In re McCartney

109 F. 621, 1901 U.S. Dist. LEXIS 211

• Court: District Court, E.D. Wisconsin
• Decided: July 18, 1901
• Status: Published

Opinion

SEAMAN, District Judge,

ifhis petition distinctly presents the questions (1) whether the garnishment proceedings were invalidated-by the adjudication in bankruptcy, and, if so (2) whether the bankruptcy court can take jurisdiction to decree accordingly, receive into court the amount payable by the garnishee, and relieve such garnishee from further liability.

1. The answer to the first question appears in the unmistakable terms of section 67 of the bankruptcy act of 1898, which provides “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 that the property affected thereby shall be discharged and released from the same, and pass to- the trustee. That this provision applies equally to voluntary and involuntary cases is settled for this circuit, at least, by the decision of the circuit court .of appeals in Re Richards, 37 C. C. A. 634, 96 Fed. 935, 3 Am. Bankr. R. 145; and it is clear that the garnishment proceeding falls directly within its terms, as recently held by Judge Brown in Re Lesser (D. C.) 108 Fed. 201. See, also, In re Kenney (C. C. A.) 105 Fed. 897, 5 Am. Bankr. R. 355; Coll. Bankr. (3d Ed.) 430. The decisions under the former bankruptcy acts, which are cited by counsel in opposition to the rule herein to show cause, are not applicable to the explicit provision of the present act, as well pointed out in the opinions above cited.

2. The question of administering relief in such case in the bankruptcy court is.not so free from difficulty. While section 67 expressly provides that liens so obtained “shall be deemed wholly discharged and released,” that the property affected “shall pass to the trustee as a part of the estate,” and that “the court may order such conveyance as shall be necessary to carry the purposes of this section into effect,” the decisions thereunder are not in unison as to the powers of the bankruptcy court to enforce such provisions. In the Second circuit the above-cited ruling by Judge Brown (In re Lesser [D. C.] 108 Fed. 201) is well in point for exercise of plenary jurisdiction in such case, and the circuit court of appeals clearly affirms like doctrine in lie Kenney, supra. On the other hand, the circuit court of appeals of the Fifth circuit pronounces against this jurisdiction (In re Seebold, 5 Am. Bankr. R. 358), following their previous ruling (In re Abraham. 35 C. C. A. 592, 93 Fed. 767), and citing Bardes v. Bank, 178 U. S. 521, 20 Sup. Cf. 1000, 44 L. Ed. 1175. But the recent decision of the supreme court, under the title of Bryan v. Bernheimer (April 15, 1901) 21 Sup. Ct. 557. 45 L. Ed.-, 5 Am. Bankr. R. 623, reverses In re Abraham, ami modifies the expressions in Bardes v. Bank, and I am of opinion, therefore, that the rule held in the Second circuit conforms to the purposes of the act, and is in accord with this later opinion of the supreme court, that it is applicable to the case at bar, and should be so applied. An order will be entered accordingly, as prayed in the petition.