Cohen v. Wasserman

• Decision Date: 05 December 1956
• Docket Number: No. 5124.,5124.
• Citation: 238 F.2d 683
• Parties: Morris COHEN, d/b/a Piehler Furs, Petitioner, Appellant, v. Arthur T. WASSERMAN, Trustee, Appellee.
• Court: U.S. Court of Appeals — First Circuit

238 F.2d 683 (1956)

Morris COHEN, d/b/a Piehler Furs, Petitioner, Appellant, v. Arthur T. WASSERMAN, Trustee, Appellee.

No. 5124.

United States Court of Appeals First Circuit.

Heard October 5, 1956.

Decided December 5, 1956.

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Alan J. Dimond, Boston, Mass., with whom Widett & Kruger, Boston, Mass., was on brief, for appellant.

Julius Thannhauser, Boston, Mass., with whom Wasserman & Salter, Boston, Mass., was on brief, for appellee.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

HARTIGAN, Circuit Judge.

This is an appeal from an order of the United States District Court for the District of Massachusetts affirming an order of the referee in bankruptcy, entered on February 29, 1956, denying petitioner-appellant's petition for the establishment of a lien in the amount of $968 on the proceeds of an eminent domain proceeding, held by the respondent-appellee, trustee in bankruptcy.

There being no issue as to the facts, they may be briefly summarized as found by the referee. The petitioner-appellant, Morris Cohen, an individual doing business as Piehler Furs, brought suit against the bankrupt, Antoinette G. Monks, by writ dated August 8, 1949 with an ad damnum of $975. On August 9, 1949, acting under said writ, the appellant caused an attachment to be made on the bankrupt's real estate located in Suffolk County in the Commonwealth of Massachusetts. On September 8, 1949 the bankrupt's real estate, which was subject to the aforementioned attachment, was taken by the Commonwealth by exercise of the right of eminent domain. On March 10, 1950 the appellant obtained a judgment against the bankrupt in the amount of $968. Within thirty days from the entry of the judgment the sheriff purported to levy on the bankrupt's interest in the attached real estate in Suffolk County. The sheriff immediately suspended further levy by "reason of prior attachments." Presumably, the "prior attachments" mentioned in the sheriff's return referred to the interest of the Commonwealth in the property resulting from the eminent domain proceeding.

Receivers of the bankrupt's property having been appointed on April 11, 1950 by the Superior Court of Suffolk county, the appellant, on May 11, 1950, filed a petition for leave to intervene in the receivership proceeding, alleging that the bankrupt, by virtue of a letter dated February 14, 1950 had ordered the proper state officer to pay appellant $951.98 out of the proceeds of the eminent domain proceeding with respect to the real estate in Suffolk County, and praying that appellant's claim be established as a preferred claim. This petition was never acted upon by the court, and it is not of any significance on this appeal.

On May 25, 1950 bankruptcy proceedings were initiated by an involuntary petition. Subsequently, the Commonwealth paid to the respondent-appellee, trustee in bankruptcy, $32,000 on account of a $48,000 judgment obtained by the appellee ($16,000 of said judgment having been paid to prior mortgagees) for the taking of the bankrupt's real estate. No part of the appellant's claim was paid by the appellee.

The referee, concluding that the title of the bankrupt to the real estate under attachment was extinguished by the taking under eminent domain on September 8, 1949, and that the attachment made by petitioner was extinguished as a result of the eminent domain proceeding, ordered that appellant's petition to establish a lien, filed August 25, 1955, be denied. This appeal is taken from an order of the district court entered on April 17, 1956 affirming the referee's action.

The question presented is whether appellant's mesne process attachment under Massachusetts law created a valid lien which was transformed into an equitable lien upon the taking of the attached real estate by eminent domain and, as such, was enforceable against the proceeds of the taking even though judgment was not obtained by appellant until after the taking by eminent domain, and notwithstanding that the actual proceeds of the condemnation were not recovered by the trustee until after the owner of the property had been declared bankrupt.

Appellee mainly contends that where realty under mesne process attachment is taken by right of eminent domain the attachment lien is extinguished, and no equitable lien against the proceeds of the taking arises to take its place, because the lien of attachment is merely inchoate. To answer this contention we must first determine the nature of the lien created by appellant's mesne process attachment of August 9, 1949.

It is clear that the nature of such a lien depends wholly upon the local law. Yumet & Co. v. Delgado, 1 Cir., 1917, 243 F. 519, Massachusetts courts have stated that "an attachment of property on mesne process is a specific charge upon the property," Davenport & Others v. Tilton, 1845, 10 Met. 320, 327, 51 Mass. 320, and, further, that it "doubtless creates an immediate lien," Gardner v. Barnes, 1871, 106 Mass. 505, 506. These cases are consistent with an earlier Supreme Court holding from which it can be gathered that in Massachusetts, for purposes of the bankruptcy law of 1841, an attachment on mesne process created a lien equal in stature to a common law lien, or a lien acquired after judgment. See Peck v. Jenness, 1849, 7 How. 612, 48 U.S. 612, 12 L.Ed. 841.

That a lien, in Massachusetts, arising from mesne process attachment, is a perfected charge or encumbrance upon the attached property from the time of attachment, is evidenced by the language in In re Blair, D.C.Mass.1901, 108 F. 529, 530, where the court stated that where "the lien is created by the attachment, the judgment and levy create no new or additional lien, but only enforce a lien already existing." See also Gatell v. Millian, 1 Cir., 1924, 2 F.2d 365; In re Crafts-Riordon Shoe Co., D.C.Mass.1910, 185 F. 931. But see Ex parte Foster, C.C.D.Mass.1842, 9 Fed.Cas. p. 508, No. 4,960.

In light of these decisions we believe that mesne process attachment in Massachusetts creates a valid lien on the property attached from the time the attachment is made. A subsequent judgment for the plaintiff does no more than establish the fact that the lien was rightly obtained. Yumet & Co. v. Delgado, supra, 243 F. at page 520. If the lien is inchoate in any way, we believe it is only so as to its enforceability against the encumbered property. The lien cannot be enforced by the attaching plaintiff against the property until he has recovered judgment. See Yumet & Co. v. Delgado, supra at page 520. But, that enforceability of the lien is not available to the plaintiff until judgment is recovered, does not affect the existence and quality of the attachment as a valid lien, as evidenced by the fact that anyone taking the property after the attachment could take it only subject to the lien.

Having concluded that the appellant had a valid lien at the time of the taking of the attached property by the Commonwealth on September 8, 1949, we must next determine what became of the lien after the taking by eminent domain. Although no Massachusetts cases dealing with this very question have come to our attention, the law is well settled elsewhere that a lien creditor may enforce his lien in equity against the proceeds of an eminent domain award. This principle is enunciated in 2 Nichols, Eminent Domain, § 5.74 (3d Ed. 1950):

"A lien is not a proprietary interest or an estate in the land, upon which it stands, but is a remedy against it, and, as the legislature may constitutionally impair a remedy without compensation, when land subject to lien is taken by eminent domain, the holder of the lien is not entitled to be made a party, or to recover compensation from the condemnor. It is, however, well settled that the award stands in place of the land, and is subject to the

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