Petition — First National Bank of Tekamah v. Hansen

Supreme Court brief1983

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In The

Supreme Court of the United States

October Term, 1982

IN THE MATTER OF ORVILLE E. HANSEN,

Debtor.

FIRST NATIONAL BANK OF TEKAMAH,

NEBRASKA,

Petitioner,

VS.

ORVILLE E. HANSEN and VIRGINIA HANSEN,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Mavreen E. McGrata

KUTAK ROCK & HUIE

The Omaha Building

1650 Farnam Street

Omaha, Nebraska 68102

(402) 346-6000

Attorneys for Petitioner

COCKLE PRINTING CO., 231! Douglas St., Omaha 68102

QUESTIONS PRESENTED FOR REVIEW

1, What effect did the expiration of the stay granted

in Northern Pipeline Co. v. Marathon Pipe Line, — U.S.

—, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982) have on this

adversary proceeding which had been originally com-

menced and tried to judgment in the Bankruptcy Court

and, which, three days before the stay expired, had been

remanded from the District Court to the Bankruptey

Court for further trial?

2. Did the Cireuit Court err in finding that North-

ern Pipeline Co. v. Marathon Pipe Line invalidated only

that portion of $241 (a) of the Bankruptey Act of 1978

which granted original jurisdiction to the bankrutpey

courts [28 U.S.C. $1471 (c)] and that, therefore, after

Marathon became effective, original jurisdiction of this

adversary proceeding vested in the District Court under

the remaining portion of § 241 (a) [28 U.S.C. § 1471 (a)

and (b)]?

3. Did the Cireuit Court err in finding that, alter-

natively, if Marathon did invalidate the whole of § 241(a),

the District Court nevertheless has original jurisdiction

of this adversary proceeding under 28 U.S.C. § 1334?

4. Is Petitioner’s constitutional right to due pro-

cess violated by the Order of the District Court wherein

the District Court, after having exercised appellate

jurisdiction over this adversary proceeding, now asserts

original jurisdiction over the case, remands the case to

itself, and proceeds to act as the trial court in this matter?

do. Did the Circuit Court err in holding that the

Emergency Rule adopted on December 25, 1982 by the

United States District Court for the District of Nebraska

(Local Rule 51) is valid and constitutional and that the

District Court can properly refer this case to the Bank-

ruptey Court under that Rule for further trial?

iii

TABLE OF CONTENTS

Table of Contents STS SRS ce A COAG eNO EE

zee Of Authontin CONSE ARN Eee

————e [Laie cna 2

Constitutional and Statutory Provisions and Court

dyitet stasis, eS caine

ene Or

Reasons for Grantine the Writ

I. The Cireuit Court’s decision is in direct conflict

with an applicable decision of this Court. .........

II. The Court should settle the important federal

question of whether, after the enactment of the

Bankruptey Act of 1978, district courts retained

original jurisdiction over matters and proceed-

ings in bankruptey under 28 U.S.C. § 1334 and,

if so, whether the jurisdiction granted by that

statute is sufficient to authorize the continued

triai of this adversary proceeding. ....................... 15

Ilt. The Court should exercise its supervisory pow-

ers over the lower courts to prevent their con-

tinued and unauthorized exercise of original jur-

isdiction over this adversary proceeding and to

eliminate the current state of confusion and con-

nee ee ee ee 18

Conclusion SE OR Se Suen a Oat

TABLE OF CONTENTS—Continued

Pages

Appendix

A. Opinion and Judgment of the United

States Court of Appeais for the Eighth

AS Lamina: 3

B. Order of the United States District

Court, entered February 10, 1983... App. 4

C. Order and Memorandum Opinion of the

United States District Court, entered

December 21, 1982 i «

D. Judgment of the United States Bank-

ruptey Court, entered July 22, 1982....00.App. 22

E. §241(a) of P. L. 95-598 [28 U.S.C.

§ 1471 only] aipp. 24

F. 28 U.S.C. $1334 i. oe

G. $238 of P. L. 95-598 ue. pp. 25

H. $402 of P. L. 95-598 ___. App. 26

I. $405 of P. L. 95-598. _App. 26

J. Rule 51 of Local Rules of United States

District Court for District of Nebras-

ka. SOU App. 28

Bm. 1U.8C, $1@ App. 35

L. 28 U.S.C. $2071 __ kpp. 3

M. Rule 83, Federal Rules of Civil Pro-

cedure. App. 36

N. Rule 927, Federal Rules of Bankruptcy

Procedure. App. 36

O. United States Constitution, Amend-

ment V. App. 37

TABLE OF AUTHORITIES

Pages

CASES :

Amalgamated Workers Union of V. I. v. Hess

Gil Carn., 478 F. 31 300 (Grd Gr. 1975) 8

In re Braniff Airways, Inc.: Braniff Airways Ine.

v. Civil Aeronautics Bd., Mise. No. 4-221-E (N.

D. Tex. 1983) aff’d. 700 F.2d 214 (5 Cir. Feb.

a ia 22

In re Color Craft Press, Ltd., 10 B.C. D. 53, 27

B. R. 392 (Bk. Ct. D. Utah Feb. 7, 1983) rev’d

10 B. C. D. 182 (D. Utah Feb. 22, 1983) _________21, 22

In re James Conley and Laura Conley, i0 B.C. D.

10, 14-16, 26 B.R. 885 (Bk. Ct. M.D. Tenn.

1983) .. - 15, 36, 23

In re Orville E. Hansen, First National Bank of

Tekamah, Nebraska v. Orville E. Hansen and

Virginia Hansen, 10 B. C. D. 280 (8th Cir. March

Sie .... 1, 22

In re Herrera: Ralph A. Herrera v. Weaver Con-

struction Company, et al, 10 B.C.D. 123 (Bk.

Ct. D. Col. Feb. 2, 1983) cc conbien 21

In re International Horizons, Inc., 689 F.2d 996

(1ith Cir. 1982) we Co ee

In re Jorges Carpet Mills, Inc.: Still v. First Bank

of Newton, Kansas, 10 B. C. D. 1, 27 B. R. 333 (Bk.

Ct. E. D. Tenn. Jan. 31, 1983)

In re Macon Uplands Venture, 2 B.R. 435 (Bk.

Ct. D. Md. 1979)

TABLE OF AUTHORITIES—Continued

Pages

In re Matlock Trailer Corp.: Walter E. Heller

& Co. Southeast, Inc. v. Matlock Trailer Corp.,

Bk. No. 382-02778, Adv. No. 382-0755 (Bk. Ct. M.

D. Tenn., Jan. 26, 1983) rev’d Gen. Dkt. No. 3:

83-X-5 (M.D. Tenn. 1983) .

Gerald W. Moody, et al, debtors v. Hon. Robert

D. Martin and Kayser Leasing Corp., No. 83-C-

io. to. wee ere 7, 1)

In re Motion to Dismiss: Constitutionality of Jur-

isdiction of the Bankruptcy Court, 23 B. R. 334

(Bk. Ct. N. D. Ga. Aug. 30, 1982)

Muskrat v. United States, 219 U.S. 346, 31 S. Ct.

250, 55 L. ed. 246 (1911)

Northern Pipeline Construction Co. v. Marathon

Pipe Line, — U.S. —, 102 S. Ct. 2858, 73 L. Ed

IE RE CRD i. passim

In re Northland Point Partners, 26 B.R. 860

(E.D. Mich. Jan. 7, 1983), order adhered to

26 B. BR. 1019 (B.D. Mich. Feb. 8, 1963)

In re Otero Mills, Inc.: Otero Mills, Ine. v. Se-

curity Bank & Trust, 10 B.C. D. 89 (Bk. Ct. D.

New Mex. Feb. 18, 1983)

In re QI Corporation v. Victor Reichenstein, Cv.

No. 83-0525 (KE. D. N. Y. March 22, 1983)

In re Kent D. Richardson and F. Nadine Richard-

son, Bk. No. 82-C-00736, Civ. No. 82PC-0746 (Bk.

Ct. D. Utah Feb. 7, 1983) rev’d 10 B.C. D. 182

(D. Utah Feb. 22, 1983)

Vii

AUTHORITIES—Continued

Pages

Schaller v. Bd. of Supervisors, 83 F.2d 1016 (Sth

Cir. 1986) ............ Oo

In re Schear Realty & Investment Co., Ine.: Win-

ters National Bank & Trust Co. of Dayton v.

Shear Group, 9 B.C. D. 1210, 25 B. R. 463 (Bk.

Ct. S. D. Ohio, Western Div. Jan. 4, 1983)

United States v. Sherwood, 312 U.S. 584, 61 S. Ct.

767, 85 L. ed. 1058 (1941) eadeu

White Motor Corporation v. Citibank, N. A., 51

U.S. L. W. 2594 (6th Cir. April 1, 1983)

In re Dorothy J. Williamson, 10 B. C. D. 298 (Bk.

Ct. M.D. Ga. 1983)

STATUTEs AND Court RuLgEs:

Sore ee eee ce eee

S200 of Poe iar eo. 8G IO

§ 241 (a) of Public Law 95-598.........2, 4, 9, 10, 11, 13, 14,

§ 402 of Publie Law 95-598 ONC MOMOLO NEG TR

[ee roe ioe...

§ 405 of Public Law 95-598 oo. 2, 4 &, ¢, 9, 16, 17, D

11U.S.C. $11

11 U.S.C. $46

11 U.S.C. §66

11 U.S.C. $105 ~

Vill

AUTHORITIES—Continued

11 U.S.C. $523 ( 0 ed

ca bk nctgh & Lunas OS I iene

vi bese

Vo a

ea ae 2, 6, 7,9, 10, 15,

SUSCCcin...._ _.._ £49, 10

ee!) i

oe. lla

Rule 51 of the Local Rules of the United States

District Court for the District of Nebraska (as

adopted December 25, gg) as

Rule 83, Federal Rules of Civil rroesdere.

Pages

)

selina a

16, 17,18

11,12, 13

7, 8, 9, 18

2,13

Rule 115, Federal Rules of Bankruptey Procedure......... 19

Rule 409, Federal Rules of Bankruptey Procedure......... 19

Rule 752, Federal Rules of Bankruptey Procedure

Rule 810, Federal Rules of Bankruptey Procedure..........

Rule 812, Federal Rules of Bankruptcy Procedure...

Rule 921, Federal Rules of Bankruptcy Procedure

Rule 927, Federal Rules of Bankruptey Procedure..........2.

TREATISES AND OTHER AUTHORITIES:

Advisory Committee’s Note to Federal Rule of

Bankruptey Procedure 812

AUTHORITIES—Continued

Pages

Chatz and Tatelbaum, Conference Report: Bank-

ruptcy Courts and the Emergency Rule, Comm.

oe ee eee ee 22

9 Moore, Federal Practice, § 204.12[6], pgs. 4-86

moo Coe Oe

Morris, Courts In Confusion, The Wall St. Journal

(midwest ed.), Dec. 24, 1982 at 1, Col. 6, 13, Col. 4... 22

S. Rep. No. 989, 95th Cong., 2d Sess. at 154

(1978) EI 0 HE OS I 10, 16, 18

Vihon, Delegation of Authority and the Model Rule:

The Continuing Saga of Northern Pipeline, 88

ean. ae oe .!..U.ULULUU.UU:C«*dSG

13 Wright and Miller, Federal Practice and Pro-

ome. Sane Cs oe) 15

In The

Supreme Court of the United States

October Term, 1982

IN THE MATTER OF ORVILLE E. HANSEN,

Debtor.

FIRST NATIONAL BANK OF TEKAMAH,

NEBRASKA,

Petitioner,

Vs.

