23 F. Cas. 887 | U.S. Circuit Court for the District of Middle Alabama | 1873
This is a petition filed under the second section of the bankrupt act, seeking a review and reversal of an order of the district court for the Middle district of Alabama, sitting in bankruptcy. From the pleadings and evidence I find the following facts: On the 12th of November, 1866, one Samuel McKirral recovered a judgment against Edward A. Blunt, in Perry county circuit court, for $2,227 and costs. On the same day, in the same court, M. Morgan & Sons recovered a judgment against the same Edward A. Blunt for $3,-201.23 and costs. Soon after the rendition of these judgments, executions were issued upon them, and thereafter, from time to time, executions were issued on the judgments according, to law, so as to preserve
In passing upon the case, I shall only uo-tice two of the questions presented, namely; 1. Had the sheriff of Perry county a right, under the facts as above detailed, to sell the property in question, and would his sale and deed, in the absence of fraud, make a good title? And, 2. Was the arrangement between the creditors to buy at the sheriff’s sale a fraudulent one? Other questions have been argued by counsel, but they have been so often passed upon by the court, as stated
The first question to be passed upon must, in my opinion, be answered in the affirmative. The judgments upon which the property was sold had for years been liens upon the property, the sheriff had levied his executions upon it, and had advertised it for sale before the filing of the petition in bankruptcy. Now, unless the naked fact of the filing of the petition by Blunt, to be adjudicated a bankrupt, operates as an injunction on the sheriff, restraining him from further proceedings under the execution, and rendering such proceedings void, then the sale by the sheriff is a good one. I do not think such is the effect of the filing of the bankrupt’s petition. Goddard v. Weaver [Case No. 5,495].
It has been held that the bankrupt court has the right by injunction to restrain a sale by a sheriff or other officer of the law, of property surrendered by the bankrupt. Irving v. Hughes [Case No. 7,076]; Jones v. Leach [Id. 7,475]; Pennington v. Sale [Id. 10,939]; Pennington v. Lowenstein [Id. 10,-938]; In re Bowie [Id. 1.728]; In re Schnepf [Id. 12,471]. But it by no means follows from this proposition that if the bankrupt court does not intervene, and the sheriff proceeds without the interference of that court, his proceedings are void, and the purchaser takes no title. The contrary has been expressly held. Thus, in Re Fuller [Id. 5,14S], the court says: ■“The judgment against the bankrupt having by lapse of time become valid, so far as the bankrupt act [of 1807 (14 Stat. 517)] is concerned, Smith has acquired a lien thereby upon the real estate in question. Upon the ■application of parties interested, this court has jurisdiction to ascertain and liquidate this lien (Bank Act, § 1), and while doing so, to enjoin Smith from enforcing the same by execution out of the state court. But after the process of the state court has been executed and the property sold thereon, it is too late for this court to interfere. The purchaser at such sale acquires a good title; -and this is so even if the judgment was fraudulent, provided the purchaser was an innocent one. For this reason, as well as upon general principles, this court could not set aside the sale upon the process of the -state court and order the property resold, however apparent it may be that it was sold much below its real value.”
So in Re Bernstein [Case No. 1,350], which in its facts very much resembled the case on trial, it was held, that where the property -of the bankrupt has been sold by the sheriff under an execution issued on a valid judgment in a state court, an injunction will not be granted. The court says: “In this case the property has been sold, and the proceeds •of it are in the hands of the sheriff. No advantage can result from requiring the money to be paid into this court with a view to its application by this court in satisfaction of the lien on the property. An order will be entered allowing the sheriff to apply the proceeds of the sale of the property towards the discharge of the amount which he is required by the execution to make, including his charges and fees therein, and directing him to pay the overplus, if any, to the as-signee, if there be one; and if there be none, then to the clerk of this court.”
In this case I decide this, that where an execution, is issued on a valid judgment of a state court, and levied by the sheriff upon the property of the judgment debtor, who, intermediate the levy and sale, is adjudged a bankrupt, and the sheriff proceeds to sell the property without restraint from the bankrupt court, and the sale is made for a fair price without fraud, and the proceeds applied to the payment of liens thereon, in the order of their priority', the sale is not void, but valid,- and the bankrupt court ought not to set aside the sale and direct the property to be re-sold. In my opinion, therefore, the sale made by the sheriff of Perry county, on the 4th of January, 1869, ought to stand, unless the agreement between themselves, under which the purchasers bought, was fraudulent.
The purpose expressed in this agreement was a proper ofie, namely, to prevent a sacrifice of the property, and to make it pay as much as possible on the liens. Its object and effect were not to suppress bidding; but, on the contrary, by the union of the means of several persons, bidding was promoted. There was nothing illegal in this arrangement. Phippen v. Stickney, 3 Metc. [Mass.] 387, 388; Kearney v. Taylor, 15 How. [56 U. S.] 494; Smull v. Jones, 1 Watts & S. 128; 1 Sugd. Vend. 17, and notes; Chitty, Cont. 407, note m. I have been unable to find anything in the said agreement of the purchasers, or in their conduct in reference to the sale, that is fraudulent. The sale appears to have been fairly conducted and the property to have brought all that it was reasonably worth.
It seems, from an amendment to the petition of the assignees in the bankrupt court, that after the sale made by the sheriff, on the 4th of January, I860, to wit: on the 1st day of August, 1870. two parcels of land, containing together twenty-five acres, were sold by the sheriff in Perry county, on an execution on a judgment of Mary Jane Williams against Blunt, issued and levied upon the 17th day of June, 1S70. As this property was seized in execution long after the bankruptcy, and appears to have been sold for little more than one-tenth of its value, I think the sale should be set aside.
A period of six months elapsed between the rendition of the decree in the bankrupt court and the filing of the petition in this court to reverse the same. This delay, unless accounted for, I should consider unreasonable, and should have dismissed the petition as coming too late, had there not been
A decree will be entered reversing so much of the decree made by the district court sitting in bankruptcy on June 14, 1872, as sets aside the sale made by the sheriff «of Perry county on the 4th day of January, 1869, and as directs the said assignees in bankruptcy to resell said real estate, and as directs the defendants in the petition in the bankrupt court to pay to the said assignees the rents since January 4, 1869, for the real estate purchased by them on that day, and as directs the delivery up of possession to said assignees of the real estate so sold on January 4, 1869, and directing all tenants in possession thereof to attorn to said assignees, and as decrees the costs made in said proceedings against the defendants.
The decree will also be against the said assignees for the costs of «this case in the district court and in this court, but the petitioners in review will be required to pay the costs incurred by said assignees in advertising the sale of said property, to take place on January 4, 1869.
So much of the decree of the district court as sets aside the sheriff’s sale of the property, made on August 1, 1870, and directs said assignees to resell the same, is affirmed.
The injunction heretofore allowed, restraining said assignees from making sale of said real estate sold by the said sheriff on January 4, 3869, and August 1, 1870, or from making any report of sale, or in any manner executing said decree rendered on June 14, 1872, will be continued and made perpetual, except so far as the same relates to and embraces the property sold by said sheriff on August 1. 1870, and, as to that, said injunction is dissolved.