Davis v. Stitzer

¶1In this case the judgment, which was excluded from the ■distribution of the bankrupt’s estate, was a lien upon the bankrupt’s real estate at the date of the filing of the petition in bankruptcy. An order was made by the court, restraining the judgment creditor from proceeding in any manner upon his judgment which is unrevoked. On the 5th of September, 1876, when the judgment W'as an unquestionable lien upon the bankrupt’s real estate, the court ordered the sale of this real estate by the assignee discharged of liens. This was in effect a conversion of the real estate into money, a substitution of the fund for • the land, as the only security to which the lien creditors could look for the payment of their debts. And, under all these circumstances, I am of opinion that, in contemplation of law and to effectuate justice, the conversion of the land, and the substitution of the fund arising from its sale, are to be taken as having been effected when this order was made, and that the rights of the claimants to the fund are to be determined with reference to the circumstances existing at the date of such order. At that time the judgment of Kight-linger was a lien upon the bankrupt’s real estate, and retained its priority upon the substituted security, and ought to have been allowed its proper portion of the fund for distribution. The order of the district court is, therefore, reversed, and the matter is remanded to that court, with directions to make distribution of the proceeds of the sale of the bankrupt’s real estate upon the basis of the rights of the lien creditors to participate therein as of the date of September 5, 1876. when the order of sale was made.