58 So. 280 | Ala. | 1912
Lead Opinion
The bill in this case was filed by appellee as trustee in bankruptcy of the estate of D. M. Sparks, a bankrupt, and sought to condemn to the satisfaction of the provable debts of the bankrupt a certain parcel of land which had been conveyed by the bankrupt to appellant more than two years, as the bill shows, before the adjudication of bankruptcy. No charge of fraud is brought against the conveyance. Complainant, has proceeded against the property as property not in the custody of the bankruptcy court — that is, as property adversely held — and seeks relief upon the theory that by the conjoint operation of section 3383 of the Code of Alabama and the Bankruptcy Act of Congress
Section 3383 of the Code provides as follows: “All conveyances of real property, deeds, mortgages, deeds of trust, or instruments in the nature of mortgages, to secure any debts, are inoperative and void, as to purchasers for a valuable consideration, mortgagees, and judgment creditors, without notice, unless the same have been recorded before the accrual of the right of such purchasers, mortgagees, or judgment creditors.” The act of Congress provides that trustees in bankruptcy, “as to all property not in the custody of the bankruptcy court, shall be deemed vested with all the rights, remedies, and powers of a judgment creditor holding an execution duly returned unsatisfied.”- — 36 U. S. St. at Large, p. 840. Whatever may be the purpose of this amendment of the Bankruptcy Law, and wherever it may have operation and effect, we think it conferred no rights upon the trustee under the facts stated in the bill. Jurisdiction of the bill is exercised by the courts of this state under the Constitution and laws of this state. The trustee is proceeding under the state law, and under that law must show that he is, or represents, a judgment creditor with a lien and without notice before he can be heard to complain that defendant’s failure to record his deed has rendered it inoperative and void. A mere judgment does not operate as a lien. —Decatur Company v. Moses, 89 Ala. 538, 7 South. 637.
Did the amendment which we have quoted have effect to make an adjudication of bankruptcy equivalent to a specific lien? Does the amendment undertake to' declare that an adjudication is the equivalent of a judgment rendered and execution thereon issued in favor of all creditors? The fact is that there has been no judgment rendered, and the competency of Congress to declare that a proceeding in bankruptcy, which has none of the characteristics of a judicial proceeding for the recovery of a judgment, shall under these circumstances have the force and effect of a judgment rendered, and an execution issued and kept alive against the property of persons holding and claiming adversely is doubted. At any rate, such is not the language of that part of the amendment supposed to have application in this case, nor does it hold any equivalent language. Persuasive to the conclusion that such was not the intention of Congress is the language of the immediately preceding clause of the amendment which, discriminating between the two classes of property rights, provides that as to property in the custody of the bankruptcy court the bankruptcy trustee shall be considered to have the same title that a creditor holding an execution or other lien by legal or equitable proceedings levied upon that property would have under the law of the state. In that case, differing in this respect from the language of the clause in question, we observe the definitely expressed purpose of making the custody of
The defendant in this case is not the holder of a mere lien recorded or unrecorded. He is the legal and equitable owner of the property. There is no shadow upon the integrity of his ownership, nor is the validity of his title under the law of this state questioned. As against this ownership his creditors could not acquire any right under the law of this state unless by proceeding to a judgment in a court of law and having an execution issued and levied or kept alive, by reissuance at each term, beyond the recordation of defendant’s deed which he may have had or may have at any time. Our conclusion is that the bill contains no equity — a fact the court should notice ex mero — and should be dismissed unless amended to cure its defect within such time as the court below may prescribe. The decree is therefore reversed, and the cause remanded.
Reversed and remanded.
Dissenting Opinion
(dissenting.) — The acnte question presented on this appeal is this: Can a trustee in bankruptcy maintain a bill against a grantee of the bankrupt, to set aside an absolute conveyance of land, made more than four months before the bankruptcy, upon the ground that the conveyance was not recorded before the accrual of the rights of the trustee; there being no judgment creditors of the bankrupt?
Our statute, section 3383 of the Code, provides that all conveyances of real property are void as to purchasers, mortgagees, judgment creditors, etc., unless recorded before the accrual of the rights of such purchasers, judgment creditors, etc. Of course, a trustee in bankruptcy is not a purchaser for value, nor is he a judgment creditor, and therefore does not come within the express terms of the statute. The difficulty arises in the construction of the Bankrupt Act, the question being whether or not it is the effect of that act, to place the trustee in the position of a judgment creditor, and to afford him all the rights and remedies which state statutes may confer upon judgment creditors.
Section 47 of the Bankrupt Act, subdivision 2, in effect provides that all property in the custody, or coming into the custody, of the bankruptcy court shall be deemed vested in the trustee, with all the rights, remedies, and powers of a judgment creditor holding a lien by legal or equitable proceeding; and that as to property not in the custody of said court, the trustee shall be deemed vested with the rights and remedies and powers of a judgment creditor holding an execution duly returned not satisfied.
Section 70 of the act provides that the trustee shall be vested with the title of the bankrupt as of the date he was adjudged a bankrupt, to all the property transferred by him in fraud of his creditors, and also to all
Under the former bankruptcy acts, there was no doubt that the trustee could not maintain a bill such as this, because the statutes, state and federal, neither conferred any rights or liens, nor the authority to maintain the bill. This was repeatedly decided by the Supreme Court of the United States. But-Mr. Collier, and a number of federal and state courts, seem to think that the effect of the provisions of the present Bankruptcy Act, above set out, was to place the trustee in the same position that a creditor would be in if he had a judgment, and execution thereon. In fact, the statute so expressly declares, as to property not in the custody of the court. It reads as follows: “As to property not in the custody of said court, the trustee shall be deemed vested with the rights and remedies and powers of a judgment creditor holding an execution duly returned not satisfied.” Mr. Collier, in discussing the first above-mentioned section, says that the trustee, as to the property not in the custody of the court, stands in the position of a judgment creditor holding an execution returned unsatisfied, thus entitling him to proceed against the assets in the same manner as a judgment creditor.— Collier on Bankruptcy, 541 542.
If this be the law and the effect of the Bankrupt Act, then unquestionably the trustee' in bankruptcy may maintain a bill to set aside a conveyance, and to subject the property conveyed thereby to the use of the estate, if the conveyance thereof was void as against such creditors because not recorded as required by section 3383 of the state Code.
The creditors are certainly hindered, if not prevented, from reducing their claims and debts to judgment in consequence of bankrupt proceedings. This was probably the reason which brought forth the provision of the act giving the trustee the same rights as judgment creditors have.
I am therefore of the opinion that the bill filed in this case may be maintained, and that the demurrer on this ground was properly overruled.
While the bankrupt may be a proper party in such bankrupt proceedings, he is not a necessary party, for the reason that the trustee evidently succeeds to all his rights, and as between him and his grantee the conveyance was, of course, valid. In my opinion the trial court, in consequence, properly held the plea of respondent setting up non-joinder of the bankrupt as a party, insufficient.