Respondents Brief — Rhodes v. Federal Land Bank

IN THB

Supreme Court of the United States

OCTOBER TERM, 1943

No. S38

ARCH S. RHODES,

Petitioner,

vs,

Trip FEDERAL LAND BANK OF ST. PAUL, A CORPORATION, AND

FEDERAL FARM MORTGAGE CORPORATION, Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

CIRCUIT COURT OF APPEALS FOR THE EIGHTH CIRCUIT.

BRIEF OF RESPONDENT

THE FEDERAL LAND BANK OF SAINT PAUL

ROBERT J. BARRY,

MIcHAEL A, SCHMITT,

JOHN FI. Lorn,

Counsel for Respondent,

The Federal Land Bank of Saint Paul,

346 Jackson Street,

St. Paul, Minnesota.

Hayward Brief Co., 601-7 Fourth Ave. So., Minneapolis

INDEX

Page

SEE a EI cio faassen o eid 6 mB wd Ace kh ed SW Wieraleie4is.40 9 4.3 1

en OUI IT I dsr ag Na os oe ee wc Ke we SNR EA Ey 1

Reasons Why Writ of Certiorari Should Be Denied............. 2

I ras ae ar aan inc na Wa a ers a aa Bie a es eh re em he KAS bbe S 3

1. Section 75(s)(3) of the Bankruptcy Act clearly provides that

only such evidence as is submitted at a hearing to fix the

value of property shall be considered in fixing the value

DIMI nearer cae ach eam is eaten is ate aieewas, « hdc os S018) bp 4d

2. The decision of the Circuit Court of Appeals herein does not

conflict with the decision of any other Circuit Court of Ap-

peals on the same matter; and it does not conflict with any

applicable decision of the Supreme Court of the United

ON ee as ware ad Gh Ca ae a, a ew al APA SLs HL or'a Bom, 4

3. The Circuit Court of Appeals has not decided herein an im-

portant question of Federa! law which has not been settled

ee)

Me I ree an er ate ea cl a oy SL Ala Ge hy He oe fee ese. 8 lbh ab 5

4. A conciliation commissioner’s order fixing value under Sec-

tion 75(s)(3) of the Bankruptcy Act is subject to review by

the District Court. No error having been assigned as to the

sufficiency of respondents’ petition for review in either the

District Court or on appeal to the Circuit Court of Appeals,

its sufficiency is not now properly reviewable by this Court... 7

oe a, pele SENS NET SE RE SIE SI SERRE ER mie are ee te en a ee 8

INDEX TO AUTHORITIES CITED

CASES

eTOr We. Mme. Ge We Ok BEE, ci k cee e nti cm cenease seer 3, 4, 5

Equitable Life Assur. Soc. vs. Deutschle, 132 F. (2d) 625....... 3

veneral Talking Pictures Corp. vs. Western Electric Co., 304 U.S.

RE eter a PORN Gare cratae © eran mid Roa GMI ai wea elk beso RO Ss 5

Daten we, mere, 207. C90) SS8. ow cw kc cn cc cee ew esc nn 3

Moser vs. Mortgage Guarantee Co., 123 F. (2d) 423............ 3

Pfister vs. Northern Illinois Finance Corp., 317 U. S. 144........ 8

Rait vs. Federal Land Bank of St. Paul. 135 F. (2d) 447........ 7

RULES AND STATUTES

General Order in Bankruptcy 36, 11 U.S. C. following 53........ 4

General Order in Bankruptcy 47, 11 U. S. C. following 53........ 4

ne We re 7 IN Ee i eG ec encaye sabe ees 4

Section 89(c) of the Bankruptcy Act, 11 U.S. C. 67(e).......... 8

Section 75(s)(3) of the Bankruptey Act, 11 U. S. C. 293(s)(3)..

