44 US 111 Lessee of Henry Waller v. James Best
44 U.S. 111
3 How. 111
11 L.Ed. 518
LESSEE OF HENRY WALLER, ASSIGNEE OF THE BANKRUPT ESTATE
OF FRANCIS A. SAVAGE, PLAINTIFF,
JAMES AND JOSEPH BEST.
January Term, 1845
THIS case came up from the Circuit Court of the United States for the district of Kentucky, on a certificate of division in opinion between the judges thereof.
The following is the entire record in the case:——
'The following statement of questions and points of law which arose in this case, and the adjournment thereof into the Supreme Court of the United States for decision, was ordered to be entered, to wit:
'Savage had the title to the land; the plaintiff claimed under the decree of his bankruptcy; the defendant, under a sheriff's sale under an execution.
'The act of bankruptcy of Savage was committed on the 27th April, 1842; the petition of his creditors was filed against him in the District Court on the 25th day of June, 1842, and he was declared a bankrupt on the 26th of October, 1842; the plaintiff was appointed the assignee, and this is his title.
'An execution of fieri facias on a judgment against the estate of Savage was delivered to the sheriff on the 9th of April, 1842, before the act of bankruptcy, and was levied on the land on the day of before the petition; but after the act of bankruptcy the defendant purchased at the sheriff's sale, had his deed, and this was his title.
'The question was, has the plaintiff, by the decree of bankruptcy and its relation back to the act of bankruptcy, the elder and better title; or has the defendant, by the prior delivery of the execution into the hands of the sheriff, and his levy of it before the petition was filed, the prior and superior title?
'On this question the judges were divided and opposed in opinion; whereupon, on motion of the counsel of the plaintiff, the question is stated and ordered to be certified to the Supreme Court for decision.'
Morehead and B. Monroe, for the plaintiff.
Richard French, for the defendants.
The argument on behalf of the plaintiff was this:
Two questions arise: 1st. Did Best, the tenant in possession and the plaintiff in the execution under which the sale of the land was made, acquire any lien, such as is recognized by the latter proviso of the 2d section of the bankrupt law, before the execution was in fact levied?
2d. If any such was acquired, is it effectual against the rights of the assignee of the bankrupt, when the act of bankruptcy was committed before the levy of the execution; or could the execution, in virtue of the lien given by the state law, which was in the hands of a sheriff, but not levied before an act of bankruptcy, be afterwards levied, and the property sold?
These questions render it necessary to look to the character of the lien given by the statutes of Kentucky, in favor of execution creditors, and when that lien commences. The statute of Kentucky (1 Stat. Law, 636) provides 'that no writ of fieri facias, or other writ of execution, shall bind the estate of the defendant or defendants but from the time such writ shall be delivered to the sheriff or other proper officer to be executed.' What is the import of the term bind, as used in the statute? That it has some binding effect is evident, but to what extent? Is it a lien within the meaning of the proviso of the bankrupt law? It is insisted that it is not, but is only so far binding as to prevent such disposition of the property by the defendant as will defeat the execution so in the hands of the officer; and does not so far bind the property as to prevent other execution creditors from levying their executions upon the debtor's property. See Tabb v. Harris, 4 Bibb (Ky.), 229; and Kelby v. Haggin, 2 J. J. Marsh. (Ky.), 212. In the latter case the court use this language: 'The only object of attaching a lien to an execution is to prevent the debtor from defeating the creditor by alienating or embarrassing his estate. The reason of the lien in such a case, does not apply to competition between creditors, and cessante ratione cessat lex; moreover, it is but sheer justice to give the preference to the creditor who by his superior industry and vigilance shall have procured the first levy on the debtor's estate.' This interpretation of the statute shows what is the character of that binding spoken of in the statute, and that it does not amount to the lien referred to in the bankrupt law until the execution be in fact levied, when it may be admitted that it amounts to such lien.
2d. The proceeding against Savage was at the instance of a creditor. The act of bankruptcy complained of was committed before any levy of the execution, though the filing of the petition and the decree were subsequent to the levy of the execution of Best. At common law a fieri facias had relation to its teste, but by our statute only from the day of its delivery to the officer. According to the adjudications of the English courts, on the bankrupt laws of that country anterior to the 36 George 3 and the 6 George 4, the uniform and well settled doctrine was that the assignee had a right to overhaul all the transactions of the bankrupt subsequent to the first act of bankruptcy, and recover all moneys or property which passed through his hands; but by the 18th section of the 6 George 4, 'all bona fide transactions entered into more than two calendar months before the date and issuing the commission against the bankrupt, and all executions and attachments against his lands or chattels bona fide executed or levied more than two calendar months before the issuing of the commissions,' are made valid, 'notwithstanding any prior act of bankruptcy, provided the parties had no notice of it.'