ORVILLE E. HANSEN and VIRGINIA HANSEN,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

ra’

OPINIONS BELOW

The Appendix to this brief sets forth the following

Judgments, Opinions and Orders of the Courts below: (A)

Opinion and Judgment of the United States Court of Ap-

peals for the Eighth Circuit entered March 23, 1983, In re

Orville Hansen, 10 B. C. D. 280 (8th Cir. 1983); (B) Order

of the United States District Court entered February 10,

1983; (C) Order and Memorandum Opinion of the United

States District Court entered December 21, 1982; and (D)

Judgment of the United States Bankruptcy Court entered

July 22, 1982.

ra’

JURISDICTION

The Opinion and Judgment of the United States Court

of Appeals for the Eighth Circuit was entered on March

23, 1983. This petition for certiorari was filed within 90

days of that date. This Court’s jurisdiction is invoked un-

der 28 U.S.C. $1254 (1).

CONSTITUTIONAL AND STATUTORY PROVISIONS

AND COURT RULES INVOLVED

Appendix E—§ 241 (a) of P.L. 95-598 [28 U.S.C.

§ 1471, only]

Appendix F—28 U.S.C. § 1334

Appendix G—4 238 of P. L. 95-598

Appendix H—4 402 of P. L. 95-598

Appendix I—4 405 of P. L. 95-598

Appendix J—Rule 51 of the Local Rules of the United

States District Court for the District of Nebraska

Appendix K--11 U.S.C. § 105

Appendix L—28 U.S.C. § 2071

Appendix M—Rule 83, Federal Rules of Civil

Procedure

Appendix N—Rule 927, Federal Rules of Bankruptcy

Procedure

Appendix O—United States Constitution, Amend-

ment V

STATEMENT OF THE CASE

On October 6, 1981, Orville Hansen, a Nebraska farm-

er, filed a voluntary Petition for Chapter 11 Reorganiza-

tion in the United States Bankruptcy Court for the Dis-

trict of Nebraska. Virginia Hansen, the Debtor’s wife,

did not file any Petition in bankruptcy.

The Debtor’s Petition listed Petitioner First National

Bank of Tekamah, Nebraska! as a secured creditor and

scheduled 100 percent (100%) of the debts owing to Pe-

titioner as liabilities of the Debtor; however, the Debtor's

schedule of assets included only one-half of the value of

those assets which Mr. Hansen had granted to Petitioner

as security for his loans and which he had warranted in the

Security Agreement were and would be owned by him

alone.

At the time of filing his Petition, Mr. Hansen advised

Petitioner for the first time in his thirty-year lending rela-

tionship, that Mrs. Hansen owned one-half of all of the

secured collateral as a co-tenant with him and that her

half of the collateral was not an asset of his bankruptcy

estate or subject to Petitioner’s lien because she was not

1The parent company of First National Bank of Tekamah,

Nebraska is Tekamah Agency Company. Affiliates of that com-

pany are: Arcadia Agency Company, Brainard Agency Com-

pany, Decatur Agency Company, First Nat’l Stanton Corp., Ida

Holding Company, Inc., Malmo Agency Company, Emerson

First Nat’l Co., Wagner Mills, Inc., Tiger Tom Assoc., Ltd., Farm

Products Elev., Inc., The Farmers Company, F.C.S., Inc., Bone

Creek Farms [all of Schuyler, Nebraska], First National Agency

Co. [Stanton, Nebraska], Valley Agency Company [Valley Ne-

braska], Fremont Inns, Inc. [Fremont, Nebraska], First State

Bank of Dwight [Dwight, Nebraska], Sunbank of South Dakota

{Sioux Falls, South Dakota}.

his business partner and she had not signed the Security

Agreement.

On November 20, 1981, Petitioner commenced this ad-

versary proceeding against the Debtor and his wife in the

United States Bankruptey Court for the District of Ne-

braska. That Court acquired original jurisdiction of this

proceeding under § 405 (b) of the B3ankruptey Act of 1978

which provides that during the transition period, the

amendment made by section 241 of the Act (28 U.S.C.

§ 1471) shall apply to the courts of bankruptcy continued

by section 404 (a) of the Act.

The Complaint, as subsequently amended, alleged six

causes of action: The first sought a declaratory judgment

adjudicating under Nebraska law the respective owner-

ship rights of the Hansens in the secured collateral and the

rights and interests of Petitioner therein; the remaining

five causes of action, all of which were contingent upon a

finding on the first cause that Mrs. Hansen did co-own the

collateral free of Petitioner’s security interest, sought (1)

a judgment for compensatory damages against the Debtor

due to his common law fraud in misrepresenting his sole

ownership of the collateral; (2) a judgment pursuant to

11 U.S. C. § 1141 and 11 U.S. C. § 523 (a) (2) denying the

Debtor a discharge of the debts he owes to Petitioner; (3)

a judgment against both Defendants for compensatory

damages due to their conversion of moneys loaned to the

Debtor for the express purpose of enabling him to pur-

chase and own collateral that would be fully secured by

Petitioner’s lien; (4) a judgment against Mrs. Hansen es-

topping her from asserting against Petitioner any owner-

ship interest she may have in the collateral; and (5) a

judgment against Mrs. Hansen for compensatory damages

due to her unjust enrichment.

While the case was pending in the Bankruptcy Court

and prior to trial, this Court on June 28, 1982 handed

down its judgment in Northern Pipeline Construction Co.

v. Marathon Pipe Line, — U.S. —, 102 S. Ct. 2858, 73

L. Ed. 2d 598 (1982). The judgment was stayed until

October 4, 1982 and that stay was extended to December

24, 1982.

While the stay was in effect, the case was tried in the

Bankruptcy Court on July 20 and 21, 1982. At the close

of Petitioner’s evidence, the Bankruptcy Court granted

the Defendants’ Motion to dismiss the Complaint in its

entirety. On July 22, 1982, the Bankruptcy Court entered

its Judgment (Appendix D) finding that the secured col-

lateral was co-owned by the Defendants and that Petitioner

had a security interest only in Mr. Hansen’s half (except

as to growing crops which the Court found were totally

unsecured). The Judgment then dismissed each and every

other cause of action.

After the Chapter 11 Petition was filed, the collateral was

liquidated and, by agreement of the parties approved by the

Bankruptcy Court, the proceeds were deposited into an escrow

account held by Petitioner subject to an Order of the Bank-

ruptcy Court that Petitioner ‘shall not set off or otherwise at-

tempt to obtain possession of the escrowed funds pending final

resolution of the dispute between the Bank, Debtor and Debt-

or’s wife or an agreement between the parties.” The Bank-

ruptcy Court, after trial and while appeal was pending in the

District Court, ordered release of the portion of the escrowed

funds which it had ruled were not subject to Petitioner’s secur-

ity interest. The Order was stayed by the District Court and

the Circuit Court during the subsequent appeals. On April 27,

1983 a further stay was granted by a Justice of this Court.

On July 28, 1982, Petitioner filed a timely appeal of

that Judgment to the District Court. The District Court

acquired jurisdiction of the appeal by virtue of § 405 (c)

(2) of the Bankruptcy Act of 1978 which gives the Dis-

trict Court during the transition period the same jurisdic-

tion as is granted under § 238 of the Act, amending 28

U.S.C. § 1334.

On December 21, 1982, the District Court entered an

Order and Memorandum Opinion (Appendix C) affirming

the Judgment of the Bankruptcy Court in part and re-

manding the case to the Bankruptcy Court for specific

findings and for the taking of such further evidence as it

deems necessary to the determination of an unresolved

issue of whether Mrs. Hansen authorized or ratified her

husband’s use of her half of the property as security for

his loans.

On December 23, 1982, in anticipation of the expira-

tion of the Marathon stay, the Judges of the United States

District Court for the District of Nebraska entered an

Order amending the Local Rules of that Court to add Local

Rule 51 effective December 25, 1982 (Appendix J). Un-

der Local Rule 51 “all cases under Title 11 and all civil

proceedings arising under Title 11 or arising in or related

to cases under Title 11 are referred to the bankruptcy

judges of this district” subject to withdrawal at any time

by the District Court on its own motion or on timely mo-

tion by a party.

On January 3, 1983, pursuant to Rule 812 of the

Rules of Bankruptcy Procedure, Petitioner filed a time-

ly Motion for Rehearing, pointing out various errors

of law made by the District Court in its rulings on the

merits. In addition, Petitioner requested that the Dis-

trict Court vacate the remand to the Bankruptey Court

and decide the remaining issue itself, as an appellate

court, for the reasons that (1) original jurisdiction of

this case no longer existed since the trial court, i.e., the

Bankruptcy Court, no longer had a valid grant of original

jurisdiction; (2) the District Court, as appellate court, is

prohibited by its own jurisdictional statute (28 U.S.C.

§ 1334 (c)] from using the Bankruptey Court as a special

master to take evidence and make findings; and (3) Local

Rule 51, which purports to enable the Bankruptcy Court

to accept the reference of this matter is unconstitutional

and invalid.

On January 20, 1983, the Rehearing Motion not hav-

ing been granted,’ Petitioner filed a Notice of Appeal with

the United States Court of Appeals for the Eighth Cir-

cuit invoking that Court’s appellate jurisdiction under 28

U.S. C. § 405 (e) (2) of the Bankruptcy Act of 1978, which

gives the Cireuit Court the same appellate jurisdiction

during the transition period as that created by § 236 of

the Act [28 U.S.C. §1293(b) added effective April 1,

1984].

On February 3, 1983, the Defendants-Appellees moved

to dismiss the appeal on the grounds that the Order of

December 21, 1982, was interlocutory because, after Mara-

thon, original jurisdiction of this case vested in the Dis-

trict Court, making the Order an effective remand which

‘A Motion for Rehearing filed under Bankruptcy Rule 812

does not suspend the running of the time for appea ing a final

order or judgment of the district court. See Advisory Commit-

tee’s Note to Federal Rule of Bankruptcy Procedure 812; and 9

Moore, Federal Practice, | 204.12[6], pgs. 4-86 to 4-88 (1982

ed.)

transferred jurisdiction of this case from the District

Court, as appellate court, te the District Court, as trial

court. Hence, Appellees argued, under new Local Rule

51, the matter can be properly referred to the Bankruptcy

Court for further trial. Petitioner resisted the Motion

asserting that the Order of December 21, 1982 was “fina!”

for the reason that original jurisdiction of this case no

longer exists in either the Bankruptcy Court or the Dis-

trict Court after Marathon and, therefore, the portion of

that Order which directed a remand was ineffectual as

such and constituted a dismissal which was final and ap-

pealable. See Amalgamated Workers Union of V.I. v.

Hess Oil Corp., 478 F. 2d 540, 542, n. 1 (3rd Cir. 1973).

Petitioner further argued that even if the District Court

had original jurisdiction, Petitioner’s constitutional right

to due process would be violated if the same court acted

as both appellate court and trial court in the same pro-

ceeding, as the District Court intended to do.

On February 10, 1983, the District Court entered an

Order (Appendix B) modifying its Order of December 21,

1982 so that the remand transfers the case from the Dis-

trict Court as appellate court, to the District Court as the

court “of original jurisdiction” for “trial de novo of the

sole factual issue remaining in this case” (the wife’s au-

thorization or ratification of her husband’s use of her prop-

erty as security for his debts). In the same Order, the

District Court “acting in the capacity of a district court

with original jurisdiction of ‘related proceedings’ within

the meaning of Local Rule 51, ... accepts jurisdiction and

simultaneously refers the trial of said issue to the United

States Bankruptcy Court for the District of Nebraska for

further proceedings in accordance with this Order, the

Memorandum and Order of December 21, 1982 and Local

Rule 51.” The Eighth Circuit treated both the Order of

December 21, 1982 and the modifying Order of February

10, 1983 as the subject of the appeal.

