Case ID: tenn_58/html/0179-01.html
Source: Caselaw Access Project
Author: {"author": "Deadeeick, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Wilson v. Eifler.
    1. Bankrupt Law. Attached Property. Where a decree has been rendered in the Supreme Court of this State reversing a cause and remanding it to the Chancery Court for the ascertainment of complainant’s debt and its collection, the bankruptcy of the defendant cannot then defeat an attachment made when the suit began.
    2. Same. Same. Replevied. The proper decree, the defendant being adjudged bankrupt pending the suit, is ah ascertainment of the debt and a decree against the surety in the replevy bond for the same, but to .be discharged by the delivery of the property. A trustee for creditors, who has joined in the replevy bond, is liable also to judgment on-the bond.
    ■3. Begissration. Notation. Illegal. A deed taken to the Kegister’s office before the levy of an attachment, and delivered to a person there not being the Register or a deputy, who noted the time of delivery on the back of the deed, but not on the note book, is not effectually noted for registration.
    FROM KNOX.
    Writ of error and supersedeas, decree March Term Chancery Court, Knoxville, 1872. O. P. Temple, Ch„
    Logan, for complainants, with whom was Lewis, who said:
    The bankruptcy of Eifler cannot avoid the conclusion to which the Chancellor came, and his decree is strictly in accordance with the law. In Bump’s Bankrupt Law the court say, no attachment made prior to the period of four months next preceding the- commencement of proceedings in bankruptcy is dissolved. Not being dissolved, it remains in full force. When the attachment is so made prior to that time, the debtor’s title to the property attached passes to the assignee, subject to the creditor’s lien, acquired by virtue of such attachment. The lien may be enforced by any requisite proceedings therefor which do not involve a judgment in personam. A judgment only to be enforced against the property attached, but not to be enforced against the person of the defendant, or any other property, may be entered, even though a discharge has been granted and pleaded in bar of the ‘^action. Bump’s Bankrupt Law, 331.
    The authorities referred to are adjudicated cases under the existing bankrupt law, and are precisely in point and decisive of the case in question. The Chancellor rendered on that subject just such a decree as is approved by these adjudications.
    Geatz, for defendant.
    The following questions present themselves for the adjudication of this honorable court:
    1. Was the deed properly received and noted for registration ?
    2. If it was, does it vest the property in the trustee as against the attachment of the. complainant?
    3. Was it necessary for Davenport to file a cross bill, or an answer in the nature of a cross bill, or could he obtain the relief under his answer.
    -4. Eifler being, by reason of his discharge in bankruptcy, released from any liability to the complainants, can his property, or property attached as his, be subjected to satisfaction of a debt from which he is released by law?
    1. As to the first: The deed upon its face shows it to have been received in the office August 18, 1866, at ten o’clock A.M., registered in deed book D., vol. 3, p. 366, and noted in note book A., p. 213.
    There is proof that the • regular deputy register had gone to court, and requested his law partner, M. L. Hall, to enter upon the record all papers brought for registration. He had left blank receipts signed to be filled up as occasion required. Under these circumstances we insist that the registration is sufficient, and carries it back to the actual time when noted. . Mont-, \gomery v. Buch, 6 Hum., 416. But we also insist that the record which shows the deed to have been, registered as above described, cannot be attacked in this collateral proceeding.
    The deed having been properly registered, the proof also shows that' J. M. Logan, the attorney of complainants, had actual notice of the filing of the deed for registration before the levy of the attachment.. The result, therefore, is, that the property was no-longer that of Eifler, when the attachment was levied, but of Davenport.
    3. The question now arises whether the answer of Davenport brought this change of property sufficiently and properly to the attention of the Chancellor, or whether it was necessary for him to file a cross bill?’ The object of a cross bill is for a defendant to obtain from the plaintiff, or co-defendant, or both, equitable relief touching the matter in litigation.
