Court Opinion

ID: 8798176
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:20:01.681698+00
Date Added: 2024-06-11T17:03:45.004821
License: Public Domain

HAZEL, District Judge.
The referee in bankruptcy sustained the objections of the trustee to the claim of McCarthy Bros. & Eord to proceeds realized on sale of certain property of the bankrupt ’which had been levied upon by the sheriff of Erie county more than four months before the filing of the petition. The claim was disallowed on the ground that the execution lien had become dormant and was unenforceable against the trustee at the time the petition was filed.
[1,2] The law is that a lien on personal property levied upon by virtue of an execution four months before bankruptcy intervenes is not lost unless the plaintiff does something to hinder, delay, or defraud other creditors. No actual intent need be shown. A mere acquiesence in adjournments of the sale by the sheriff has been held insufficient to render a lien dormant, but in this case the referee has found on the evidence before him that there would have been no adjournment of the sale without the consent of the petitioning creditor, and that such consent, on the authority of Excelsior Company v. Globe Cycle Works, 48 App. Div. 304, 62 N. Y. Supp. 538, was the equivalent of a direction to the sheriff to adjourn it, and thus the other creditors were hindered or delayed. In the absence of any other explanation accounting for such delay I incline to the view that the referee was correct in his conclusion. It malees no essential difference that the instructions to the sheriff to adj ourn the sale were not in writing or that there was no request made to him, as in the Globe Cycle Works Case, to release any portion of the property. The evidence showed that the execution in favor of the petitioning creditor was issued in October, 1912, the property levied upon and advertised for sale, and that after-wards the execution sale was adjourned about 18 different times, until March, 1913, when an injunction issued in this proceeding. Under these circumstances there was such delay in the enforcement of the execution as to render the execution lien dormant against later execution creditors and the trustee in bankruptcy. Freeman on Executions (3d Ed.) vol. 2, § 206.
[3] The referee was right, too, in holding that the execution lien, although acquired more than four months before bankruptcy intervened, was subject to attack by the trustee. By the amendment of *4741910 to section 47 of the Bankruptcy Act the trustee was vested with the rights, remedies, and powers of a creditor holding a lien. He was in the precise situation of a junior judgment' creditor with an execution lien, and had a right to invalidate a preceding lien either for laches, fraud, or dormancy as of the date of the filing of the petition in bankruptcy. Matter of Lane Lumber Co., 213 Fed. 587, 130 C. C. A. 167, 32 Am. Bankr. R. 469. Counsel for petitioner attaches importance to the case of Bailey v. Baker Ice Machine Co., 239 U. S. 269, 36 Sup. Ct. 50, 60 L. Ed.-; but I think that case was decided upon another principle. It concerns a conditional contract of sale which had been filed within the four months period, and the Supreme Court of the United States held that as the contract was recorded under the recording act of the state the trustee could not assail it.
[4] The petitioner next contends that the execution issued on its judgment against the bankrupt was later revived in suich a way as to restore to it the benefit of its original lien, but to this I do not agree. The word “revive,” true enough, implies bringing back to life or action after suspension; a judgment upon revival becoming a new judgment. So, also, where the act of revival again brings into being .an execution on a levy which had become dormant, the revival is in the nature of a recreation and dates, from the act of revival. A dormant execution may still be, as between the parties, a lien, and the judgment may be satisfied on sale of the property, yét as against another, whose rights have in the meantime intervened and become vested, there can be no retrocession of legal rights.
The claim of lien and right to priority of payment is disallowed, and the report of the referee is approved.