Our bankrupt law has this proviso in the 2d section (1st proviso): 'That all dealings and transactions by and with the bankrupt, bona fide made and entered into more than two months before the petition filed against him or by him, shall not be invalidated by this act, provided that the other party to any such dealings or transactions had no notice of a prior act of bankruptcy, or of the intention of the bankrupt to take the benefit of this act.'
These provisos have no bearing upon the questions involved. No reference is here made to any executions or attachments, as in the English statute, but they are left to be governed by the last proviso of the 2d section.
The binding effect of writs of fieri facias in England, by the common law, was from the teste; by the statutes of Kentucky it is from the delivery to the sheriff: but in the character of this binding effect there is believed to be no other distinction but in respect of the time of its commencement. It may be proper then to learn what was the course of adjudication by the English courts upon this question. In Cooper v. Chitty, 2 W. Bl., 65; 1 Burr., 20, it is said if a sheriff take goods of a bankrupt in execution after the act of bankruptcy and before commission issued, and sell them after the commission, trover will lie against him.
Again, the sheriff seized the goods of a defendant under a fieri facias, and sold and delivered them to the judgment creditor, in satisfaction of the debt, after a secret act of bankruptcy committed by the defendant, but before the issuing of a commission against him: held, that the seizure and sale of the goods was a wrongful conversion, for which the sheriff was liable in an action of trover at the suit of the assignee subse quently chosen. Balme v. Hutton, 3 Moo. & S., 1; 9 Bing., 471; 1 Car. & M., 262; reversing s. c. Tyrw., 17; 2 Car. & J., 19; 2 Younge & J., 101, held by seven judges K. B. and C. P. (Gaselie, J., dissentient); Price v. Helyar, 1 Bing., 597; 1 M. & P., 541; S. P. Porter v. Starkie, 1 M. & S., 260; Blogg v. Phillips, 2 Campb., 129.
Farther, in Lazarus v. Waithman, 5 Moo., 313, where a trader committed an act of bankruptcy on the 9th of November, and the sheriff took his goods in execution on the 15th November, and sold them on the 21st December, and a commission issued on the 23d, and an assignment made on the 6th January following, it was held, 'that the assignee might maintain trover against the sheriff,' although he had sold before the assignment was made, as the bankrupt's property vested in him by such assignment from the act of bankruptcy by relation.
These authorities are deemed sufficient to show that the binding effect of an execution from its date, in England, was not such as to give the execution creditor any lien or preference over other creditors, unless the execution was in fact levied before the act of bankruptcy; and if not levied, the decree in bankruptcy, by relation, reached back, and effectually passed all the rights of the bankrupt to the assignee, as they existed at the time of the commission of the act of bankruptcy. And there is believed to be nothing in our bankrupt law which requires that it should receive a different interpretation from the English statutes in this particular. The action of some creditor was necessary to bring about the decree in bankruptcy; it is, therefore, the effort of the creditor, not of the defendant in the execution, which brings about the decree. The investiture of the rights of the debtor in the assignee is the act of the law, and the effect of the action of one or more creditors, for his own benefit and that of other creditors; and the result of this conclusion is, that there is a pro rata distribution of the bankrupt's property, rather than the appropriation of the whole to a single creditor.
Is the placing the execution in the hands of the sheriff a dealing by and with the bankrupt, to which the first proviso in the 2d section has reference? It is insisted that it is not. The bankrupt has, in that matter, been passive entirely. There has been no act upon his part, which is to acquire sanctity by the lapse of sixty days, spoken of in this proviso. But in this case sixty days had not elapsed; therefore, this proviso is altogether inoperative.
Although when an execution is levied, and a sale made, the title of the purchaser reaches back, and is protected from any effort of the debtor to pass the title of the property, yet it is not so when two executions are out against the same defendant, in the hands of different officers—that which is first levied will hold, though it be youngest in date; and a levy and sale under that which was first in the hands of the officer, but last levied, will be ineffectual to pass any title to the purchaser. This is the law, as understood by the counsel, in contests between execution creditors in Kentucky: and it is insisted that the case of a petitioning creditor in bankruptcy is analagous to that of an execution creditor, and that the filing of the petition by a creditor is tantamount to the levy of an execution: it is a proceeding by which a lien is acquired by the assignee, for the benefit of the general creditors, and will oust any such inchoate lien as that relied on as arising from an execution not in fact levied.
