
Footnote 7] At the time
petitioner filed his first amendment, seeking to be adjudged a
bankrupt, subsection (n) continued in the same form. It was changed
by the Act of August 28, 1935, to the language shown below.
[
Footnote 8] By the terms of
the second and
Page 304 U. S. 511
third paragraphs of § 4 of that Act, all rights of redemption of
petitioner which had not expired in land within the jurisdiction of
the court of bankruptcy were extended. By the earlier subsection
(n), the line of cleavage, between property subject to the
bankruptcy jurisdiction and property free from it came at the date
when the "farmer's petition or answer was filed." When this
language was adopted, there was no provision for a petition in
bankruptcy under § 75. There was provision only for a petition for
composition or extension. [
Footnote
9] By § 4 of the Act of
Page 304 U. S. 512
August 28, 1935, subsection (n) was changed to comport with
subsection 75(s), permitting a petitioner to amend and ask "to be
adjudged a bankrupt." We are of the opinion that it is the date of
filing this request for adjudication as bankrupt which fixes "the
line of cleavage" as to the property. This conclusion is really in
conformity with the reasoning governing the rule in the General
Bankruptcy Act. There, the first petition seeks an adjudication in
bankruptcy. Under § 75, it is only the later amendment which does.
[
Footnote 10] As the 120
acres had been reconveyed to the petitioner prior to his filing of
the petition of October 11, 1935, seeking adjudication as a
bankrupt, his interest in the 120 acres was subject to bankruptcy
jurisdiction. As the land was reconveyed to the petitioner prior to
the decree of foreclosure, petitioner was an owner entitled to
redeem after the sale. Ind.Stat.Ann., Burns' 1933, c. 40, § 2-4001
et seq. The amendment of October 11, 1935, was the first
opportunity to bring the 120 acres
Page 304 U. S. 513
into the jurisdiction of the Bankruptcy Court, and we think it
had that effect.
Second. The conclusion that all the lands in
controversy, except the 80.31-acre tract, are within the
jurisdiction of the Bankruptcy Court under the petitioner's
amendment asking to be adjudged a bankrupt and are lands, subject
to petitioner's right of redemption, as extended by subsection (n)
of § 75, requires the reversal of the judgments below as to these
lands unless the provisions of § 75(n), extending the period of
redemption, are unconstitutional. Respondent insists that these
provisions are a direct invasion of the state's rights under the
Tenth Amendment, and violative of the respondent's own rights, by
virtue of its title acquired by purchase at the judicial sale, in
contravention of the Fifth Amendment.
The right of the Congress to legislate on the subject of
bankruptcies is granted by the Constitution in general terms. "The
Congress shall have Power . . . To establish . . . uniform Laws on
the subject of Bankruptcies throughout the United States," Article
1, § 8, cl. 4. To this specific grant there must be added the
powers of the general grant of clause eighteen: "To make all Laws
which shall be necessary and proper for carrying into Execution the
foregoing Powers. . . ." The subject of bankruptcies is incapable
of final definition. The concept changes. It has been recognized
that it is not limited to the connotation of the phrase in England
or the States at the time of the formulation of the Constitution.
[
Footnote 11] An
adjudication in bankruptcy is not essential to the jurisdiction.
The subject of bankruptcies is nothing less than "the subject of
the relations between an insolvent or nonpaying or fraudulent
debtor and his
Page 304 U. S. 514
creditors extending to his and their relief." [
Footnote 12] This definition of Judge
Blatchford, afterwards a member of this Court, has been cited with
approval here. [
Footnote
13]
The development of bankruptcy legislation has been towards
relieving the honest debtor from oppressive indebtedness and
permitting him to start afresh. [
Footnote 14] By the Act of March 3, 1933, the Congress
deliberately undertook the rehabilitation of the debtor as well as
his discharge from indebtedness. [
Footnote 15] This legislation for rehabilitation has been
upheld as within the subject of bankruptcies. [
Footnote 16] But respondent urges that, under
the Bankruptcy Clause, Congress is confined to legislation for the
adjustment of the debtor-creditor relationship, and insists that
the purchaser at an Indiana judicial sale is not a creditor, but a
grantee, with rights acquired by the purchase separate and distinct
from the rights and obligations arising from the creation of the
debt. While there may be no relation of debtor and creditor between
the bankrupt and the purchaser of his property at judicial sale, we
think the purchaser at a judicial sale does enter into the radius
of the bankruptcy power over debts. His purchase is in the
liquidation of the indebtedness. The debtor has a right of
redemption of which the purchaser is advised, and, until that right
of redemption expires, the rights of the purchaser are subject to
the power of the Congress over the relationship of debtor and
creditor and its power to legislate for the rehabilitation of the
debtor. The person whose land has been sold at foreclosure
Page 304 U. S. 515
sale and now holds a right of redemption is, for all practical
purposes, in the same debt situation as an ordinary mortgagor in
default; both are faced with the same ultimate prospect -- either
of paying a certain sum of money or of being completely divested of
their land. We think the provision for the extension of the period
of redemption comes clearly within the power of the Congress under
the bankruptcy clause. But respondent presses a further argument
that the Fifth and Tenth Amendments are violated.
