Gilbert Schmidt v. Karl Herrmann

This is an appeal from a judgment of the district court dismissing appellants’ complaint with prejudice for failure to comply with Rule 9(b), FRCivP, and orders of the court to comply with the Rules of Procedure. The complaint involved the approval by the bankruptcy court of the sale of certain real property of a bankrupt corporation. The litigation has been in the federal courts since 1967, at which time the debtor, Federal Shopping Way, Inc. (FSW), was faced with an involuntary petition for reorganization under Chapter X of the Bankruptcy Act. That the litigation is not a stranger to this court is made evident by our decision in the Chapter X proceeding, In the Matter of Federal Shopping Way, Inc., 433 F.2d 144 (CA9 1970). Subsequent to that proceeding, the debtor was adjudicated a bankrupt and liquidation proceedings under the Bankruptcy Act were ordered. Two appeals from that decision were later dismissed because the docket fees were not paid and the appeals were not pursued. Many of the appellants before us were purchasers of the capital stock of FSW and of its debentures.

The record shows that FSW had acquired considerable real property on each side of Highway 99 near…