Miller v. . Bowles

The appellant, who is the assignee in bankruptcy of Bowles, Brothers Co., contends that the attachment sued out in this State by Alvah Miller against them was dissolved and its lien discharged by the proceedings in bankruptcy. Under the fourteenth section of the bankrupt act it is distinctly provided that the assignment to the assignee in bankruptcy shall relate back to the commencement of the proceedings in bankruptcy, and that thereupon, by operation of law, the title to all the property and estate of the bankrupt, both real and personal, shall vest in the assignee, although the same is then attached on mesne process as the property of the debtor, and shall dissolve any such attachment made within four months next preceding the commencement of said proceedings. The language of the statute is plain and distinctly covers the attachment sued out by Miller. That attachment was not final but mesne process. Its effect as available to Miller depended altogether upon the result of the suit in which it was issued. The lien or interest of Miller was merely conditional. If he obtained judgment in his favor the attachment would be beneficial to him. If there could be any doubt as to the meaning of the statute, looking at its language alone, the history of the clause in question will put an end to it. Under the bankrupt act of 1841, which contained no such clause, a question was made whether proceedings in bankruptcy cut off the lien of attachments; judicial opinion was divided on the subject. Judge STORY, in several cases in his circuit, decided that such liens were cut off under the act. (Ex parte Foster, 2 Story, 131.) On the other hand, several of the State courts, and, finally, the Supreme Court of the United States, decided the other way. (Peck v. Jenness, 7 How., 612.) It was, undoubtedly, to reverse this rule and make the intention of Congress clear, that the declaration in question was introduced into the present bankrupt law. The learned judge who gave the opinion of the Supreme Court in this case, refers to the case ofWilson v. City Bank of St. Paul (17 Wall., 473) as a controlling authority in favor of sustaining Miller's attachment. The case had not been reported at the time it was thus referred to; and upon examining the reported case it appears plainly to have no bearing upon the present question. It related to the question of fraudulent preferences under the thirty-fifth section of the bankrupt act, and to the effect of the bankrupt proceedings on a lien on final process.

The case of Marshall v. Knox (16 Wall., 552) turned upon the distinction between a lessor's lien for rent under the law of Louisiana and the lien of an attaching creditor which only becomes a perfected lien by the judgment which may ensue. (P. 558.) The lien of the lessor was sustained, as being "one of the strongest and most favored in the law of Louisiana." We are of opinion, therefore, that the proceedings in bankruptcy did dissolve the lien of Miller's attachment, and that the rights of the assignee must prevail over his claims unless, by the proceedings in the Supreme Court, some new right has become vested in Miller. Such cannot be the effect of the proceedings which were taken. The appointment of the receiver and the transfer of the custody of the attached property, from the sheriff to him, altered no one's right, and did not profess to alter them. Receivers are part of the machinery by which equity protects and secures the rights of parties. Their custody is that of the law, and is in its nature provisional and suspensive, leaving the rights of the parties concerned to be controlled by the ultimate judgment of the court. Miller, therefore, had no lien upon the property attached at the time when his judgment was obtained, and there was therefore no foundation for the order at Special Term, which has been affirmed at General Term, giving preference in payment to Miller's judgment.

The orders at General and Special Terms should be reversed, with costs.

All concur.

Orders reversed.