    The respondent, Davenport, in the meaning and spirit of the foregoing instance, • sought no relief as against Wilson & Co. Wilson & Co. had levied an attachment upon property as belonging to Eifler, while in fact it belonged to Davenport. Suppose the complainant had sued them both, alleging that one owed the debt and the other claimed the property, etc. It would in effect be the same result. The question for the Chancellor to decide was simply as to whether it. was Eifler’s or Davenport’s property, and this could be and was raised by the. answer. A cross bill would have been had on demurrer. Barbour’s Chancery Practice,. vol. 2, ch. 9, book 4, p. T29.
    The bill alleges that the property was that of Eifler,. the answer of Davenport was that it is not Eifler’» but his own property. Rio decree of the court is necessary to give us the property, we have it already; the decision of the court upon the question made that it was not Eifler’s property is sufficient, and no active decree was necessary for Davenport to obtain his right.
    4. The last question presents some curious features, worthy of the serious consideration of the court. Eifler,. by the decree of the Chancellor, and by operation of the bankrupt law, is forever and entirely released from' the original indebtedness. If this be so, and there-can be no doubt about that, it seems that all liens created by reason of the very indebtedness must fall with it. Suppose a note is given, and in order to-secure the payment of it a mortgage is executed. I could imagine many cases where the note might remain in force and be good, while , the mortgage fails, but I confess to be unable to imagine any case where the note fails and the mortgage remains good.
    ' But another consideration is this: Assuming that the attachment still holds good, although the original debt should fail, the question is, where this claim should be made. A cause should not be divided, but if one court has jurisdiction for one purpose it has it for all purposes. The suggestion of bankruptcy in one of the lower courts of the State, by the terms of the bankrupt law, operates as an injunction upon the parties litigant, and prevents them from proceeding with their case. The jurisdiction in bankruptcy is vested solely in the District Courts of the United States, and a discharge obtained therein is conclusive, ■except when gotten by fraud, and even this cannot be pleaded except within two years from its date.
    Taking these, and other reasons, does it not appear reasonable when we insist that it is the duty of the creditor to present his claim by. attachment in the District Court of the United States, and his failure to do so must be taken as a waiver.
    Another very cogent reason for our position: Suppose A., being a creditor of B., attaches his property. The practice is to levy the same upon any property found by the sheriff. But suppose the property attached largely exceeds the debt claimed, must the proceedings in bankruptcy await the long and tedious process of our State courts? The very object of the bankrupt law is a speedy conversion of the property of the bankrupt, and distribution among the creditors. If our position be not true, the very object of the bankrupt law fails entirely. It seems to us the only ■true practice is to let the assignee marshal all the assets, and if the lien by attachment holds good, to pay the creditor the amount of his debt.
    But again, as before stated, the District Court of the United States, by express provisions of the bankrupt law, has sole and exclusive jurisdiction of all matters, as well as estate (no matter if encumbered with liens), belonging to the bankrupt, to the entire exclusion of the State courts. The extent of the powers of the court of bankruptcy is fully shown in the first section of the Act: “ The jurisdiction extends to all cases and controversies arising between the bankrupt and any creditor, etc., to collect all the assets of the bankrupt, to the ascertainment and liquidation of liens, specific claims, adjustment of priorities,” etc.
    When a court of bankruptcy has acquired jurisdiction, proceedings of other courts in relation to the bankrupt’s estate inoperative and void. Pillow v. Lang-tree, 5 Hum., 389; Houston v. City Bank of New Orleans, 6 Howard, 504.
    It is, therefore, in conclusion, submitted to the honorable court that—
    1. The deed from Eifler to Davenport vested the property afterward attached in the assignee, Jos. Davenport, and that his answer sufficiently raised the issue in the court below.
    2. That under the bankrupt law the property of the bankrupt is removed into the United States Court, where all the assets are marshalled and distributed, subject to liens, and in accordance with liens, and that therefore the remedy of complainant was to enforce his lien, if it exists, before that tribunal.
    As to the writ of error of complainant, we believe it is not necessary to burden the court with an argument. Under the provisions of the bankrupt law he is clearly no longer .personally responsible for the debt. The discharge could only be set up by cross bill, and this is done. There certainly was no final judgment,' as contemplated by the Bankruptcy Act, when the cross bill was filed.
   Deadeeick, J.,