On March 23, 1983, after oral argument, the Eighth

Circuit dismissed the appeal [Appendix A], finding that

the Order appealed from was interlocutory because, after

Marathon, the District Court has original jurisdiction of

this adversary proceeding under either 28 U.S.C. § 1471

(a) and (b) or 28 U.S.C. § 1334 and holding further that

the Local Rule under which reference of this case is made

from the District Court, as the “court of original jurisdic-

tion” to the Bankruptcy Court for further trial, is valid

and constitutional.

REASONS FOR GRANTING THE WRIT

I. The Circuit Court’s decision is in direct conflict

with an applicable decision of this Court.

The Bankruptcy Act of 1978 repealed the former

Bankruptcy Act of 1898 effective October 1, 1979. The

repeal abolished all of the sections of the former Act

which had granted original subject matter jurisdiction to

the district courts [11 U.S.C. $11 (a) (20), 11 U.S.C.

§ 46 and 11 U.S.C. $66]. Section 241 (a) of the new Act

established a new grant of subject matter jurisdiction by

adding 28 U.S. C. § 1471 to the United States Code. Sec-

tion 405 (b) of the new Act made the amendments pro-

vided by Section 241 (a) applicable during the transition

period to “the courts of bankruptcy continued by Section

404 (a)” of the Act. These “continued courts of bank-

ruptcy,” as defined under section 1(10) of the former

Bankruptcy Act, include both the bankruptcy courts and

the district courts.

The jurisdictional grant contained in § 241 (a) [28

U.S. C. § 1471] purported to vest jurisdiction at two levels.

Subsections (a) and (b) of § 1471 vested district courts

with original jurisdiction of all “eases under title 11” and

“of all civil proceedings arising under title 11 or arising

in or related to cases under title 11.” Subsection (c) of

§ 1471, however, prohibited the district courts from ex-

ercising any of that jurisdiction by providing that the

pankruptey courts “shall exercise all of the jurisdiction

conferred by this section on the district courts.” The role

assigned to the district courts under the new Act was that

of appellate review. See Section 238 of the new Act

amending 28 U.S.C. § 1334 to change the jurisdiction

granted by that statute to district courts from original

jurisdicion to appellate jurisdiction. And see S. Rep.

No. 989, 95th Cong., 2d Sess. at 154 (1978), stating:

[T]he district judge will function only as an appel-

late judge in bankruptcy matters. . . . (emphasis

added).

In Northern Pipeline Co. v. Marathon Pipe Lane,

— U.S. —, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982), this

Court construed the jurisdictional grant made by § 241

(a). Six of the Justices of this Court found that this

statute made a “single” grant of jurisdiction to a “single”

court, the bankruptcy court. These Justices further found

that this single statutory grant of jurisdiction to the bank-

ruptcy court, although invalid only in part, was noi sever-

able, thus requiring invalidation of the statute in its en-

tirety.

The Eighth Circuit’s Opinion and Judgment is in di-

rect conflict with this Court’s judgment in Marathon. The

Cireuit Court has misconceived Marathon to mean that

§ 241 (a) effectively vested subject matter jurisdiction in

both district courts and bankruptcy courts and that only

that portion of § 241 (a) which granted original jurisdic-

tion to the bankrrptey courts [28 U.S. C. 4 1471 (c)] was

invalidated, thus leaving in effect the remainder of the

statute which purported to vest jurisdiction in the district

courts. In so holding, the Cireuit Court has ignored the

construction which six of the Justices of this Court placed

on that portion of $1471 which supposedly vested origi-

nal jurisdiction in the district courts, but which, it was

held, in reality, did not.

The construction placed on § 1471 (a) and (b) begins

in the plurality opinion which notes that “the relationship

between the district court and the bankruptcy court was

changed under the 1978 Act” so that bankruptcy courts

are “no longer ‘subordinate adjuncts of the district

court’” but are “‘independent of the United States dis-

trict court,’” 73 L. Ed. 2d at 621, n. 31. That district

courts were no longer intended to serve as courts of origi-

nal jurisdiction in bankruptcy with the ability to control

cases and proceedings at the trial level, was made plain

by the elimination under the 1978 Act of their discretion-

ary power to refer matters “at the trial stage” to the bank-

ruptcy referee for decision and to withdraw the reference

at any time, 73 L. Ed. 2d at 621, n.21. Under the new Act,

the Bankruptcy Court was permitted to “exercise ‘all of the

jurisdiction’ conferred by the Act on the district courts”

and to “exercise all ordinary powers of district courts”

by, among other things, entering enforceable judgments

which are “subject to review only under the more deferen-

tial ‘clearly erroneous’ standard,” 73 L. Ed. 2d at 624.

Thus, the plurality found that the intent of this stat-

utory scheme was to make the bankruptcy court the “ulti-

mate repository” of all of the original jurisdiction created

by the statute, 73 L. Ed. 2d at 604, n. 3, and to confer on

it powers “far greater” than those that could be permis-

sibly exercised by a non-Article III adjunct, 73 L. Ed. 2d

at 625.

The mechanism of the dual level vesting of jurisdic-

tion used by Congress to effectuate this purpose was con-

strued to be what it actually was, a “facade” which, in

reality, granted no jurisdiction whatsoever to the district

courts, 73 L. Ed. 2d at 625. The mechanism used, in fact,

“removed most, if not all, of the essential attributes of

the judicial power from the Art ITI district court” and

“vested those attributes in a non-Art III adjunct,” 73

L. Ed. at 625 (emphasis added). Thus, the plurality found

that by § 1471

Congress has vested jurisdiction of this and all mat-

ters related to cases under title 11 in a single non-

Art IIT Court, and has done so pursuant to a single

statutory grant of jurisdiction. 73 L. Ed. 2d at 625,

n. 40 (emphasis added).

Accordingly, having found that only a “single” court re-

ceived jurisdiction from this statute and having found that

that court lacked Art III powers, the plurality held that

“[{s]uch a grant of jurisdiction cannot be sustained as an

exercise of Congress’ power to create adjuncts to Art ITT

courts,” 73 L. Ed. 2d at 6235.

The concurring opinion agrees with the view that § 241

(a) vests original jurisdiction solely in the bankruptcy

court, stating that under this statutory scheme “[a]1] mat-

ters of fact and law in whatever domains of the law to

which the parties’ disputes may lead are to be resolved by

the Bankruptcy Court in the first instance, with only tradi-

tional appellate review apparently contemplated by Art

IIT courts,” 73 L. Ed. 2d at 628 (emphasis added).

Thus, six Justices of this Court recognized that Sec-

tion 241 (a) made only a single grant of original jurisdic-

tion to a single court, the Bankruptey Court.

Having so found, both the plurality and the concurring

opinions agreed that the sole grant of jurisdiction made

by the statute (i.e., the “single” grant to the “single”

court, the bankruptcy court), although invalid only in part,

was not readily severable, 73 L. Ed. 2d at 625-626, n. 40

and 628. Accordingly, the six Justices held that the stat-

ute must be struck down in its entirety and that the Mara-

thon case must be dismissed from the federal judicial sys-

tem.

In light of the fact that six Justices found that the

statute was not intended to and did not confer exercisable

district court original jurisdiction, the piurality expressly

rejected the suggestion that the case be “routed to the

United States District Court” for trial, 73 L.Ed.2d at

626, n. 40. The plurality recognized that this suggestion

of permitting the district court to exercise the jurisdiction

granted by §1471(a) and (b) would not comply with or

effectuate the legislative purpose, stating that “it is for

Congress to determine the proper manner of restructur-

ing the Bankruptcy Act of 1978 to conform to the require-

ments of Art III, in the way that wiil best effectuate the

legislative purpose,” 73 L. Ed. 2d at 626, n. 40 (emphasis

added).*

Both the concurring and the plurality opinions fur-

ther agreed that the Marathon holding, once effective,

would impair the administration of the bankruptcy laws

and leave no valid means of adjudication of bankruptcy

matters. Hence, the six Justices agreed to stay their judg-

ment for a specified period of time “to afford Congress

an opportunity to reconstitute the bankruptcy courts or

to adopt other valid means of adjudication,” 73 L. Ed. 2d

at 626 and 628.

That the whole of § 241(a) was invalidated is further

evidenced by the dissenting opinion written by Justice

White and joined in by Justices Burger and Powell which

speaks of the “sweeping invalidation of § 241(a),” 73 L.

Kd. 2d at 631, n. 3. Clearly, taking all of the opinions to-

gether, it is indisputable that all of the Justices of this

Court agreed that the holding of Marathon invalidated

the jurisdictional statute in its entirety.

Notwithstanding the total invalidation of 4 241(a),

the Eighth Circuit has ruled that Marathon severed and

‘In so finding the plurality maintained the rule enunciated

many times by the Court in the past, that severance is imper-

missible where Congress did not intend one provision of a

statute to stand, if another should fall. See, e. g., Muskrat v.

United States, 219 U.S. 346, 363, 31 S.Ct. 250, 55 L. ed. 246,

252 (1911) (where appellate jurisdiction of a particular kind of

claim conferred on Supreme Court was unconstitutional, orig-

inal jurisdiction of such claims conferred on the court of claims

must also fall since Congress intended the two grants to stand

together).

saved that portion of the statute which purported to grant

original jurisdiction to district courts. This ruling is in

direct conflict with the Marathon decision. We, therefore,

respectfully submit that this Petition should be granted to

effectuate the Marathon holding and to prevent the lower

courts from continuing to exercise original jurisdiction

over this adversary proceeding in the absence of a valid

grant of jurisdictional authority. The Court should grant

the Petition and instruct the lower courts to dismiss this

proceeding without prejudice to Petitioner’s right to seek

a further adjudication of its state law claims in the courts

of the State of Nebraska. Cf. Schaller v. Bd. of Super-

visors, 83 F.2d 1016 (8th Cir. 1936).

II. The Court should settle the important federal

question of whether, after the enactment of

the Bankruptcy Act of 1978, district courts re-

tained original jurisdiction over matters and

proceedings in bankruptcy under 28 U.S. C.

§ 1334 and, if so, whether the jurisdiction

granted by that statute is sufficient to au-

thorize the continued trial of this adversary

proceeding.

Prior to October 1, 1979, 28 U.S.C. § 1334 [Appendix

F'] provided district courts with “original jurisdiction, ex-

clusive of the courts of the States, of all matters and pro-

ceedings in bankruptcy.” The jurisdiction granted by this

statute was “summary jurisdiction” only, 13 Wright and

Miller, Federal Practice and Procedure, § 3570 (1975 ed.)

and was intended to complement the broader jurisdiction

granted to the district courts by the Bankruptey Act of

1898. See In re James Conley and Laura “Conley, 10 B.

C.D. 10, 14-16, 26 B. R. 885, 894-896 (Bk. Ct. M. D. Tenn.

1983).

Section 238 of the Bankruptcy Act of 1978 [ Appendix

G] amended § 1334 to eliminate the grant of original juris-

diction and to provide for a grant of appellate jurisdiction

to the district courts. This amendment was an effectua-

tion of the Congressional purpose of allowing the Bank-

ruptcy Court to exercise “all” of the district court’s orig-

inal jurisdiction and of the intent to confine the role of

the district court to appellate review only. See S. Rep.

No. 989, supra, at 154.

The amended version of 4 1334 hecame effective on

October 1, 1979. Section 402(a) of the new Act provides

that “Except as otherwise provided in this title [Title IV

—Transition] this Act shall take effect on October 1, 1979.”

The effective date of new 28 U.S.C. § 1334 is “other-

wise provided” in 4 405(c) (2) which states “During the

transition period [beginning October 1, 1979], the juris-

diction of the district courts ... to hear appeals shall be

the same as the jurisdiction of such courts ... granted

under the amendments made by Section... 238... .” Thus,

the effective date of new 28 U.S. C. § 1334 is the beginning

of the transition period, October 1, 1979 and the grant of

original jurisdiction in old 413834 expired at that time.

