Cobleigh v. State Land Office Board , 305 Mich. 434 ( 1943 )

The sole issue presented by this appeal is whether a trustee in bankruptcy, who was appointed prior to the expiration of the period of redemption from a tax sale, is an owner, within the provisions of Act No. 155, Pub. Acts 1937, as last amended by Acts Nos. 29, 244, 329, Pub. Acts 1939 (Comp. Laws Supp. 1940, § 3723-1 etseq., Stat. Ann. 1940 Cum. Supp. § 7.951 et seq.), entitled to match the highest bid at a so-called "scavenger sale."

The bankruptcy act (11 USCA, § 110a) provides that a trustee in bankruptcy shall be vested by operation of law with the "title of the bankrupt as of the date of the filing of the petition in bankruptcy * * * to all * * * (5) property, * * * which prior to the filing of the petition he (the bankrupt) could by any means have transferred or which might have been levied upon and sold under judicial process against him, or otherwise seized, impounded, or sequestered."

In referring to this section of the bankruptcy act the court said in Horton v. Moore (C.C.A.), 110 F.2d 189; certiorari denied, 311 U.S. 692 (61 Sup. Ct. 75, 85 L. Ed. 448); rehearing denied, 311 U.S. 728 (61 Sup. Ct. 173, 85 L. Ed. 474):

"Under the plain language of the act, all property vests in the trustee which prior to the filing of the petition the bankrupt could by any means have transferred. Therefore transferability is the determining factor."

See, also, In re Seiffert, 18 F.2d 444.

The bankrupt, Nathan Greenberg, during the period immediately preceding his adjudication, had two separate and distinct rights. Under the provisions of 1 Comp. Laws 1929, § 3467, as amended by Act No. 52, Pub. Acts 1939 (Comp. Laws Supp. 1940, § 3467, Stat. Ann. 1940 Cum. Supp. § 7.120), he could redeem his land from the tax sale before title vested in the State, and this privilege of redemption was transferable and assignable. Mercer v. Stephens,185 Mich. 290. See, also, Closser v. McBride, 182 Mich. 594. This right of redemption under the transferability test of the bankruptcy act was property of the bankrupt, which passed to his trustee. The other right belonging to Greenberg was created by section 7 of Act No. 155, Pub. Acts 1937, as amended by Act No. 244, Pub. Acts 1939 (Comp. Laws Supp. 1940, § 3723-7, Stat. Ann. 1940 Cum. Supp. § 7.957). As an owner, he had the privilege under this section of the statute of matching the highest bid at the "scavenger sale" and thereby redeeming his property, but:

"The right to match the highest bid at the scavenger sale is a granted privilege, limited to persons having an interest in the land at the time of the sale for unpaid taxes." Redford UnionSchools v. State Land Office Board, 297 Mich. 535, 537.

See, also, Stickler v. State Land Office Board, 297 Mich. 271. This privilege was neither a vested nor assignable right.Meltzer v. State Land Office Board, 301 Mich. 541, 546. Compare James A. Welch Co., Inc., v. State Land Office Board,295 Mich. 85.

We see no conflict with Wragg v. Federal Land Bank of NewOrleans, 317 U.S. 325 (63 Sup. Ct. 273, 87 L. Ed. 273). Although the classes of property passing to a trustee in bankruptcy are determined primarily by Federal law, the State law controls the question of whether a particular property right of the bankrupt is transferable. In re Landis (C.C.A.), 41 F.2d 700, certiorari denied 282 U.S. 872 (51 Sup. Ct. 77, 75 L. Ed. 770). Whether property is subject to seizure and sale under execution must also, generally, be determined by local law. Spindle v.Shreve, 111 U.S. 542 (4 Sup. Ct. 522, 28 L. Ed. 512). See, also, notes in 48 A.L.R. p. 784.

Since the granted privilege to match a bid is not an assignable right and is not one that the bankrupt could "by any means have transferred," it is not a property right which vested in Greenberg's trustee in bankruptcy.

The bill filed by plaintiff as trustee in bankruptcy for Greenberg, in which he sought a deed to the property in question, was properly dismissed.

The decree is affirmed, with costs to appellees.

BOYLES, C.J., and CHANDLER, NORTH, STARR, WIEST, BUTZEL, and SHARPE, JJ., concurred.