Mitchell v. Ada Investment Co., 246 P. 10

Mitchell v. Ada Investment Co.

246 P. 10 | Idaho | 1926

On August 28, 1920, there was pending in the district court for Canyon county an action in which the Overland National Bank was plaintiff and Walter R. Sebree was defendant. On that date there was filed in the action an affidavit for attachment and thereafter a writ of attachment was issued under which property belonging to Sebree was attached. On the twenty-seventh day of December, 1920, judgment was made and entered in favor of the bank and against Sebree. Execution issued and the property theretofore attached was sold at sheriff's sale.

Sebree filed a petition in bankruptcy on March 12, 1921, and was thereafter adjudged a bankrupt. On May 21, 1921, the present action was commenced. The plaintiff is the trustee in bankruptcy of Sebree, as indicated by the title, and the defendant is the successor in interest of the Overland National Bank, the plaintiff in the action against Sebree. The purpose of this action, as expressed in the prayer, was to have the attachment lien obtained in the action of Overland NationalBank v. Sebree "declared null and void and that the same and all proceedings thereunder be dissolved." It is alleged that on December 27, 1920, the said Sebree was insolvent. This was the date of the entry of the judgment against Sebree. There is no allegation that Sebree was indebted, other than to the Overland *426 National Bank, when the attachment was obtained. The cause was tried to the court without a jury, and the appeal is from a judgment in favor of the trustee.

While the Bankruptcy Act recognizes the validity of liens obtained more than four months prior to the filing of the petition in bankruptcy, a fair consideration of the law and its purposes impels one to the conclusion that only valid liens obtained more than four months prior to the filing of the petition are exempted from the operation of the act. (Black on Bankruptcy, 4th ed., sec. 934.) The Bankruptcy Act (sec. 70) vests the trustee with the title of the bankrupt as of the date of the adjudication in bankruptcy. As to property not in custody of the bankruptcy court, he is vested, under the act (sec. 47a-2), with "all the rights, remedies and powers of a judgment creditor holding an execution duly returned unsatisfied." This status is assumed as of the date of the filing of the petition in bankruptcy. (Bailey v. Baker IceMach. Co., 239 U.S. 268, 36 Sup. Ct. 50, 60 L. ed. 275; AcmeHarvester Co. v. Beekman Lumber Co., 222 U.S. 300,32 Sup. Ct. 96, 56 L. ed. 208; Fairbanks Steam. Shovel Co. v. Wills,240 U.S. 642, 36 Sup. Ct. 466, 60 L. ed. 841.) While it is admitted that the attachment was obtained more than four months prior to the time that Sebree was declared a bankrupt and that judgment was made and entered within four months prior to the adjudication in bankruptcy, it is well settled that the lien was created by the attachment, and that the lien is not affected by the fact that judgment was entered within the four months' period. (In re Blair, 108 Fed. 529; In reCrafts-Riordan Shoe Co., 185 Fed. 931; Metcalf Brothers Co.v. Barker, 187 U.S. 165, 23 Sup. Ct. 67, 47 L. ed. 122; In reBeaver Coal Co., 113 Fed. 889, 51 C.C.A. 519.)

The trustee claims that the affidavit for attachment was insufficient and false; that the court, therefore, was without jurisdiction to issue the writ of attachment and that the purported lien of the attachment was void. *427

It was set forth in the affidavit for attachment that one of the notes "was originally secured by a pledge of certain corporate bonds, but such security has, without any act of the plaintiff, become valueless." It is the position of the trustee that the affidavit is insufficient in that it did not also allege that the debt was not secured by any mortgage or lien upon real or personal property, or any pledge of personal property. This question is determined by Farmers State Bank ofStar v. Gray, 36 Idaho 49, 210 P. 1006. On a second rehearing therein it was held (in a concurring opinion by Justice Budge, concurred in by Justices McCarthy and Lee) that it is not necessary that an affidavit for attachment disclose that the payment of the debt "has not been secured by any mortgage or lien upon real or personal property, or any pledge of personal property," when it appears from the affidavit that the debt was originally secured, and "that such security has, without any act of the plaintiff . . . . become valueless." In that case it was said that:

"The affidavit provided for is different in each class. In neither class is one required to state the facts stated in the other class. The first class of cases is where the debt has not been secured. There the affidavit must state 'that the payment of the same has not been secured by any mortgage or lien upon real or personal property or any pledge of personal property.' . . . . The other class is where the debt has been secured and there the affidavit must state the fact that security has been given and also that such security has, without any act of the plaintiff or the person to whom the security was given, become valueless. In this latter class it is not necessary to state that the debt 'has not been secured by any mortgage or lien upon real or personal property or any pledge of personal property.'"

The affidavit being sufficient on its face, the court had jurisdiction to issue the writ. The remaining question for determination is the effect of the falsity of the affidavit, since it is also the position of respondent that a false *428 affidavit does not confer jurisdiction to issue a writ of attachment.

