Massachusetts Bonding & Ins. Co. v. Kemper , 136 C.C.A. 593 ( 1915 )

DENISON, Circuit Judge

(after stating the facts as above). [1, 2] 1. A motion is made to dismiss the appeal, because it was not taken within 10 days, as required by section 25a. So far as the appeal seeks a reversal of the order disallowing the general claim, this motion must be granted, upon the authority of the cases cited by us in Re Martin, 201 Fed. 31, 34, 119 C. C. A. 363; but this does not dispose of the whole appeal. The denial of the lien and the disallowance of the general claim are so distinct that there could have been an independent appeal from either part of the order; and the appeal from so much of, the order as refused the lien must be treated separately. While this assertion of lien eventually took very much the form of an attempt to ■secure the allowance of a preferred claim, and so appealable only under the 10-day limitation, yet we think that, considering the form in which it arose, it may fairly be regarded as presenting a controversy ■over the title to or rights in specific property, and that therefore this ■appeal is, pro tanto, entitled to be considered as taken under section 24a. To that extent, the motion to dismiss is denied. Southern Co. v. Elliotte (C. C. A. 6, Nov. 13, 1914) 218 Fed. 567, 134 C. C. A. 295. By granting the motion as to the general claim, we intimate no opinion whether that claim had been so filed that there was anything for the order appealed from to operate upon in that respect as an adjudication.

[3, 4] 2. In Title Guaranty Co. v. Witmire, 195 Fed. 41, 43, 115 C. C. A. 43, we held that an instrument substantially like the present application contract was, in real effect, a chattel mortgage, and was governed by chattel mortgage recording statutes. It results that under -the Ohio statute² the purported assignment of title to or creation of the lien on this machinery was invalid as against creditors; and, under the amendment of June 25, 1910, to section 47a (2), as interpreted by us in the opinion this day filed in Potter Mfg. Co. v. Arthur, 220 Fed. 843, 136 C. C. A. 589, it was invalid as against a trustee in bankruptcy. This statute does not suggest whether it intends to speak only of subsequent creditors.

[5] 3. As above recited, after .filing the petition in bankruptcy but before the adjudication, the Bonding Company took possession of the property, and, as possession is by statute, a substitute for recording, we have the question whether the amendment of 1910 vests the trustee with the rights of a lien-holding creditor as of the date of the bankruptcy petition or as of the date of the adjudication. Since section 70a in general terms provides that the trustee is vested with the bankrupt’s title as of the date of adjudication, it has been natural to assume that the rights of the trustee do not for any purpose reach back to the date of filing the petition; and there are decisions to that effect, or leaving the question open. In re Rose (D. C.) 206 Fed. 991, 993; Big Four Co. v. Wright (C. C. A. 8) 207 Fed. 535, 537, 125 C. C. A. 577, 47 L. R. A. (N. S.) 1223; In re Jacobson (D. C.) 200 Fed. 812, 814.

We can see no escape from applying to this situation the principle of the decision in Acme Co. v. Beekman Co., 222 U. S. 300, 32 Sup. Ct. 96, 56 L. Ed. 208, where it was held that, in spite of the language of section 70a, the trustee’s rights extended, by relation, back to the commencement of the proceedings sufficiently to defeat the lien of an intervening attachment. The right of a general creditor to get a superior lien by levying an attachment and the right of the holder of an unrecorded mortgage to get a universally effective lien by recording' the mortgage impress us as wholly analogous; and if the trustee’s right goes back to the commencement of bankruptcy proceedings in the former case, it must in the latter. To the same general effect as the Acme Case is Everett v. Judson, 228 U. S. 474, 33 Sup. Ct. 568, 57 L. Ed. 927, 46 L. R. A. (N. S.) 154, which holds that interest of the trustee-in a life insurance policy maturing intermediate petition and adjudication, is to be fixed as of the earlier date.

We have applied the same principle to the right of the bankrupt debtor to discharge his debt by payment to the bankrupt after petition filed. Toof v. Bank, 206 Fed. 250, 124 C. C. A. 118. The controlling principle must be' that, for the purpose of fixing priority as between the trustee and adversely claiming lienholders, the time of filing the petition is the vital date, and that a lien which, on that date, whs invalid as against creditors levying execution, cannot be perfected so as to make it valid against the trustee by action of the lienholder before adjudication. Indeed, to hold the contrary would be to say that, so far as this section is concerned, the mortgagee could with safety withhold his mortgage from the record, relying upon the mortgagor not to file a voluntary petition and to delay an adjudication upon an involuntary petition long enough to give the mortgagee an opportunity to file his mortgage.

This conclusion makes it unnecessary to consider whether the ultimate effect of taking possession and enforcing the security could be thought to create a preference as of that date, and so make the security invalid under the sections which relate to preferences and recording.

For the reasons stated, so far as the appeal relates to the general claim, it is dismissed, and so far as it relates to the lien claimed, the order below is affirmed. Appellee will recover costs.

2 Sec. 8560, Gen. Code: “A mortgage, or conveyance intended to operate as .a mortgage, of goods and chattels, which is not accompanied by an immediate delivery, and followed by an actual and continued change of possession ■of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, subsequent purchasers, and mortgagees in good faith, unless the mortgage, or a true copy thereof, be forthwith deposited as directed in the next.succeeding section.”