Court Opinion

ID: 6906621
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:01:29.636437+00
Date Added: 2024-06-11T16:06:22.324622
License: Public Domain

On Petition eor Rehearing.
(179 Pae. 558.)
In Banc.
HARRIS, J.
2. Section 67f of the Bankruptcy Act (Act July 1, 1898, Chap. 541, 30 Stat. 564, Comp. Stats., § 9651) reads as follows:
“That all levies, judgments, attachments, or other liens, obtained through legal proceedings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the levy, judgment, attachment, or other lien shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the estate of the bankrupt, unless the court shall, on due notice, order that the right under such levy, judgment, attachment, or other lien shall be preserved for the benefit of the estate; and thereupon the same may pass to and shall be preserved by the trustee for the benefit of the estate as aforesaid. And the court may order such conveyance as shall be necessary to carry the purposes of this section into effect: Provided, That nothing herein contained shall have the effect to destroy or impair the title obtained by such levy, judgment, attachment, or other lien, of a bona fide purchaser for value who shall have acquired the same without notice or reasonable cause for inquiry.”
In his petition for a rehearing the plaintiff argues that the words “filing of a petition in bankruptcy against him” makes Section 67f applicable only to involuntary bankruptcies. There are three judicial decisions which give support to this contention of the plaintiff: In re Delue (D. C.), 91 Fed. 510; In re Easley (D. C.), 93 Fed. 419; In re O’Connor (D. C.) 95 Fed. *707943. Section 1 of the Bankruptcy Act (U. S. Comp. Stats., § 9585) expressly provides that:
“The words and phrases used in this act and in proceedings pursuant hereto shall, unless thé same he inconsistent with the context, be construed as follows: (1) ‘A person against whom a petition has been filed’ shall include a person who has filed a voluntary petition. ’ ’
One of the principal objects of the Bankruptcy Act is to place creditors upon an equal footing; but it is obvious that if Section 67f is made applicable only to involuntary bankruptcies it will have the effect of bringing about rather than preventing inequality among creditors. Reason and the literally overwhelming weight of authority make Section 67f applicable to both voluntary and involuntary bankruptcies: Gabriel v. Tonner, 138 Cal. 63 (70 Pac. 1021, 1022); Longley v. McCann, 90 Ark. 252, 255 (119 S. W. 268); Stickney & Babcock Coal Co. v. Goodwin, 95 Me. 246, 248 (49 Atl. 1039. 85 Am. St. Rep. 408); Brown v. Case, 180 Mass. 45, 47 (61 N. E. 279); Cavanaugh v. Fenley, 94 Minn. 505, 507 (103 N. W. 711, 110 Am. St. Rep. 382); Hall v. Chicago, B. & Q. R. Co., 88 Neb. 20, 24 (128 N. W. 645); Gardiner v. Ross, 19 S. D. 497, 505 (104 N. W. 220); Farrell v. Lockett, 115 Tenn. 494, 498 (91 S. W. 209); Wallace v. Camp, 200 Pa. St. 220, 221 (49 Atl. 942); Mencke v. Rosenberg, 202 Pa. St. 131, 137 (51 Atl. 767, 90 Am. St. Rep. 618); McKenney v. Cheney, 118 Ga. 387 (45 S. E. 433); Mohr v. Mattox, 120 Ga. 962, 965 (48 S. E. 410); In re Beals (D. C.), 116 Fed. 530, 533; In re McCartney (D. C.), 109 Fed. 621; In re Lesser (D. C.), 100 Fed. 433, 437; In re Rhoades (D. C.), 98 Fed. 399, 400; In re Vaughan (D. C.), 97 Fed. 560; In re Richards, 96 Fed. 935, 941 (37 C. C. A. 634).
*708Our statute (Section 301, L. O. L.) provides that—
“From the date of the attachment, until it be discharged or the writ executed, the plaintiff, as against third persons, shall be deemed a purchaser in good faith and for a valuable consideration of the property, real or personal, attached, # * .”
3. Turning again to Section 67f of the Bankruptcy Act it will be noticed that this section contains a proviso to the effect that nothing contained in the section shall destroy or impair the title obtained by an attachment of a bona fide purchaser for value who shall have acquired such title without notice or reasonable cause for inquiry. The plaintiff argues that when Section 301, L. O. L., and Section 67f of the Bankruptcy Act are construed together they have the effect of preserving the lien of the creditor’s attachment if the attaching creditor can show that “he was such attaching creditor in good faith and without notice of the debt- or’s insolvency.” It must be remembered that Ford was only an attaching creditor; he was not a purchaser at a sale on execution; the property was attached, but not sold. The contention now made by Ford was squarely presented in the case of In re Kaupisch Creamery Co. (D. C.), 107 Fed. 93, and Judge Bellinger there held that the state statute and the Bankruptcy Act—
“do not mean the same thing. The proviso in the act of congress has reference to the title of an innocent purchaser; the state act has reference to the priority of lien in favor of an attaching or judgment creditor. The state enactment does not purport to give an attaching creditor the character of a bona fide purchaser, —a thing involving an absurdity, and not possible. It gives him such priority of right as a bona fide purchaser acquires by his purchase. The proviso in the act of congress refuses to recognize such a priority where the lien is obtained on proceedings begun within the prescribed time. It protects the title of *709the bona fide purchaser, but repudiates the lieu of the attachment. ’ ’
The lien created by the attachment was dissolved by force of Section 67f of the Bankruptcy Act when F. B. Tompkins was adjudged a bankrupt: Lehman, Stern & Co. v. S. Gumbel & Co., 236 U. S. 448, 454 (59 L. Ed. 666, 35 Sup. Ct. Rep. 307); Goodnough Mercantile Co. v. Galloway, 48 Or. 239, 249 (84 Pac. 1049).
The remainder of the petition is only a restatement of the argument which the plaintiff made in his brief submitted at the hearing.
The petition for a rehearing is denied.
Affirmed. Rehearing Denied.