Ford v. Henderson

Oregon Supreme Court
Ford v. Henderson, 91 Or. 701 (Or. 1919)
178 P. 381; 1919 Ore. LEXIS 79
Bean, Beeson, Harris, McBride

Ford v. Henderson

Opinion of the Court

HARRIS, J.

J. D. Tompkins used or disposed of 62 of the 552 sacks of oats delivered to him by the sheriff and hence on November 18, 1916, Tompkins had only 490 sacks; but the evidence shows conclusively that on November 18, 1916, J. D. Tompkins returned the 490 sacks of oats to Henderson and paid the latter $62 for the 62 sacks which had been used. The record does not inform us as to the amount for which Ford was suing in the Justice’s Court, but we may of course assume that the sum sued for did not exceed $250: Section 951, L. O. L. The value of the oats was fixed in the verdict returned by the jury in the action of replevin and it may therefore be assumed that the 490 sacks returned to Henderson and the $62 cash paid to him were mo re. than enough to satisfy any judgment that might be rendered in the action in the Justice’s Court. It is not necessary to determine whether J. D. Tompkins could have compelled Henderson to receive the 490 sacks and $62 for *705the missing 62 sacks, for the record shows that J. D. Tompkins paid $62 and redelivered 490 sacks and Henderson received the money and oats in absolute good faith. In passing it is proper to say, too, that Henderson was not elected trustee until the creditors and referee, who were present at the first meeting of creditors held on November 28, 1916, were informed of the fact that Henderson, acting as constable, had held the oats in his possession for ten days, and the referee suggested that “it would be a fine thing for” Henderson to act because it would save expense in moving the oats.

It will be recalled that the constable levied on the crop of oats on September 7,1916, and that eight days afterwards, on September 15th, F.B. Tompkins was adjudged a bankrupt. The Bankruptcy Act (Act July 1, 1898, Chap. 451, 30 Stat. 544) provides that all attachments or other liens obtained through legal proceedings at any time within four months prior to the filing of a petition in bankruptcy shall be deemed null and void in case the insolvent person is adjudged a bankrupt, and the property affected by the attachment is discharged and released from the same. • It therefore follows that the adjudication in bankruptcy plus the appointment of the trustee operated to annul, as against the trustee, whatever interest Ford may have acquired under the writ of attachment and to vest Henderson as trustee with the title of F. B. Tompkins as of the date the latter was adjudged a bankrupt: Bankruptcy Act of 1898, § 67f (Comp. Stats., § 9651); 3 R. C. L. 291; 1 Loveland on Bankruptcy, §§ 368, 370.

The decree appealed from is affirmed. Affirmed.

McBride, C. J., and Beeson and Bean, JJ., concur.

*706Rehearing denied April 1, 1919.

070rehearing

On Petition eor Rehearing.

(179 Pae. 558.)

In Banc.

HARRIS, J.

2. Section 67f of the Bankruptcy Act (Act July 1, 1898, Chap. 541, 30 Stat. 564, Comp. Stats., § 9651) reads as follows:

“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, and shall pass to the trustee as a part of the estate of the bankrupt, unless the court shall, on due notice, order that the right under such levy, judgment, attachment, or other lien shall be preserved for the benefit of the estate; and thereupon the same may pass to and shall be preserved by the trustee for the benefit of the estate as aforesaid. And the court may order such conveyance as shall be necessary to carry the purposes of this section into effect: Provided, That nothing herein contained shall have the effect to destroy or impair the title obtained by such levy, judgment, attachment, or other lien, of a bona fide purchaser for value who shall have acquired the same without notice or reasonable cause for inquiry.”

In his petition for a rehearing the plaintiff argues that the words “filing of a petition in bankruptcy against him” makes Section 67f applicable only to involuntary bankruptcies. There are three judicial decisions which give support to this contention of the plaintiff: In re Delue (D. C.), 91 Fed. 510; In re Easley (D. C.), 93 Fed. 419; In re O’Connor (D. C.) 95 Fed. *707943. Section 1 of the Bankruptcy Act (U. S. Comp. Stats., § 9585) expressly provides that:

“The words and phrases used in this act and in proceedings pursuant hereto shall, unless thé same he inconsistent with the context, be construed as follows: (1) ‘A person against whom a petition has been filed’ shall include a person who has filed a voluntary petition. ’ ’

