In re Wright’s Estate
17 F. Supp. 908 (1936)
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Rule of Law:
An individual can be considered a "farmer" under the Bankruptcy Act if their primary occupation is farming, even if they do not personally reside on the farm property or perform the labor, so long as the farming operations are conducted for their personal benefit and they retain general control and direction over the activities, which can be exercised through an agent or manager.
Facts:
- For approximately ten years prior to her death, Mrs. Eugenia S. Wright's business affairs were managed by her son, Robert Layton.
- Wright owned multiple large farm plantations which were operated by tenant farmers and sharecroppers using her livestock and equipment.
- Through her son, Wright financed the farming operations, generally determined what crops to plant, marketed the final products, and settled with the tenants for their share of the proceeds.
- Wright did not reside on any of her farm properties.
- Wright also owned significant city property, including a commercial building that generated substantial rental income, and received royalties from mineral leases.
- The gross revenue from Wright's farming operations versus her non-farming sources varied annually, with non-farming income sometimes exceeding farm income.
Procedural Posture:
- The heirs of Mrs. Eugenia S. Wright filed a petition in bankruptcy court seeking relief under Section 75 of the Bankruptcy Act.
- Certain creditors opposed the petition before the Conciliation Commissioner, a court official, arguing the deceased was not a "farmer" as defined by the act.
- After taking evidence, the Conciliation Commissioner ruled in favor of the creditors, finding that Mrs. Wright was not a farmer.
- The petitioners (the heirs) appealed the Commissioner's decision to the U.S. District Court for review.
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Issue:
Does an individual who owns extensive farmland but does not personally reside on or cultivate it, instead managing it through an agent and using tenant farmers, qualify as a person "primarily, bona fide, personally engaged in producing products of the soil" under Section 75 of the Bankruptcy Act?
Opinions:
Majority - Dawkins, District Judge
Yes. An individual who owns farmland and manages it through an agent using tenant farmers is "personally engaged in producing products of the soil" under the Bankruptcy Act. The court reasoned that it is not necessary for an owner to reside on the property or personally superintend the operations to be considered a farmer. The farming operation remains the owner's as long as it is conducted for her personal benefit, she furnishes the means to carry it on, and she retains general control over key decisions like crop selection and marketing, even if this control is exercised through a manager. The use of sharecroppers did not change the nature of her business, which the court determined was principally that of farming, with her other income sources being more passive in nature.
Analysis:
This decision broadens the definition of "farmer" for bankruptcy purposes, shifting the focus from physical labor and residency to financial risk and managerial control. It establishes that an individual can be principally engaged in the business of farming through delegation to an agent and the use of tenant labor. This interpretation accommodates modern agricultural business structures, allowing large-scale, absentee landowners to access the protections of farmer-specific bankruptcy provisions previously thought to be reserved for those who personally tilled the soil.
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