Chiсago Tunnel Terminal Corporation, appellant, filed a voluntary petition in bankruptcy on October 21, 1957, and was duly adjudged a bankrupt. Its subsеquent petition for an order to restrain the Rutland Transit Company (Rutland) from proceeding with a sale of its property in satisfaction оf a judgment obtained by Rutland two years previously on October 11, 1955, was denied. This appeal is from the order denying that petition and marks the third time in two years that appellant has brought this litigation to this court. The only issue raised is whether or not, as computed under provisions of the Bankruptcy Act, Rutland’s lien was in effect for more than four months prior to the filing of the instant voluntary bankruptcy proceeding.
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The judgment upon whiсh Rutland seeks to levy was affirmed by this court May 3, 1956. 7 Cir.,
Appellant contends that the entire period from July 11, 1956, when it filed its voluntary petition under Chapter X of the Bankruptcy Act (11 U.S.C.A. §§ 501-676), through October 7, 1957, when this court issued its mandate after affirming the dismissal of that petition by the district court, is a suspended period in the computation of time under the bankruptcy law in relation to the recovery of preferences and аvoidance of liens. Section 261 of the Bankruptcy Act provides for such suspension “while a proceeding under this chapter [Chaрter X] is pending and until it is finally dismissed.” (Our emphasis.) 11 U.S.C.A. § 661. Under its theory, the Rutland lien was effective from April 11, 1956, when execution issued on the judgment, until July 11, 1956, when the voluntary petition fоr reorganization was filed (a period of three months) and, in addition, from October 8, 1957, after issuance of this court’s mandate to Octobеr 21, 1957, the date of the voluntary petition in bankruptcy (a period of 13 days), and was, thus, within the four months preference period.
It is appellee’s position, however, that the effectiveness of its lien was reinstated November 27, 1956 when the district court dismissed appellant’s pеtition for reorganization. This was, it urges, such a final dismissal as would stop the suspension of the running of any period of time with respect to the lien. In this connection Rule 62(a) and (d) of the Federal Rules of Civil Procedure, 28 U.S. C.A. provides for an automatic stay of ten days after a judgment аnd for a further stay upon appeal which is “effective when the supersedeas bond is approved by the court.” Appelleе urges that Rut-land could then have enforced its lien at any time between December 8, 1956 1 and December 28, 1956. (This court approved and оrdered filed the bond and surety of appellant as of December 28, 1956.) This additional period of 20 days together with the 3 months and 13 days as cоmputed by appellant would add up to more than four months.
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We agree with appellee that the district court’s dismissal of the petition for reorganization was such a final dismissal of the Chapter X proceeding as would abrogate the suspension of the lien and that the lien was again effective and enforceable until such time as this court approved and ordered filed the bond and surety of appellant. During this period appellee could have enforced its lien subject to a reversal by this court of the district court’s dismissal of the petition for reorganization. In Wilson v. Alliance Life Ins. Co., 5 Cir., 1939,
Appellant has for a long period avoided compliance with the order of the district court entered July 9, 1956. Its ultimate compliance on October 24, 1957 came only after it voluntarily placed itself into bankruptcy with a view toward further delaying appellee in its attempts to secure execution on its judgment. The gоod faith of appellant in all this has been seriously questioned. In light of the fact that the Chapter X proceeding was disallowed by the district court on the ground that it had been filed in bad faith “for the purpose of preventing Rutland Transit Co. from proceeding further with its efforts to obtаin satisfaction of its judgment against the debtor”, it is open to serious question whether appellant should be allowed to take further advаntage of such proceeding in seeking to prevent appellee from obtaining satisfaction of its judgment. But in view of our holding we need not decide this.
The order of the district court denying appellant’s petition for an order restraining the sale of the bankrupt’s property in question is
Affirmed.
Notes
. This is under the assumption that the provision for automatic stay is applicable. Rule 62(a) provides that: “Except as stated herein, no execution shall issue upon a judgment nor shall proceedings be taken for its enforcement until the expiration of 10 days after its entry. * * * ” This seems applicable only when the judgment entered is the one appealed from or sought to be enforced. In this case Rutland would have been seeking enforcement of a prior judgment. But we do not decide this point.