Court Opinion

ID: 8196630
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:20:01.145756+00
Date Added: 2024-06-11T16:40:47.210015
License: Public Domain

Stevens, J.
(on motion for rehearing). The motion for rehearing presents a question not considered when the case was decided, — that is, whether the bankruptcy of Millard’s Inc. discharged the surety on the bond given to release the debtor’s property from attachment.
The rule is well established that the purpose of sec. 67 (f) of the Bankruptcy Act, so far as it avoids liens obtained through legal proceedings within four months prior to the filing of the petition in bankruptcy, is to secure an equitable distribution of the bankrupt’s assets among his creditors, and that only the trustee and those claiming under him can avail themselves of this ■ provision of the Bankruptcy Law. Black, Bankruptcy (4th ed.) § 935; Frazee v. Nelson, 179 Mass. 456, 460, 61 N. E. 40; Rochester L. Co. v. Locke, 72 N. H. 22, 54 Atl. 705, 706; Kobrin v. Drazin, 97 N. J. Eq. 400, 128 Atl. 796; Equitable Credit Co. v. Miller, 164 Ga. 49, 137 S. E. 771, 772; Smith v. First Nat. Bank, 76 Colo. 34, 227 Pac. 826; Swaney v. Hasara, 164 Minn. 416, 205 N. W. 274, 276.
This is not a case in which the surety is seeking to invoke the benefit of sec. 67 (f) of the Bankruptcy Act on its own behalf. That it cannot do. The defendant is relying upon the fact that the trqstee has taken possession of the property attached and that he is now claiming title to the same, freed from the lien of attachment.
The bond sued on here is not an independent obligation to pay plaintiff’s judgment. It, “even though it be absolute *99in terms, is no more than a substitute for the attached property.” Thompson v. Royal Indemnity Co. 197 Wis. 43, 48, 221 N. W. 415. Any proceeding which results in a dissolution of the attachment or which vests the title to the attached property in the trustee in bankruptcy, freed from the lien of attachment, effectually releases the surety on the bond here in question. “Whatever destroys the attachment destroys all liability upon the bond.” Simon Casady & Co. v. Hartzell, 171 Iowa, 325, 151 N. W. 97, 99.
To ascertain the liability of the surety the court must look beyond the form of the bond to the purpose sought to be accomplished when' it was given. The purpose was not to put the plaintiff in a more favorable position than it would have been in had the bond not been given. The purpose was to secure to the plaintiff the benefit of its attachment by placing it in the same position that it would have been in had the bond not been given. Had no bond been given, if Millard’s Inc. was insolvent at the time of the attachment, the bankruptcy would avoid the attachment and the property attached would have been subjected to the payment of the claims of all creditors.
The plaintiff is now in precisely the same position that it would have been in if no bond had been given. It has lost no rights through the giving of the bond. It has gained none that it would not have possessed had the bond not been given.
By the Court. — Motion denied, with $25 costs. Former mandate confirmed.