Court Opinion

ID: 8753271
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:35:45.30075+00
Date Added: 2024-06-11T17:01:05.190193
License: Public Domain

On Rehearing
In his motion to amend the order entered herein on December 28, 1965, which motion is considered as a motion for rehearing, the receiver crystallizes and amplifies his contention. His contention rests upon Section 311 of the Bankruptcy Act and its implications. Section 311 reads:
“Where not inconsistent with the provisions of this chapter, the court in which the petition is filed shall, for the purposes of this chapter, have ex-*50elusive jurisdiction of the debtor and his property, wherever located.”
From this language, the receiver reasons that no one can obtain a lien of any kind against the debtor’s property while it rests within this “exclusive jurisdiction” of the bankruptcy court. The argument is supported by the statement and development of practical considerations which we acknowledge to be forceful. It is also supported by a contention, which we will not spell out here, that acceptance of the receiver’s view would give a logical symmetry and balance to the Act, as it applies to judgments taken before the filing of the petition and those taken subsequently.
After careful consideration, we are obliged to persist in .the view that acquiescence in the receiver’s contention requires surgery upon the statute beyond this court’s power to perform.
The essence of the receiver’s contention is that, by conferring upon the bankruptcy court “exclusive jurisdiction” of the debtor’s property, Section 311 renders such property invulnerable to siege which may be laid against it outside the bankruptcy court. However, Section 314 makes plain that no such automatic shield is raised by the filing of a Chapter XI petition. Indeed, the holder of a preexisting lien may go so far as to foreclose it in another forum and to have the debtor's property sold unless, on notice and for cause shown, he is specifically restrained from doing so. The Congress in Section 314 also made it explicit that despite the “exclusive jurisdiction” of the bankruptcy court over the property of the debtor, a creditor was free to commence and to prosecute a suit against the debtor in another forum, unless specifically restrained. Thus the only issue concerns the attributes of a judgment obtained by a creditor in such a suit. Since the Congress considered that, unless specifically restrained, the holder of a pre-existing lien should be free to exercise complete dominion over the property of the debtor despite the “exclusive jurisdiction” of the bankruptcy court, it is difficult to understand why by reason of this “exclusive jurisdiction” a judgment properly obtained by a creditor should be shorn of its otherwise normal and familiar quality as a lien against the debtor’s property. It cannot be supposed that the Congress was unaware that judgments obtained in the courts of many states constitute liens upon the real property of the judgment debtor. See, for example, Illinois Revised Statutes (1963), ch. 77, sec. 1; Code of Iowa (1962) secs. 624.23, 624.24; Missouri Revised Statutes (1959), sec. 511.350; Page’s Ohio Revised Code Annotated (1964 Supplement), sec. 2329.02; Deering’s 1961 Code of Civil Procedure of the State of California, sec. 674.
For the reasons given, the receiver’s motion to amend the order entered herein on December 28, 1965, has been denied.