From Casetext: Smarter Legal Research

Matter of Nat. Homeowners Sales Service Corp.

United States Court of Appeals, Fourth Circuit
May 10, 1977
554 F.2d 636 (4th Cir. 1977)

Summary

holding that a party must stay a bankruptcy court order of sale, when appealing that order, on the ground that sale of the property in question to a good faith purchaser renders the appeal moot

Summary of this case from Alexander v. Chesapeake, Potomac and Tidewater Books, Inc.

Opinion

No. 76-2051.

Argued April 6, 1977.

Decided May 10, 1977.

Randolph A. Sutliff, Fairfax, Va. (Stephen L. Best and McCandlish, Lillard, Bauknight, Church Best, Fairfax, Va., on brief), for appellant.

James M. Lewis, Alexandria, Va. (John S. Stump and Boothe, Prichard Dudley, Alexandria, Va., on brief), for appellees Alexandria National Bank of Northern Virginia and United Virginia Bank/National.

Charles A. Trainum, Jr., Washington, D.C. (Henry H. Glassie and Glassie, Pewett, Beebe Shanks, Washington, D.C., on brief), for appellee Savage/Fogarty Companies, Inc.

Appeal from the United States District Court for the Eastern District of Virginia.

Before WINTER, BUTZNER and HALL, Circuit Judges.


This is an appeal from an order of the district court modifying and affirming an order of the bankruptcy court.

The National Homeowners Sales Service Corporation, finding itself in financial trouble, agreed to a Chapter XI reorganization proceeding. The bankruptcy court ordered sold the debtor's principal asset, the George Mason Hotel, to Savage/Fogarty Companies, Inc. The district court affirmed the sale over the objection of National. Sale of the hotel was consummated and the debtor now appeals.

Chapter XI of the Bankruptcy Act, 11 U.S.C. §§ 722 et seq.

After confirmation of the purchase agreement by the district court, the debtor sought and was granted a stay of execution of the order of sale pending appeal to this Court. The stay, however, was conditioned on the posting of a supersedeas bond by the debtor. Bankruptcy Rule 805. No bond was ever posted. Savage/Fogarty then paid the price called for in the contract and a deed to the property was executed, delivered and recorded.

The debtor contends on appeal that (1) the bankruptcy court lacked jurisdiction to order sale of the debtor's major asset under Chapter XI reorganization proceedings, (2) the sale of the hotel was improperly conducted, (3) the bankruptcy court abused its discretion in not confirming a contract for purchase of the hotel for a higher price by an affiliate of the debtor, and (4) the district court lacked jurisdiction to modify the purchase agreement.

Contrary to the debtor's assertion, the bankruptcy court had jurisdiction to order sale of the debtor's property. In Chapter XI proceedings, a court a bankruptcy has exclusive jurisdiction over the debtor and property, wherever located. 11 U.S.C. § 711.

We need not consider the debtor's other contentions because the appeal must be dismissed for mootness.

Rule 805 of the Rules of Bankruptcy and Rule 62(d) of the Federal Rules of Civil Procedure permit a district court to stay enforcement of a bankruptcy court order pending appeal. Under those rules, the district court may condition the granting of the stay upon the filing of a supersedeas bond. In that event, the filing of the petition for review does not effect a stay unless the bond is filed. See, e. g., Country Fairways, Inc. v. Mottaz, 539 F.2d 637, 641 (7th Cir. 1976).

This Court recently considered this issue. In Matter of Abingdon Realty Corp., 530 F.2d 588 (4th Cir. 1976), involved an appeal by a bankrupt where no supersedeas bond had been filed nor a stay pending appeal otherwise effected. In holding that the bankruptcy court order was moot and affirming an order of dismissal, we said at 530 F.2d 589-90:

It is settled law that the filing of a petition to review an order of a bankruptcy judge (formerly a referee in bankruptcy), does not stay the effect or operation of the order unless a supersedeas bond is filed or the order itself provides for a stay. [Citing cases and 2A Collier on Bankruptcy, 14th ed., 1974, ¶ 39.26, p. 1526]. A proposed amendment to Bankruptcy Rule 805, which has been approved by the Judicial Conference of the United States, would add the following sentence at the end of that rule: `Unless an order approving a sale of property or issuance of a certificate of indebtedness is stayed pending appeal, the sale to a good faith purchaser or the issuance of a certificate to a good faith holder shall not be affected by the reversal or modification of such order on appeal, whether or not the purchaser or holder knows of the pendency of the appeal.' The Advisory Committee's Note states that the sentence proposed to be added `is declaratory of existing case law.' We agree. [Citing cases, including Fink v. Continental Foundry Machine Co., 240 F.2d 369 (7 Cir. 1957), cert. denied, 354 U.S. 938, 77 S.Ct. 1401, 1 L.Ed.2d 1538, and 11 Wright Miller, federal Practice and Procedure: Civil § 2904, n. 31.]

Here, as in Abingdon, there was a confirmed sale to a good faith purchaser. Substantial investment has been made upon reliance of good title to the hotel property having vested in Savage/Fogarty. The appeal from the district court order modifying and affirming the bankruptcy court order of sale became moot in the absence of an effective stay order.

APPEAL DISMISSED.


Summaries of

Matter of Nat. Homeowners Sales Service Corp.

United States Court of Appeals, Fourth Circuit
May 10, 1977
554 F.2d 636 (4th Cir. 1977)

holding that a party must stay a bankruptcy court order of sale, when appealing that order, on the ground that sale of the property in question to a good faith purchaser renders the appeal moot

Summary of this case from Alexander v. Chesapeake, Potomac and Tidewater Books, Inc.

finding that an appeal was moot where the property was sold to a good faith purchaser because substantial investment had been made upon reliance of good title to the property

Summary of this case from IN RE XACT TELESOLUTIONS, INC.

In Matter of National Homeowners Sales Service Corp., 554 F.2d 636 (4th Cir. 1977) the Fourth Circuit, in sustaining good faith purchaser status and dismissing the appeal as moot, relied upon substantial investment that had been made upon reliance of good title to the property having vested in the purchaser.

Summary of this case from Miami Center Ltd. v. Bank of New York
Case details for

Matter of Nat. Homeowners Sales Service Corp.

Case Details

Full title:IN THE MATTER OF NATIONAL HOMEOWNERS SALES SERVICE CORPORATION D/B/A…

Court:United States Court of Appeals, Fourth Circuit

Date published: May 10, 1977

Citations

554 F.2d 636 (4th Cir. 1977)

Citing Cases

Willemain v. Kivitz

Finding as we do that Hampshire was a good faith purchaser under § 363(m) of the Bankruptcy Code and that…

Sannini v. Casscells

Although the filing of a supersedeas bond is not a condition precedent for seeking appellate review by this…