Montana Attorney General Opinion 15-506

Opinion No. 506 ~(ortgages-Foreclosw·es-Sheriff's Certificate and Deed-Bankruptcy, HELD: The l!~ederal Statute, pro\'id- ing for jurisdiction in Bankruptcy Courts of agricultural compositions and extensions, is intended to include a moratoriulll for farmers pending and 346 OPIXIOXS OF THE ATTORNEY GENERAL during t~se proceedings; therefore, said Act forhids the issuance of a sheriff's certificate and deed upon fore- closure while such proceedings are pending, April 9, 1934. You inquire as to your duty in the following case: On March 3, 1933, there became effective 47 Stat. 1470, 11 U. S. C. A., Sec. 203; Sec. 75 Bankruptcy Act, a law authorizing Courts of Bankruptcy to .take jurisdiction of agricultural com- positions and extensions. On ~iarch 21 a party filled a petition for composi- tion and extension under this Act. On March 27 the sheriff sold real estate belonging to the same party under a decree of foreclosure. Except for such Federal Act a sheriff's deed would issue on March 27, 1934. You inquire whether or not you are prohibited from issuing such sheriff's deed by reason of this Federal statute. The general Bankruptcy Law has IJeen upheld and the filing of a peti- tion in Bankruptcy has been held, gen- erally, to be a caveat to the whole world. The Act. in question provides: "n. The filing of a petition plead- ing for relief under this section shall subject the farmer and his property, wherever located, to the exclusive jurisdiction of the court. * * *" "0. Except upon petition made to and granted by the judge after hear- ing and report by the conciliation com- missioner, the following proceedings shall not be instituted, or if instituted at any time prior to the filing of a petition under this section, shall not be maintained, in any court or other- wise, against. the farmer or his prop- erty, at any time after the filing of the petition under this section, and prior to the confirmation or other dis- position of the composition or exten- sion proposal by the court: * * * "2. Proceedings for foreclosure of a mortgage on land, or for cancellation, recission, or specific performance of an agreement for sale of land or for recovery of possession of land ;". The only authority we have on the subject is the law. It has never been construed so far as we have been ahle to ascertain. In 22 American Bar As- sociation Journal, January, 1934, pp. 9-11, 36, cited in Legal Periodical Di- gest, 1934, Sec. 513, by Professor .John Hanna, the Act is discussed generally. .As stated by Professor Hanna, this law is intended to include a mora- torium for farmers pending and during these proceedings. In the absence of any authorities on the question we will adopt the conclusions reached by the courts in similar questions on the Bank- ruptcy Law and hold that the Federal Statute forbade the issuance of the sheriff's certificate as issued in thi"s case and that, as such certificate was wrongfully issued, no sheriff's deed should issue in this case. This Federal Law does not deprive the holder of a mortgage or other lien of his mortgage or lien. It does per- mit fifteen farmers in any county to petition for the appointment of a con- ciliation commissioner. The commis- sioner is appointed by the Bankruptcy Court. Thereafter an insolvent farmer may file a petition to effect a com- position or an extension of time to pay his debts. The filing of this petition stays all le,ies, attachments, mortgage foreclosures or similar proceedings. 'i'he further proceedings are explained in the Act.