See In re International Horizons, Inc., 689 F.2d 996, 1000,

n. 5 (11th Cir. 1982) [“Section 405(c) (2) of the Bankrupt-

ey Reform Act provides that 28 U.S.C. § 1334 is now in

effect.”]; In re Dorothy J. Williamson, 10 B.C. D. 298,

303-304 (Bk. Ct. M.D. Ga. 1983) [holding that old § 1334

ceased to be operative on 10/1/79]; In re James C. Con-

ley € Laura Conley, 10 B.C. D. 10, 15, 26 B. R. 885, 896

(Bk. Ct. M.D. Tenn. 1983) [holding that old § 1334 was

repealed by implication on 10/1/79 because its continued

existence would be in direct conflict with Section 405(b)

which expresses Congress’ intent that only the bankruptev

courts shall exercise original jurisdiction during the trans-

ithen period], and In re Macon [ ‘plands Venture, 2 B.R.

435, 441 (Bk. Ct. D. Md. 1979) [holding that under the 1978

Act original jurisdiction is vested “exclusively” in the

bankruptcy court and district courts can exercise only

appellate jurisdiction over eases filed under the new Act

and then only if that procedure has been adopted by the

Circuit Court of which the district court is a part].

Marathon found that the new Bankruptey Act signifi-

cantly changed the relationship between the district courts

and the bankruptey courts, making the latter the sole re-

cipient of original jurisdiction with the power to enter en-

forceable judgments subject only to appellate review.

In so finding, the Court did not expressly address the

issue of whether Congress intended district courts, during

the transition period, to continue to retain and exercise

the original jurisdiction granted to them by old 28 U.S. C.

§ 1334; however, it is apparent that Congress did not so

intend since such a purpose would be in direct conflict with

the intent expressed in § 405(a)(1) (“All eases commenced

under Title 11 of the United States Code during the trans-

ition period shall be referred to the United States bank-

ruptcy judges”) and with § 405(b) which, by making § 241

(a) applicable during the transition period, expresses an

intent that only the bankruptcy courts would exercise

original jurisdiction during that period.

This important federal question should be settled

by this Court, and particularly in this case, since in the

instant case the District Court has already exercised the

appellate jurisdiction granted to it by the amended ver-

sion of § 1334 and the Circuit Court has ruled that the

District Court may now exercise original jurisdiction in

the same case under the unamended version of the same

statute.

The Circuit Court’s opinion would make both the

amended and the unamended versions of § 1334 operable

at the same time. This holding must be erroneous, par-

ticularly in view of the legislative history of the new Act

which states “the district judge will function only as an

appellate judge in bankruptcy matters,” S. Rep. No. 989,

supra (emphasis added). Moreover, the claims over which

the District Court would be asserting original jurisdiction

include state law claims for monetary damages against a

non-bankrupt party, Mrs. Hansen, which require plenary

jurisdiction not granted by $1334. In re Otero Mills, Inc.,

10 B.C. D. 89, 90 (Bk. Ct. N. D. Mex. 1983).

III. The Court should exercise its supervisory

powers over the lower courts to prevent their

continued and unauthorized exercise of orig-

inal jurisdiction over this adversary proceed-

ing and to eliminate the current state of con-

fusion and conflict in the lower courts.

On the day the Marathon stay expired, the United

States District Court for the District of Nebraska, like

all of its sister courts, adopted a new local rule [Local

Rule 51, Appendix J] purporting to make a reference to

the Bankruptcy Court of all cases under title 11 and of all

civil proceedings arising in or related to cases under title

11. The Rule was drafted by the Ninth Circuit at the

request of William Foley, Director of the Administrative

Office of the United States Courts acting upon the direc-

tion of the Judicial Conference of the United States, and

rests upon the erroneous assumption that district courts

retained exercisable original jurisdiction after Marathon

and that, in the exercise of their own rulemaking powers,

district courts can, by local rule, authorize bankruptcy

judges to adjudicate bankruptcy cases and proceedings.‘

The Rule violates 28 U.S.C. § 2071, Rule 83 of the

Federal Rules of Civil Procedure and Rule 927 of the

Federal Rules of Bankruptcy Procedure, all of which pro-

hibit the implementation of any local rule which is incon-

sistent with the rules of practice and procedure prescribed

by this Court. On its face, the Rule conflicts with the

following rules prescribed by this Court: (1) Bankruptcy

Rules 752 and 810 which, contrary to the Rule, require the

district court to accept the factual findings of the bank-

ruptcy court unless “clearly erroneous;” {2) Bankruptcy

Rule 921 which, contrary to the Rule, provides that a judg-

ment entered by a bankruptcy judge is effective upon entry

(no submission to a district judge for review is required) ;

(3) Bankruptcy Rules 115(b) and 409(c) which, contrary

to the Rule, permit either party to demand a jury trial

on any issue triable of right by a jury; and (4) Part VIII

of the Bankruptcy Rules which provide procedures for

appeals to the District Court, all of which are disposed

of by the Rule in “related proceedings.”

s5The memorandum accompanying the model rule identi-

fied 11 U.S.C. § 105 as the source of rule making authority

drawn upon to support the delegation of authority to the bank-

ruptcy courts. That statute, however, is an unlikely source of

district court rulemaking power since its intent appears to be

to confer power on the new Bankruptcy Courts equivalent to

that already held by District Courts under 28 U.S.C. § 1651

(the ‘all writs statute”). See Vihon, Delegation of Authority

and the Model Rule: The Continuing Saga of Northern Pipe-

line, 88 Comm. L. J. 64, 69 (Feb. 1983).

The Rule renders inoperable many existing statutes

not affected by Marathon. For example, the Rule makes

the reference of bankruptcy cases to the bankruptcy judg-

es discretionary while § 405(a) provides for a mandatory

reference of bankruptcy cases to bankruptcy judges. The

Rule eliminates the operation of 28 U.S.C. 4 1293(b) and

28 U.S. C. § 1482 which, respectively, permit direct appeals

from the bankruptcy court to the circuit court or to bank-

ruptcy panels designated under §160(a) of Title 28. The

Rule further attempts to create an estoppel against liti-

gants who fail to object to the Bankruptcy Court’s delegated

jurisdiction by providing that a party must raise the jur-

isdictional question of the bankruptcy judge’s authority

to enter a final order “prior to the time of entry of the

order or judgment of the district court after review.”

More importantly, if after Marathon district courts

are vested with exercisable original jurisdiction under the

unamended version of 28 U.S.C. $1334, as the Circuit

Court has found, the Rule impermissibly expands that

jurisdiction (which is limited to “matters and proceedings

in bankruptcy”) by purporting to give district courts con-

trol of “related proceedings” such as this one which are

beyond the scope of § 1334. See Order of Feb. 10, 1983,

App. B; Local Rule 51, Part ITI, App. J; and United States

v. Sherwood, 312 U.S. 584, 589-590, 61 S. Ct. 767, 85 L. ed.

1058 (1941). Further, the Rule purports to grant blanket

authority to bankruptcy judges to enter valid binding judg-

ments in particular types of proceedings, (non-“related

proceedings”), thereby attempting to make the very sev-

erance of bankruptcy court jurisdiction, which this Court

said was impermissible in Marathon.

The Eighth Circuit has erroneously sanctioned this

departure from accepted judicial rulemaking powers and

has approved the District Court’s wrongful attempt to ex-

ercise and to delegate original jurisdiction of this case

to the Bankruptcy Court. To support its holding, the

Eighth Circuit has relied upon decisions of other circuit

and district courts which reach similar conclusions. Those

conclusions, however, are the product of similar miscon-

ceptions of the meaning of Marathon and have resulted

from much dispute and disagreement between the lower

courts with numerous bankruptcy courts holding that nei-

ther they nor the district courts have any jurisdiction

after Marathon’, and with district courts’ and circuit

6In re Dorothy J. Williamson, 10 B. C. D. 298 (Bk. Ct. M. D.

Ga. March 14, 1983); In re Otero Mills, Inc.: Otero Mills, Inc.

v. Security Bank & Trust, 10 B. C.D. 89 (Bk. Ct. D. New Mex.

Feb. 18, 1983); In re Kent D. Richardson and F. Nadine Rich-

ardson, Bk. No. 82C-00736, Civ. No. 82PC-0746 (Bk. Ct. D. Utah

Feb. 7, 1983) rev’d 10 B.C. D. 182 (D. Utah Feb. 22, 1983); In

re Color Craft Press, Ltd., 10 B.C. D. 53, 27 B. R. 392 (Bk. Ct.

D. Utah Feb. 7, 1983) rev’d 10 B.C. D. 182 (D. Utah Feb. 22,

1983); In re Jorges Carpet Mills, Inc.: Still v. First Bank of New-

ton, Kansas, 10 B. C. D. 1, 27 B. R. 333 (Bk. Ct. E. D. Tenn. Jan.

31, 1983); In re Matlock Trailer Corp.: Walter E. Heller & Co.

Southeast, Inc. v. Matlock Trailer Corp., Bk. No. 382-02778,

Adv. No. 382-0755 (Bk. Ct. M.D. Tenn., Jan. 26, 1983) rev'd

Gen. Dkt. No. 3:83-X-5 (M.D. Tenn. Feb. 23, 1983); In re

James C. Conley and Laura Coniey, 10 B. C. D. 10, 26 B. R. 885

(Bk. Ct. M. D. Tenn. Jan. 26, 1983); In re Schear Realty & Invest-

ment Co., Inc.: Winters Nationai Bank & Trust Co. of Dayton

v. Shear Group, 9 B. C. D. 1210, 25 B. R. 463 (Bk. Ct. S. D. Ohio,

Western Div. Jan. 4, 1983); In re Motion to Dismiss: Constitu-

tionality of Jurisdiction of the Bankruptcy Court, 23 B. R. 334

(Bk. Ct. N. D. Ga. Aug. 30, 1982). And see Jn re Herrera: Ralph

A. Herrera v. Weaver Construction Company, et al, 10 B. C. D.

123 (Bk. Ct. D. Col. Feb. 2, 1983) [holding that district court

jurisdiction exists, but that the emergency rule is invalid].

7In re Q1 Corporation v. Victor Reichenstein, Cv. No. 83-

0525 (E.D. N. Y. March 22, 1983); In re Matlock Trailer Corp.,

(Continued on next page)

courts® taking the opposite position, often for dissimilar

reasons, leaving both litigants and the courts in a state of

confusion.’

We respectfully submit that the Court should grant

this Petition and, in the exercise of its supervisory powers

over the lower courts, the Court should rule that after

Marathon the bankruptcy courts and district courts have

no authority, either by statute or by rule, to continue ad-

(Continued from previous page)

Walter E. Heller & Company Southeast, Inc. v. Matlock Trailer

Corp., Gen. Dkt. No. 3:83-X-5 (M.D. Tenn. Feb. 23, 1983); In

re Color Craft Press, Ltd.: Color Craft Press, Ltd. v. Nationwide

Shopper Systems, Inc. and In re Kent D. Richardson and F. Na-

dine Richardson: Gillman, et al v. Preston Family Invest. Co.,

et al, 10 B. C. D. 182 (D. Utah Feb. 22, 1983) rev’ing 10 B.C. D.

53 and Bk. No. 82C-0736, supra; In re Braniff Airways, Inc.:

Braniff Airways Inc. v. Civil Aeronautics Bd., Misc. No. 4-221-E

(N. D. Tex. 1983); In re Northland Point Partners, 26 B. R. 860

(E. D. Mich. Jan. 7, 1983), order adhered to 26 B. R. 1019 (E. D.

Mich. Feb. 8, 1983) [certified to 6th Circuit under 28 U.S. C.

§ 1292(b) by Order entered Feb. 8, 1983].

8White Motor Corporation v. Citibank, N. A., 51 U.S. L. W.

2594 (6th Cir. Aprii 1, 1983); In re Braniff Airways: Braniff Air-

ways, Inc. v. Civil Aeronautics Board, 700 F.2d 214 (5th Cir.