(a) The Fifth Amendment is said to be violated, and the property
of respondent, the purchaser at the judicial sale, taken without
due process [
Footnote 17] by
the provision for extension of the time of redemption. Section
75(n) provides that "the period of redemption shall be extended . .
. for the period necessary for the purpose of carrying out the
provisions of this section." The stay may be approved for the
period during which the debtor seeks to effect a composition,
[
Footnote 18] and, as
contemplated by § 75(s), for a moratorium period not exceeding
three years during which the court's equitable supervision over the
land continues, and a reasonable rental is required. [
Footnote 19] That such an extension
is consonant with the due process clause of the Fifth Amendment is
indicated by our decision in
Home Bldg. & Loan Assn. v.
Blaisdell, 290 U. S. 398,
where we held that neither the due process clause of the Fourteenth
Amendment nor the contracts clause was violated by an emergency
state statute authorizing extension of the period of redemption
from foreclosure sales for a just and equitable period not
exceeding two years, conditioned on payment by the mortgagor of a
reasonable rental, as directed by the court.
Page 304 U. S. 516
The mortgage contract was made subject to constitutional power
in the Congress to legislate on the subject of bankruptcies.
Impliedly, this was written into the contract between petitioner
and respondent.
"Not only are existing laws read into contracts in order to fix
obligations as between the parties, but the reservation of
essential attributes of sovereign power is also read into contracts
as a postulate of the legal order. [
Footnote 20]"
And the fact that, in this case, the purchaser at the
foreclosure sale was also the mortgagee is not a determining
factor. Any purchaser at a judicial sale must purchase subject to
the possibility of the exercise of the bankruptcy power in a manner
consonant with the Fifth Amendment.
We have held that § 75(s) does not unconstitutionally affect the
rights of the mortgagee. [
Footnote 21] We do not think the provision for extension
of the period of redemption in § 75(n) is invalid. The rights of
the purchaser are preserved, the possibility of enjoyment is merely
delayed. The rights of a purchaser who, under the state law, is
entitled to the redemption money or possession within a year, are
not substantially different from those of a mortgagee entitled, on
the maturity of the obligation, to payment or sale of the
property.
(b) In view of our decision that the law is within the
bankruptcy power, scant reliance can be placed on the Tenth
Amendment. Respondent argues that to subject property bought in at
a foreclosure sale to the extended redemption period and other
provisions of § 75(s)
"would be a direct invasion of the powers reserved to the State
by the Constitution, and a violation of [respondent's] property
rights theretofore determined by the courts of the Indiana in
accordance with the law of that State. "
Page 304 U. S. 517
If the argument is that Congress has no power to alter property
rights, because the regulation of rights in property is a matter
reserved to the States, it is futile. Bankruptcy proceedings
constantly modify and affect the property rights established by
state law. A familiar instance is the invalidation of transfers
working a preference, though valid under state law when made.
Recent decisions illustrate other instances:
"A court of bankruptcy may affect the interests of lienholders
in many ways. To carry out the purposes of the Bankruptcy Act, it
may direct that all liens upon property forming part of a
bankrupt's estate be marshaled, or that the property be sold free
of encumbrances and the rights of all lienholders be transferred to
the proceeds of the sale.
Van Huffel v. Harkelrode,
284 U. S.
225,
284 U. S. 227. Despite the
peremptory terms of a pledge, it may enjoin sale of the collateral
if it finds that the sale would hinder or delay preparation or
consummation of a plan of reorganization.
Continental Illinois
Nat. Bank & Trust Co. v. Chicago, R.I. & P. Ry. Co.,
294 U. S.
648,
294 U. S. 680-681. It may
enjoin like action by a mortgagee which would defeat the purpose of
[§ 75] subsection (s) to effect rehabilitation of the farmer
mortgagor."