Mae tan ae aaa OREN AA eae kh S6 a 6 ANS ou eS LR Oy ty 8

Section 240 of the Judicial Code, 28 U.S. C. 347...........0006- 1

IN THB

Supreme Court of the United States

OCTOBER TERM, 1943

No, 838

ARCIL S. RHODES,

Petitioner,

Us,

Tier FEDERAL LAND BANK OF ST. PAUL, A CORPORATION, AND

FEDERAL FARM MORTGAGE CORPORATION, Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

Cirrcuir Court OF APPEALS FOR THE EIGHTH CIRCUIT.

BRIEF OF RESPONDENT

THE FEDERAL LAND BANK OF SAINT PAUL

BASIS OF JURISDICTION

This Court has jurisdiction under Section 240 of the Ju-

dicial Code, as amended by the Act of February 13, 1925.

RESTATEMENT OF THE ISSUES

(a) Where a Conciliation Commissioner, in fixing value

of property of a farmer-debtor after a hearing pursuant to

Section 75 (s) (3) of the Bankruptey Act (11 U. 8S. C.

203 (s) (3)), improperly considered evidence not submitted

at such hearing, and upon petition by respondents for re-

view of said order fixing value, the District Court found it

9

to be clearly erroneous and accordingly moditied it, was the

Circuit Court of Appeals correct in affirming the District

Court on the ground that the value must be determined sole-

ly from the evidence adduced at the hearing, and that the

use of evidence obtained in any other manner made the Com-

missioner’s order clearly erroneous,

(b) Where the District Court, having found an order of

a Conciliation Commissioner fixing value after a hearing

pursuant to Section 7) (s) (3) of the Bankruptcy Act (11

U.S. @. 203 (s) (3)) to be clearly erroneous, proceeds to

modify the order with respect to the value of the property

upon the evidence before it, was the Circuit Court of Ap-

peals correct in affirming the District Court on the ground

there was ample supportive evidence.

REASONS WHY WRIT OF CERTIORARI SHOULD BE

DENIED

.

Section 75 (s) (3) of the Bankruptey Act clearly provides

that only such evidence as ix submitted at a hearing to fix the

value of property shall be considered in fixing the value

thereof.

»

The decision of the Circuit Court of Appeals herein does

not conflict with the decision of any other Circuit Court of

Appeals on the same matter: and it does not conflict with

any applicable decision of the Supreme Court of the United

States.

»

>.

The Cireuit Court of Appeals has not decided herein an

important question of Federal law which has not been settled

by this Court.

3

4,

A Conciliation Commissioner’s order fixing value under

Section 75 (s) (3) of the Bankruptey Act is subject to re-

view by the District Court. No error having been assigned

as to the sufficiency of respondents’ petition for review in

either the District Court or on appeal to the Circuit Court

of Appeals, its sufficiency is not now properly reviewable by

this Court.

ARGUMENT

Bi

Section 75 (s) (3) of the Bankruptey Act Clearly Provides

That Only Such Evidence As Is Submitted At A Hearing

To Fix the Value Of Property Shall Be Considered In Fix-

ing the Value Thereof.

The decision of the Circuit Court of Appeals of which pe-

titioner seeks review holds it clearly erroneous for a Con-

ciliation Commissioner, in fixing the value of property after

a hearing, pursuant to Section 75 (s) (3) of the Bankruptey

Act, to consider any evidence save that submitted at the hear-

ing itself. The subsection is clear and concise:

“The Court shall cause a reappraisal of the debtor's

property, or in its discretion set a date for hearing, and

after such hearing, fir the value of the property, in ac-

cordance with the evidence submitted. . . 2° (Ttalies

added. )

There is no uncertainty in the law as to the meaning of

the above quoted provision. In Carter vs. Kubler, 320 U.S.

2445, this Court stated that the valuation must be determined

solely from the evidence adduced at the hearing. See, also,

Moser vs. Mortgage Guarantee Co., 9 Cir., 123 F. (2d) 423;

Equitable Life Assur. Noc. vs. Deutschle, & Cir., 132 F. (2d)

525; Nauk vs. Anderson, & Cir., 7 FL (2d) 331.

