Court Opinion

ID: 8629908
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:35:57.375504+00
Date Added: 2024-06-11T16:55:43.985952
License: Public Domain

HOPKINS, District Judge.
I think the lien created by chapter 153 of the Revised Statutes of the state of Wisconsin, entitled, “Of the Lien of Mechanics” (Tayl. St. p. 1761), attaches from the time the building was commenced, upon which the work was done or material used. Sections 1 and 4 taken together are so clear upon that point that there seems little room for difference of opinion. The case (Dobbs v. Enearl, 4 Wis., 451) cited by counsel for assignee as establishing a contrary doctrine has, I think, been substantially overruled by the cases of Witte v. Meyer, 11 Wis., 295, and of Jessup v. Stone, 13 Wis., 466; at all events as it has not been followed by the court which pronounced it. and as it is so widely different from my understanding of the statute, 1 do not feel disposed to follow it unless I am bound to, as the construction given to a state statute by the highest tribunal of the state. And as later decisions of the same court *382are at variance with it, I cannot regard it as the law of the state, hut shall adopt the views expressed in the later decisions above referred to, which sustain the interpretation given by me to the statute as to the time the lien attaches. I therefore think that any mechanic who had a lien at the filing of the petition in bankruptcy would have a right, by leave of this court, to file a petition according to the provisions of section 4 of the act of 1859, so as to continue it, notwithstanding the commencement or pendency of bankruptcy proceedings.
The bankrupt act provides for the protection of legal liens against the bankrupt’s property, instead of destroying them; I hold, therefore, that where a party has a lien when the petition in bankruptcy is filed, but according to the requirements of the statute, in order to continue it beyond a certain period, it is necessary to file a petition in the clerk’s office, such party having first obtained the leave of this court, has the right to file such petition, and thereby continue the lien thereon, or if he does not filé his petition in the clerk’s office, but asks to have his rights established in this court, that the court should hold that as against property in the hands of an assignee in bankruptcy it should not be necessary to file a petition in the state court to continue it. In re Coulter [Case No. 3,276]. See opinion of supreme court of Massachusetts in Re Clifton v. Foster [103 Mass. 233].
Since the commencement of proceedings in bankruptcy and the appointment of the assignees, several parties have commenced suits against bankrupts and assignees to enforce their liens in the state circuit court. These suits were improperly brought. The liens of mechanics and all others should be presented to and be ascertained by this court, and the parties claiming thpse liens have no right to bring such suits in the state court without first obtaining leave of this court to do so. Angel v. Smith, 9 Ves. 335; In re Heller, 3 Paige, 199; In re Hopper, 5 Paige, 489; Wiswall v. Sampson, 14 How. [55 U. S.] 52. I therefore disallow the costs of all those cases, and direct the assignee or clerk to pay only the amount of the lien in such case.
If a party has a claim, lien or interest in the property in the hands of an assignee in bankruptcy, he should apply to this court for relief, and this court may grant the relief or allow a suit to be brought either in this or the state courts to determine the same; but without such consent I think parties have no right to sue, and are guilty of a contempt of the authority of the court in so doing. This principle is applicable to every interference with the possession of a receiver, sequestrator, committee or custodian who holds property as the officer of the coait, as his possession is in law the possession of the court itself. ICdw. Itec. 129; In re Heller, 3 Paige, 199; Kayo v. Cunningham, 5 Madd. 406; In re Hopper, 5 Paige, 489; Taylor v. Carryl, 20 How. [61 U. S.] 583.
Those parties who have commenced such suits must discontinue them before they can be paid' by this court the amount of their claims. This court acquired jurisdiction over the property and the bankrupts and had taken possession of the property. It will, therefore, insist upon its right to administer and distribute the property. Parties should understand that they have no right to commence suits against assignees in bankruptcy to affect the property, for as they are accountable to this court for the property, it is the duty of the com! to protect them in the possession. The federal courts sedulously avoid all interference with property held by the state courts or their officers, and they with equal solicitude and firmness maintain their right to hold property which is in their possession, or in the custody of their officers, against the process of any state court, and will not permit persons through process issuing from state courts to interfere with impunity with property so in possession of the federal courts, or their officers; and this principle has in the United States supreme court, as stated in Taylor v. Carryl, 20 How. [61 U. S.] 595, received its clearest illustrations, and it has been employed most frequently in that court, and with most benign results. And as stated in that opinion, “It forms a recognized portion of the duty of this court to give preference to such principles and methods of procedure as shall seem to conciliate the distinct and independent tribunals of the states and of the Union, so that they may co-operate as harmonious members of a judicial system, co-extensive with the United States and submitting to the paramount authority of the same constitution, laws and federal obligations.”
Upon filing discontinuance of the suits pending in the state courts for the enforcement of such liens, the clerk will pay out of the funds in court due from such sale, the amount of liens hereby allowed. In Bos-worth & Son’s Case, the issue is as to whether the materials were furnished and used for this store. The only proof is that of Mr. Gleason, who says only $396.90 of those charged were actually used in the building; the balance was used by another firm, who were building adjoining to them. I shall only, therefore, allow that sum. When the material is not in fact used by the party in the building sought to be charged, the seller must show that they were sold to be so used (Esslinger v. Huebner, 22 Wis. 633), which he failed to do in this case. In the case of Sanborn & Butterfie’d, for work, they claim $91.81, but Mr. Gleason testified that they had not finished their contract and that it would be worth $25 to finish it; so I deduct from the claim $23, and al’ow it at $.:6.81 and interest. It appears from the bill of particulars annexed to Bangs & Fish’s proof that $147.51 of the amount of the claim -was *383for work done after filing the petition in bankruptcy. This part of the claim is not allowable. Mechanics should have stopped then, and if they went on they certainly cannot create a lien upon the property when in the possession of the court. Their claim is allowed at $393.64, and interest at seven per cent, since January 1, 1871.
NOTE [from original report]. That a creditor claiming a lien must proceed in the bankrupt court, or obtain leave from that court, consult Smith v. Kehr [Case No. 13,071]: In re Ulrich [Id. 14,32S]. For construction of the mechanic's lien law in other states, on similar questions. consult In re Dey [Id. 3,870]: In re Gregg [Id. 5,79(1.]