Wright v. Vinton Branch, 300 U.S. at
300 U. S. 470.
[
Footnote 22]
Such action does not indicate a disregard of the property rights
created by state law. The state law still establishes the norm to
which Congress must substantially adhere; a serious departure from
this norm --
i.e., from the quality of the property rights
created by the state courts -- has led to condemnation of the
federal action as constituting a deprivation of property without
due process. [
Footnote
23]
Page 304 U. S. 518
Property rights do not gain any absolute inviolability in the
bankruptcy court because created and protected by state law. Most
property rights are so created and protected. But if Congress is
acting within its bankruptcy power, it may authorize the bankruptcy
court to affect these property rights, provided the limitations of
the due process clause are observed.
Insofar as the judgments below struck from the schedules the
80.31-acre tract and refused to permit amendment to show the
character of appellant's interest, they are affirmed. As to the
rest of the land in question, they are reversed.
Affirmed in part and reversed in part.
MR. JUSTICE CARDOZO took no part in the consideration or
decision of this case.
[
Footnote 1]
"Whenever the constitutionality of any Act of Congress affecting
the public interest is drawn in question in any court of the United
States in any suit or proceeding to which the United States, or any
agency thereof, or any officer or employee thereof, as such officer
or employee, is not a party, the court having jurisdiction of the
suit or proceeding shall certify such fact to the Attorney General.
In any such case, the court shall permit the United States to
intervene and become a party for presentation of evidence (if
evidence is otherwise receivable in such suit or proceeding) and
argument upon the question of the constitutionality of such Act. In
any such suit or proceeding, the United States shall, subject to
the applicable provisions of law, have all the rights of a party
and the liabilities of a party as to court costs to the extent
necessary for a proper presentation of the facts and law relating
to the constitutionality of such Act."
[
Footnote 2]
This fact is stated in respondent's brief. Petitioner's answer
to respondent's motion to strike out from the schedules the real
estate in controversy alleges
"that all the steps under said § 75 were taken; that later
petitioner (Wright) amended his petition under subsection (s) of §
75, as amended August 28, 1935."
By stipulation, the allegations of the answer were admitted as
evidence. There is apparently no issue as to the fact of the filing
of a petition in bankruptcy on December 19, 1934.
[
Footnote 3]
Apparently his wife had died in the meanwhile. The record
indicates that she died prior to May 27, 1935.
[
Footnote 4]
Everett v. Judson, 228 U. S. 474,
228 U. S. 478;
Local Loan Co. v. Hunt, 292 U. S. 234,
292 U. S. 244;
4 Remington, Bankruptcy, §§ 1377, 1395, 1400; 1 Collier,
Bankruptcy, p. 1641.
[
Footnote 5]
In considering this 80.31-acre tract, we are not concerned with
such property acquired subsequent to the filing under § 75 as would
be controlled by § 75(n) as amended by the Act of August 28,
1935.
"In proceedings under this section, except as otherwise provided
herein, the jurisdiction and powers of the courts, the title,
powers, and duties of its officers, the duties of the farmer, and
the rights and liabilities of creditors, and of all persons with
respect to the property of the farmer and the jurisdiction of the
appellate courts shall be the same as if a voluntary petition for
adjudication had been filed and a decree of adjudication had been
entered on the day when the farmer's petition, asking to be
adjudged a bankrupt, was filed with the clerk of court or left with
the conciliation commissioner for the purpose of forwarding same to
the clerk of court."
[
Footnote 6]
"A sheriff's certificate, however, after the expiration of the
year for redemption, invests the holder with an equitable estate in
the land of such high character that it only requires his demand
for a deed to ripen it into an absolute legal title."
Hubble v. Beery, 180 Ind. 513, 519, 103 N.E. 328,
330.
[
Footnote 7]
"(n) The filing of a petition pleading for relief under this
section shall subject the farmer and his property, wherever
located, to the exclusive jurisdiction of the court. In proceedings
under this section, except as otherwise provided herein, the
jurisdiction and powers of the court, the title, powers, and duties
of its officers, the duties of the farmer, and the rights and
liabilities of creditors, and of all persons with respect to the
property of the farmer and the jurisdiction of the appellate
courts, shall be the same as if a voluntary petition for
adjudication had been filed and a decree of adjudication had been
entered on the day when the farmer's petition or answer was
filed."
47 Stat. 1470.
[
Footnote 8]
"(n) The filing of a petition or answer with the clerk of court,
or leaving it with the conciliation commissioner for the purpose of
forwarding same to the clerk of court, praying for relief under
section 75 of this Act, as amended, shall immediately subject the
farmer and all his property, wherever located, for all the purposes
of this section, to the exclusive jurisdiction of the court,
including all real or personal property, or any equity or right in
any such property, including, among others, contracts for purchase,
contracts for deed, or conditional sales contracts, the right or
the equity of redemption where the period of redemption has not or
had not expired, or where a deed of trust has been given as
security, or where the sale has not or had not been confirmed, or
where deed had not been delivered at the time of filing the
petition."
