Citations
- 206 F.2d 643
Full opinion text
BORAH, Circuit Judge.
This appeal by the trustee in bankruptcy of Riverview Building & Supply, Inc., bankrupt, is from a summary judgment entered on motion of appellee Mutual Lumber Company, Inc., dismissing appellant’s complaint against appellee and from an order entered ex proprio motu dismissing the complaint as to the nominal parties R. C. Dix and Ira Mae Dix.
Appellant instituted this action in the United States District Court for the Southern District of Florida to set aside a mortgage and subsequent foreclosure in the Circuit Court of Duval County, Florida, in favor of appellee as a voidable preference under Section 60 of the Bankruptcy Act, 11 U.S.C.A. § 96, as amended Mar. 18, 1950, c. 70, § 1, 64 Stat. 22, and applicable Florida law.
The subject matter of the suit is real estate located in Duval County, Florida. The bankrupt corporation never held the legal or record title to the property. The property, which was unimproved real estate, was purchased in the year 1950 by R. C. Dix and Ira Mae Dix, his wife, and title was conveyed to and remained in them until the termination of the foreclosure proceedings hereinafter described. During the period of their ownership, Dix, who was the president of and a large stockholder in Riverview Building & Supply, Inc., caused a building to he constructed upon the property and same was thereafter used by Riverview Supply as its office, place of busiuess and materials depot. Thereafter, the corporation became involved in financial difficulties and the appellee lumber company, an unsecured creditor of Riverview Supply, began pressing the latter for paymeut of its debt of $7,709.14. As a result, Dix and his wife on December 9, 1950, executed and delivered to appellee a mortgage upon the property in the amount of the debt payable to appellee corporation as evideuced by their promissory note for said amount. On December 11, 1950, tne morígage was filed for record and recorded in Duval County, Florida, and was specifically made subject to a prior recorded mortgage from Dix and his wife to the Gulf Life Insurance Company.
On January 4, 1951, pursuant to the covenants of the mortgage, a foreclosure suit was filed by appellee in the Circuit Court of Duval County, naming Dix and his wife, Riverview Supply, and its sublessee, New York Terminal Warehouse Company, Inc., as defendants. Service was had upon the defendants in accordance with the laws of tlie State of Florida and decrees pro confesso were duly and regularly entered against, all defendants in the cause. On January 31, 1951, an involuntary petition in bankruptcy was filed against Riverview Supply and on the day following it was ad judicated a bankrupt. There was no attempt by the bankrupt’s trustee or other parties to intervene in the state proceeding and on February 21, 1951, the state court entered its final decree of foreclosure ad-indicating the validity of the mortgage, the right of Mutual Lumber Company, Inc., to a foreclosure, and the equities between said company and Riverview Supply with respect to the real estate there, and here, involved. On March 5, 1951, the property was purchased at a foreclosure sale by appellee for a valuable consideration subject to the existing mortgage of Gulf Life Insurance Company and on March 6, 1951, the sale was confirmed by the Circuit Court of Duval County.
The complaint alleged that the funds of the bankrupt were used in the purchase of thc property and that the building which was thereafter constructed thereon was in f]le possession of the bankrupt and was paid j'01. jn part with the bankrupt’s funds. Further, that the mortgage in favor of the appellee company was executed and delivered at a time when the bankrupt was insolvent anc^ that Dix and his wife intended by this transaction to confer a preference upon appellee, an unsecured creditor. 1 he relief prayed was that there be an accounting arlc-l that R. C. Dix and Ira Mae Dix be decreed to have held the title to the proper-*y.as trustees of the bankrupt; that the lc&al> as well as equitable, title to the property be vested in the appellant trustee with tbe riKht of possession and administration all