Wright v. Union Central Life Ins. Co., 311 U.S. 273 (1940)
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Wright v. Union Central Life Insurance Co.
No. 51
Argued November 20, 22, 1940
Decided December 9, 1940
311 U.S. 273
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
1. Under § 75(s)(3) of the Bankruptcy Act, the debtor, upon his request, must be afforded an opportunity to redeem the property at its current value (as reappraised, or as fixed by the court after hearing, pursuant to provisions of the section), before the property may be ordered sold at public sale. P. 277.
2. The debtor’s right, upon request, to redeem pursuant to the procedure prescribed in the first proviso of § 75(s)(3) cannot be defeated by the request of a secured creditor for a public sale under the second proviso. P. 279.
3. The power of the bankruptcy court under § 75(s)(3) to appoint a trustee and order a sale or other disposition of the property if the debtor
at any time fails to comply with the provisions of this section, or with any orders of the court made pursuant to this section, or is unable to refinance himself within three years,
may not be exercised so as to deprive the debtor of his right to redeem at the reappraised value or at the value fixed by the court. P. 280.
4. Provisions of the Bankruptcy Act for the relief of farmer debtors must be liberally construed to give the debtor the full measure of the relief afforded by Congress. P. 279.
5. Pursuant to § 75(s) of the Bankruptcy Act, a farmer debtor had been adjudged bankrupt and proceedings against him had been stayed. Subsequently, a mortgage creditor petitioned the bankruptcy court for an immediate sale of the property, alleging, inter alia, that the debtor’s financial condition was beyond hope of rehabilitation and that he had failed to comply with provisions of § 75(s)(3) and orders of the court pursuant thereto. The debtor answered and filed a cross-petition under § 75(s)(3) requesting a reappraisal of the property or that its value be fixed by the court after hearing, and that he be allowed to redeem at the value so determined and free from any liability on account of any deficiency. Upon hearing, the court found the value of the property, but ordered its sale without affording the debtor an opportunity to redeem at that value.
Held:
(1) That the debtor’s cross-petition should have been granted; that he was entitled to have the property reappraised or the value fixed at a hearing; that the value having been thus determined, he was then entitled to have a reasonable time, fixed by the court, in which to redeem at that value, and that, if he did so redeem, the land should be turned over to him free and clear of encumbrances, and his discharge granted. P. 281.
Only in case the debtor failed to redeem within a reasonable time would the court be authorized to order a public sale.
(2) As thus modified, the order of the court should stand, granting the mortgagee the privilege of purchasing the property at the sale and of crediting the indebtedness of the debtor against the purchase price; the debtor to have the privilege of redemption within ninety days, upon payment of the sales price and interest thereon, as provided by § 75(s)(3) of the Act. P. 281.
108 F.2d 361 modified.
Certiorari, 310 U.S. 618, to review the affirmance of an order of the bankruptcy court directing that the property of a debtor be sold.