Court Opinion

ID: 8121118
Source: CourtListenerOpinion
Date Created: 2022-09-09 14:53:54.603835+00
Date Added: 2024-06-11T09:13:18.715851
License: Public Domain

Estee, J.
The hearing in this matter Was had upon the petition of Wade Warren Thayer, Trustee of the above named bankrupt, praying this Court far an order to ha issued to Arthur M. Brown as- High Sheriff of the Territory of Hawaii, requiring him to show causa before this Court- why he should not deliver up to said trustee, a certain stock of merchandise iu his possession belonging to said bankrupt, situated in a store at 1037 *137Nuuanu street in Honolulu, and which the said High Sheriff held under and by virtue of an execution issued in pursuance of certain judgments rendered on the 3rd day of July, 1901, in the District Court of Honolulu, Territory of Hawaii, in favor of S. M. Giinbaum & Co., and against the said bankrupt, and a portion of which said- stock of merchandise the said High Sheriff was about to sell at public auction.
The facte as shown, on the bearing appear to be these:
On the 17th day of July, 1901, Lum Mam Suk filed in this Court, in due and regular form, a petition, praying to be adjudged a bankrupt, and thereafter, on the 18th day of July, 1901, an order was made by this Court declaring1 and adjudging the said petitionjer a bankrupt.
It further appears, that prior thereto, to wit: on the 3rd day of July, the District Court of Honolulu, Island of Oahu, rendered four judgments against the said Lum Mam Suk, doing business as the Chu Tip Company, im favor of M. S. Grimbaum & Got, Limited, and executions issued out of said District Court to Arthur M. Brown, the High Sheriff of Honolulu, under which he took possession of the stock of merchandise forming a part of the asserts of said bankrupt, and was about to sell the same toi satisfy said judgments when this: order to show cause was issued.
The Trustee of the bankrupt claims possession >od: these goods under the provisions of Subdivision f of Section 67 of tbe Bankruptcy Act of 1898, tire said executions being issued upon judgments rendered within four months prior to¡ tbe filing of the petition in insolvency of the bankrupt and the order of adjudication of bankruptcy, while the High Sheriff claims that this is not a case falling under the provisions of Subdivision f of Section 67, but is controlled by the provisions of Subdivision e of said Section 67.
There is no dispute as to the fact that this judgment was obtained' 'against the insolvent within four months prior to the filing of the petition in bankruptcy, and the adjudication thereon. The point raised by the counsel for the High Sheriff that *138Subdivisión f applies only >to involimtary proceedings in bankruptcy is not a goad one in view of die provisions of Subdivision 1 of Section 1 of die Bankruptcy Act, which provides that the words—
“A parson against whom a petition has been filed shall include a person who: has filed a voluntary petition.”
In re Blair, 108 Fed Rep. 529; In re Lesser et al., 108 Fed. Rep. 203; In re Lesser, 100 Fed Rep. 433; In, re Richards, 96 Fed. Rep. 935. C. C. A.
Therfe semis' to be a difference of opinion between some of the United' States Courts as to die construction to b© given to Subdivisions c and £ of Section 67, which subdivisions are hopelessly in conflict; but I am clearly of the opinion that not only the weight of authority hut the better reasoning sustains Subdivision f where there is any question aisi toi which shall prevail in a proceeding relative to liens upon the property of a bankrupt and obtained through legal proceedings within four months prior to the adjudication. This would seem to be in accordance with the well known rules of statutory construction.
As was said by the Circuit Court of Appeals in the case of In re Richards, 96 Fed. Rep. 935, 939:
“The twoi Subdivisions a and f of Section 67 of the Bankruptcy Act relating to the. effect of an adjudication of bankruptcy upoml existing, liens upon the property of a bankrupt accquired through legal proceedings are irreconcilable: and antagonistic; and therefore in any case of conflict between them the former must give way to> the latter.”
The Court further saying,—
“All liens obtained through legal proceeding's against an insolvent debtor within four months: prior to' the filing of a, petition in bankruptcy, by or against him, are annulled by bis: adjudication as a bankrupt irrespective of the question whether the debtor suffered or permitted the lien to> be obtained, and irrespective of any knowledge by the creditor of the debtor’s insolvency.”
*139See also St. Cyr v. Daignanlt, 103 Fed. Rep. 854.
So too, in the very recent case of In re Kenny, decided by tire Circuit Court of Appeals, 105 Fed. Rep. 897, where the Court in construing Section 67 f, uses tbe following language:
“There can be no doubt that it was the intention of Congress by this Section to. prohibit creditors of the bankrupt from obtaining preferences over other creditors as the result of any legal proceedings against Mm during the! period of four months prior to the filing of the petition; and apt words 'are used to express its intention. The property of the bankrupt is safe>guarded against all such proceedings by the provisions that such of them as would ordinarily be liens against such bankrupt shall be deemed null and void and the property wholly discharged and released from the same.”
It seems to1 me from thiei ■autharitie.s quoted 1 am compelled to hold that Subdivision f controls in this proceeding, and the judgments under which the executions were issued and the property levied upon by thei High Sheriff, Brown, having been obtained within “four months prior to the filing of the petition in bankruptcy,” are null and void; that such executions should be released at once and -the property turned over to the trustee of the bankrupt as part of the assets of Ms estate, to he administered upon by tbe said trustee for the benefit of the creditors of thei said bankrupt under the .provisions of the Bankruptcy Act. It is so. ordered.
Note: See In Matter of Estate of S. W. Lederer. Infra P. —