In re Hufnagel , 12 F. Cas. 819 ( 1875 )

BROWN, District Judge.

It is claimed by the assignee, that the petitioner had no right, after proceedings in bankruptcy had been instituted, to sell the bankrupt’s property upon his execution against him. No question is made with regard to the validity of the judgment which was obtained on the 12th of November. Execution was thereupon issued and levied on the 31st day of December, twenty-seven days before the proceedings-in bankruptcy were commenced, and receipt taken by the sheriff from a third party for the property seized.

First It is well settled that an adjudication of bankruptcy sweeps within the purview of the bankrupt court all the property of the debtor, whether incumbered or unin-cumbered, and that no steps can thereafter be taken to enforce claims against such property, either by way of attachment, execution, distress, replevin, or foreclosure, except through the bankrupt court, or by its permission, in the state court. Phelps v. Sellick [Case No. 11.079], and cases cited therein. In re Cook [Id. 3,151]; In re Vogel [Id. 16,983]; Stuart v. Hines [33 Iowa, 60]. A party who has levied an execution upon the property of the bankrupt before adjudication, ought not to proceed to a sale without such permission, and if he does so, the sale-may be set aside, and he may be held liable-for the actual value of the property, regardless of the amount realized upon such sale. Davis v. Anderson [Case No. 3,623); In re Rosenberg [Id. 12,055]; Smith v. Kehr [Id. 13,071]. Bills have frequently been sustained, enjoining sheriffs >of state courts from-selling the property of bankrupts upon execution, where it was made to appear that the estate would be injuriously affected. In re Kerosene Oil Co. [Id. 7,726]; In re Mallory [Id. 8.991]; Jones v. Leach [Id.. 7,475]; In re Suedaker. 3 N. B. R. 629; In re Lady Bryan Min. Co. [Case No. 7,9S0]; In re Clark [Id. 2,801]; Pennington v. Sale [id. 10,939]. Regularly, therefore, the petitioner should have proved his judgment as. a secured debt, and obtained the permission of this court to sell the property by virtue of his execution. In re Bridgeman [Id. 1,866]; In re Bigelow [Id. 1,396]; In re Davis [Id. 3,61S]; In re Ruehle [Id. 12,113]; In re Frizelle [Id. 5,133]; Bromley v. Smith [Id. 1,922]; Davis v. Anderson [Id. 3,623].

As it does not appear, however, in this-case, that the judgment was obtained by collusion, nor that the levy was improperly made, nor that the property did not bring its full value upon the sale, I think it within the power of the court to say it will not interfere to disturb it. To refuse to confirm. the sale, and order the proceeds paid to the assignee, and at the same time to permit the petitioner to prove his claim as a secured debt, and receive his money from the proceeds, would result in nothing but the accumulation of costs. As the petitioner has acted under an honest misapprehension of his duty in the premises, I am disposed, under the circumstances, to confirm the sale, and to hold his part of the transaction valid. The same view was taken of the discretion of the court in refusing to interfere in Re Iron Mountain Co. [Case No. 7,065]; Re Bowie [Id. 1,728]; Norton v. Boyd, 3 How. [44 U. S.] 426; McLean v. Rockey [Case No. 8,891]; Re Lambert [Id. 8,026]; Lee v. German Sav. Inst [Id. 8,188]; Re Schnepf [Id. 12,471]; Re Bernstein [Id. 1,350]. I do not think the fact that petitioner held the notes and accounts as further securities for the judgment, deprived him of the lien of his levy, or that such lien was released by taking the receipt of Martin. Swope v. Arnold [Id. 13,702]; Barker v. Binninger, 14 N. Y. 271; Bond v. Willett, *40 N. Y. 377. After-payment of judgment and costs, however, there appears to be a surplus of thirty-two dollars, for which petitioner must account to the assignee.

Second. I think the petitioner is entitled to an order for the payment of one hundred and ninety dollars rent, from the commencement of proceedings in bankruptcy to the day possession was surrendered by the as-signee. The securities held by petitioner have nothing to do with this claim. They were placed in fiis hands to seeure the payment of rent from Hufnagel, not from his assignee. As the title of the assignee relates back to the commencement of proceedings in bankruptcy, the assignee must pay rent from that date. In re Walton [Case No. 17,131]; In re Appold [Id. 499]; In re Merrifield [Id. 9,465; In re Rose [Id. 12,043]; Ex parte Faxon [Id. 4,104]; In re Butler [Id. 2,236].

Third. For the rent due upon the new lease, from its date to January 27th, the date of commencement of proceedings, the petitioner must prove his claim before the register as a secured debt. On surrendering his securities to the assignee, he may then file a petition for payment from the proceeds, lie has no claim, however, for rent from the surrender of possession by the assignee to the date of re-renting. [Eev. St. U. S.] I 5071 provides that “where the bankrupt is liable to pay rent or other debt falling due at fixed and stated periods, the creditor may prove for a proportionate part thereof up to the time of the bankruptcy, as if the same grew due from day to day, and not at such fixed and stated periods.” “No debts other than those above specified shall be proved or allowed against the estate.” I think the design of this provision was to apportion the rent at the date of filing the petition, permitting the rent, then accrued, to be proved as a debt agaiust the estate, leaving the subsequent rent unaffected by the discharge in bankruptcy. Indeed, no other construction is practicable. In the cases of long leases, the settlement of the estate might be indefinitely prolonged, if the landlord were permitted, every time he suffered damage by the non-performance of his lease, to prove it as a claim against the estate. Such a claim is, in its nature, almost impossible of liquidation at the date of filing the petition, as the landlord may procure a tenant the next day, and may not be able to find one before the expiration of the lease. There are certain cases of contingent debts and liabilities provided for by section 5068, but I think claims for rent are controlled by section 5071. The reasoning of the learned judge for the Southern district of New York upon this point in Re May [Case No. 9,325] is entirely satisfactory to me, and is supported by the cases of In re Webb [Id. 17,315]; In re Merrifield [Id. 9,465]; Ex parte Houghton [Id. 6,725]; Auriol v. Mills, 4 Term R. 94; Hendricks v. Judah, 2 Caines, 25; Lansing v. Prendergast, 9 Johns. 127; Savory v. Stocking, 4 Cush. 607; Bosler v. Kuhn, 8 Watts & S. 183. This portion of petitioner’s claim is therefore disallowed.

An order will be entered in conformity with this opinion.