Court Opinion

ID: 9517395
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:15:50.998041+00
Date Added: 2024-06-11T09:44:02.294604
License: Public Domain

WOLLMAN, Judge
(dissenting).
I cannot agree that respondents as purchasers at a bankruptcy sale have standing to avoid appellant’s lien under the provisions of 11 U.S.C.A. § 107. The authorities cited in the majority opinion seem to me to compel the conclusion that only the trustee in bankruptcy may assert invalidity of liens under the provisions of § 107.
As the majority opinion states, the purposes of § 107 is to prevent one creditor from being preferred over other creditors of a bankrupt. This being the case, I can see no reason why a purchaser at any bankruptcy sale should be permitted to invalidate liens under the provisions of § 107 inasmuch as he comes upon the scene after the adjudication of bankruptcy and therefore does not share the unhappy fate of creditors who have learned to their sorrow that they walked too long with the bankrupt. This is especially true where, as in the instant ease, the purchaser had notice of the lien at the time he purchased at the bankruptcy sale.
The decision in Fischer v. Pauline Oil & Gas Co., 309 U.S. 294, 60 S.Ct. 535, 84 L.Ed. 764, declared that the predecessor of § 107 was not self-executing; it did not, in my opinion, hold that a purchaser at a bankruptcy sale is entitled to invalidate a lien for his own benefit. The case of Finney v. Knapp Co., 145 Ga. 400, 89 S.E. 413, was decided prior to the Fischer case and was premised on the assumption that the law in question was self-executing and that it automatically voided liens such as the one here involved. Moreover, in Finney the property had been ordered sold free and clear of all liens and encumbrances. Also, it appears that the case was in effect overruled by Morris Plan Bank of Georgia v. Simmons, 201 Ga. 157, 39 S.E.2d 166, where the Georgia Supreme Court held that a garnishee defendant could not assert the defense of § 107 because:
“* * * the petition * * * seeking to set aside the default judgment against themselves as garnishees, *476does not purport to serve any purpose recognized by the bankruptcy act, and the plaintiffs do not show any right to invoke its provisions. They are debtors rather than creditors of the bankrupt, and would therefore have no interest whatever in avoiding the lien for the benefit of such creditors. Nor are we concerned here with any right of the bankrupt, for it does not appear that the debt owed to him by garnishees was set apart to him as an exemption. Furthermore, he is not complaining.”
See also Branch v. Human, 215 Ga. 209, 109 S.E.2d 732. So also in the instant case, respondents are not purporting to set aside the appellant’s lien to serve any purpose recognized by the bankruptcy act.
In Kruger v. Harber Realty Corp., 11 N.J.Super. 552, 78 A.2d 621, a person claiming an ownership interest through a conveyance from a trustee in bankruptcy was not permitted to assert the invalidity of a prior lien under the provisions of § 107. See also Grimbilas v. Linfair, Inc., 126 N.J.L. 82, 18 A.2d 412 and Kobrin v. Drazin, 97 N.J.Eq. 400, 128 A. 796.
We are told that it would be inequitable to hold in the circumstances of this case that respondents may not assert the provisions of § 107, but we are not given any reasons why it would be inequitable to so hold. The fact that such a holding would have the effect of preferring appellant as a creditor of the bankrupt should not be of any legitimate concern to respondents as purchasers. Respondents do not claim that they are attempting to vindicate the rights of other creditors of the bankrupt. Indeed, it does not appear that they could validly make such a claim.
Respondents saw fit to purchase the property in question at a time when they were on notice of appellant’s attachment lien. I cannot believe that the purpose of § 107 is to give strangers to the bankrupt and his creditors the right to invalidate an otherwise valid lien when neither the trustee nor any creditor has seen fit to take such action.