4

The requirement that only such evidence shall be consid-

ered as is adduced at the hearing itself is in accord with

the usual course of judicial proceedings. Each party is en-

titled to be present and to be apprised of all the evidence

upon which a factual adjudication rests. Each party is en-

titled to an opportunity to examine, explain or rebut all such

evidence. These are basic elements of a fair judicial hear-

ing. Carter vs. Kubler, supra.

»

~_e

The Decision Of the Circuit Court Of Appeals Herein Does

Not Conflict With the Decision Of Any Other Circuit Court

Of Appeals On the Same Matter; And It Does Not Conflict

With Any Applicable Decision Of the Supreme Court Of

the United States.

The applicable rule to be applied in a review of the ref-

eree’s findings is clearly stated in General Order in Bank-

ruptey 47:

“The judge shall accept his findings of fact unless

clearly erroneous. The judge after hearing may adopt

the report or may modify it or may reject it in whole

or in part or may receive further evidence or Inay re-

commit it with instructions.” (Italies added. )

The applicable rule to be applied to findings of the Dis-

trict Court is clear, Under General Order 36 the Rules

of Civil Procedure apply to bankruptcy proceedings. Rule

52 of the Rules of Civil Procedure provides :

“Pindings of fact shall not be set aside unless clearly

erroneous.”

Instead of any conflict with an applicable decision of this

Court, the decision of the Cireuit Court of Appeals herein is

in accord with Carter vs. Kubler, 320 U.S. 245, wherein this

Court said:

5

“Section 75 (s) (8) makes clear the impropriety of

the conciliation cCommissioner’s action. If the District

Court conducts a hearing to determine the value of the

property or if the conciliation commissioner is author-

ized to hold such a hearing, the statute provides that

the valuation shall be fixed tin accordance with the evi-

dence submitted’ at the hearing * * *. The valuation

must thus be determined solely from the evidence ad-

duced at the hearing and the use of evidence obtained

in any other manner is improper. Woser rs. Mtg. Guar-

antee Company, supra; Equitable Life Assurance Soe,

rs. Deutschle (C. C. A. 8), 132 F. (2d) 525, 52 Am.

mankr. Rep. (N. S.) 116. And the parties are entitled

to a valuation based on a strict adherence to this or-

derly procedure.”

The situation presented by the facts in the instant case is

the same asin Carter vs. Kubler, supra, and the Circuit Court

of Appeals cited and followed this Court's decision.

»

>.

The Circuit Court Of Appeals Has Not Decided Herein An

Important Question Of Federal Law Which Has Not Been

Settled By This Court.

The respondents submit that the important question of

Federal law involved herein has been settled by this Court.

The petitioner's petition and brief herein exhibit an attempt

to have this Court, on a writ of certiorari, reconsider the

facts. The major portion of petitioner's brief is devoted to

argument on the relative qualifications of the witnesses,

their interest in the proceedings, the weight to be accorded

their testimony, and the relative consideration to be given

sales of land in the vicinity of the petitioner’s farm. Cer-

tiorari is not granted to review evidence. General Talking

Pictures Corporation vs. Western Blectric Company, 304 U.

S. 175, 178:

6

“There is nothing in the lower courts’ decision on

either of the added questions to warrant review here.

Whether respondents acquiesced in the infringement

and are estopped depends upon the facts. Granting of

the writ would not be warranted merely to review the

evidence or inferences drawn from it. Nouthern Power

Co. vs. North Carolina Pub, Serr, Co., 268 UL S. 508,

GS L. Ed. 413, 44.8. Ct. 164; U.S. rs. Johnston, 268 U.

S. 220, 227, 69 L. Ed. 925, 926, 45 8. Ct. 496. Moreover,

the decision on that point rests on concurrent findings.

They are not to be disturbed unless plainly without sup-

port. O. S. vs. Chemical Foundation, 272 U.S. 1, 14,

71 L. Ed. 131, 142, 47 8. Ct. 1; U.S. rs. MeGorean, 290

U. 8. 592, 78 L. Ed. 522, 54.8. Ct. 95; Alabama Power

(Co. rs. Ickes, 302 U.S. 464, 82 L. Ed. 374, 58 S. Ct. 300.