One of the principal objects of the Bankruptcy Act is to place creditors upon an equal footing; but it is obvious that if Section 67f is made applicable only to involuntary bankruptcies it will have the effect of bringing about rather than preventing inequality among creditors. Reason and the literally overwhelming weight of authority make Section 67f applicable to both voluntary and involuntary bankruptcies: Gabriel v. Tonner, 138 Cal. 63 (70 Pac. 1021, 1022); Longley v. McCann, 90 Ark. 252, 255 (119 S. W. 268); Stickney & Babcock Coal Co. v. Goodwin, 95 Me. 246, 248 (49 Atl. 1039. 85 Am. St. Rep. 408); Brown v. Case, 180 Mass. 45, 47 (61 N. E. 279); Cavanaugh v. Fenley, 94 Minn. 505, 507 (103 N. W. 711, 110 Am. St. Rep. 382); Hall v. Chicago, B. & Q. R. Co., 88 Neb. 20, 24 (128 N. W. 645); Gardiner v. Ross, 19 S. D. 497, 505 (104 N. W. 220); Farrell v. Lockett, 115 Tenn. 494, 498 (91 S. W. 209); Wallace v. Camp, 200 Pa. St. 220, 221 (49 Atl. 942); Mencke v. Rosenberg, 202 Pa. St. 131, 137 (51 Atl. 767, 90 Am. St. Rep. 618); McKenney v. Cheney, 118 Ga. 387 (45 S. E. 433); Mohr v. Mattox, 120 Ga. 962, 965 (48 S. E. 410); In re Beals (D. C.), 116 Fed. 530, 533; In re McCartney (D. C.), 109 Fed. 621; In re Lesser (D. C.), 100 Fed. 433, 437; In re Rhoades (D. C.), 98 Fed. 399, 400; In re Vaughan (D. C.), 97 Fed. 560; In re Richards, 96 Fed. 935, 941 (37 C. C. A. 634).

*708Our statute (Section 301, L. O. L.) provides that—

“From the date of the attachment, until it be discharged or the writ executed, the plaintiff, as against third persons, shall be deemed a purchaser in good faith and for a valuable consideration of the property, real or personal, attached, # * .”

3. Turning again to Section 67f of the Bankruptcy Act it will be noticed that this section contains a proviso to the effect that nothing contained in the section shall destroy or impair the title obtained by an attachment of a bona fide purchaser for value who shall have acquired such title without notice or reasonable cause for inquiry. The plaintiff argues that when Section 301, L. O. L., and Section 67f of the Bankruptcy Act are construed together they have the effect of preserving the lien of the creditor’s attachment if the attaching creditor can show that “he was such attaching creditor in good faith and without notice of the debt- or’s insolvency.” It must be remembered that Ford was only an attaching creditor; he was not a purchaser at a sale on execution; the property was attached, but not sold. The contention now made by Ford was squarely presented in the case of In re Kaupisch Creamery Co. (D. C.), 107 Fed. 93, and Judge Bellinger there held that the state statute and the Bankruptcy Act—

“do not mean the same thing. The proviso in the act of congress has reference to the title of an innocent purchaser; the state act has reference to the priority of lien in favor of an attaching or judgment creditor. The state enactment does not purport to give an attaching creditor the character of a bona fide purchaser, —a thing involving an absurdity, and not possible. It gives him such priority of right as a bona fide purchaser acquires by his purchase. The proviso in the act of congress refuses to recognize such a priority where the lien is obtained on proceedings begun within the prescribed time. It protects the title of *709the bona fide purchaser, but repudiates the lieu of the attachment. ’ ’

The lien created by the attachment was dissolved by force of Section 67f of the Bankruptcy Act when F. B. Tompkins was adjudged a bankrupt: Lehman, Stern & Co. v. S. Gumbel & Co., 236 U. S. 448, 454 (59 L. Ed. 666, 35 Sup. Ct. Rep. 307); Goodnough Mercantile Co. v. Galloway, 48 Or. 239, 249 (84 Pac. 1049).

The remainder of the petition is only a restatement of the argument which the plaintiff made in his brief submitted at the hearing.

The petition for a rehearing is denied.

Affirmed. Rehearing Denied.

Reference

Full Case Name
FORD v. HENDERSON
Status
Published