In re Kemp

HALLETT, District Judge

(orally). A petition was filed January 15th and the adjudication was’on the 20th of January last. In November prior to that, certain of the creditors, Adolph Hirsch and Simon Hirsch, took out a writ of attachment and levied it upon the goods of the bankrupt. This suit was pending at the time when the petition was filed and the adjudication made, and is still pending. On the 20th of March, upon, petition of the trustee, this court enjoined the sheriff of Teller county from selling the goods levied upon in the attachment suit; and, when the matter came on for hearing in the county court recently, it is said that the county court ordered the goods to he turned over to the trustee. The sheriff of Teller county has now moved the court to dissolve the injunction, which was issued on the 20th of March, and to require the trustee to turn over the goods to him; that is, to return the goods to him which he has delivered to the trustee under the order of the county court of Teller county. This motion must rest upon the ground that the attachment proceeding was not affected by the bankruptcy of the defendant in that suit. Upon that matter counsel for the sheriff contends that the question turns upon clause “f” of section 67 of the bankruptcy act. That clause declares that:

All “levies, judgments and attachments or other liens obtained through legal proceedings against a person who is insolvent at any time within four months prior to the filing of the petition in bankruptcy against him should be deemed null and void in case he is adjudged a bankrupt.”

Counsel contends that this clause of section 67 relates only to a case in which there may be an involuntary petition filed upon which adjudication shall be made, and not to a case in which a voluntary petition shall be filed by the bankrupt. Some courts have apparently so decided; but those courts appear to be of the opinion that the cases of adjudication upon a voluntary petition fall under clause “c” of the same section, and that elaüse “c” relates to voluntary cases, and clause “i” of section 67 to involuntary cases. The court of appeals of the Seventh circuit held that this clause “c” was in conflict with clause “f” of section 67, and that clause “f” was the only one that could be enforced; also, that clause “f” related to voluntary as well as involuntary bankrupts. In re Richards, 37 C. C. A. 634, 96 Fed. 935. As stated before, other courts, circuit and district courts of the United States, have held that the two clauses, “c” and “f,” may stand together, and that clause “c” may relate to voluntary cases. It is not necessary to decide in this case whether the view taken by the circuit court of appeals of the Seventh circuit be the correct one or not; but whether the case fall within clause “c,” or within clause “f,” the attachment must fall, as being one taken out within four months before the bankruptcy of Kemp. The adjudication of bankruptcy established the fact of insolvency, and under clause “c,” the attachment having been taken out within four months before the bankruptcy, the bankrupt was insolvent at the time the proceeding in attachment was begun/and under that clause, if that be the one which is applicable to the case, the attachment fails as much as under clause “f” of the bankruptcy act. So that it must be said that the attachment taken out within four months of Kemp’s bankruptcy was vacated and set aside by that proceeding on the part of Kemp,— by his becoming a bankrupt. And the plaintiffs in that attachment suit must stand upon the same footing as other creditors of the bankrupt. If the plaintiffs in that suit are entitled to anything for the care of the property pending the attachment, or if they are entitled to any part of" the costs of that suit, they must apply before' the referee for the allowance of that claim as a preferred claim. There are decisions of the courts which show to what extent creditors in the position of the plaintiffs in the attachment suit may be reimbursed for the care of the property and the costs in the suit. Upon this, the motion of the sheriff of Teller county to have the property returned to him must he overruled.