Court Opinion

ID: 6718691
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:50:53.646202+00
Date Added: 2024-06-11T16:01:32.749327
License: Public Domain

WESTENHAVER, J.
Epitomized Opinion
Application by the trustee for an injunction to stay prosecution of a foreclosure suit pending in the state court o.f Mahoning county, O.
One Angeloff filed his voluntary petition in bankruptcy, August 11, 1922, and on that date was adjudicated a bankrupt. A foreclosure suit had been brought by the defendant bank, June 20, 1922. The mortgage had been July executed and recorded April 28, 1921. On June 26, 1921, a receiver foj the mortgaged property had been appointed by thj state court. One of the defendants was the ownel of a junior mortgage, and the other two her me chanics’. liens. All the mortgages and liens werj admittedly valid, and were acquired by the holder* and attached to the real estate more than foul months before the petition in bankruptcy was filed although the foreclosure was begun, and the-othe defendants intervened, within the four months be fore the filing.
The court herein, in denying the application, hold that the trustee is not entitled to have a stay o proceedings in the state court to allow the bank ruptcy court to marshal liens upon the property and sell and administer it in the bankruptcy pro ceedings. On the other hand, the state court ha jurisdiction to proceed with the suit, sell the rea estate, pay the valid liens, and surrender the re maining porceeds, if any, to the trustee (see in re Rehorer, 177 Fed. 381) which has become settle: law, by decision in analogous situations. (See Metcalf v. 187 U. S. 177, and Globe Bank v. 236 U. S 288.)
If the lien is one that has been acquired withii four months, or is one which is voided or displace: by the adjudication in bankruptcy, or if the lie) is valid because created four months prior to tin adjudication but suit to enforce it is not begun ii the state court until after the adjudication, in al such cases the proceedings in the state court iqai be enjoined or stayed. See cases cited in the ful opinion.