The assignee had his election to sue the sheriff or to sue the purchaser of the land; and having elected to sue the purchaser of the land, who was the plaintiff in the execution levied thereon, and having shown title and right of possession, the judgment should be for the assignee, for the possession of the land.
French, for defendants.
The question on which the court below divided was, whether the title acquired by purchase under an execution which came to the hands of the sheriff before the act of bankruptcy, and was levied after the act of bankruptcy, but before filing of petition in bankruptcy, related back to the time the execution came to the hands of the sheriff, and overreached the title of the assignee in bankruptcy; or, was the title of the assignee the better title?
The defendants rely on the last proviso in the 2d section of the bankrupt law, which protects 'any liens, mortgages, or other securities on property, real or personal, which may be valid by the laws of the states respectively.'
That an execution, delivered to the proper officer, constitutes a lien on defendants' property, and that title acquired by purchase under such execution relates back to the time of delivery, is a proposition most clearly settled by judicial decision in Kentucky. In Million v. Ryley, 1 Dana (Ky.), 359, execution was delivered to sheriff, June 16th, and was levied August 5th. On the intermediate July 22d, defendant sold and conveyed. Held, that execution acquired a lien from June 16th, and that purchaser's title related back to that time. He recovered, therefore, in ejectment against the vendee of execution debtor.
In Clagett v. Force, 1 Dana (Ky.), 428, after execution delivered, defendant removed a horse to Indiana, and sold him there. The purchaser brought the horse to Kentucky, where he was levied on by the same execution, delivered as aforesaid. Held, that the lien was not lost by the removal to Indiana, and sale there; and, therefore, that the horse was subject to the execution.
Orchard v. Williamson, 6 J. J. Marsh. (Ky.), 561; after execution delivered, defendant swapped a horse for another. Both were levied on: and held, that both were subject, one by virtue of the lien, and the other as the property of defendant.
Addison, &c. v. Crow, 5 Dana (Ky.), 274; levying an execution has the effect of rendering the lien more specific, and of continuing the lien and authority of the sheriff; further than this, it had no greater efficacy than placing the execution in the hands of the sheriff. Neither the delivery nor the levy divests the defendant of title: he may sell and pass the title, still the execution is a lien or charge on the land, and when completed by sale, the title relates back to the delivery, and overreaches all intermediate conveyances.
Hood, &c. v. Winsatt, 1 B. Mon. (Ky.): after execution delivered, property was removed to another county. The execution was returned on the return day, and another one issued to the county to which the property had been removed, and was placed in the hands of the sheriff of that county the same day. Held, that the lien was continued from the delivery of the original execution.
Having referred to a few of the Kentucky cases, which hold, without the shadow of doubt, that an execution delivered acquires a lien, I shall notice some of the decisions in which the above recited proviso of the 2d section of the bankrupt law is brought under review.
The leading case is that of Ex parte Foster, 5 Law Rep., 55.
The question judicially decided in this case was, that by the laws of Massachusetts a party proceeding by attachment did not acquire a lien on the attached property until judgment, and that a petitioner in bankruptcy could enjoin proceedings on the attachment, until it was ascertained whether the bankrupt obtained his certificate. If he did, he could plead the certificate in bar of the attachments, and thus defeat the inchoate lien.
The profession generally, however, understood the case differently, and supposed the effect of it would be to cut off all judgment liens, execution liens, even though levied, vendors' liens, &c., from all benefit under the proviso above referred to. This case, thus understood, was relied on as authority before other judges, and first before Judge Conkling, of New York, in the case, In the matter of Allen and others, 5 Law Rep., 363.
In this case judgment creditors had attached choses in action. The court sustained the lien acquired by the attachment, evidently inclining to a broader definition of the liens embraced by the proviso in question than was given in Ex parte Foster.
The next case is Downer and others v. Bracket, 5 Law Rep., 392, before Judge Prentiss, of Vermont. He discusses the subject ably and at large, declaring his opinion that every kind of lien, unless fraudulent, to wit, the vendor's lien, attachment liens, judgment liens, &c., are protected,—pp. 394, 396. Attachment binds as effectually as judgment or execution issued. Judgment or execution issued binds all the property of debtor, &c. Grosvenor v. Gold, 9 Mass., 209, is referred to, to show that the lien of judgment, execution issued, and attachment, all stand on the same ground.
In Haughton v. Eustice, 5 Law Rep., 505, Judge Thompson, of Vermont, decided that an attachment lien was protected by the proviso in question. He expressed the opinion that judgment liens, and such similar liens, were protected.
