PHILLIPS, Circuit Judge.
The Waddell Investment Company
Bonner satisfied his bids by cancelling his mortgage indebtedness against the lands. The special master delivered deeds to Bonner without requiring him to pay the ten per cent cash deposit on the agreement of Bonner that he would make payment of such fees and costs of sale. Bonner also promised the trustee to pay such fees and costs.
After the sale, Bonner entered into written agreements with Waddell under the terms of which Bonner assumed and agreed to pay the notes secured by the Waddell mortgages, the due dates of the principal notes were extended, and the rate of interest was reduced to six per cent until maturity and was fixed at ten per cent thereafter.
The referee made an order requiring Bonner to pay such fees and costs. The District Court affirmed the order but provided that Bonner should be credited with the amounts paid on the Waddell indebtedness assumed by him. On an appeal this court ordered a rehearing. See Bonner v. Cannon, 10 Cir., 60 F.2d 228.
On remand the trustee on April 28, 1933, filed an amended claim against Bonner. This claim came on for hearing before the referee as to eight of the tracts of land purchased by Bonner, the claim with respect to the remaining seven tracts having been amicably adjusted between the trustee and Bonner. The claim with respect to the eight tracts in part reads as follows:
Attys. Referee Trustee "Tract Amount Fee 1% 2% No. Bid 2½% Com. Com. Taxes Abstract 6 $ 2,000.00 $ 50.00 $ 20.00 $ 40.00 $ 74.04 $ 37.00 7 3,500.00 87.50 35.00 70.00 10.00 33.25 10 3,250.00 81.25 32.50 65.00 108.79 29.00 11 3,500.00 87.50 35.00 70.00 101.20 22.50 12 4,500.00 112.50 45.00 90.00 199.08 23.75 18 1,100.00 27.50 11.00 22.00 146.01 23.50 27 1,100.00 27.50 11.00 22.00 ..... 23.00 29 3,000.00 75.00 30.00 60.00 ..... 22.50 Total $21,950.00 $548.75 $219.50 $439.00 $639.12 $214.50 The attorneys fee, Referee com., Tr. Com., and taxes amount to $1,846.37 * * * * * * * * * General expense of sale, such as pub. notice of sale, appraisal, etc., $211.38 Total cost of abstracts on eight tracts 214.50 Cost of deed on Tract 10 801.00"
The special master and the trial court found that Bonner was not liable for the last three items covering general expense of sale, abstract costs and costs of deed to tract No. 10 and charged him with the remaining items. They held that Bonner's claim for recoupment against Waddell could not be adjudicated in the bankruptcy proceeding. On a second appeal to this court
"Bonner's contention, as we understand it, is that he is not liable for costs of sale of tracts of land purchased by him where he held a second mortgage, but that such costs should be assessed against the first mortgagee, and if not paid by him, then paid by the other creditors. We cannot accede to any such untenable distinction. Bonner bid at the sale knowing that the costs of sale of a particular tract must be paid from the sale price of such tract, and be paid in cash by the successful bidder if he elected to discharge his bid by crediting the amount of liens thereon; and it makes not the slightest difference if the bidder used his own liens, or those of another, in so discharging his bid. Here again, such costs must come from the tract of land sold or be paid by mortgagees on other tracts of land, to be later collected from Waddell if they can. Bonner took Waddell out of the bidding, foreclosed his own second mortgages, has had all the benefits of the expense of administering these lands on which he held liens, and he ought to pay the expenses incurred for his use."
On August 25, 1927, Waddell assigned to Suiter the mortgage covering tract No. 6 and the note secured thereby. On July 16, 1925, Waddell assigned to Strehle the mortgage covering tract No. 11 and the note secured thereby. On July 1, 1925,
Bonner and Mabel R. Bonner, his wife, brought this action against Suiter, Haag and others. In their petition they alleged that under orders of the bankruptcy court they paid to Hal M. Cannon, trustee of the estate of Mullen, bankrupt, the sum of $5,343.41 to cover fees, costs and expenses of sale for which Waddell was primarily liable; that they are entitled to have such sum credited on the first mortgages held by Waddell, or its assigns, and that when so credited, the mortgage indebtedness will be fully discharged. The Bonners prayed that the Waddell mortgages and notes secured thereby be cancelled and that the defendants be enjoined from instituting any suit or suits to foreclose such mortgages or to enforce the payment of the notes secured thereby.
Haag and Suiter filed answers and cross-complaints in which they set up their notes and mortgages and prayed for foreclosure thereof. Hickok and Strehle filed intervening petitions in which they set up their notes and mortgages and prayed foreclosure thereof.
From a judgment denying relief to the Bonners and adjudging and decreeing foreclosure of the mortgages of Suiter, Haag, Strehle, and Hickok, the Bonners have appealed.
The trial court found that the burden was on Bonner to prove that he had not been reimbursed by Waddell, or its assigns, for the costs and expenses paid by him and that he had failed to carry that burden; that he was estopped by his conduct from asserting any claim against Suiter, Haag, Strehle, or Hickok; that he received the benefit of the foreclosure of his second mortgage and was properly charged with the costs and expense of the sale; and that as to the amount of $1,619.33 which he paid as garnishee of Waddell he had been reimbursed by the assignees of Waddell.
Waddell received no direct benefit from the foreclosure proceeding. Bonner voluntarily availed himself of the bankruptcy proceeding to effect foreclosure of his second mortgage. The bankruptcy estate received no benefit from the sales. Under these circumstances the costs of sale were properly chargeable to Bonner. A lienholder must bear the expense of bankruptcy administration which is solely for his benefit.