That Sebree could have gone into court, in the first action, and had the attachment discharged on account of the falsity of the affidavit would seem to be indisputable. (C. S., secs. 6812 and 6814.) It is submitted, however, that these sections apply to the defendant and his remedy is by motion in the action. One against whom an action is instituted and whose property is attached may not sit supinely by, and, after judgment is entered, have the attachment vacated merely because of the falsity of the affidavit for attachment. The bank was a bonafide creditor of Sebree when the first action was instituted and when the attachment lien was created; that it was entitled to judgment against Sebree is not even questioned. The status of the trustee, that of creditor of the same Sebree, arose more than four months after the attachment lien was perfected. In the absence of any allegation or proof that there was fraud or collusion between the bank and Sebree, no reason has been suggested why one occupying the status of such creditor should be permitted to practically reopen the case and have the court weigh other evidence and again determine the issues. Both the regularity and propriety of the attachment were in issue in the action in which the affidavit was filed and the writ was issued, and were determined by the judgment in favor of the bank. (Gooden v. Lewis, 101 Kan. 482, 167 P. 1133.) Neither a judgment debtor nor his lien creditor may set aside such a lien for any irregularity or impropriety in the attachment which did not divest the court of jurisdiction to issue the writ. Van Fleet's Collateral Attack, sec. 532, says that "attachment proceedings are not void because the affidavit is false in fact"; and at sec. 60, that "jurisdiction always depends upon the allegations and never upon the facts."

"The right to challenge the truth of the allegations of the affidavit is given by statute to the defendant or his assignee for the benefit of creditors, to be exercised in the action. It cannot be attacked collaterally, if good on its *429 face, except for fraud or collusion. Rice v. Wolff, 65 Wis. 1,26 N.W. 181." (Barth v. Burnham, 105 Wis. 548, 81 N.W. 809.)

See, also, Reg. v. Bolten, 1 Ad. El. M. S. 66, 72, 41 E. C. L. 439, 442; Wapples on Attachment, sec. 157; Darling v.Conklin, 42 Wis. 478; Gooden v. Lewis, 101 Kan. 482,167 Pac. 1133; Lovier v. Gilpin, 6 Dana, 321, 36 Ky. 478; Harrison v.Pender, 44 N.C. 78, 57 Am. Dec. 573; Electric Plaster Co. v.Blue Rapids City Township, 81 Kan. 730, 106 P. 1079, 25 L.R.A., N.S., 1237; Title Ins. Trust Co. v. CaliforniaDevelopment Co., 171 Cal. 173, 152 P. 542 (560, 561);Fridenberg v. Pierson, 18 Cal. 152, 79 Am. Dec. 162; Producers'Naval Stores Co. v. M'Allister, 278 Fed. 13; Greene v. Tripp,11 R.I. 424; Jarvis v. Barrett, 14 Wis. 591; Hillman v.Griffin, 6 Cal. Unrep. 354, 59 P. 194, 696; Barth v. Burnham,105 Wis. 548, 81 N.W. 809.

It is argued that this court has held that an attachment issued on a false affidavit will be dissolved. To such holding, we adhere. But the falsity of the affidavit must be brought to the attention of the court in the action in which the writ was issued. Such was the situation in Mark Means Transfer Co. v.McKinzie, 9 Idaho 165, 73 P. 135; Barton v. Groseclose,11 Idaho 227, 81 P. 623; Vollmer v. Spencer, 5 Idaho 557,51 Pac. 609; Willman v. Friedman, 3 Idaho 734, 35 P. 37. It is contended that this court held in. Murphy v. Montandon, 3 Idaho 325, 35 Am. St. 279, 29 P. 851, that an attachment issued on a false affidavit is void. While such language was used in that decision, a careful examination of the issues involved and that which was necessary to a decision convinces us that it should not control the issue here presented. Murphy v. Montandon,supra, was an action against sureties on a redelivery bond, judgment in a prior action having been obtained by Murphy against the defendant whose property was released from attachment by the execution of the redelivery bond signed by Montandon. In the first action the record, according to the decision, showed on its face that the plaintiffs had security. The affidavit, however, did not disclose that the *430 security had become valueless, as required by the statute. The affidavit was, therefore, not only false but the record disclosed on its face that the case was not one in which the law permits an attachment. It appears further that the decision in that case was actually based on the exclusion of the affidavit from the evidence. It may be admitted that there is room for argument as to the authority of Murphy v. Montandon,supra, on the question here presented, but, in any event, we are unwilling to hold, under such facts as we have here, that where it appears from the record that the court had jurisdiction to issue a writ of attachment, a stranger to the action, may, in an independent action, establish the falsity of the affidavit for attachment and thereby invalidate the lien of the attachment.

Judgment reversed. Costs to appellant.

William A. Lee, C.J., and Givens and Taylor, JJ., concur.