Court Opinion

ID: 8748334
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:16:07.440558+00
Date Added: 2024-06-11T17:00:47.975260
License: Public Domain

DAY, Circuit Judge,
after making the foregoing statement, delivered the opinion of the court.
Section 67 of the bankruptcy act provides:
“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.”
Under this section the question presented is, when did the lien of the levy attach'to the property in such sense that it may be said to have been “obtained” within four months, within the meaning of the act? An examination of the decisions of the supreme court of Tennessee discloses that the rule of the common law prevails in that state, and the lien of the execution relates back to the teste thereof, which is the first day of the term at which the judgment was rendered. This was decided in the early case of Preston v. Surgoine, Peck, 72-80, and seems to have been adhered to as a general rule since. In Barnes v. Hayes, I Swan, 304, the supreme court of Tennessee held that the execution related to the date of the teste, “which is the first day of the term from which it issues, and operates as if it were actually running from the date of its teste to the day of its return, and is a lien on all the goods of the defendant owned by him during that period.” In Battle v. Bering, 7 Yerg. 528, 27 Am. Dec. 526, it was held that, if the judgment debtor sold the property before the execution issued, but the teste of the execution was prior to the day of the sale, the property is bound in the hands of the purchaser. In that case Chief Justice Catron declared that, until the legislature changed the rule, it was the duty of the court to administer it as it had been settled, although, in his opinion, the safer rule was found in the statute of Charles II, declaring that no execution should be a lien on personals so as to defeat bona fide purchasers. In Berry v. Clements, 9 Humph. 311, it was held that personal property transferred in good faith before the actual *409rendition of the judgment, but after the teste, was not bound by the lien, as it could not fasten upon the property which had been aliened before the judgment was rendered. In that case Justice McKinney observed that thp common-law fiction might be repelled, whenever necessary to the attainment of justice, by showing the true time of signing the judgment, providing this could be made to appear from any entry or memorandum in the record. In Edwards v. Thompson, 85 Tenn. 720, 4 S. W. 913, 4 Am. St. Rep. 807, the court held that, as a growing crop of corn cannot be levied on in Tennessee until after November 15th, it is not subject to the lien of an execution until that date, so as to overreach or defeat a prior bona fide sale by the owner. Judge Caldwell, who delivered the opinion, recognizes the rule that the lien of an execution in Tennessee relates to the teste, and attaches to all personalty owned by the debtor between the teste and the levy of the execution, so as to defeat all intermediate transfers. After pointing out that this doctrine of relation had its origin in the desire to prevent the debtor from alienating his property to the injury of the creditor after judgment, the learned judge adds:
“But if for any reason tlie property of the debtor cannot be seized, under execution, it cannot he affected by the usual lien or the doctrine of relation. If the property be absolutely protected from execution under statutory exemption laws, of course there is no lien upon it. So, if it is free from execution during a specified period, it is free from the lien during the same period. The lien of an execution, as such, exists only in connection with the execution itself, and cannot attach to property before the property is subject to levy.”
In the case in hand we think an application of this reasoning results in holding that there could be no lien upon the property before the same was acquired by the debtor. It was not subject to levy until it belonged to the judgment debtor. To extend the lien to the property before that time is to extend a legal fiction to the absurdity of holding the property bound in the hands of strangers to the judgment. As Judge Caldwell points out, the rule was created by the courts to prevent one from alienating his property which ought to be subject to the judgment debt. When the judgment is rendered and execution issued, the lien fastens upon the property owned by the debtor. If he shall acquire more after judgment, it may be seized in execution, and is bound from the time it became subject to the execution; certainly not before. In the present case the property was not the subject of seizure upon execution until the debtor acquired it. No lien could be obtained upon it until that time. The lien arises from the execution, and attaches to the property in order to make the execution effectual, not to make the lien superior to the execution’, and by fiction fastening upon property not subject to levy. In this view, as the property was acquired by the bankrupt within four months prior to the filing of the petition, we think the lien was vacated, and the property passed to the trustee freed therefrom. We conclude the referee was right in so holding, and the district court erred in reaching a different conclusion.
The judgment will be reversed, and the cause remanded for further proceedings in conformity with this opinion.