Case ID: va_71/html/0140-01.html
Source: Caselaw Access Project
Author: {"author": "MOKCURE, P.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*McAden & als. v. Keen & als.
    July Term, 1878,
    Wytheville.
    1. Bankruptcy — Rights of Bona Fide Purchasers — Estate ‘Vesting' in Assignee.— Only the estate of a bankrupt, whatever it may be, at the time of his becoming such, including any estate he may have aliened by an act fraudulent and void as to his creditors, is vested in his assignee in bankruptcy for the benefit of his creditors. And, therefore, no estate which may have been sold by him to a bona fide purchaser for valuable consideration fully paid prior to the act of bankruptcy, becomes so vested in said assignee.
    2. Same — Bona Fide Sale of Portion of Estate — Judgment Liens — Credits.—A judgment creditor of a bankrupt whose judgment is a lien upon any estate bona fide sold and conveyed by the bankrupt, before his bankruptcy, may claim ar.d secure in the proceeding in bankruptcy, his portion of the estate of the bankrupt, in virtue of his said judgment, without accounting or giving credit for anything on account of the lien of his judgment upon the estate so sold and conveyed.
    3. Same — Same—Same—Recovery of Balance of Jnda’anent. — Though such creditor may have so claimed and received in the proceeding in bankruptcy, his portion of the estate of the bankrupt. such judgment creditor may, by a suit in equity, enforce the lien of his said judgment upon the estate bona fide sold and conveyed before the act of bankruptcy, for the recovery of any balance of said judgment which may remain unsecured in the proceeding in bankruptcy; and that, though he may not, in the said proceeding, have asserted or given any notice of the lien of his said judgment upon the estate so sold and conveyed.
    This case was heard at Richmond, but was decided at Wytheville. It was a creditor’s bill in the circuit court of Pittsylvania comity, brought in 1870 by James McAden and others against W. W. Keen and Robert A. Walters and others, purchasers of real estate from Keen, to subject the said real estate to satisfy the judgments * of the plaintiffs. There were two amendments of the bill bringing in other parties. It appears that in 1867 Keen filed his petition in bankruptcy, and in September, 1869, received his discharge; that these plaintiffs were creditors who proved their debts; that the lands they seek to subject in this suit to the payment of their judgments were sold and conveyed by Keen before he filed his petition in bankruptcy, and were not mentioned by him in his schedules; nor did the plaintiffs in proving their debts refer to their judgment liens upon these lands. The real estate surrounded by Keen seems to have been absorbed by judgment debts having priority to those of the plaintiffs. The cause came on to be heard on the 9th of September, 1875. when the court expressed the opinion that the plaintiffs, having been parties to the suit in the bankrupt court, and claiming their debts therein, enforcing liens on property surrendered by the bankrupt, and failing to make known to the court other liens held by them upon other property, were estopped from maintaining a suit in any court to enforce their hens claimed in this suit; and without deciding any other question in the cause, dismissed the bills with costs. And thereupon the plaintiffs obtained an appeal from the decree.
    E. E. Bouldin, for the appellants.
    Thomas S. Elournov and William J. Robertson, for the appellees.
    
      
      Bankruptcy — Rights of Bona Fide Purchasers. — The principal case is cited and the holding set out in its first headnote is sustained in Parker v. Dillard, 75 Va. 422. See also Barr v. White, 30 Gratt. 531.
    
   MOKCURE, P.,

delivered the opinion of the court.

This cause, which is pending in this court at Richmond, having been there fully heard but not determined, this day came here the parties, by their counsel, and the *court having maturely considered the transcript of the record of the degree aforesaid and the argument of counsel, is of opinion that only the estate of a bankrupt, whatever it may be at the time of his becoming such, including of course any estate he may have aliened, by an act fraudulent and void as to his creditors, is vested in his assignees, in bankruptcy for the benefit of his creditors; and, therefore, that no estate which may have been sold and conveyed by him, by deed duly recorded, to a bona fide purchaser for valuable consideration fully paid prior to the act of bankruptcy, becomes so vested in said assignees.

The court is further of opinion, that a judgment creditor of the bankrupt, whose judgment is a lien upon any estate so sold and conveyed by the bankrupt, may claim and secure in the proceeding in bankruptcy his portion of the estate of the bankrupt, in virtue of his said judgment, without accounting or giving credit for anything on account of the lien of his judgment upon the estate so sold and conveyed as aforesaid.

The court is further of opinion, that notwithstanding such creditor may have so j claimed and received in the proceeding in bankruptcy his portion of the estate of the : bankrupt as aforesaid, such judgment cred-Í itor may. by a suit in equity, enforce the lien ' of his said judgment upon the estate so sold and conveyed as aforesaid, for the recovery of any balance of said judgment which may remain unrecovered in the said proceeding in bankruptcy: and that notwithstanding he may not, in the said proceeding, have asserted or given any notice of the lien of his said judgment upon the estate so sold and conveyed as aforesaid.

The court is therefore of opinion, that the circuit court erred in dismissing the original and amended bills of the complainants; and that instead of doing so, the said court ought to have proceeded to adjudicate the rights of the *parties involved in the case, in regard to which rights it is not deemed proper by this court, as it would be premature, to express any further opinion than as aforesaid until the said circuit court shall have adiudicated upon them, and it may become the duty of this court to suoervise the judgment of that court on appeal.

Therefore, it is decreed and ordered that the said decree appealed from be reversed and annulled; that the aopellec, Robert A. Walters, pay to the appellants their costs bv them expended in the prosecution of the’r appeal aforesaid here; and that the cause be remanded to the said circuit court for further oroceedingsto behad therein to a final decree, in accordance with the principles hereinbefore declared: which is ordered to be entered on the order-book here and forthwith certified to the clerk of this court at Richmond aforesaid, who shall enter the same on his order-book and certify it to the said circuit court of Pittsylvania county.

Decree reversed.