Farmer Bros. Co. v. Huddle Enterprises, Inc.

The appellant sought authority from the Referee in Bankruptcy to foreclose a deed of trust. Its application was denied, the District Court upheld the Referee’s order, and this appeal followed. Our jurisdiction rests upon certain provisions of the Bankruptcy Act. 11 U.S.C. §§ 47 , 716.

The deed of trust was executed by Paul S. Cummins and his wife, Ruth, to secure the payment of two promissory notes calling for the payment to appellant of two principal sums of $200,000 and $25,000. The trust deed is junior to one executed in favor of another debtor to secure an original indebtedness of $1,000,000 and is senior to two others. It covers eighteen separate parcels of property on which automobile service station facilities were situated and which, with one exception, are under long-term, income-producing leases to a major retail distributor of petroleum products. The income derived from these leases has been applied and, with the approval of the court, is being applied toward the payment of the obligation secured by the first deed of trust. As of October 13,1964, that obligation had been reduced from its original principal amount of $1,000,000 to a balance of $515,730.41.

The owners…