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90 F.2d 98

Docket No. 8092.

Diller v. Shoemaker

Ninth Circuit Court of Appeals

Decided May 4, 1937.

Ninth Circuit Court of Appeals · decided 1937-05-04

Cited by 3 later decisions — most recently January 1938

3 federal appellate ·

3 counsel of record

Relies on Louisville Joint Stock Land Bank v. Radford · Wright v. Vinton Branch of Mountain Trust Bank

Good law ✅— No negative treatment on recordhow we know

Opinion by Clifton Mathews · Decided 1937-05-04

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¶1Harry Graham Balter, of Los Angeles, Cal., for appellant.

¶2John L. Rowland and Bauer, Matdonald, Schultheis & Pettit, all of Los Angeles, Cal., for appellees John Hancock Mut. Life Ins. Co. and California Trust Co.

¶3Robert Mack Light, of San Bernardino, Cal., for appellee Shoemaker.

¶4Before DENMAN and MATHEWS, Circuit Judges, and NETERER, District Judge.

¶5MATHEWS, Circuit Judge.

¶6This appeal is from an order dismissing a proceeding under section 75 of the Bankruptcy Act, as amended (11 U.S.C.A.-§ 203).

¶7Section 75,. comprising subsections (a) to (r),' inclusive, was added to the Bankruptcy Act by the Act of March 3, 1933, c. 204, § 1, 47 Stat. 1470-1473. Subsections (a) and (b) were amended by the Act of June 7, 1934, c. 424, §§ 8 and 9, 48 Stat. 925. Subsection (s) was added to section 75 by the Frazier-Lemke Act of June 28, 1934, c. 869, 48 Stat. 1289-1291. Subsection (r) was amended by the Act of May 15, 1935, c. 114, § 3, 49 Stat. 246. Subsections (b), (g), (k), (n), (p), and (s) were amended by the new Erazier-Lemke Act, August 28, 1935, c. 792, §§ 1-6, 49 Stat, 942-945.

¶8Appellant commenced this proceeding on September 14,1934, by filing a petition praying for relief under subsections (a) to (r), inclusive, of section 75, supra.1 Having failed to obtain acceptance of his composition or extension proposal, appellant on March 4, 1935, filed an amended petition, praying to be adjudged a bankrupt, pursuant to subsection (s), as it then existed (Fra*99zier-Lemke Act of June 28, 1934.2 Thereupon, on March 4, 193S, the District Court made such order of adjudication and, on the same day, referred the matter to a referee in bankruptcy.

¶9On May 27, 1935, while this matter was pending before the referee, the Supreme Court, in Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 55 S.Ct. 854, 79 L.Ed. 1593, 97 A.L.R. 1106, held that subsection (s) of section 75 (Frazier-Lemke Act of June 28, 1934) was unconstitutional. On June 3, 1935, appellee Shoemaker 3 filed a motion to dismiss this proceeding, on the ground of the unconstitutionality of subsection (s), and thereafter, on the same day, without notice to appellant, the referee granted said motion.

¶10On June 24, 1935, appellant filed a second amended petition, praying (1) that this proceeding, in so far as affected by subsection (s) of section 75 (Frazier-Lemke Act of June'28, 1934), be dismissed, and (2) that appellant be given ninety days “within which to attempt to effect a compromise and adjustment of his obligations to his creditors under the terms and provisions of section 75,” meaning of course, the provisions contained in subsections (a) to (r), inclusive. Thereafter, on June 24, 1935, the court granted said petition. On July 24, 1935, appellee Shoemaker again petitioned the court to dismiss the proceeding. The court on September 5, 1935, denied Shoemaker’s petition, but without prejudice to a renewal thereof.

¶11On August 28, 1935, subsection (s) of section 75 was amended by the new FrazierLemke Act, § 6, supra (11 U.S.C.A. § 203 (s). Having again failed to obtain acceptance of his composition or extension proposal, appellant on September 19, 1935, filed a third amended petition, praying to be adjudged a bankrupt, pursuant to subsection (s), as amended by the new Frazier-Lemke Act.4 The District Court made such order of adjudication on September 21, 1935.

¶12On November 19, 1935, Shoemaker filed a supplemental petition, praying dismissal of the proceeding on the ground that subsection (s) of section 75, as amended by the Frazier-Lemke Act of August 28, 1935, was unconstitutional. On that ground alone, the District Court on January 4, 1936, granted Shoemaker’s petition and dismissed the proceeding. This appeal followed.

¶13Since this appeal was heard, the Supreme Court has, in Wright v. Vinton Branch of Mountain Trust Bank (U.S.) 57 S.Ct. 556, 81 L.Ed. —, decided March 29, 1937, held that subsection (s) of section 75, as amended by the new Frazier-Lemke Act, is constitutional. Thus the ground on which the District Court dismissed this proceeding is now seen to be untenable.

¶14Appellee Shoemaker contends, however, that the dismissal should be upheld on the ground that no validly initiated proceeding was pending before the District Court on September 19, 1935, when appellant filed his third amended petition, praying to be adjudged a bankrupt, under and pursuant to subsection (s), as amended, and that, therefore, the District Court had no authority to entertain said amended petition. There is no merit in this contention. Paragraph (5) of subsection (s), as amended, provides: “This Act [title] shall be held to apply to all existing cases now pending in any Federal court, under this Act [title], as well as to future cases; and all cases that have been dismissed by any conciliation commissioner, referee, or court because of the Supreme Court decision holding the former subsection (s) unconstitutional, shall be promptly reinstated, without any additional filing fees or charges.” 49 Stat. 945 (11 U. S.C.A. § 203(s) (5).

¶15Although, as claimed by Shoemaker, this proceeding, in so far as it was a proceeding under subsection (s) of section 75 (Frazier-Lemke Act of June 28, 1934), was dismissed prior to September 19,’ 1935, such dismissal was because of the Supreme Court’s decision holding said subsection (s) unconstitutional. Consequently, the proceeding could be and was reinstated by the *100filing of appellant’s third amended petition.

¶16Other grounds of dismissal urged by appellees are (1) that this proceeding was not commenced or prosecuted in good faith; (2) that the relation of debtor and creditor does not exist between appellant and appellees; and (3) that subsection (s) of section 75, as amended by the new FrazierLemke Act, is inapplicable to the situation presented by the facts of this case. These grounds were not considered or passed on by the District Court and are, therefore, not considered by this court.

¶17Order reversed, and case remanded for further proceedings in conformity with this opinion.

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