Pasadena Investment Company and William J. Clark v. Marguerite J. Weaver

This bankruptcy matter is before us on a petition for an order restraining a trust deed sale. The petition was filed in an arrangement proceeding under Chapter XI of the Bankruptcy Act (Act), sections 301 et seq., 52 Stat. 905 et seq. (1938), 11 U.S.C. §§ 701 et seq. (1964). The petitioner is the debtor, Mrs. Marguerite J. Weaver, there being no receiver. She filed the petition in an effort to prevent the loss of her fifty-five acre ranch near Tulare, California, which is under a term lease and term sublease.

Mrs. Weaver and her deceased husband were trustors under the trust deed given on that property to secure their promissory note in the amount of $51,000. Pasadena Investment Company (Pasadena), beneficiary under the trust deed, and William J. Clark, who acquired the note and trust deed after the note became due, were named respondents in the petition. The ground for relief, asserted in the petition, is that Pasadena fraudulently procured the trust deed from Mr. and Mrs. Weaver.

A three-day hearing on the petition was held before a referee in bankruptcy. Based upon findings of fact and conclusions of law thereafter entered, the referee entered an order declaring the note and…