"In all cases where, at the time of filing the petition, the
period of redemption has not or had not expired, or where the right
under a deed of trust has not or had not become absolute, or where
the sale has not or had not been confirmed, or where deed had not
been delivered, the period of redemption shall be extended or the
confirmation of sale withheld for the period necessary for the
purpose of carrying out the provisions of this section. The words
'period of redemption,' wherever they occur in this section, shall
include any State moratorium, whether established by legislative
enactment or executive proclamation, or where the period of
redemption has been extended by a judicial decree. In proceedings
under this section, except as otherwise provided herein, the
jurisdiction and powers of the courts, the title, powers, and
duties of its officers, the duties of the farmer, and the rights
and liabilities of creditors, and of all persons with respect to
the property of the farmer and the jurisdiction of the appellate
courts shall be the same as if a voluntary petition for
adjudication had been filed and a decree of adjudication had been
entered on the day when the farmer's petition, asking to be
adjudged a bankrupt, was filed with the clerk of court or left with
the conciliation commissioner for the purpose of forwarding same to
the clerk of court."
[
Footnote 9]
Act of March 3, 1933, § 75(c):
"(c) At any time within five years after this section takes
effect (March 3, 1933), a petition may be filed by any farmer,
stating that the farmer is insolvent or unable to meet his debts as
they mature, and that it is desirable to effect a composition or an
extension of time to pay his debts. The petition or answer of the
farmer shall be accompanied by his schedules. The petition and
answer shall be filed with the court, but shall, on request of the
farmer or creditor, be received by the conciliation commissioner
for the county in which the farmer resides and promptly transmitted
by him to the clerk of the court for filing. If any such petition
is filed, an order of adjudication shall not be entered except as
provided hereinafter in this section."
[
Footnote 10]
Section 75, as originally enacted, was a part of chapter 8 of
the Bankruptcy Act, approved March 3, 1933, and did not contemplate
an adjudication in bankruptcy. Section 73 of that chapter reads as
follows:
"Sec. 73. Additional Jurisdictions. -- In addition to the
jurisdiction exercised in voluntary and involuntary proceedings to
adjudge persons bankrupt, courts of bankruptcy shall exercise
original jurisdiction in proceedings for the relief of debtors, as
provided in sections 74, 75, and 77 of this Act."
The Amendments of Bankruptcy Rules, Order of June 1, 1936, 298
U.S. 695, are based upon petitions for composition, rather than
bankruptcy.
See particularly General Order 50, p. 701.
[
Footnote 11]
Adair v. Bank of America Assn., 303 U.
S. 350;
Continental Bank v. Chicago, R.I. & P.
Ry. Co., 294 U. S. 648,
294 U. S.
668.
[
Footnote 12]
In re Reiman, 20 Fed.Cas. p. 490, No. 11,673.
[
Footnote 13]
Continental Illinois Nat. Bank & Trust Co. v. Chicago,
R.I. & P. Ry. Co supra, 294 U. S. 672;
United States v. Bekins, ante, pp.
304 U. S. 27,
304 U. S. 47;
Hanover National Bank v. Moyses, 186 U.
S. 181,
186 U. S.
187.
[
Footnote 14]
Williams v. U.S. Fidelity
& G. Co., 236 U. S. 549,
236 U. S.
554-555;
Louisville Bank v. Radford,
295 U. S. 555,
295 U. S.
582.
[
Footnote 15]
Adair v. Bank of America Assn., supra, pp.
303 U. S.
354-355, notes 2 and 3.
[
Footnote 16]
Wright v. Vinton Branch, 300 U.
S. 440,
300 U. S.
456.
[
Footnote 17]
Compare Louisville Bank v. Radford, 295 U.
S. 555,
295 U. S.
601.
[
Footnote 18]
Cf. Adair v. Bank of America Assn., 303 U.
S. 350.
[
Footnote 19]
See Wright v. Vinton Branch, 300 U.
S. 440,
300 U. S. 460
et seq.
[
Footnote 20]
Home Bldg. & Loan Assn. v. Blaisdell, supra, at
290 U. S.
435.
[
Footnote 21]
Wright v. Vinton Branch, supra.
[
Footnote 22]
See also Adair v. Bank of America Assn., supra,
restricting the enforcement of a mortgage upon the gross proceeds
of a crop.
[
Footnote 23]
Louisville Bank v. Radford, 295 U.
S. 555.