delivered the .opinion of the court.

This cause was before this court at its September Term, 1869, at which time it was held that the plea in abatement filed by the defendants was sufficiently verified for the purposes of this cause. It was further adjudicated that as against Eifler the evidence of an intent fraudulently to convey his property was sufficient to authorize an attachment against his property, and that the Chancellor should have rendered a decree against him.

The decree of the Chancellor as to Eifler was reversed, and the cause remanded to the Chancery Court with directions to ascertain the amount due to complainants, and to render a decree in their favor for the amount so ascertained, and to make the necessary orders and decrees for the satisfaction of that decree. 7 Col., 32.

It was further held that the title of Davenport, trustee, in the deed of assignment made by Eifler to the property alleged to have been assigned was not in issue, and that in order to an adjudication upon the question of the validity of his title, he should have put that matter in issue by proper pleadings, so as to enable the court to pass upon it.

Davenport had become a party upon his petition, and then united with Eifler in the plea in abatement. The court held that Davenport had ho interest in the question of complainant’s right to an attachment against Eifler, unless said attachment interfered with his rights to the property attached, and dismissed the bill as to him, but without prejudice. Upon the cause being remanded to the Chancery Court, Davenport was allowed to become a party defendant upon his application, and he filed his answer to the complainant’s bill, exhibiting with his answer the assignment of Eifler to him as trustee for certain creditors therein named. In this answer he claims the property levied on by attachment by virtue of said assignment to him, which he insists was acknowledged and registered before the levy of the attachment, and also because as to some of the articles claimed to have been attached, the levy was vague and uncertain, and therefore void. Davenport died, and Jos. Gratz was appointed trustee in his stead.

After the cause was remanded to the Chancery Court, Eifler filed, on the 28th of April, 1870, his cross bill in said cause, representing that on the 26th of December, 1868, he had filed his petition in the District Court of the United States for the Eastern District of Tennessee, for the adjudication of himself as a bankrupt, and that on the 29th of July, 1869, a discharge was granted him from all his debts, etc. Upon the foregoing facts we are of opinion that it has been judicially determined in this case that Eifler\s property was liable to the attachment issued in this case, and we are further of opinion that the trustee and his surety in the replevin bond are liable to complainants for the amount of their debt, unless the record shows that the assignment was registered or noted for registration before the levy of the attachment. It appears that the assignment was left with M. L. Hall on the day the attachment was levied; that Hall was Clerk of the Circuit and District Court of the United States, and kept his office in the rear of the court house, and that H. M. Aiken, the Deputy Register of Knox county, kept the Register’s' books in his (Hall’s) office. Hall says that on the 18th of August, 1866, Aiken was absent, and the deed of assignment was brought into his (Hall’s) office, and he made the following endorsement on said deed: Received August 18, 1866, 10 o’clock a.m.” Hall states he was neither Register nor Deputy Register at the time, but made the memorandum to enable Mr. Aiken to know the time when the deed was brought to the office for registration; that he made no entry on the note book in the Register’s office. Aiken, the Deputy Register, shows that the deed was not in fact registered for several days after it was left at the office, and was not entered upon the note book until after the levy of the attachment, although the counsel of complainants had notice of its execution before the levy of the attachment. But the rights of an attaching creditor are not affected by notice of a previous unregistered deed, and the question to be determined is, was the deed of assignment registered, or noted for registration, within the requirements and meaning of our statutes, before the levy of the attachment. Sec. 454 of the Code requires the register to keep a book in which he shall note the day and the hour at which instruments were left with him for registration. Secs. 2072 to 2075 inclusive, show that to give validity to an instrument as a registered paper as against creditors, or bona fide purchasers without notice, there must be an actual registration of the instrument, or it must be noted for registration in the manner and by the officer prescribed by the statute.

"Without discussing, therefore, the question as to whether the pleadings in this case are of such character as to' authorize the trustee to assert his rights to the attached property, we are of opinion that the assignment was not registered or noted for registration in time and manner so as to defeat the attaching creditor.

Upon the coming in of the cross bill of Eifler, and the certificate of his discharge in bankruptcy, the Chancellor declined to give a personal judgment against him for complainant’s debt, but gave a decree against the trustee and his surety, allowing them to discharge themselves by delivery of the property attached, except two mirrors, or so much thereof as might be sufficient for the satisfaction of complainants debts, and in the event the property was delivered he ordered it to be sold for the satisfaction of the debt.

In this we think there was no error, and we affirm the decree.