19 F. Supp. 836 | D. Or. | 1937
On October 24, 1934, a petition for the reorganization of the Ostlind Manufacturing Company was filed by the debtor, and after proper notice to all parties concerned, an order was entered, confirming the plan under section 77B of the acts relating to bankruptcies (11 U.S.C.A. § 207). Upon petition of the debtor on February 11, 1936, an order was issued to show cause why the order confirming reorganization should not be vacated and an order entered, appointing a trustee to take possession and control of the debtor’s assets and to sell the same free and clear of all liens and encumbrances except taxes and to impress the proceeds thereof with the liens and claims of creditors, bondholders,- and other persons in accordance with their priorities. Thereafter, notice was sent to all parties interested, and the court appointed a trustee upon March 23, 1936, directed him to send notice of appointment to all parties interested and proceed to sell all the assets of the estate. Subsequently, an order was entered, vacating the order confirming the reorganization. Some months afterward, when the proof of mailing of notices had been made, an order was entered, declaring the company insolvent, and directing immediate sale. No notice was sent of the offer which was accepted, but after sale wai made, an order was entered, authorizing the execution and delivery of conveyances to the property. This order was subsequently modified by an order dated July 29, 1936, directing conveyance to be made to the parent corporation of purchaser. The purchase price was paid.
The final account of the trustee was then filed. Thereupon, the court directed that notice of a final hearing he published for three weeks. This matter was referred by order of court to the Honorable Estes Snedecor, who, though recognizing the irregularities, has recommended confirmation of the final report and distribution in accordance therewith.
All the parties interested were here before the court for the purpose of reorganization of the corporation. Ninety-five per cent, of all classes of creditors, bondholders, and stockholders joined in the plan for reorganization, the consummation of which failed, and rendered liquidation inevitable on account of the insolvency of the company. Furthermore, each party interested was given fair notice of every step taken throughout the entire proceeding, except the terms of the particular sale, and acquiesced therein. From initiation until now, each move has been characterized by good faith upon the part of the debtor. Distribution of the proceeds of sale has been urged by every one who appeared at the hearing. No one has objected. An order of this court sanctioned each move. There is no suggestion that chicanery or unfair dealing character
But the vital element of jurisdiction cannot be conferred by consent or acquiescence.
“Jurisdiction” is the power to hear and determine.
This court, after reorganization plans failed, directed liquidation of the properties. Such action was permitted by the acts of Congress if the debtor has been found insolvent.
The fundamental purpose of the acts relating to bankruptcies is to conserve the properties for the benefit of debtor and creditors alike
Owing to the ambiguities in the language of the statute, liquidation in this case proceeded in conformity to an equitable receivership rather than in accordance to the acts relating to bankruptcies.
A sale of the property of the bankrupt estate was made, with notice to the interested parties that the trustee would be directed to so proceed. But no notice was given to the terms of the particular sale. No appraisement was had. The property of the estate was perishable in the sense that the upkeep was so expensive that if long delay had ensued, the value would have been lost. There were numerous other technical errors of minor consequence, resulting from a failure to follow the mandatory provisions of the applicable law.
But it may be objected that since the provisions of the statute are mandatory, violation thereof removes the foundation for the orders. But jurisdiction once established is not so avoided. This court in each instance determined that ordinary equity procedure was to be followed rather than that laid down in the statute. But in no instance did it sanction an act beyond the power of equity nor beyond the scope of the statute. These decisions were, it now appears, erroneous.
But where a court has jurisdiction, it is not obliged to render correct decisions. It has the authority to hear and determine. If within the scope of power and founded in jurisdiction, the decision, whether right or wrong, is a judicial act and a finality.
Owing to the fact, however, that erroneous decisions were rendered, the principle that a court could set aside its own determinations during the term was early developed, and thereafter procedure for modification or reversal by review in another court was established. These are forms of direct attack as distinguished from collateral. The mere fact that a determination is subject to direct attack does not render it less conclusive, so long as it stands.
It is thus apparent that in accordance with the specific terms of the statute, the property was surrendered to this court by voluntary act of the debtor, who thereby also submitted to its authority. ■ All acts done pursuant to order-of this court were within the scope of the primary purpose of the section of the bankruptcy act, because the intention was, in the final phase, to liquidate the property of the bankrupt and distribute it among the creditors. Each step was in accordance with the fundamental equities, and the procedure adopted was that which would have been adopted by
It is probable in the event of appeal, the irregularities would be held harmless and nonprejudicial.
The report of the special master is confirmed in all respects and distribution will proceed in accordance with the plan set out therein. The court specifically adopts the opinion of the special master as to the various phases of distribution and payment of costs and expenses.
Guaranty Trust Co. v. Green Cove Railroad Co., 139 U.S. 137, 147, 11 S.Ct. 512, 35 L.Ed. 116.