Feb. 28, 1983); and In re Orville E. Hansen, First National Bank

of Tekamah, Nebraska v. Orville £E. Hansen and Virginia Hansen,

10 B. C. D. 280 (8th Cir. March 23, 1983).

*Some Bankruptcy judges have expressed fear of personal

liability for continuing to act under the new rule, In re Schear

Realty & Investment Co., supra, 9 B.C. D. at 1215-1216 and

Chatz and Tatelbaum, Conference Report: Bankruptcy Courts

and the Emergency Rule, Comm. L. J. 61, 62 (Feb. 1983)(remarks

of Bankruptcy Judge Paskay at special conference called by

Senator DiConcini, Jan. 7, 1983); others have refused to act at

all and have been subjected to mandamus by the district court,

Gerald W. Moody, et al, debtors v. Hon. Robert D. Martin and

Kayser Leasing Corp., No. 83-C-174-C (D. Wisc. March 7, 1983);

at least one has resigned, Morris, Courts In Confusion, The

Wall St. Journal (midwest ed.), Dec. 24, 1982 at 1, Col. 6, 13,

Col. 4.

judicating title 11 cases or civil proceedings arising in or

related to title 11 cases, including this adversary proceed-

ing.

CONCLUSION

On the basis of the foregoing, a Writ of Certiorari

should be issued to review the Judgment and Opinion of

the Eighth Circuit and, upon review, this Court is request-

ed to reverse that decision and order the dismissal of this

case.

Respectfully submitted,

FIRST NATIONAL BANK OF

TEKAMAH, NEBRASKA

By: Maureen E. McGratu

KUTAK ROCK & HUIE

The Omaha Building

1650 Farnam Street

Omaha, Nebraska 68102

(402) 346-6000

Attorneys for Petitioner

Dated May 3, 1983

App. 1

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 83-1158

IN THE MATTER OF:

ORVILLE E. HANSEN,

Debtor.

THE FIRST NATIONAL BANK

OF TEKAMAH, NEBRASKA,

Appellant,

ORVILLE E. HANSEN and

VIRGINIA HANSEN,

Appellees.

Appeal from the United States District Court

for the District of Nebraska

Submitted: March 14, 1983

Filed: March 23, 1983

Before HEANEY, BRIGHT and ROSS, Circuit Judges.

PER CURIAM.

In October 1981 appellee Orville Hansen filed this

Chapter 11 bankruptcy proceeding. In November 1981

appellant First National Bank of Tekamah filed a petition

in bankruptcy court seeking adjudication of its rights as

a secured creditor of Hansen. The bankruptcy court, in

July 1982, dismissed the complaint and entered judgment

for Hansen.

The bank appealed the judgment to the district court!

pursuant to 28 U.S.C. § 1334. On December 21, 1982, the

district court affirmed the bankruptey court’s ruling in

part and remanded to the bankruptcy court for additional

factual findings. On December 23, 1982, the district court

of Nebraska adopted Local Rule 51 to allow the continued

operation of the bankruptcy courts in light of Northern

Pipeline Const. v. Marathon Pipe Line Co., 102 8. Ct. 2858

(1982).

On February 10, 1983, the district court denied the

bank’s motion for reconsideration. The district court pur-

suant to Local Rule 51 remanded the case to itself for a

de novo trial on the remaining factual issue and referred

the case to the bankruptcy court for its recommendation.

The bank appealed the orders of December 21, 1982, and

February 10, 1983, and Hansen moved to dismiss this ap-

peal for lack of a final appealable order. We stayed the

implementation of the judgment of the district court pend-

ing appeal.

We agree with appellee that this appeal must be dis-

missed as interlocutory. This court has held that district

court orders of remand are not final appealable orders.

see, e.g., Giordano v. Roudenbush, 565 F. 2d 1015 (8th Cir.

1977); Transportation-Com. Div. v. St. Louis-San Fran-

cisco Ry. Co., 419 F. 2d 933 (8th Cir. 1969).

1The Honorable C. Arlen Beam, United States District Judge

for the District of Nebraska.

App. 3

Appellant argues the appeal is not interlocutory be-

cause the district court lacked jurisdiction over the case

after December 24, 1982. We reject appellant’s argument

and conclude that Marathon did not invalidate 28 U.S.C.

§1471(a) and (b) and even if it did, the jurisdictional

grant, 28 U.S. C. § 1834, remains effective during the post-

Marathon transitional period. Further, we find that Local

Rule 51 is constitutional and valid. In re: Braniff Air-

ways, Inc., Mise. 4-221-E (N.D. Tex. January 20, 1983),

aff'd In the Matter of: Braniff Airways, Inc., No. 83-1048

(5th Cir. February 28, 1983); In re Color Craft Press Ltd.,

No. C83-0140J (D. Utah February 22, 1983) ; In the Matter

of Northland Point Partners, No. 82-05387-W (KE. D. Mich.

January 7, 1983). See also In re Keene Corp., No. 82-1242,

51 U.S. L. W. 3601, 3613 and 3616 (S.Ct. February 22,

1983) (mandamus denied). Therefore, we hold that the

distriet court had jurisdiction and its order of remand to

itself for further findings was proper and in accordance

with Loca! Rule 51.

Accordingly, the appeal is dismissed and the stay is

dissolved unless extended by the district court.

a true copy.

Attest:

_CLERK, U.S. Court of Appeals, Eighth Circuit.

App. 4

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEBRASKA

BK 81-1992

Adv. No. A81-808

IN THE MATTER OF:

ORVILLE E. HANSEN,

Debtor.

THE FIRST NATIONAL BANK (CF

TEKAMAH, NEBRASKA,

Plaintiff,

VS.

ORVILLE E. HANSEN and

VIRGINIA HANSEN,

Defendants.

CV 82-0-412

CV 82-0-464

CV 82-0-515

ORDER

Filed February 10, 1983

This matter is before the Court after receipt of briefs

in support of and in opposition to appellant’s motion for

rehearing and vacation of judgment and appellees’ motion

for reconsideration.

This case was reviewed on appeal from the United

States Bankruptcy Court for the District of Nebraska,

resulting in this Court’s Memorandum and Order of De-

cember 21, 1982. All legal and factual issues except one

App. 5

were affirmed on appeal, with one factual issue to be re-

manded for trial de novo by a court of competent juris-

diction.

At the time of this Court’s judgment, the Bankruptcy

Court had jurisdiction to entertain this case on remand

and to take evidence and decide the remaining factual

issue. As of December 25, 1982, however, the Bankruptcy

Court lost original jurisdiction of “related proceedings,”

ie., cases such as this one which “in the absence of a peti-

tion in bankruptcy, could have been brought in a district

court or a state court.” Local Rule 51; Northern Pipeline

Construction Co. v. Marathon Pipe Line Co., 102 8. Ct.

2858 (1982). As a result, appellant urges that the remain-

ing issue to be tried in this action cannot be “remanded”

to the Bankruptey Court for de novo determination, ap-

parently because the only forum in the federal judicial

system with original jurisdiction of such a “related pro-

ceeding” would be a federal district court.

If, as the Bank contends, the issue remaining to be

tried cannot be “remanded” to the Bankruptcy Court, then

it can be remanded by this Court, acting in its appellate

capacity, to the United States District Court for the Dis-

trict of Nebraska as a court of original jurisdiction over

“related proceedings.” If so remanded, the issue to be

tried can and will then be “referred” under Local Rule 51

to the Bankruptcy Court for “findings, conclusions and a

proposed judgment or order to the district judge,” after

the hearing of additional evidence. Jd. Once remanded

to the District Court, this case will no longer be in the

posture of an “appeal” within the meaning of 28 U.S.C.

§ 1334(c) (in effect during the transition period), and can

therefore be referred without conflicting with section

1334(c).

App. 6

IT IS THEREFORE ORDERED that the order of

December 21, 1982, issued by this Court in its appellate

capacity, is modified as follows:

These actions are hereby remanded to the United

States District Court for the District of Nebraska for

trial de novo of the sole factual issue remaining in this

case, l.e., whether Virginia Hansen authorized and/or

ratified Orville Hansen’s pledge of her interest in their

common property to the First National Bank of Te-

kamah, and if so, to what extent and with respect to

which property did she authorize or ratify such pledge.

IT IS FURTHER ORDERED that to this extent

appellant’s motion is granted in part and is otherwise de-

nied, and appellees’ motion is denied.

IT IS FURTHER ORDERED that, acting in the ea-

pacity of a district court with original jurisdiction of “re-

lated proceedings” within the meaning of Local Rule 51,

this Court hereby accepts jurisdiction and simultaneously

refers the trial of said issue to the United States Bank-

ruptey Court for the District of Nebraska for proceedings

in accordance with this order, the Memorandum and Order

of December 21, 1982, and Local Rule 51.

DATED this 10th day of February, 1983.

BY THE COURT:

/s/ C. Arlen Beam

United States District Judge

App. 7

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEBRASKA

BK 81-1992

Adv. No. A81-808

IN THE MATTER OF:

ORVILLE E. HANSEN,

Debtor.

THE FIRST NATIONAL BANK OF

TEKAMAH, NEBRASKA,

Plaintiff,

vs.

ORVILLE E. HANSEN and

VIRGINIA HANSEN,

Defendants.

CV 82-0-412

CV 82-0-464

CV 82-0-515

ORDER

Filed December 21, 1982

IT IS ORDERED that:

1. These actions are hereby remanded to the United

States Bankruptcy Court for the District of Nebraska for

further proceedings in accordance with the Memorandum

Opinion issued contemporaneously herewith.

2. In all other respects the Judgment of the Bank-

ruptcy Court is affirmed.

3. The temporary stay pending appeal issued by this

Court on September 7, 1982, and continued on September

App. 8

16, 1982, is hereby dissolved, and the appellant may apply

to the Bankruptcy Court for such further relief as may

be necessary in that regard.

DATED this 21st day of December, 1982.

BY THE COURT:

/s/ C. Arlen Beam

United States District Judge

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEBRASKA

BK 81-1992

Adv. No. AS1-808

IN THE MATTER OF:

ORVILLE FE. HANSEN,

Debtor.

THE FIRST NATIONAL BANK OF

TEKAMAH, NEBRASKA,

Plaintiff,

ORVILLE E. HANSEN and

VIRGINIA HANSEN,

Defendants.

CV 82-0-412

CV 82-0-464

CV 82-0-515

MEMORANDUM OPINION

Filed December 21, 1982

App. 9

These related cases are before the Court on appeal

from the Bankruptcy Court’s Judgment of July 22, 1982,

and subsequent Order of September 3, 1982. As further

set forth below, the Court affirms the Judgment of the

Bankruptcy Court as to all issues raised on appeal with

one exception, and as to that issue the Court remands this

action for further proceedings in accordance with this

Memorandum Opinion.

The First National Bank of Tekamah, Nebraska, is

the primary creditor of Orville E. Hansen, the debtor in

a Chapter 11 reorganization proceeding filed in the United

States Bankruptey Court for the District of Nebraska.

Virginia Hansen, the debtor’s wife, is not a party to the

bankruptey action. The Bank sought a determination that

Mr. Hansen is the sole owner of certain farm property

which consists of most of the assets accumulated by the

Hansens during their 32 years of marriage, and that all

of the property is subject to the Bank’s security interest.

After a trial on the merits, the Bankruptcy Court found

as follows. Virginia Hansen owns one-half of the prop-

erty in question free and clear of the Bank’s lien. The

Bank failed to prove its allegations of partnership, mis-

representation, estoppel, unjust enrichment, conversion,

right to contribution and agency. Orville Hansen’s debt

is dischargeable, and the Bank does not have a perfected

security interest in the Hansens’ growing crops or the

proceeds thereof.