There is evidence to support them.”

pers rs eee oe aa

The Circuit Court of Appeals concurred with the District

Court in the instant case, and said (R. 110):

“Since the proceedings and order of the conciliation

commissioner were ‘clearly erroneous’ on the ground

stated, the only remaining question is whether the value

fixed by the district judge was proper on the evidence.

On that point, there can be no sound question, so far

as our right of review extends in the matter.”

Respondents submit that not only is petitioner’s vehement

argument of the facts not a proper basis for granting cer-

tiorari, but much of it is unwarranted by the record.

“1

4.

A Conciliation Commissioner’s Order Fixing Value Under

Section 75 (s) (3) of the Bankruptcy Act Is Subject To

Review By the District Court. No Error Having Been As-

signed As To the Sufficiency Of Respondents’ Petition For

Review In Either the District Court Or On Appeal To the

Circuit Court Of Appeals, Its Sufficiency Is Not Now Prop-

erly Reviewable By This Court.

Petitioner's motion in the District Court to dismiss re-

spondents’ petition for review was solely upon the ground

that the District Court was without jurisdiction to review

an order of the Conciliation Commissioner fixing value of

property after a hearing pursuant to Section 75 (s) (3) of

the Bankruptey Act. The motion was denied upon. this

ground (R. 99, 100).

The sufficiency of respondents’ petition for review was not

raised in petitioner’s motion to dismiss in the Distriet Court

(R. 91, 92) nor in his Statement of Points on appeal to the

Circuit Court (R. 102, 108).

Respondents submit that the sufficiency of the petition for

review is not now properly reviewable by this Court,

The law is clear that an order of the Conciliation Com-

missioner fixing value of a farmer-debtor’s property pursu-

ant to a hearing under Section 75 (s) (3) is subject to re-

view by the District Court. In Rait vs. The Federal Land

Bank of Saint Paul, 8 Cir., 185 FB. (2d) 447, the Court said:

“We have previously assumed that the right to review

an order of the conciliation commissioner approving a

reappraisal, or fixing the value of the property after a

hearing, has always existed under the general provisions

of subsection ¢ of section 39 of the Bankruptey Act,

11 UL S.C. A. 67, subo ce. 2. . Tf there has heretofore

been any real question in the matter which we have

failed to recognize, it has now been sufficiently settled,

we believe, against appellant’s contention, by the expres-

8

sions in Pfister vs. Northern Illinois Finance Corpora-

tion. B17 U.S. 144... . We accordingly hold that, in

a proceeding under section 75, sub. s of the Bankruptcy

Act, an order of the conciliation commissioner approv-

ing a reappraisal made of the farmer-debtor’s property,

or fixing the value of the property after a hearing, prop-

erly is subject to review by the district judge. si

In Pfister vs. Northern Illinois Finance Corp., 317 U. 8.

144, this Court held that all proceedings subsequent to the

initial appraisal under Section 75 (s) of the Bankruptcy Act

are subject to review under Section 39 (c) of the Bankruptey

Act, the Court stating:

“It is obvious that this proviso couched in terms of

appeal, could not have been intended to control the re-

view of the manifold activities of a commissioner en-

eaged in handling an estate through three or more years

of bankruptey. To hold the proviso generally ap-

plicable would leave unregulated reviews of orders en-

tered more than four months after the commissioner ap)

proves the appraisal. The section applicable to these re-

views is $39 (c).”

Respondents submit that there appears no substantial rea-

son or necessity for granting a writ of certiorari to the Cir-

euit Court of Appeals for the Eighth Circuit, and prays the

petition be denied.

Respectfully submitted,

Rosert J. BARRY,

MICHARBL A, SCHMITT,

JoHN F. Lorp,

Counsel for Respondent,

The Federal Land Bank of Saint Paul,

346 Jackson Street,

St. Paul, Minnesota.