That the case of Foster was greatly misapprehended is evident from the subsequent decisions of Judge Story.
Thus, in the case of Parker and Blanchard, plaintiffs in Matter of Muggridge, &c., 5 Law Rep., 351, after judgment, Judge Story maintained the lien by attachment; because, after judgment there could be no day in court to plead the discharge. He also expressed the opinion that judgment liens were protected by the proviso in question.
In the case, The matter of Cook, 5 Law Rep., 443, Judge Story expressed surprise that the case of Foster had been so much misunderstood, and in this latter case sustains the lien of the attaching creditors, who had obtained judgment, declaring that this lien was equivalent to the common law judgment lien, adding, that he never doubted that that lien was protected.
All the judges, then, to whose opinions I have referred, concede that judgment liens are protected; and Judge Prentiss places judgment liens and executions issued on the same footing.
I will endeavor, further, to show that the lien of execution issued is fully equivalent to the judgment lien.
Land by the common law, as it originally stood, was not, except under some peculiar circumstances, subject to the debts of the owner. 2 Bac. Abr. tit. Execution, A, 685; 3 Black. 418.
The judgment lien on land arises from the construction of the statute of Edward 1, chap. 18, commonly called the statute of Westminster. See Ex parte Foster, 5 Law Rep., 63, 67.
It was by this statute the eligit was given, by virtue of which the judgment creditor has his election to take a fieri facias for the sale of goods and chattels, or the elight to extend the goods and chattels and one-half the land. See 2 Bac. Abr. tit. Execution, A, 686; 3 Black. 418.
This statute does not expressly give any lien, but only authorizes the creditor, at his election, to sue out the eligit directed to the sheriff, and the command of the writ as prescribed is, that the sheriff shall levy the debt of the goods and chattels, and one-half the land. See form of writ, 2 Bac. Abr. tit. Execution, C, 710.
It is by construction of this statute, the writ relates back to the judgment, and overreaches all intermediate encumbrances.
In like manner, at common law, the fieri facias, which commanded the sheriff to levy the debt of the goods and chattels, related back to its teste, and bound from that time. 2 Bac. Abr. tit. Execution, I, 733; as judgments did from time of judgment, same title, 731.
By 29th Charles 2, the statute of frauds, (the same from which the Kentucky statute is copied,) executions only bind from the time they are delivered. 2 Bac. Abr. tit. Execution, I, 733.
Judgments docketed, and executions delivered, are evidently, in Bacon, at the pages cited, (731, 733,) placed on the same footing.
They seem to be placed on the same footing in the case of Foster, 5 Law Rep., 63, 67.
There are some other striking analogies between judgments and executions issued, which I will notice.
An execution, as conceded, does not vest a title until executed, neither does a judgment. Ex parte Foster, 5 Law Rep., 64. Covenant of seisin is not broken by outstanding judgment. Sedgwick v. Hollenback, 7 Johns. (N. Y.), 380.
As between execution plaintiffs, he that by superior diligence acquires the first levy is preferred; so between judgments of the same date, he that first sues execution and sells, acquires a preference. Adams v. Dyer, 8 Johns. (N. Y.), 350; Watterman, &c., v. Haskins, 11 Id., 230.
Sale under junior execution, if first levied, would be valid; so is sale under junior judgment. Sanford v. Roosa, 12 Johns. (N. Y.), 162.
To conclude, then, the title of the assignee can only relate back to the act of bankruptcy. The title of the defendants, as we have seen by the cases of Million v. Ryley, 1 Dana (Ky.), 359, and Addison, &c., v. Crow, 5 Id., 274, relates back to the time the execution was delivered to the sheriff. This period being anterior to the act of bankruptcy, the title of the defendants is older than that of the plaintiff.
2d. All the authorities concurring in the opinion, that judgment liens are protected by the proviso in the 2d section, and the analogies between the judgment lien and execution issued being so striking, I would respectfully maintain, that the title of the defendants is also protected by the proviso referred to.
Mr. Chief Justice TANEY delivered the opinion of the court.
This case comes before the court upon a certificate of division between the judges of the Circuit Court of the United States for the district of Kentucky, upon the following statement: —
'Savage had the title to the land; the plaintiff claimed under the decree of his bankruptcy; the defendant, under a sheriff's sale under an execution.
'The act of bankruptcy of Savage was committed on the 27th April, 1842; the petition of his creditors was filed against him in the district court on the 25th day of June, 1842, and he was declared a bankrupt on the 26th October, 1842; the plaintiff was appointed the assignee, and this is his title.