Matters on appeal to this Court after trial on the

merits in the Bankruptcy Court are subject to the clearly

erroneous standard of review. Therefore, unless this Court

is left with the definite and firm conviction that a. mistake

App. 10

has been committed, the findings of fact by the Bankruptcy

Court are to be affirmed. Acacia Mutual Life Ins. Co. v.

Perimeter Park Investment Assoc., Ltd., 616 F. 2d 150, 151

(Sth Cir. 1980) (Bankruptcy Rule 810); Lang v. Cone, 542

F, 2d 751, 754 (8th Cir. 1976) (appeal from Fed. R. Civ. P.

41(b) dismissal).

The Bank first urges that either Orville Hansen owns

all of the property on the Hansen farm and his wife owns

none, or, in the alternative, that the Hansens were engaged

in a secret business partnership. The primary basis for

this view is Orville Hansen's practice of using his name

alone in dealings with creditors, suppliers and others, with-

out reference to his wife’s interest in the farm property.

On the other hand, both of the Hansens testified be-

for the Bankruptcy Court that any property they acquired

was regarded by them as jointly owned and that neither

had ever considered Orville Hansen the exclusive owner

of the farm assets. In addition, their expression of in-

tent to hold all property concurrently has been consistent

with their treatment of titled assets. Their only bank

account is a joint checking account at appellee Bank into

which their farm income was deposited, and Virginia, who

undertook the farm bookkeeping duties, wrote many of the

checks on this account. The Hansens are parties to a land

contract to purchase their farm in joint tenancy, the deed

to which is held in escrow at appellee Bank. The contract,

deed and escrow instructions bear the names of both Gr-

ville and Virginia Hansen. Their vehicles also are titled

in joint tenancy. Insurance policies on the property in

question name both Orville and Virginia. The sign in

front of their farm reads “The Hansens, Orville and Vir-

App. 11

ginia.” They both exercised open and continuous posses-

sion and control of the farm and everything on it.

The record reveals no evidence that either of the

Hansens brought any goods or capital into their mar-

riage, and for 32 years they worked together in their vari-

ous farming endeavors. Although Virginia apparently as-

sumed most of the housekeeping and child care responsi-

bilities, she also performed duties more specifically re-

lated to farming. The record clearly indicates that all

of the property accumulated by the Hansens over a 32

year period derives from their joint efforts in their farm-

ing operations. See Craig v. United States, 451 F. Supp.

378 (D. S. D. 1978).

Appellee relies on several Nebraska cases which hold

that in the absence of an express contract a husband is

not required to compensate his wife for work performed

beyond her “ordinary household duties” in connection with

property or business interests to which he alone holds

title. See, e. g., Peterson v. Massey, 199 Neb. 829, 53

N. W. 2d 912 (1952). In the present action, however, both

spouses hold legal title to all titled property; both agree

that all of their assets are jointly owned, and compensa-

tion for services is not the issue. Cotenancy is the issue.

Applying the principle that the form of ownership in

which property is taken depends to a substantial extent

on the intent of the parties, see generally In re White-

side’s Estate, 159 Neb. 362, 368, 67 N.W. 2d 141, 145

(1954), the Bankruptcy Court found that Orville and Vir-

ginia Hansen own the farm property in cotenancy, each

owning a one-half undivided interest. This finding is not

clearly erroneous and is sufficiently supported by the

record.

App. 12

With respect to the contention that the Hansens were

parties to a secret business partnership, the Bankruptey

Court found that the record contains no evidence of any

such partnership agreement. Furthermore, as a general

rule “joint tenants and tenants in common are not part-

ners and thus have no implied authority to bind each other.

Thus a third party who takes a mortgage from one of the

cotenants or makes improvements at the request of one

of the cotenants may find himself out of luck in attempt-

ing to proceed against another cotenant’s interest.” Volk-

mer, Nebraska Law of Concurrent Ownership, 13 Creigh-

ton L. Rev. 513, 529 (1979).

In Ogallala Fertilizer Co. v. Salsbery, 186 Neb. 537,

184 N.W. 2d 729 (1971), the Nebraska Supreme Court

declined to impute a business partnership relation to a

married couple who shared a joint checking account into

which their farm income was deposited, so that in a sense

they shared profits and losses from the farm enterprise,

not unlike business partners. Yet this, being quite a usual

marital arrangement, standing alone, is insufficient to

establish a partnership... .” Jd. at 538, 184 N. W. 2d at

730. Moreover, the creditor who had dealt exclusively

with the husband could not recover his claim from the

wife in the absence of proof that the husband had con-

tracted with the creditor in the capacity of a managing

partner in whose name all partners transacted business

with third parties. The Bankruptcy Court in the present

action was not clearly erroneous in concluding on the basis

of the evidence before him that, as in the Ogallala Fer-

tilizer case, Mr. Hansen contracted with appellee in his

individual capacity rather than as the managing partner

of a business partnership.

App. 13

With respect to the claims of estoppel and fraud, the

Bankruptcy Court found that Virginia Hansen at no time

made any misrepresentations to the Bank, nor did she act

improperly in any manner. The record suggests that the

Bank’s surprise at the discovery of Virginia Hansen’s in-

terest in the farm property derives primarily from its re-

markably casual banking practices, including an avowed

policy of ignoring the existence of farm wives in extend-

ing agricultural loans to their husbands. The loan offi-

cer who has managed Orville Hansen’s account since 1976

testified that for at least 10 years the Bank has operated on

the assumption that farm wives do not own farm property.

The Bank’s reasoning in Orville Hansen’s case was cireu-

lar, i.e., because Orville was the person with whom the

Bank dealt, it seems never to have occurred to the loan

officers involved that Virginia Hansen might have her own

interest in the property. As a result, no Bank official ever

inquired of either Orville or Virginia whether either or

both of them considered Virginia a co-owner of the farm

property.

Notwithstanding the Bank’s knowledge of the Han-

sens’ joint checking account and the status of their real

estate purchase in joint tenancy, the Bank has taken the

position that it was entitled to assume that all remaining

property belonged exclusively to Orville Hansen. The

Bank made no inquiries and did not even conduct lien or

title searches with respect to the farm vehicles, which

would have revealed joint ownership of those assets by

the Hansens. Bank officials never requested Virginia to

sign loan documents, financing statements, guarantees or

promissory notes. They never requested her presence at

App. 14

loan negotiations, and she never participated in any deal-

ings with the Bank. See contra, Clements v. Doak, 140

Neb. 265, 266, 299 N. W. 505, 507 (1941).

The annual property statements on which the Bank

now claims reliance were prepared in a most informal

manner. At the periodic request of his loan officer, Or-

ville Hansen would bring in a list of all of the property

on the farm and his estimate of its current value. Mr.

Hansen would then sign a property statement in blank,

and later the loan officer would complete it after minimal

discussion, if any, concerning the cattle count or whether

property previously listed had appreciated or declined in

value. Periodically the loan officer would drive by the

Hansen farm or visit to inspect the livestock. Despite

the Bank’s awareness of the Hansens’ joint tenancy in

their checking account and realty, the entire value of both

cash on hand (checking account) and the realty appeared

on the property statements in the loan officer’s handwrit-

ing. In addition, no real estate appraisals were ever con-

ducted by the Bank.

In the absence of any statements by Virginia Hansen

it is difficult to see how she could have misrepresented her

ownership interests or how the Bank could have relied on

her representations so as to give rise to a basis for es-

toppel. If a cotenant “does nothing to mislead a third per-

son, or where the conduct of the tenant is not such as to

warrant a third person’s reliance thereon, the tenant is

not estopped to assert that he is not bound by the unau-

thorized acts of his cotenant.” First Nat. Bank in Ord v.

Morgan, 172 Neb. 849, 854, 112 N. W. 2d 26, 30 (1961).

App. 15

As te whether an equitable lien should attach to Mrs.

Hansen’s share of the farm property on the theory of un-

just enrichment, Comment 5 to Neb. Rev. Stat. § 9-203

(Reissue 1980) (attachment and formal requirements for

enforceability of security interests) states:

The theory of equitable mortgage, insofar as it has

operated to allow creditors to enforce informal se-

curity agreements against debtors, may well have de-

veloped as a necessary escape from the elaborate re-

quirements of execution, acknowledgement and the

like which the nineteenth century chattel mortgage

acts vainly relied on as a deterrent to fraud. Since

this Article reduces formal requisites to a minimum,

the doctrine is no longer necessary or useful. More

harm than good would result from allowing creditors

to establish a secured status by parol evidence after

they have neglected the simple formality of obtaining

a signed writing.

The record does not establish that Orville Hansen

conveyed any of the Bank’s collateral to his wife. The

Hansens purchased their property jointly using joint

funds, some of which derived from the loans Orville ob-

tained from appellee and others of which were traceable

to Virginia’s hard work on the farm, as well as Orville’s.

To use the theory of unjust enrichment to impress an equi-

table lien on her share of their joint property would cir-

cumvent the simple requirement that a secured lender

obtain a signed writing pursuant to section 9-203, supra.

As stated herein, no fraud, misrepresentation or other im-

proper behavior was established at trial.

Having failed to protect its own interests, such as by

requiring that Virginia Hansen sign a security agreement

and note, the Bank now claims that Mrs. Hansen con-

App. 16

verted the proceeds of the loans extended to her husband.

The loan funds were deposited in the Hansens’ joint bank

account, as were the profits from the farming operation.

The contents of this account were not subject to the Bank’s

lien, and Virginia was entitled to draw on the account for

any purpose including purchases. As the funds were

used to make joint purchases, the Bank’s security interest

attached to Orville Hansen’s share of property acquired

thereby to the extent that such goods qualified as after-

acquired property under the description of collateral in his

security agreement with the Bank. See Neb. Rev. Stat.

§ 9-203, supra. There is no showing in the record that the

funds were used for purposes other than the payments

and purchases for which the loans were extended. The

Bankruptcy Court was not clearly erroneous in rejecting

the Bank’s claim of conversion.

Orville Hansen never purported to grant a mortgage

in the farm real estate to the Bank. Moreover, the Bank

knew that the land was in the process of purchase by the

Hansens as joint tenants. Therefore, it is less than clear

to this Court why the entire value of the real estate owned

by the Hansens, or in fact any of it, should be considered

subject to the Bank’s security interest. Furthermore, this

issue does not appear to have been raised before the Bank-

ruptey Court. For these reasons, this claim must fail on

appeal.

A related claim concerns whether Orville Hansen has

a right of contribution against his wife for funds he may

have used to pay her portion of the land contract pay-

ments. The record does not establish whether or to what

extent the source of such payments consisted of Orville

Hansen’s separate loan funds as opposed to the Hansens’

App. 17

joint profits from their farming operations. As the rec-

ord reveals inadequate proof that Orville Hansen in fact

paid “more than his share” of their joint obligation, the

Bankruptcy Court did not err in refusing io find that such

a right of contribution exists in this case. Furthermore,

under Nebraska law, even if one spouse contributes more

than his share of the purchase price of property acquired

in the name of the other or jointly, a presumption arises

that a gift was intended as to the amount contributed in

excess of the payor spouse’s half. Hoover v. Haller, 146

Neb. 697, 705, 21 N. W. 2d 450, 455 (1946).

The issue which troubles this Court and which re-

quires a remand for further findings and perhaps further

evidence involves the Bank’s assertion that Virginia Han-

sen authorized her husband to pledge her property.

It is clear that no agency relation is presumed to

exist by virtue of cotenancy and that “one cotenant can-

not ordinarily bind his fellows by contracts with third per-

sons, unless he is... duly authorized or unless they there-

after ratify his act.” 20 AM. JUR. 2d Cotenancy and Joint

Ownership §§ 2, 91, 102 (1965). Accord, Aherens v. Dye,

206 Neb. 423, 425, 293 N. W. 2d 388, 390 (1980). Further-

more, in the absence of such authorization or ratification,

a co-owner of property can convey or mortgage only such

interest as he has, and the sale or lien will not affect the

interests of the other co-owners. Jolliffe v. Maxwell, 3

Neb. Unoff. 244, 91 N. W. 563, 565-66 (1902).

