Document: 364 U.S. 603 81 S.Ct. 347 5 L.Ed.2d 323 Wm. G. LEWIS, Trustee, Petitioner,v.MANUFACTURERS NATIONAL BANK OF DETROIT. No. 94. Argued Dec. 15, 1960. Decided Jan. 9, 1961. Mr. Stuart E. Hertzberg, Detroit, Mich., for petitioner. Richard D. Rohr, respondent. Justice DOUGLAS delivered the opinion of Court. 1 The bankrupt borrowed money from respondent on November 4, 1957, giving as security a chattel mortgage an automobile. In Michigan, where transaction took place, mortgages were void against creditors mortgagor unless filed with Register Deeds1 special dispensation to purchasemoney if within 14 days execution mortgage. This mortgage, however, was not mortgage; and though executed it recorded until 8, 1957. 2 Over five months later—on April 18, 1958—the borrower voluntary petition in bankruptcy adjudication followed, petitioner being named trustee. 3 There no evidence that any creditor had extended credit between date its recordation. But since been immediately, referee held relied upon § 70, sub. c Bankruptcy Act, 11 U.S.C. 110, c, U.S.C.A. which, so far material here, reads: 4 'The trustee, all property, whether or coming into possession control court, which could have obtained lien by legal equitable proceedings at bankruptcy, shall be deemed vested such rights, remedies, powers then holding thereon proceedings, actually exists.' He ruled 'clothes Trustee rights who concluded under Michigan law taken prior he during four-day period when 'off record' therefore trustee can claim same even there creditor. District Court overruled Appeals affirmed 275 F.2d 454. case is here writ certiorari we granted because conflict decision Constance v. Harvey, 215 571, decided Second Circuit subsequently followed court Conti Volper, 229 317. 363 837, 80 1613, 1724. 6 Petitioner's turns words, 'upon * exists,' contained c. 7 Prior 1910 better title property than had. See York Mfg. Co. Cassell, 201 344, 352, 26 481, 484, 50 L.Ed. 782; Zartman First National Bank, 216 134, 138, 30 368, 369, 54 418. provision are concerned written give ideal judicial creditor.2 8 predecessor present 47(a)(2) amended Act provided relevant part: 9 '* trustees, custody thereon; also, judgment duly returned unsatisfied.' 36 Stat. 840. 10 That language status 'as time filed.' Bailey Baker Ice Machine Co., 239 268, 276, 50, 54, 60 275. 1938 provisions transferred change.3 12 1950 recast read follows: 13 64 26. Thus distinction other abolished; given through both types property. Amendment, created anomaly. House Report4 accompanying 1952 amendment cast form states: 15 now recognized did accurately express what intended. Since trsutee already has bankrupt's proper say his own What should said interest may ostensible owner. Accordingly, section 70c revised clarify meaning state more intended.' 16 We think one consistent theory underlies several versions set forth, viz., creditors—whether they existing hypothetical—to succeeds ascertained 'the bankruptcy,'5 anterior point time. say, acquires filed. statutory words (existing hypothetical) lien' refer date.6 17 construction seems us fit scheme Act.7 Section e enables aside fraudulent transfers having provable claims void. urges would power transactions injured enrich unsecured expense secured creditors, creating windfall merely reason happenstance bankruptcy. 18 It true some instances have. 11, 29, gives him two years institute regardless limitations might under. 60, 96, right recover preferential made four local law. A like exists 67, a, 107, respects invalidation liens insolvent. d, carefully defines voided 'within year filing' petition. 19 Congress striking balance specific periods repose beyond longer upset—except them aside.8 Yet construe does, repose. Security entered good faith before upset ingenious enough conjure up hypothetical situation right. rule pressed deprive mortgagee States previously delay day recording without unrecorded. 20 too great wrench system, absent plain indication lacking here. 21 Affirmed. 22 HARLAN. 23 As judge wrote I appropriate long come view second Constance, 575, ill-considered. welcome this opportunity join setting matter Mich.Comp.Laws, 1948, 566.140, Pub.Acts 233. 1959, 10-day grace mortgagees vis-a -vis creditors. MacLachlan, (1956), p. 187. Committee Report concerning Amendment said: 'It evident proposed attempt effect ideas quite distinct: First, considered levied law: and, second, stand position unsatisfied, thus entitling proceed precisely individual done subject assets. way, effect, will debarred bankruptcy—certainly very desirable eminently fair trustee.' H.R.Rep. 511, 61st Cong., 2d Sess., 7. 187; 1409, 75th 1st pp. 34—35. 2320, 82d 16, U.S.Code Congressional Administrative News 1952, 1976. While speaks bankruptcy,' term defined 1(13), 1(13). After passed bill change holding. President vetoed bill, stating: 'I withheld my approval H.R. 7242, amend sections 1, 57j, 64a(5), 67b, 67c, further purposes. recognize need legislation solve certain problems regarding priority but satisfactory solution. unduly unnecessarily prejudice sound administration Federal tax laws. cases, example, unwarranted over after filing lien. 'This defects can, believe, corrected compromising primary commendable purpose.' Cong.Rec., September 1960, A7013. Report, urging amendment, clear inequity often result construed supra, it: injecting substance 70e, statutorily relating back general levy benefit license irrespective avoid remained imperfected Harvey. Under only limit ability conceive used basis down imperfect transfers. doctrine Harvey presents real threat transactions, validity hitherto challenge act. Moreover, required policy act, prejudiced imperfections transfer normally protected 70e.' 745, 86th 8—9. Seligson, Creditors' Rights, Jour. Nat. Assoc. Referees Bankruptcy, Oct. 113, 118; Marsh, Harvey—The 'Strong-Arm Clause' Re-Evaluated, 43 Cal.L.Rev. 65; Note, 57 Mich.L.Rev. 1227. See, e.g., e, 32, stated, 70e avoided applicable State law, limitation case.'

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