'An execution of fieri facias on a judgment against the estate of Savage was delivered to the sheriff on the 9th April, 1842, before the act of bankruptcy, and was levied on the land on the ___ day of _____ before the petition; but after the act of bankruptcy the defendant purchased at the sheriff's sale, had his deed, and this was his title.
'The question was has the plaintiff, by the decree of bankruptcy and its relation back to the act of bankruptcy, the clder and better title; or has the defendant, by the prior delivery of the execution into the hands of the sheriff, and his levy of it, before the petition was filed, the prior and superior title?'
The statute of Kentucky, upon this subject, provides 'that no writ of fieri facias, or other writ of execution, shall bind the estate of the defendant or defendants but from the time such writ shall be delivered to the sheriff, or other proper officer, to be executed.' According to the laws of that state a judgment is not a lien upon land, and the real as well as personal estate is not bound until the process of execution against the property of the defendant is delivered to the officer. The question to be determined is, whether the delivery of the fieri facias to the sheriff to be executed created a lien on the property of the defendant, for the amount for which the execution was issued? If it, did, the title of the defendant is the superior and better title, and protected by the last proviso in the 2d section of the act to establish a uniform system of bankruptcy throughout the United States.
In construing the statute above mentioned, the decisions of the courts of Kentucky have not been entirely uniform. In the case of Tabb v. Harris, 4 Bibb (Ky.), 29, decided in 1816, it was held, that the delivery to the sheriff created no lien on the property of the defendant. In a subsequent case, however, in the same volume, Daniel v. Cochrane's administrator, 4 Bibb (Ky.), 532, decided in 1817, the court, in delivering their opinion, speak of the lien of fieri facias, from the time it was delivered to the sheriff to be executed, as if it were a known and settled principle of law in that state. But this was out the main point in that case, which turned upon the question, whether the execution continued to bind the property of the debtor until the judgment was satisfied. The court held that it did not, and that the lien ceased after the return day of the execution, if it was not levied before. The question, as to the lien acquired by the delivery to the officer, again arose in the case of Kilby v. Haggin, 3 J. J. Marsh. (Ky.), 208, and in this case, which was decided in 1830, the doctrine in the case of Tabb v. Harris was fully sustained; and it was directly and distinctly decided, that the delivery to the sheriff created no lien against any other creditor, and that an execution afterwards placed in the hands of the sheriff, if first levied upon the property, was entitled to a preference.
But in the case of Million v. Ryley, 1 Dana, (Ky.), 360, decided in 1833, the court held, that the plaintiff obtained a lien by the delivery to the sheriff, and that the title acquired by the purchaser, when the execution was regularly levied and the property sold, related back to the delivery to the officer; and they speak of this lien as secured to the creditor by the Kentucky statute. In 1837 this subject again came before the court, in the case of Addison and others v. Crow and others, 5 Dana, (Ky.), 274, and in this case the question appears to have been very fully considered, and the case of Million v. Ryley was referred to and commented on, and the principle decided in it in relation to the lien of an execution re-affirmed. In this case the court say 'the levy of a fieri facias upon the land of the debtor undoubtedly renders the lien more specific, and being a necessary step in the execution of a writ, completes the authority of the officer to sell, and has the further effect of giving continuance both to the authority and the lien, which would otherwise expire with the return of the writ. And we do not perceive any necessity or reasonable ground for ascribing to it any other efficacy than this;' and in page 277 of the same case, the court again say, 'no reason appears for attributing to a levy any efficacy except as one step towards the consummation of the lien arising from the delivery of the execution to the officer.' This is the latest decision in the courts of the state to which we have been referred, or of which we are aware, and, as we have already said, it appears to have been well considered. And whatever doubts might before have been entertained, we must, under the authority of this case, regard it as the settled law of the state, that the creditor obtains a lien upon the property of his debtor by the delivery of the fieri facias to the sheriff; that it acquires no additional validity or force by being actually levied, but that the lien is as absolute before the levy as it is afterwards, and continues while the process remains in the hands of the sheriff to be executed.
In this view of the subject it is unnecessary to examine or to remark upon the cases which have been decided in other states or in England, because the question depends altogether upon the law of Kentucky. And as by the laws of that state a Fieri facias, when delivered to the sheriff, is a lien upon the property of the debtor while it continues in the hands of the officer to be executed, the creditor is not deprived of this lien by an act of bankruptcy on the part of the debtor committed before the levy is made, but after the execution is in the hands of the sheriff. In the case before us, therefore, the court are of opinion that the defendant, by the prior delivery of the execution and the subsequent levy and sale, has the prior and superior title, and we shall certify accordingly to the Circuit Court.