Voorhees v. United States Bank, 35 U.S.(10 Pet.) 449, 9 L.Ed. 490; Gunn v. Plant, 94 U.S. 664, 669, 24 L.Ed. 394.
Thompson v. Terminal Shares (C.C.A.8) 89 F.(2d) 652, 654.
See Jecker v. Montgomery, 54 U.S. (13 How.) 498, 515, 14 L.Ed. 240.
Grand Boulevard Investment Co. v. Strauss (C.C.A.8) 78 F.(2d) 180, 182; See Continental Illinois National Bank & Trust Co. v. Chicago, Rock Island & Pacific Ry. Co., 294 U.S. 648, 667, 675, 55 S.Ct. 595, 601, 605, 79 L.Ed. 1110.
Hanover National Bank v. Moyses, 186 U.S. 181, 192, 22 S.Ct. 857, 46 L.Ed. 1113.
11 U.S.C.A. § 207(a).
Edelstein v. United States (C.C.A.8) 149 F. 636, 638, 9 L.R.A.(N.S.) 236.
11 U.S.C.A. § 207(c) (8).
Dowell v. Applegate, 152 U.S. 327, 336-340, 14 S.Ct. 611, 38 L.Ed. 463.
Continental Illinois National Bank & Trust Co. v. Chicago, Rock Island & Pacific Ry. Co., supra.
West Texas Construction Co. v. Nelson (C.C.A.5) 77 F.(2d) 754, 755.
Robertson v. Howard, 229 U.S. 254, 263, 264, 33 S.Ct. 854, 57 L.Ed. 1174.
11 U.S.C.A. § 11(3) and (17).
11 U.S.C.A. § 11(7).
Van Huffel v. Harkelrode, 284 U.S. 225, 227, 228, 52 S.Ct. 115, 116, 76 L.Ed. 256, 78 A.L.R. 453.
In re Rosenbaum Grain Corporation (C.C.A.7) 83 F.(2d) 391, 393, 394; In re Theiberg (D.C.) 280 F. 408.
11 U.S.C.A. § 11(7).
Robertson v. Howard, supra.
11 U.S.C.A. § 207 (k).
In re Chez Marianne, Inc. (D.C.) 15 F.Supp. 326; Gerdes Corporate Reorganization, § 1155.
11 U.S.C.A. § 11(17).
Edelstein v. United States, supra; Sabin v. Larkin-Green Logging Co. (D.C.) 218 F. 984; Larkin-Green Logging Co. v. Sabin (C.C.A.9) 222 F. 814.
None of tbe defects here are jurisdictional. A trustee appointed by the court has authority to act; In re Austin Resort & Land Co. (D.C.) 12 F.Supp. 459, 462; and a failure to summon creditors for an election is a mere irregularity. Scofield v. United States (C.C.A.6) 174 F. 1, 3. See In re Rosenfeld-Goldman Co. (D.C.) 228 F. 921, 923. A lack of appraisement is insufficient to invalidate a sale by tbe bankruptcy court or collateral attack. Robertson v. Howard, 229 U.S. 254, 264, 33 S.Ct. 854, 57 L.Ed. 1174. See, also, In re Georgian Hotel Corporation (C.C.A.7) 82 F.(2d) 917, 920. A sale which is informal may not be attacked collaterally. Standley v. Graham Production Co. (C.C.A.5) 83 F.(2d) 489, 491; Dugan v. Logan, 229 Ky. 5, 16 S.W.(2d) 763, 765, 766. On direct attack such a sale is not void. In re Jacobson (C.C.A.9) 4 F.(2d) 211, 213.
Broadway Trust Co. v. Dill (C.C.A.3) 17 F.(2d) 486.
In re Rosenbaum Grain Corporation, supra; In re Shoe & Leather Reporter, Petitioner (C.C.A.1) 129 F. 588, 589.
In re Burr Mfg. & Supply Co. (C.C.A.2) 217 F. 16, 18.
In re Jacobson (C.C.A.9) 4 F.(2d) 211, 213; In re 211 East Delaware Place Building Corporation (D.C.) 14 F.Supp. 96.
11 U.S.C.A. § 47 (Bankr.Act, § 24, as amended May 27, 1926, c. 406, § 9, 44 Stat. 664, June 7, 1934, c. 426, 48 Stat. 926).
In re Burr Mfg. & Supply Co. supra; Files v. Brown (C.C.A.8) 124 F. 133, 138; In re American Austin Car Co. (D.C.) 12 F.Supp. 893.
Humphrey v. Bankers Mortg. Co. of Topeka, Kan. (C.C.A.10) 79 F.(2d) 345, 352.
Sabin v. Larkin-Green Logging Co., supra.
Edelstein v. United States, supra.