In re Paine

18 F. Cas. 1004, 9 Ben. 144, 17 Nat. Bank. Reg. 37, 1877 U.S. Dist. LEXIS 220
CourtDistrict Court, S.D. New York
DecidedMay 10, 1877
StatusPublished

This text of 18 F. Cas. 1004 (In re Paine) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Paine, 18 F. Cas. 1004, 9 Ben. 144, 17 Nat. Bank. Reg. 37, 1877 U.S. Dist. LEXIS 220 (S.D.N.Y. 1877).

Opinion

BLATOHFORD, District Judge.

On the 11th of October, 1S76, one McCord recovered a judgment against the bankrupt in the supreme court of New York, for the sum of $2,954.20 gold and $499.48 currency. On the 14th of October an execution on such judgment was placed in the hands of the sheriff of the city and county of New York. The bankrupt owned, at the time, certain wooden ware, which was stored in the cellar of a building No. 54 Maiden Lane, in the city of New York. The sheriff did not levy or attempt to levy on such wooden ware, nor did he know of its existence, nor did he enter the building in which it was. On the 19th of October, the bankrupt filed a voluntary petition in bankruptcy in this court. In the schedule of the bankrupt’s personal property, annexed to such petition, the fact was stated that there was wooden ware belonging to the bankrupt at 54 Maiden Lane. The sheriff now presents to this court a petition setting forth the foregoing facts and claiming that the execution became and was and is a lien upon all of the aforesaid property, from the time of the delivery of the execution to him for service, as against the debtor and his assignee in bankruptcy, and that the sheriff is entitled to take said property and sell it and apply the proceeds upon- the execution, and praying that this court will make an order acknowledging said lien and [1005]*1005authorizing the sheriff to take said property under the execution and sell it and apply the proceeds, as far as they will go, to the satisfaction of the execution. The assignee in ■bankruptcy resists the application, on the ground that, as the sheriff made no actual levy on the property before the petition in bankruptcy was filed, the sheriff has no lien on it by virtue of the execution and no claim to any priority in payment out of its proceeds.

The statutes of New York (2 Rev. St. pp. 365, 306, §§ 13, 14, 17) provide as follows: “Sec. 13. Whenever an execution shall be issued against the property of any person, his goods and chattels, situated within the .-jurisdiction of the officer to whom, such execution shall be delivered, shall be bound only from the time of the delivery of the same to be executed. Sec. 14. If there be several executions issued out of a court of record against the same defendant, that which shall have been first delivered to an officer to be executed shall have preference, notwithstanding a levy may be first made under another execution; but if a levy and sale of any goods and chattels shall have been made under such other execution, before an actual levy under the execution first delivei'ed, such goods and chattels shall not be levied upon or sold by virtue of such first execution.” “Sec. 17. The title of any purchaser in good faith, of any goods or chattels, acquired prior to the actual levy of any execution, without notice of such execution being issued, shall not l>e divested by the fact that such execution had been delivered to an officer to be executed, before such purchase was made.” These statutory provisions have been construed by the courts of New York. In Slade v. Van Vechten, 11 Paige, 21, it was held, that where an execution is in the hands of the sheriff at the time of a general assignment of the property of the defendant in the execution for the payment of his debts, the lien of the execution upon the personal property liable to seizure and sale thereon is paramount to the title of the general assignee; and that the general assignee is not a bona fide purchaser within the meaning of the foregoing provisions which protects the title of bona fide purchasers who have, purchased between the delivery of the execution to the sheriff and an actual levy upon the property. To enable a subsequent purchaser or assignee of the debtor’s property to overreach the prior legal lien of the execution thereon, before levy, and to protect his title under section 17 of the statute, he must show that he is a bona fide purchaser without notice, within the intent and meaning of said section. A subsequent purchaser, who obtains the legal title to property merely in satisfaction of a pre-existing indebtedness, is not entitled to protection, as being a bona fide purchaser who has no notice of a prior lien on the property. Ray v. Birdseye, 5 Denio, 625. See, also, Roth v. Wells, 29 N. Y. 489, 490; Williams v. Shelly, 37 N. Y. 375.

Under the statute of New York, the goods- and chattels of this debtor, situated within the jurisdiction of the sheriff, were bound as against the debtor, from the time of the delivery of the execution to the sheriff to be-executed. They were so bound, without any levy being made under the execution. This-binding created a lien and was a lien. The-bankruptcy statute does not invalidate such-a lien, but recognizes and allows it. Sections 5066, 5075. The bankrupt’s goods and chattels passed into the hands of the as-signee in bankruptcy subject, to this lien. He took them as security for the precedent debts of the general creditors of the bankrupt, and not as a purchaser of them in good faith without notice of the issuing of the execution. He took no greater title in them than the bankrupt had at the time the petition in bankruptcy was filed, and that was a title subject to the lien of the execution. Under sections 5044, 5046, and 5047 of the statute, he took “the like” rights and remedies which the bankrupt had when the proceedings in bankruptcy were commenced,, but no greater rights or remedies.

I am referred to the case of In re Tills [Case No. 14,052] as holding a contrary view. The point of that decision is, that the seizure-of the goods of an execution defendant by the United States marshal, under a warrant of seizure on an adjudication in bankruptcy on a creditor’s petition, is such an execution, of process as will divest the lien of a prior unlevied execution. The case arose in Missouri and was decided according to the statutes of Missouri and their interpretation by the state courts of Missouri. It was held, that the law of Missouri was, that where there were two executions, the later one, if there was a levy under it, gave to it priority over an earlier one, under which no levy was. made till after the levy under the later one: that the delivery of an execution to the sheriff gave a lien which bound the debtor’s goods in the bauds of the debtor, and of any one to whom he might voluntarily convey them, but such lien would bind neither the-goods nor their proceeds in the hands of an officer who had seized'them under process from a court of competent jurisdiction at the instance of another creditor; and that a seizure of the goods by the marshal under a warrant in involuntary bankruptcy, after adjudication, had the same effect as the levy of an execution, to divest the lien of a prior unlevied execution.

In the case now under consideration not only was the adjudication of bankruptcy made on a voluntary petition, but the statute of New York, before cited (section 14), differs entirely from the law of Missouri, for it expressly provides, that, “if there be several executions issued out of a court of record against the same defendant, fliat which shall have been first delivered to an [1006]*1006officer to be executed, shall have preference, notwithstanding a levy may be first made under another execution.” Therefore if an adjudication on a petition in voluntary bankruptcy, or an assignment following such adjudication, could be regarded as equivalent to the issuing and levy of a second execution, the first execution would, under the statute of New York, have preference.

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Related

Williams v. . Shelly
37 N.Y. 375 (New York Court of Appeals, 1867)
Slade v. Van Vechten
11 Paige Ch. 21 (New York Court of Chancery, 1844)
Ray v. Birdseye
5 Denio 619 (Court for the Trial of Impeachments and Correction of Errors, 1846)

Cite This Page — Counsel Stack

Bluebook (online)
18 F. Cas. 1004, 9 Ben. 144, 17 Nat. Bank. Reg. 37, 1877 U.S. Dist. LEXIS 220, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-paine-nysd-1877.