In re Ledbetter

267 F. 893, 1920 U.S. Dist. LEXIS 1014
CourtDistrict Court, N.D. Georgia
DecidedAugust 12, 1920
DocketNo. 728
StatusPublished
Cited by5 cases

This text of 267 F. 893 (In re Ledbetter) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Ledbetter, 267 F. 893, 1920 U.S. Dist. LEXIS 1014 (N.D. Ga. 1920).

Opinion

SIBLEY, District Judge.

Facts are stipulated as follows: First National Bank of Livonia, holding a note for a debt and interest “and all costs of collection, including 10 per cent, as attorney’s fees,” secured by a deed to land, gave 10 days’ notice in writing of intention to sue at a named term of a named state court, and filed the suit in the forenoon of September 4, 1917. At 5 :30 p. m. of same day the defendant filed his voluntary petition in bankruptcy. The bank sought to prove as a secured claim its note for principal, interest, attorney’s fees/'and court costs inctirred in the suit. The question is whether the attorney’s fees and court costs are provable.

[1] The court costs are expressly controlled by Bankruptcy Act, § 63(3), (5), being Comp. St. § 9647, declaring debts to be provable when “founded upon a claim for taxable costs incurred in good faith by a creditor before the filing of the petition in action to recover a provable debt,” and when “founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt’s application for a discharge, less costs incurred and interest accrued after the filing of the petition and up to the entry of such judgments.” The note here sued on was a provable debt, and costs which were incurred in good faith before the filing of the petition in bankruptcy are a provable debt against the bankrupt’s estate. In re Allen (D. C.) 96 Fed. 512. But if, after the filing of the petition in bankruptcy, the creditor elects to pursue to judgment his remedy in the state court, instead of relying on that afforded by tire bankrupt court, costs subsequently arising are not provable and will be disallowed.

[2] The attorney’s fees stand upon a similar footing, if indeed they are not included in the very words of the statute. In former times the fees of attorneys and solicitors for services in connection with cases in court were a part of the “taxable costs”; these being regarded as officers of court equally with sheriffs and clerks. Such costs are recognized in the federal courts by R. ’S. §§ 823,' 824 (Comp. St. §§ 1375, 1378). Though in Georgia these fees have not been taxed as cos'ts for a lo'ng time (see McDonald v. Napier, 14 Ga. 89, 110) and [895]*895the attorney’s fees are required at the hands of the opposite party only as a matter of contract, and are for many purposes treated as a principal obligation (see Peeples v. Strickland, 101 Ga. 829, 29 S. E. 22; Evans v. Bank, 147 Ga. 621, 95 S. E. 219), still they are strictly limited by law, and by Park’s Code, § 4252, obligations in evidence of debt to pay attorney’s fees in addition to interest are void, unless suit is actually brought after 10 days’ written notice of intention to sue, and of the term and court to which suit will be brought; payment not having been made on or before the last day for suit to that term. A tender or payment within this time prevents the collection of the fee from the debtor (Browne v. Edwards, 122 Ga. 277, 50 S. E. 110); and the right to pay continues up to the actual filing of the suit on the last day for suit (Harris v. Powers, 129 Ga. 75, 88, 58 S. E. 1038). The collection of the fee also depends on success in the suit. Smith v. Baker, 137 Ga. 298, 72 S. E. 1093. It thus has many of the incidents of an item of costs, and it is not improbable that Congress intended attorney’s fees so circumstanced to be dealt with as taxable costs for bankruptcy purposes, as well as those the amount of which is fixed by law as an item of costs. As the right to tax the defendant with attorney’s fees is lost by payment or tender before suit, so also it is lost by the filing of a petition in bankruptcy. In re Weiland (D. C.) 197 Fed. 116. It was said in Bank v. Sherman, 101 U. S. 403, 406 (25 L. Ed. 866), of Act of March 2, 1867, c. 176:

“The filing of the petition was a caveat to all the world. It was in effect an attachment and injunction. * * * The bankrupt became, as it were, for many purposes, civiliter mortals.” i

And the assertion is repeated of the present act in Mueller v. Nugent, 184 U. S. 1, 14, 21 Sup. Ct. 927, 45 L. Ed. 711. After the filing of the bankruptcy proceeding, no creditor may perfect his inchoate right to put upon the bankrupt an attorney’s fee for the filing and conduct of a suit which he must know is unnecessary and will likely be futile. It may even be that under the quoted provision of section 63 good faith must exist when the creditor files his suit before the filing of the bankruptcy petition — that is, he must have a real purpose effectively to assert his debt against the debtor, rather than a purpose, knowing a baukrupcly to be imminent, to impose an unnecessary charge upon the bankrupt estate. No attack upon the good faith of this creditor is made, however, and good faith is to be presumed.

[3] But the contention is that fractions of a day are not regarded in law, and that this petition in bankruptcy is to be treated as filed on. the first moment of September 4, 1917, and in consequence neither the attorney’s fee nor any of the costs can in legal contemplation have been incurred “before the filing of the petition.” It is a general rule that fractions of a day are not to he regarded, and the rule is fully applicable whenever a period is fixed, measured by clays, in or after which a thing may or must be done. Section 31 of the Bankruptcy Act (Comp. St. § 9615), declaring that in such a case the first day is excluded and the last to be counted, fairly implies that fractions are to be disregarded. See In re Warner (D. C.) 144 Fed. 987. But where [896]*896one day only is involved, and the rights of litigants depend on priority in time of two occui-rences on that day, and the priority can be established, the courts will ascertain and regard the actual priority. There is only a presumption that they occurred at the same time. Levy v. Bank, 158 Ill. 88, 42 N. E. 129, 30 L. R. A. 380. In 8 A. & E. Ency. Law (2d Ed.) 744, in stating the exceptions to the rule that fractions of a day are disregarded, a number of older English and American cases are cited under note 1, in which priority in time on the same day was investigated and given effect between bankruptcies and attachments, and attachments and bills of sale. Where the defendant died the day a decree was taken, the priority of the decree was investigated, and the decree upheld, in Ex parte Massie, 131 Ala. 62, 31 South. 438, 56 L. R. A. 671, 90 Am. St. Rep. 20. In Louisville v. Savings Bank, 104 U. S. 469, 26 L. Ed. 775, after reviewing many cases, a unanimous court held:

“When necessary to determine conflicting rights, courts of justice will tafee cognizance of the fractions of a day.”

The validity of bonds voted in aid of a railroad was upheld, though on the same day a constitutional provision was adopted prohibiting such; it being held that the latter became effective only on the closing of the polls at sunset, and it appearing that the bonds were issued that morning. The doctrine was declared settled in Taylor v. Brown, 147 U. S. 645, 13 Sup. Ct. 549, 37 L. Ed. 313. Following these cases, when it appeared,that the President signed a tariff act at 4:06 o’clock p. m., it was heldAjdiat goods imported in the forenoon of that day were not taxable under it. U. S. v. Stoddard (C. C.) 89 Fed. 699, affirmed 91 Fed. 1005, 34 C. C. A.

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Cite This Page — Counsel Stack

Bluebook (online)
267 F. 893, 1920 U.S. Dist. LEXIS 1014, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-ledbetter-gand-1920.