The record establishes Virginia Hansen’s knowledge

that her husband had pledged farm property to the Bank

as security for his loans, and that on certain occasions,

at least, he was pledging all of their cattle. Even counsel

App. 18

for Orville Hansen conceded in his opening statement to

the Bankruptcy Court that Virginia knew or assumed Or-

ville had granted the Bank a security interest in all of the

cattle and feed on the farm. In advance of certain loan

applications, the Hansens apparently discussed Orville’s

intention to visit the Bank to borrow funds and to pledge

certain property. As to other occasions, the record is not

clear whether Virginia knew the extent of her husband’s

borrowings and the character or amount of property

pledged. Whether their discussions and Virginia’s knowl-

edge of and cooperation in Orville’s efforts to borrow

funds from the Bank amount to prior authorization for

her husband to pledge her property and/or ratification of

such pledge cannot be reviewed on this record.

The Bankruptcy Court made no findings as to whether

Virginia Hansen authorized the pledge of her property by

her husband or whether she subsequently ratified such

pledge, and, if so, the extent to which her property is

therefore encumbered. As to these issues, the Bankruptey

Court concluded only that Virginia Hansen had not signed

a note or security agreement and that Orville Hansen had

not formed an intent to convey an interest in his wife’s

property. Specifically, the Court stated:

I conclude as law that Mrs. Hansen’s interest is free

and clear of First National Bank’s security interest

in that she did not sign any note to the bank to evi-

dence the indebtedness, that the loans were made to

Mr. Hansen and that there is no security agreement

in existence which bears Mrs. Hansen’s signature. I

make that finding in view—notwithstanding the sug-

gestion that there was some implied authority. I do

not believe that Mr. Hansen acted with the intent to

convey the interest or give a security agreement in-

App. 19

volving Mrs. Hansen’s interest simply because he did

not think in terms of those legal concepts. The bank,

as I have said, failed to inquire.

The latter of these findings, i.e. that Orville Han-

sen did not intend to convey a security interest in the half

of the farm property owned by Virginia, is contradicted

by the evidence. Mr. Hansen did not even testify to this

effect. On the contrary, the record contains multiple ad-

missions that he intended to pledge all of certain kinds of

property on the farm, e.g. cattle, in which he was a co-

owner, and his actions were consistent with such intent.

While Mr. Hansen may not have maintained an intent to

deceive the Bank, and the evidence suggests that he did

not, nevertheless he purported to convey a security in-

terest in any and all farm property in which the Bank

required an interest as a prerequisite to granting him

the loans. As the Bankruptey Court concluded, Mr. Han-

sen probably did not think in terms of the legal conse-

quences flowing from his coownership of the farm prop-

erty with his wife. One such consequence is that he could

effectively pledge only his own undivided interest in the

common property in the absence of Virginia’s authori-

zation or ratification of such pledge as to her share of

the property. See 20 AM. JUR. 2d, Cotency and Joint

Ownership § 102 (1965). However, as the record strong-

ly suggests that Orville Hansen intended to pledge all

property available to him to secure his loans from the

Bank, it is necessary to determine de novo whether Mrs.

Hansen made her share of the property available to him

for this purpose. Such a determination is properly re-

manded to the Bankruptey Judge, who has had the oppor-

tunity to see and judge the credibility cf the witnesses

App. 20

involved and who can take such further evidence, if any,

as may be necessary to make this determination. This ac-

tion will therefore be remanded to the Bankruptey Court

for specific findings on the issue of Virginia Hansen’s

actual, not implied, authorization and/or ratification of

her husband’s pledge of her share in their common prop-

erty. If the Bankruptcy Court concludes that Mrs. Han-

sen did authorize her husband to pledge property of which

she is co-owner, the nature and extent of the property

so encumbered must be determined, e. g., cattle only, eat-

tle and feed, or all coneurrently-owned farm assets.

On the issue of dischargeability, the Bankruptcy

Court’s finding that appellee failed to establish the essen-

tial element of intent to deceive is not clearly erroneous

and is therefore affirmed.

In 1965, Orville Hansen executed a security agree-

ment which granted the Bank a security interest in crops

on a farm then leased by the Hansens. The legal descrip-

tion of that farm was included in the agreement. Under

the Nebraska Uniform Commercial Code as it then existed

and until July, 1980, no security interest could attach

under an after-acquired property clause ‘‘to crops which

become such more than one year after the security agree-

ment [was] executed.’’ Thus, the 1965 agreement ex-

pired as to Orville Hansen’s share of growing crops

‘‘which became such” after 1966. Subsequently, the 1980

amendments to the Nebraska Uniform Commercial Code

deleted the limitation as to after-acquired crops. Appel-

lee contends that its security interest in crops then re-

vived to cover the Hansens’ 1981 corn crop. However,

in the meantime, the Hansens had ceased farming on the

App. 21

realty described in the 1965 security agreement and had

for years engaged in farming in their present location.

In 1967, Orville Hansen had executed another security

agreement granting a security interest in crops and after-

acquired property ‘‘on the Orville Hansen farm,’’ but

without a legal description. See Neb. Rev. Stat. § 9-203

(1) (a) (Reissue 1980). As a result, in 1981 there was

no security agreement on file with a legal description of

the real property location of the Hansens’ 1981 corn crop.

On the basis of these facts, the Bankruptcy Court held

that the Bank was unsecured as to Orville Hansen’s share

of the 1981 corn crop and its proceeds. This finding is

affirmed.

An order has been entered contemporaneously here-

with in accordance with this Memorandum Opinion.

DATED this 21st day of December, 1982.

BY THE COURT:

/s/ C. Arlen Beam

United States District Judge

App. 22

APPENDIX D

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF NEBRASKA

Case No. BKS81-1992

A81-808

IN THE MATTER OF:

ORVILLE E. HANSEN,

Deptor,

THE FIRST NATIONAL BANK

OF TEKAMAH, NEBRASKA,

Plaintiff,

Vs.

ORVILLE E. HANSEN and

VIRGINIA HANSEN,

Defendants.

JUDGMENT

In accordance with the findings of fact and conelu-

sions of law made in Court and on the record, it is hereby

ORDERED, ADJUDGED AND DECREED:

1. First National Bank of Tekamah, Nebraska, plain-

tiff, has a valid security interest in the undivided one-half

interest of Orville E. Hansen in the equipment, livestock,

contract rights, accounts and proceeds owned by the said

Orville E. Hansen, defendant, on the date of the filing of

this petition for relief and no valid security interest in

any other assets of the defendants, Orville E. Hansen and

Virginia Hansen;

2. That the Court finds generally in favor of the

defendants and against the plaintiff on the plaintiff’s

second cause of action in its amended complaint;

App. 23

3. That the Court finds generally in favor of the

defendant, Orville E. Hansen, and against the plaintiff on

the third cause of action in the plaintiff’s amended com-

plaint;

4. That the Court finds generally in favor of the

defendants and against the plaintiff on the fourth cause

of action of plaintiff’s amended complaint;

5. That the Court finds generally in favor of the de-

fendants and against the plaintiff on the fifth cause of

action of plaintiff’s amended complaint;

6. That the Court finds generally in favor of the

defendant, Virginia Hansen, and against the plaintiff on

the sixth cause of action of plaintiff’s amended complaint.

DATED: July 22, 1982.

BY THE COURT:

/s/ David L. Crawford

U.S. Bankruptey Judge

Copies to:

Michael Helms, Attorney, 1800 First Nat’l. Center, Oma-

ha, Ne. 68192

Maureen McGrath, The Omaha Building, 1650 Farnam

Street, Omaha, Ne. 68102

App. 24

APPENDIX E

P. L. 95-598, § 241 (a) [28 U.S.C. § 1471]

See. 241 (a) Title 28 of the United States Code is

amended by inserting immediately after chapter 89 the

following:

$1471. Jurisdiction

(a) Except as provided in subsection (b) of this

section, the district courts shall have original and exclu-

sive jurisdiction of all cases under title 11.

(b) Notwithstanding any Act of Congress that con-

fers exclusive jurisdiction on a court or courts other than

the district courts, the district courts shall have original

but not exclusive jurisdiction of all civil proceedings aris-

ing under title 11 or arising in or related to cases under

title 11.

(ec) The bankruptey court for the district in which

a case under title 11 is commenced shall exercise all of the

jurisdiction conferred by this section on the district

courts.

(d) Subsection (b) or (¢) of this section does not

prevent a district court or a bankruptcy court, in the in-

terest of justice, from abstaining from hearing a partic-

ular proceeding arising under title 11 or arising in or

related to a case under title 11. Such alstention, or a

decision not to abstain, is not reviewable by appeal or

otherwise.

(e) The bankruptcy court in which a case under title

11 is commenced shall have exclusive jurisdiction of all of

the property, wherever located, of the debtor, as of the

commencement of such case.

App. 29

APPENDIX F

28 U.S.C. § 1334. Bankruptcy matters and proceedings.

The district courts shall have original jurisdiction,

exclusive of the courts of the States, of all matters and

proceedings in bankruptcy. June 25, 1948, c. 646, 62

Stat. 931.

APPENDIX G

P. L. 95-598, § 238

Sec. 238. (a) Section 1334 of title 28 of the United

States Code is amended to read as follows:

**$1334. Bankruptcy appeals

‘‘(a) The district courts for districts for which pan-

els have not been ordered appointed under section 160 of

this title shall have jurisdiction of appeals from all final

judgments, orders, and decrees of bankruptcy courts.

‘‘(b) The district courts for such districts shall have

jurisdiction of appeals from interlocutory orders and de-

crees of bankruptcy courts, but only by leave of the dis-

trict court to which the appeal is taken.

‘‘(c) A district court may not refer an appeal under

that section to a magistrate or to a special master.”.

(b) The table of sections of chapter 85 of title 28

of the United States Code is amended by striking out the

item relating to section 1334 and inserting in lieu thereof

the following:

“1334. Bankruptcy appeals.”

App. 26

APPENDIX H

P. L. 95-598, § 402

$402. (a) Except as otherwise provided in this title,

this Act shall take effect on October 1, 1979.

(b) Except as provided in subsections (c) and (d)

of this section, the amendments made by title 2 of this

Act shall take effect on April 1, 1984.

220, 222, 224, 225, 228, 229, 235, 244, 245, 246, 349, and 251

of this Act shall take effect on October 1, 1979.

(d) The amendments made by sections 217, 218, 230,

247, 302, 314 (j), 317, 327, 328, 338, and 411 of this Act

shall take effect on the date of enactment of this Act.

(e) The amendments made by sections 335(a) and

336(a) of this Act shall take effect on April 1, 1984.

APPENDIX I

P. L. 95-598, § 405

§ 405. (a)(1) All cases commenced under titie 11 of

the United States Code during the transition period shall

be referred to the United States bankruptcy judges. The

United States bankruptcy judges may exercise in such eases

the jurisdiction and powers conferred by subsection (b)

of this section on the courts of bankruptcy continued by

section 404(a) of this Act, and all proceedings in such cases

shall be before the United States bankruptcy judges, ex-

cept—

(A) a proceeding to enjoin a court;

(B) a proceeding to punish a criminal contempt—

App. 27

(i) not committed in the bankruptcy judge’s

actual presence; or

(ii) warranting a punishment of !mprison-

ment; or

decision of a United States bankruptcy judge.

(2) Except as provided in subsection (c) of this sec-

tion, any proceeding in a court of bankruptcy in a case

under title 11 of the United States Code that is not before

the United States bankruptcy judge shall be before the

judge of the court of bankruptcy for the district in which

such case is pending.

