Court Opinion

ID: 8786217
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:35:47.109614+00
Date Added: 2024-06-11T17:03:05.375882
License: Public Domain

KOHLSAAT, Circuit Judge
(after stating the facts as above). This is a controversy to determine which of two liens is entitled to priority against the property of a bankrupt. Appellant, as trustee, represents the holders of 200 bonds for $100 each, bearing interest at the rate of 5 per' cent., dated October 7, 1905, and maturing October 1, 1920, secured by a chattel mortgage on all the plant of the bankrupt, including the stock in trade. It will be noted that the indebtedness runs for a period of practically 15 years, while under the laws of Illinois a chattel mortgage is valid for only three years. In their efforts to keep said bonds secured, the parties resorted to the provisions of section 4 of chapter 95, Hurd’s Revised Statutes of Illinois, wherein it is provided that by filing in the recorder’s office and with the justice of the peace who took the acknowledgment an. affidavit within 30 days of the maturity 'of the debt, setting forth the mortgagee’s interest in the mortgaged property, and the amount remaining unpaid thereon, and the time when the same will become due by extension or otherwise, “the lien of the mortgage shall be continued and extended for and during the term of one year from the filing of such affidavit, or until the maturity of the indebtedness or extension thereof secured by said mortgage, provided such time shall not exceed one year from the date of filing such affidavit.” This affidavit was filed on October 5, 1908. Thereafter, and on October 6, 1909, a second and similar affidavit was filed. On the strength of these renewals, appellant contends that his mortgage constituted a valid lien at the date of the institution of bankruptcy proceedings.
Appellee represents, inter alia, the rights of the bankrupt’s creditors acquired under and by virtue of several executions issued upon judgments obtained by certain creditors and placed by them in the hands of the sheriff for service, to the claims of whom appellee has been subrogated under the provisions of section 67c of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 564 [U. S. Comp. St. 1901, p. 3449]). It appears that on June 3, 1910, six judgments, aggregating more than $25,000, were entered by confession in the superior court of Cook county on judgment notes that day executed by the bankrupt. Upon these executions were at once taken out and placed in the hands of the sheriff, according to the petition. The referee finds they were so placed for service. They never were served, as the bankruptcy proceedings were instituted on June 4, the next day.
It is appellant’s contention that these executions never became a lien, that they were secured through connivance of the parties, were never placed in the sheriff’s hands for service, but to be held by him. While the transaction bears some evidence of an intent to take advantage of the delay of appellant in securing an extension of his' lien, there is no claim that the sums represented by the judgment notes were not just claims, and we are not at liberty to disregard the finding of the referee that the 'executions were placed in the sheriff’s hands for service.
[ 1 ] Appellant distinguishes between executions placed in the sheriff’s hands for service and those placed there to be executed. Undoubtedly, the delivery to the sheriff must not be a limited delivery. Hurd’s Revised Statutes of Illinois (1909) p. 1364; Gilmore v. Davis, 84 Ill. *85487; Western Union Cold Storage Co. v. Rose, 60 Ill. App. 452; 2 Freeman on Executions (3d Ed.) § 206, p. 1030.
In the present case, however, there is an utter lack of evidence preserved in the record to show any attempt on the part of the judgment creditors to limit the duty- of the sheriff. The Illinois statute seems to contemplate two duties on the part of the sheriff in regard to executions placed in his hands: (1) Serving of notice of execution; (2) levying. Hurd’s Revised Statutes of 1909. In Cook v. Scott, 1 Gil-man (Ill.) 333, Davis v. Chicago Dock Co., 129 Ill. 180, 21 N. E. 830, Bingham v. Maxcy, 15 Ill. 290, Boggess v. Pennell, 46 Ill. App. 150, and Hamilton v. Quimby, 46 Ill. 90, it is held that it is the duty of the sheriff to serve notice thereof and make a demand upon the debtor before making a levy. Appellant cites these in support of his contention that service does not include levy. We think, however, that in the present case the two are identical. In Peck v. City National Bank.. 51 Mich. 353, 16 N. W. 681, 47 Am. Rep. 577, it is said:
‘.‘Service of an execution includes every act and proceeding necessary to be taken by the sheriff to make the money and includes the sale of the property when necessary.”
The word has been defined to mean “execution of process.” 35 Cyc. 1432. This construction seems to us reasonable in the case before us. It would be placing a strained meaning upon the transaction to hold that, when a party places an execution in the hands of a process officer, the latter is not charged with the duty, without further instructions, to proceed to make the money called for by the writ, which itself commands him to do so. In the absence of directions not to levy, it is the duty of the officer to obey the directions and commands of the writ. Nor is the duty waived by refusal of plaintiff to give directions. Koren v. Roemheld, 6 Ill. App. 275; Sweetser v. Matson, 153 Ill. 568, 39 N. E. 1086, 27 L. R. A. 374, 46 Am. St. Rep. 911; 17 Cyc. 105_ _ .
[2] We therefore hold the liens of the executions here to be valid as against the bankrupt as of June 3,. 1910. The last attempt at an extension of appellant’s lien was on October 6, 1909, so that there is no question of liens attaching during the period intervening the first and second renewals. If it was within the power of the appellant to reinstate the mortgage lien after it had expired by again filing the affidavit required by the statute in order to secure the first extension, then its lien was valid as against the executions. The matter is therefore narrowed down to the question whether appellant acquired a lien valid against subsequent execution liens by taking action a day after the prescribed period for such action. It is a well-settled rule of law that the statute in regard to chattel mortgages is in derogation of the common law, and should be strictly followed. Porter v. Dement, 35. Ill. 478. This has been applied to extensions. Griffen v. Henry, 99 Ill. App. 284. There can be no doubt but that the statute requires the extension in any case to be effected during the life of the mortgage. The language is unmistakably clear. No reason is perceived why this requirement should not be vital. It has been so held. In re New York Economical Printing Co., Bankrupt, 6 Am. *86Bankr. Rep. 617, 110 Fed. 514, 49 C. C. A. 133 (2d Cir. Ct. of Appeals); Jones on Chattel Mortgages (5th Ed.) p. 287. The latter states:
“A chattel mortgage which has ceased to be valid by a failure to file It as-required by law cannot be revived by any act of the parties so as to give it priority over other liens.”
It is further supported by Seaman v. Eager, 16 Ohio St. 209; Nitchie v. Townsend, 4 N. Y. Super. Ct. 299.
As between the mortgagor and mortgagee, no recording is necessary. As we construe the mortgage act, appellant had nothing more than an unrecorded chattel mortgage. As regards third persons, he had no lien or priority. As between his mortgage and the lien of the executions here under consideration, his rights were secondary.
The decree of the District Court is affirmed.