(b) During the transition period, the amendments

made by sections 241, 243, 250, and 252 of this Act shall

apply to the courts of bankruptcy continued by section

404(a) of this Act the same as such amendments apply to

the United States bankruptcy courts established under sec-

tion 201 of this Act.

(c)(1) During the transition period, an appeal from

a judgment, order, or decree of a United States bankruptcy

judge shall be—

(A) if the cireuit council of the cireuit in which

the bankruptcy judge sits so orders for the district in

which the bankruptcy judge sits, then to a panel of

three bankruptcy judges appointed in the manner pre-

scribed by section 160 of title 28 of the United States

Code, as added by section 201 of this Act;

(B) if the parties to the appeal agree to a direct

appeal to the court of appeals for such circuit, then to

such court of appeals; or

the bankruptcy judge sits.

App. 28

(2) During the transition period, the jurisdiction of

the district courts, the courts of appeals, and panels of

bankruptcy judges to hear appeals shall be the same as

the jurisdiction of such courts and panels granted under

the amendments made by sections 236, 237, 238, and 241

of this Act to hear appeals from the judgments, orders,

and decrees of the bankruptey courts established under

section 201 of this Act.

(d) The rules prescribed under section 2075 of title

28 of the United States Code and in effect on September

30, 1979, shall apply to cases under title 11, to the extent

not inconsistent with the amendments made by this Act,

or with this Act, until such rules are repealed or super-

seded by rules prescribed and effective under such section,

as amended by section 248 of this Act.

APPENDIX J

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEBRASKA

ORDER AMENDING LOCAL

RULES OF PRACTICE

Filed December 25, 1982

IT HEREBY IS ORDERED that effective December

25, 1982, the following shall be effective in this district:

RULE 51

ADMINISTRATION OF BANKRUPTCY COURT

The purpose of this rule is to supplement existing law

and rules with respect to the authority of the bankruptcy

App. 29

judges of this district to act in bankruptcy cases and pro-

ceedings until Congress enacts appropriate remedial legis-

lation in response to the Supreme Court’s decision in

Northern Pipeline Construction Co. v. Marathon Pipe Line

Co., — U.S. —, 102 S. Ct. 2858 (1982), or until March 31,

1984, whichever first occurs.

The judges of the district court find that exceptional

circumstances exist. These circumstances include: (1) the

unanticipated unconstitutionality of the grant of power to

bankruptey judges in § 241(a) of Public Law 95-598, (2)

the clear intent of Congress to refer bankruptcy matters

to the bankruptcy judges, (3) the specialized expertise

necessary to the determination of bankruptcy matters;

and (4) the administrative difficulty of the district courts’

assuming the existing bankruptcy caseload on short notice.

THEREFORE, the orderly conduct of the business

of the court requires this referral of bankruptey cases to

the bankruptcy judges.

Filing of Bankruptcy Papers

The bankruptcy court constituted by § 404 of Public

Law 95-598 shall continue to be known as the United States

Bankruptcy Court of this district. The Clerk of the Bank-

ruptecy Court is hereby designated to maintain all files in

bankruptcy cases and adversary proceedings. All papers

in cases or proceedings arising under or related to Title 11

shall be filed with the Clerk of the Bankruptcy Court re-

gardless of whether the case or proceeding is before a

bankruptcy judge or a judge of the district court, except

that a judgment by the district judge shall be filed in ac-

cordance with Rule 921 of the Bankruptcy Rules.

1i3

Reference to Bankruptcy Judges

All eases under Title 11 and all civil proceedings aris-

ing under Title 11 or arising in or related to cases under

Title 11 are referred to the bankruptcy judges of this dis-

trict.

The reference to a bankruptcy judge may be with-

drawn by the district court at any time on its own motion

or on timely motion by a party. A motion for withdrawal

of a reference shall not stay any bankruptcy matter pend-

ing before a bankruptcy judge, unless a specific stay is

issued by the district court. If a reference is withdrawn,

the district court may retain the entire matter, may refer

part of the matter back to the bankruptcy judge, or may

refer the entire matter back to the bankruptcy judge with

instructions specifying the powers and functions that the

bankruptcy judge may exercise. Any matter in which the

reference is withdrawn shall be reassigned to a district

judge in accordance with the court’s usual system for as-

signing civil cases.

ITT.

Powers of Bankruptcy Judges

1. The bankruptcy judges may perform in referred

bankruptcy cases and proceedings all acts and duties nec-

essary for the handling of those cases and proceedings,

except that the bankruptcy judges may not conduct:

A. A proceeding to enjoin a court;

B. A proceeding to punish a criminal contempt—

App. 31

(1) not committed in the bankruptey judge’s ac-

tual presence, or

(2) warranting a punishment of imprisonment;

C. An appeal! from a judgment, order, decree or deci-

sion of a United States bankruptcy judge; or

D. Jury trials.

Those matters which may not be performed by a bank-

ruptcy judge shall be transferred to a district judge.

2. Except as provided in paragraph 3 of this section,

orders and judgments of bankruptcy judges shall be effec-

tive upon entry by the Clerk of the Bankruptcy Court, un-

less stayed by the bankruptey judge or a district judge.

3. Related proceedings are those civil proceedings

that, in the absence of a petition in bankruptcy, could have

been brought in a district court or a state court. Related

proceedings include but are not limited to claims brought

by the estate against parties who have not filed claims

against the estate. Related proceedings do not inelnde:

contested and uncontested matters concerning the admin-

istration of the estate; allowance of and objection to claims

against the estate; counterclaims by the estate in what-

ever amount against persons filing claims against the

estate; orders in respect to obtaining credit; orders to

turn over property of the estate; proceedings to set aside

preferences and fraudulent conveyances; proceedings with

respect to lifting of the automatic stay; proceedings to

determine dischargeability of particular debts; proceed-

ings to object to the discharge; proceedings with respect

to the confirmation of plans; orders approving the sale of

property where not arising from proceedings resulting

from claims brought by the estate against parties who

App. 32

have not filed claims against the estate; and similar mat-

ters. A proceeding is not a related proceeding merely

because the outcome will be affected by state law.

In related proceedings the bankruptcy judge may not

enter a judgment or dispositive order, but shall submit

findings, conclusions, and a proposed judgment or order

to the district judge, unless the parties to the proceeding

consent to entry of the judgment or order by the bank-

ruptey judge.

IV.

District Court Review

1. A notice of appeal from a final order or judg-

ment or proposed order or judgment of a bankruptcy

judge or an application for leave to appeal an interlocu-

tory order of a bankruptey judge shall be filed within ten

days of the date of entry of the judgment or order or of

the lodgment of the proposed judgment or order. As

modified by paragraphs numbered 2 and 3 of this section,

the procedures set forth in Part VIII of the Bankruptey

Rules apply to appeals of bankruptcy judges’ judgments

and orders and the procedures set forth in Bankruptcy

Interim Rule 8004 apply to applications for leave to ap-

peal interlocutory orders of bankruptcy judges. Modifi-

cation by the district judge or the bankruptcy judge of

time for appeal is governed by Rule 802 of the Bank-

ruptcy Rules.

2. A district judge shall review:

A. An order or judgment entered under para-

graph 2 of Section III of this rule, if a time-

ly notice of appeal! has been filed or if a time-

App. 33

ly application for leave to appeal has been

granted;

B. An order or judgment entered under para-

graph 2 of Section III of this rule, if the

bankruptcy judge certifies that circumstances

require that the order or judgment be ap-

proved by a district judge, whether or not

the matter was controverted before the bank-

ruptcy judge or any notice of appeal or ap-

plication for leave to appeal was filed; and

C. A proposed order or judgment lodged under

paragraph 3 of Section III of this rule,

whether or not any notice of appeal or appli-

cation for leave to appeal has been filed.

3. In conducting review, the district judge may hold

a hearing and may receive such evidence as appropriate

and may accept, reject or modify, in whole or in part, the

order or judgment of the bankruptcy judge, and the dis-

trict judge need give no deference to the findings of the

bankruptcy judge. At the conclusion of the review, the

district judge shall enter an appropriate order or judg-

ment.

4. When the bankruptcy judge certifies that circum-

stances require immediate review by a district judge of

any matter subject to review under paragraph numbered

2 of this section, the district judge shall review the mat-

ter and enter an order or judgment as soon as possible.

5. It shall be the burden of the parties to raise the

issue of whether any proceeding is a related proceeding

prior to the time of the entry of the order or judgment

of the district judge after review.

App. 34

Local Rules

In proceedings before a bankruptcy judge, the local

rules of the bankruptcy court shall apply. In proceedings

before a judge of the district court, the local rules of the

district court shall apply.

Bankruptcy Rules and Title IV of Public Law 95-598

Courts of bankruptcy and procedure in bankruptcy

shall continue to be governed by Title LV of Public Law

95-598 as amended and by the bankrutpcy rules prescribed

by the Supreme Court of the United States pursuant to

28 U.S.C. § 2075 and limited by § 405 (d) of the Act, to

the extent that such Title and Rules are not inconsistent

with the holding of Northern Pipeline Construction Co.

v. Marathon Pipe Line Co., supra.

VIL.

Effective Date and Pending Cases

This rule shall become effective December 25, 1982,

and shall apply to all bankruptcy cases and proceedings

not governed by the Bankruptcy Act of 1898 as amended

and filed on or after October 1, 1979. Any bankruptcy

matters pending before a bankruptey judge on December

25, 1982, shall be deemed referred to that judge.

Dated December 24, 1982.

BY THE COURT

/s/ Warren K. Urbom

Chief Judge

App. 35

/s/ Albert G. Schatz

District Judge

/s/ C. Arlen Beam

District Judge

APPENDIX K

11 U.S.C. § 105: Power of court

(a) The bankruptcy court may issue any order, proc-

ess, or judgment that is necessary or appropriate to carry

out the provisions of this title.

(b) Notwithstanding subsection (a) of this section,

a bankruptcy court may not appoint a receiver in a case

under this title.

Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2555.

APPENDIX L

28 U.S. C. § 2071: Rule-making power generally

The Supreme Court and all courts established by Act

of Congress may from time to time prescribe rules for the

conduct of their business. Such rules shall be consistent

with Acts of Congress and rules of practice and procedure

prescribed by the Supreme Court.

App. 36

APPENDIX M

Federal Rules of Civil Procedure

Rule 83. Rules by District Courts

Each district court by action of a majority of the

judges thereof may from time to time make and amend

rules governing its practice not inconsistent with these

rules. Copies of rules and amendments so made by any

district court shall upon their promulgation be furnished

to the Supreme Court of the United States. In all cases

not provided for by rule, the district courts may regulate

their practice in any manner not inconsistent with thece

rules,

APPENDIX N

Federal Rules of Bankruptcy Procedure

Rule 927. Local Bankruptcy Rules

Each district court by action of a majority of the

judges thereof may from time to time make and amend

rules governing practice and procedure under the Act not

inconsistent with these rules. Copies of rules and amend-

ments so made shal! upon their promulgation be furnished

to the Administrative Office of the United States Courts.

The clerk of each court shall make appropriate arrange-

ments, subject to the approval of the Director of the Ad-

ministrative Office of the United States Courts, for mak-

ing copies of such rules available to members of the public

In all cases not provided for bv

who may request them:

oly

rule, the district court may regulate its practice in

manner not inconsistent with these rules.

App. 37

APPENDIX O

UNITED STATES CONSTITUTION,

AMENDMENT V

No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or in-

dictment of a Grand Jury, except in cases arising in the

land or naval forces, or in the Militia, when in actual

service in time of War or public danger; nor shail any

person be subject for the same offense to be twice put in

jeopardy of life or limb; nor shall be compelled in any

criminal case to be witness against himself, nor be de-

prived of life, liserty, or property, without due process

of law; nor shall private property be taken for public use,

without just compensation.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.